Filed with the Securities and Exchange Commission on April 18, 2005
Registration No. 333-117052
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form S-3
Post-Effective Amendment No. 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)
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)
TIMOTHY P. HARRIS, CHIEF LEGAL OFFICER
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:
ROBIN WAGNER, VICE PRESIDENT AND CORPORATE COUNSEL
One Corporate Drive, Shelton, Connecticut 06484 (203) 925-7176
Approximate date of commencement of proposed sale to the public:
May 2, 2005 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, other than securities offered only in connection with dividend or
reinvestment plans, 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
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value Adjusted
Annuity Contracts $-0- $-0-
*Pursuant to Rule 429 under the Securities Act of 1934, the prospectus contained
in this Registration Statement also relates to annuity contracts which are
covered by our earlier registration statements, including Registration File
Number 333-55608, 333-97941, 333-110027.
- --------------------------------------------------------------------------------
**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.
================================================================================
ASAP III/Apex II/ASL II/ XT-SIX
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
A Prudential Financial Company
One Corporate Drive, Shelton, Connecticut 06484
AMERICAN SKANDIA APEX(SM) II
Flexible Premium Deferred Annuity
PROSPECTUS: MAY 2, 2005
This Prospectus describes American Skandia APEX(SM) II, a flexible premium
deferred annuity (the "Annuity") offered by American Skandia Life Assurance
Corporation ("American Skandia", "we", "our" or "us"). The Annuity may be
offered as an individual annuity contract or as an interest in a group annuity.
This Prospectus describes the important features of the Annuity and what you
should consider before purchasing the Annuity. THE ANNUITY OR CERTAIN OF ITS
INVESTMENT OPTIONS AND/OR FEATURES MAY NOT BE AVAILABLE IN ALL STATES. VARIOUS
RIGHTS AND BENEFITS MAY DIFFER BETWEEN STATES TO MEET APPLICABLE LAWS AND/OR
REGULATIONS. For more information about variations applicable to your state,
please refer to your Annuity contract or consult your Investment Professional.
Certain terms are capitalized in this Prospectus. Those terms are either defined
in the Glossary of Terms or in the context of the particular section.
American Skandia offers several different annuities which your investment
professional may be authorized to offer to you. Each annuity has different
features and benefits that may be appropriate for you based on your financial
situation, your age and how you intend to use the annuity. The different
features and benefits include variations in death benefit protection and the
ability to access your annuity's account value. The fees and charges you pay and
compensation paid to your Investment Professional may also be different between
each annuity.
THE VARIABLE INVESTMENT OPTIONS
The variable investment options, each a Sub-account of American Skandia Life
Assurance Corporation Variable Account B, invest in an underlying mutual fund
portfolio. Currently, portfolios of the following underlying mutual funds are
being offered: American Skandia Trust, Gartmore Variable Investment Trust, Wells
Fargo Variable Trust, A I M Advisors, Inc., Evergreen Variable Annuity Trust,
ProFunds VP, First Defined Portfolio Fund LLC and The Prudential Series Fund,
Inc.
PLEASE READ THIS PROSPECTUS
PLEASE READ THIS PROSPECTUS AND THE CURRENT PROSPECTUS FOR THE UNDERLYING MUTUAL
FUNDS. KEEP THEM FOR FUTURE REFERENCE. If you are purchasing the Annuity as a
replacement for existing variable annuity or variable life coverage, you should
consider any surrender or penalty charges you may incur when replacing your
existing coverage and that this Annuity may be subject to a contingent deferred
sales charge if you elect to surrender the Annuity or take a partial withdrawal.
You should consider your need to access the Annuity's Account Value and whether
the annuity's liquidity features will satisfy that need.
AVAILABLE INFORMATION
We have also filed a Statement of Additional Information that is available from
us, without charge, upon your request. The contents of the Statement of
Additional Information are described on page 93. This Prospectus is part of the
registration statement we filed with the SEC regarding this offering. Additional
information on us and this offering is available in the registration statement
and the exhibits thereto. You may review and 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. These documents, as well as documents
incorporated by reference, may also be obtained through the SEC's Internet
Website (http://www.sec.gov) for this registration statement as well as for
other registrants that file electronically with the SEC.
For Further Information call:
- - 1-800-752-6342
THESE ANNUITIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ISSUED, GUARANTEED OR
ENDORSED BY, ANY BANK, ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC), THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY. AN INVESTMENT IN THIS ANNUITY INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF VALUE, EVEN WITH RESPECT TO AMOUNTS ALLOCATED TO THE AST MONEY
MARKET SUB-ACCOUNT. 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.
AMERICAN SKANDIA APEX(SM) II IS A SERVICE MARK OF THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA.
Prospectus Dated: May 2, 2005 Statement of Additional Information Dated: May 2, 2005
APEX2PROS505 ASAPEXIIPROS
PLEASE SEE OUR PRIVACY POLICY AND IRA DISCLOSURE STATEMENT
ATTACHED TO THE BACK COVER OF THIS PROSPECTUS.
Contents
Introduction ............................................................................... 1
Why Would I Choose to Purchase This Annuity? ............................................. 1
What Are Some of the Key Features of This Annuity? ....................................... 1
How Do I Purchase This Annuity? .......................................................... 1
Glossary of Terms .......................................................................... 2
Summary of Contract Fees and Charges ....................................................... 3
Expense Examples ........................................................................... 12
Investment Options ......................................................................... 13
What Are the Investment Objectives and Policies of the Portfolios? ....................... 13
What Are the Fixed Allocations? .......................................................... 27
Fees and Charges ........................................................................... 28
What Are the Contract Fees and Charges? .................................................. 28
What Charges Apply Solely to the Variable Investment Options? ............................ 29
What Fees and Expenses are Incurred by the Portfolios? ................................... 30
What Charges Apply to the Fixed Allocations? ............................................. 30
What Charges Apply if I Choose an Annuity Payment Option? ................................ 30
Exceptions/Reductions to Fees and Charges ................................................ 30
Purchasing Your Annuity .................................................................... 31
What Are Our Requirements for Purchasing the Annuity? .................................... 31
Managing Your Annuity ...................................................................... 32
May I Change the Owner, Annuitant and Beneficiary Designations? .......................... 32
May I Return the Annuity if I Change My Mind? ............................................ 32
May I Make Additional Purchase Payments? ................................................. 32
May I Make Scheduled Payments Directly from My Bank Account? ............................. 32
May I Make Purchase Payments Through a Salary Reduction Program? ......................... 33
Managing Your Account Value ................................................................ 34
How and When Are Purchase Payments Invested? ............................................. 34
Are There Restrictions or Charges on Transfers Between Investment Options? ............... 34
Do You Offer Dollar Cost Averaging? ...................................................... 36
Do You Offer Any Automatic Rebalancing Programs? ......................................... 37
Are Any Asset Allocation Programs Available? ............................................. 37
Do You Offer Programs Designed to Guarantee a "Return of Premium" at a Future Date? ...... 38
May I Give My Investment Professional Permission to Manage My Account Value? ............. 39
May I Authorize My Third Party Investment Advisor to Manage My Account? .................. 39
How Do the Fixed Allocations Work? ....................................................... 40
How Do You Determine Rates for Fixed Allocations? ........................................ 41
How Does the Market Value Adjustment Work? ............................................... 41
What Happens When My Guarantee Period Matures? ........................................... 42
Access To Account Value .................................................................... 43
What Types of Distributions Are Available to Me? ......................................... 43
Are There Tax Implications for Distributions? ............................................ 43
Can I Withdraw a Portion of My Annuity? .................................................. 43
How Much Can I Withdraw as a Free Withdrawal? ............................................ 44
Is There a Charge for a Partial Withdrawal? .............................................. 44
Can I Make Periodic Withdrawals from the Annuity During the Accumulation Period? ......... 44
Do You Offer a Program for Withdrawals Under Section 72(t) of the Internal Revenue Code?.. 45
What Are Minimum Distributions and When Would I Need to Make Them? ....................... 45
Can I Surrender My Annuity for Its Value? ................................................ 45
What is a Medically-Related Surrender and How Do I Qualify? .............................. 45
What Types of Annuity Options Are Available? ............................................. 46
How and When Do I Choose the Annuity Payment Option? ..................................... 47
How Are Annuity Payments Calculated? ..................................................... 47
(i)
Contents
Living Benefit Programs .................................................................. 49
Do You Offer Programs Designed to Provide Investment Protection for Owners While They
are Alive? ........................................................................... 49
Guaranteed Return Option Plus(SM) (GRO Plus(SM)) ....................................... 50
Guaranteed Return Option (GRO) ......................................................... 54
Guaranteed Minimum Withdrawal Benefit (GMWB) ........................................... 57
Guaranteed Minimum Income Benefit (GMIB) ............................................... 61
Lifetime Five Income Benefit (Lifetime Five) ........................................... 65
Death Benefit ............................................................................ 71
What Triggers the Payment of a Death Benefit? .......................................... 71
Basic Death Benefit .................................................................... 71
Optional Death Benefits ................................................................ 71
American Skandia's Annuity Rewards ..................................................... 75
Payment of Death Benefits .............................................................. 75
Valuing Your Investment .................................................................. 78
How is My Account Value Determined? .................................................... 78
What is the Surrender Value of My Annuity? ............................................. 78
How and When Do You Value the Sub-Accounts? ............................................ 78
How Do You Value Fixed Allocations? .................................................... 78
When Do You Process and Value Transactions? ............................................ 78
What Happens to My Units When There is a Change in Daily Asset-Based Charges? .......... 80
Tax Considerations ....................................................................... 81
General Information ...................................................................... 88
How Will I Receive Statements and Reports? ............................................. 88
Who is American Skandia? ............................................................... 88
What Are Separate Accounts? ............................................................ 88
What is the Legal Structure of the Underlying Funds? ................................... 90
Who Distributes Annuities Offered by American Skandia? ................................. 91
Incorporation of Certain Documents by Reference ........................................ 91
Financial Statements ................................................................... 92
How to Contact Us ...................................................................... 92
Indemnification ........................................................................ 92
Legal Proceedings ...................................................................... 93
Contents of the Statement of Additional Information .................................... 93
Appendix A -- Condensed Financial Information About Separate Account B ................... A-1
Appendix B -- Calculation of Optional Death Benefits ..................................... B-1
Appendix C -- Plus40(TM) Optional Life Insurance Rider ................................... C-1
Appendix D -- Description and Calculation of Previously Offered Optional
Death Benefits ........................................................................... D-1
Appendix E -- Additional Information on Asset Allocation Programs ........................ E-1
(ii)
AMERICAN SKANDIA APEX II PROSPECTUS
Introduction
Why Would I Choose to Purchase This Annuity?
This Annuity is frequently used for retirement planning because it allows you to
accumulate retirement savings and also offers annuity payment options when you
are ready to begin receiving income. The Annuity also offers a choice of
different optional benefits, for an additional charge, that can provide
principal protection or guaranteed minimum income protection for Owners while
they are alive and one or more death benefits that can protect your retirement
savings if you die during a period of declining markets. It may be used as an
investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Roth
IRA, Section 401(a) plans (defined benefit plans and defined contribution plans
such as 401(k), profit sharing and money purchase plans) or Tax Sheltered
Annuity (or 403(b)). It may also be used as an investment vehicle for
"non-qualified" investments. The Annuity allows you to invest your money in a
number of variable investment options as well as in one or more fixed
allocations.
When an Annuity is purchased as a "NON-QUALIFIED" investment, you generally are
not taxed on any investment gains the Annuity earns until you make a withdrawal
or begin to receive annuity payments. This feature, referred to as
"tax-deferral", can be beneficial to the growth of your Account Value because
money that would otherwise be needed to pay taxes on investment gains each year
remains invested and can earn additional money. However, because the Annuity is
designed for long-term retirement savings, a 10% penalty tax may be applied on
withdrawals you make before you reach age 59 1/2. Annuities purchased as a
non-qualified investment are not subject to the maximum contribution limits that
may apply to a qualified investment, and are not subject to required minimum
distributions after age 70 1/2.
When an Annuity is purchased as a "QUALIFIED" investment, you should consider
that the Annuity does not provide any tax advantages in addition to the
preferential treatment already available through your retirement plan under the
Internal Revenue Code. An Annuity may offer features and benefits in addition to
providing tax deferral that other investment vehicles may not offer, including
death benefit protection for your beneficiaries, lifetime income options, and
the ability to make transfers between numerous variable investment options
offered under the Annuity. You should consult with your investment professional
as to whether the overall benefits and costs of the Annuity are appropriate
considering your overall financial plan.
What Are Some of the Key Features of This Annuity?
- - This Annuity is a "flexible premium deferred annuity." It is called
"flexible premium" because you have considerable flexibility in the timing
and amount of premium payments. Generally, investors "defer" receiving
annuity payments until after an accumulation period.
- - This Annuity offers both variable investment options and Fixed
Allocations. If you allocate your Account Value to variable investment
options, the value of your Annuity will vary daily to reflect the
investment performance of the underlying investment options. Fixed
Allocations of different durations are offered that are guaranteed by us,
but may have a Market Value Adjustment if you withdraw or transfer your
Account Value before the Maturity Date.
- - The Annuity features two distinct periods -- the accumulation period and
the payout period. During the accumulation period your Account Value is
allocated to one or more investment options.
- - During the payout period, commonly called "annuitization," you can elect
to receive annuity payments (1) for life; (2) for life with a guaranteed
minimum number of payments; (3) based on joint lives; or (4) for a
guaranteed number of payments. We currently make annuity payments
available on a fixed or variable basis.
- - For annuities issued on or after June 20, 2005 (subject to state
availability) this Annuity offers a Loyalty Credit which we add to your
Account Value after it has been in effect for five full contract years
(i.e., on your fifth Contract Anniversary), subject to our rules and State
availability.
- - This Annuity offers optional benefits, for an additional charge, that can
provide principal protection or guaranteed minimum income protection for
Owners while they are alive.
- - This Annuity offers a basic Death Benefit. It also offers optional Death
Benefits that provide an enhanced level of protection for your
beneficiary(ies) for an additional charge.
- - You are allowed to withdraw a limited amount of money from your Annuity on
an annual basis without any charges, although any optional guaranteed
benefit you elect may be reduced. Other product features allow you to
access your Account Value as necessary, although a charge may apply. After
Annuity Year 4, you are allowed to make unlimited withdrawals from your
Annuity without any charges.
- - Transfers between investment options are tax-free. Currently, you may make
twenty transfers each year free of charge. We also offer several programs
that enable you to manage your Account Value as your financial needs and
investment performance change.
How Do I Purchase This Annuity?
We sell the Annuity through licensed, registered investment professionals. You
must complete an application and submit a minimum initial purchase payment of
$10,000. We may allow you to make a lower initial purchase payment provided you
establish a bank drafting program under which purchase payments received in the
first Annuity Year total at least $10,000. If the Annuity is owned by an
individual or individuals, the oldest of those Owners must be age 85 or under,
as of the Issue Date of the Annuity. If the Annuity is owned by an entity, the
annuitant must be age 85 or under, as of the Issue Date of the Annuity. The
availability and level of protection of certain optional benefits may vary based
on the age of the Owner, on the Issue Date of the Annuity or the date of the
Owner's death.
1
AMERICAN SKANDIA APEX II PROSPECTUS
Glossary of Terms
Many terms used within this Prospectus are described within the text where they
appear. The description of those terms are not repeated in this Glossary of
Terms.
ACCOUNT VALUE
The value of each allocation to a Sub-account (also referred to as "variable
investment option") or a Fixed Allocation prior to the Annuity Date, plus any
earnings, and/or less any losses, distributions and charges. The Account Value
is calculated before we assess any applicable Contingent Deferred Sales Charge
("CDSC" or "surrender charge") and/or, other than on a contract anniversary, any
fee that is deducted from the contract annually in arrears. The Account Value
includes any Loyalty Credit we apply. The Account Value is determined separately
for each Sub-account and for each Fixed Allocation, and then totaled to
determine the Account Value for your entire Annuity. The Account Value of each
Fixed Allocation on other than its Maturity Date may be calculated using a
market value adjustment.
ANNUITIZATION
The application of Account Value (or Protected Income Value for the Guaranteed
Minimum Income Benefit, if applicable) to one of the available annuity options
for the Annuitant to begin receiving periodic payments for life, for a
guaranteed minimum number of payments or for life with a guaranteed minimum
number of payments.
ANNUITY DATE
The date you choose for annuity payments to commence. A maximum Annuity Date may
apply.
ANNUITY YEAR
A 12-month period commencing on the Issue Date of the Annuity and each
successive 12-month period thereafter.
CODE
The Internal Revenue Code of 1986, as amended from time to time.
FIXED ALLOCATION
An allocation of Account Value that is to be credited a fixed rate of interest
for a specified Guarantee Period during the accumulation period.
GUARANTEE PERIOD
A period of time during the accumulation period where we credit a fixed rate of
interest on a Fixed Allocation.
INTERIM VALUE
The value of a Fixed Allocation on any date other than the Maturity Date. The
Interim Value is equal to the initial value allocated to the Fixed Allocation
plus all interest credited to the Fixed Allocation as of the date calculated,
less any transfers or withdrawals from the Fixed Allocation.
ISSUE DATE
The effective date of your Annuity.
MVA
A market value adjustment used in the determination of Account Value of each
Fixed Allocation on any day more than 30 days prior to the Maturity Date of such
Fixed Allocation.
OWNER
With an Annuity issued as an individual annuity contract, the Owner is either an
eligible entity or person named as having ownership rights in relation to the
Annuity. With an Annuity issued as a certificate under a group annuity contract,
the "Owner" refers to the person or entity who has the rights and benefits
designated as to the "Participant" in the certificate.
SURRENDER VALUE
The value of your Annuity available upon surrender prior to the Annuity Date. It
equals the Account Value as of the date we price the surrender minus any
applicable CDSC, Annual Maintenance Fee, Tax Charge and the charge for any
optional benefits. The surrender value may be calculated using a Market Value
Adjustment with respect to amounts in any Fixed Allocation.
UNIT
A measure used to calculate your Account Value in a Sub-account during the
accumulation period.
VALUATION DAY
Every day the New York Stock Exchange is open for trading or any other day the
Securities and Exchange Commission requires mutual funds or unit investment
trusts to be valued.
2
AMERICAN SKANDIA APEX II PROSPECTUS
Summary of Contract Fees and Charges
Below is a summary of the fees and charges for the Annuity. Some fees and
charges are assessed against your Annuity while others are assessed against
assets allocated to the variable investment options. The fees and charges that
are assessed against the Annuity include the Contingent Deferred Sales Charge,
Transfer Fee, Tax Charge and Annual Maintenance Fee. The charges that are
assessed against the variable investment options are the mortality and expense
risk charge, the charge for administration of the Annuity, and the charge for
certain optional benefits you elect, other than the Guaranteed Minimum Income
Benefit, which is assessed against the Protected Income Value. Each underlying
mutual fund portfolio assesses a charge for investment management, other
expenses and with some mutual funds, a 12b-1 charge. The prospectus for each
underlying mutual fund provides more detailed information about the expenses for
the underlying mutual funds.
The following table provides a summary of the fees and charges you will pay if
you surrender the Annuity or transfer Account Value among investment options.
These fees and charges are described in more detail within this Prospectus.
YOUR TRANSACTION FEES AND CHARGES
(ASSESSED AGAINST THE ANNUITY)
FEE/CHARGE AMOUNT DEDUCTED
- -----------------------------------------------------------------------------------------------------------
Contingent Deferred Sales Charge* 8.5%
The charge is a percentage of each applicable Purchase Payment
deducted upon surrender or withdrawal. The period during which a
particular percentage applies is measured from the Issue Date of the
Annuity.
Transfer Fee $10 (currently, $15 maximum)
(Currently, we deduct the fee after the
20th transfer each Annuity Year. We
guarantee that the number of charge free
transfers per Annuity Year
will never be less than 8.)
Tax Charge Up to 3.5% of the value that is annuitized, depending on the
requirements of the applicable jurisdiction. This charge is deducted
generally at the time you annuitize your contract.
* The following are the Contingent Deferred Sales Charges (as a percentage of
each applicable Purchase Payment) upon surrender or withdrawal. For purposes of
calculating this charge we consider the year following the Issue Date of your
Annuity as Year 1.
Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yrs. 5+
8.5% 8.0% 7.0% 6.0% 0.0%
3
AMERICAN SKANDIA APEX II PROSPECTUS
Summary of Contract Fees and Charges continued
The following table provides a summary of the periodic fees and charges you will
pay while you own the Annuity, excluding the underlying mutual fund Portfolio
annual expenses. These fees and charges are described in more detail within this
Prospectus.
YOUR PERIODIC FEES AND CHARGES
ANNUAL FEES/CHARGES ASSESSED AGAINST THE ANNUITY
FEE/CHARGE AMOUNT DEDUCTED
- -------------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee Smaller of $35 or 2% of Account Value
(Only applicable if Account Value is less than $100,000)
(Assessed annually on the Annuity's anniversary date or upon
surrender)
ANNUAL FEES/CHARGES OF THE SUB-ACCOUNTS(1)
(AS A PERCENTAGE OF THE AVERAGE DAILY NET ASSETS OF THE SUB-ACCOUNTS)
FEE/CHARGE AMOUNT DEDUCTED
- -------------------------------------------------------------------------------------------------------------------------
Mortality & Expense Risk Charge(2) 1.50%
Administration Charge(2) 0.15%
Settlement Service Charge(3) 1.40% per year of the value of each Sub-account if the Owner's
beneficiary elects the Qualified Beneficiary
Continuation Option(4) ("Qualified BCO")
Total Annual Charges of the Sub-accounts 1.65% per year of the value of each Sub-account
(1.40% per year if you are a beneficiary electing the Qualified BCO)
1: These charges are deducted daily and apply to Variable Investment Options
only.
2: The combination of the Mortality and Expense Risk Charge and Administration
Charge is referred to as the "Insurance Charge" elsewhere in this Prospectus.
3: The Mortality & Expense Risk Charge and the Administration Charge do not
apply if you are a beneficiary under the Qualified Beneficiary Continuation
Option. The Settlement Service Charge applies only if your beneficiary elects
the Qualified Beneficiary Continuation Option.
4: When an Annuity is used as an IRA, 403(b) or other "qualified investment",
upon the Owner's death a beneficiary may generally elect to continue the Annuity
and receive Minimum Distributions under the Annuity instead of receiving the
death benefit in a single payment. If a beneficiary elects this option, the
beneficiary will incur the Settlement Service Charge. Please refer to the
section of this prospectus that describes the Qualified Beneficiary Continuation
Option for more detailed information about this option, including certain
restrictions and limitations that may apply.
4
AMERICAN SKANDIA APEX II PROSPECTUS
Summary of Contract Fees and Charges continued
The following table provides a summary of the fees and charges you will pay if
you elect any of the following optional benefits. Not all optional benefits may
be purchased in combination with one another. You may only elect one optional
living benefit. The optional living benefits are the Guaranteed Return Option
Plus program (and where not available, Guaranteed Return Option), the Guaranteed
Minimum Withdrawal Benefit, the Guaranteed Minimum Income Benefit and the
Lifetime Five(SM) Income Benefit. For the optional death benefits, you may elect
the Highest Anniversary Value Death Benefit or the Highest Daily Value Death
Benefit together with the Enhanced Beneficiary Protection Death Benefit, or any
of these three benefits individually, but the Combination 5% Roll-up and HAV
Death Benefit may only be purchased individually. The fees and charges and each
of the optional benefits are described in more detail within this Prospectus.
YOUR OPTIONAL BENEFIT FEES AND CHARGES
OPTIONAL
BENEFIT FEE/ TOTAL ANNUAL
OPTIONAL BENEFIT CHARGE CHARGE*
- -----------------------------------------------------------------------------------------------------------------------------
GUARANTEED RETURN OPTION PLUS(SM) (GRO PLUS(SM))/ GUARANTEED RETURN OPTION
We offer a program that guarantees a "return of premium" at a future 0.25% of average daily 1.90%; 1.65% for
date, while allowing you to allocate all or a portion of your Account net assets of the Sub- Qualified BCO
Value to certain Sub-accounts. accounts
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
We offer a program that guarantees your ability to withdraw amounts 0.35% of average daily 2.00%; 1.75% for
over time equal to an initial principal value, regardless of the net assets of the Sub- Qualified BCO
impact of market performance on your Account Value. accounts
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)**
We offer a program that, after a seven-year waiting period, guarantees 0.50% per year of the 1.65%
your ability to begin receiving income from your Annuity in the form average Protected
of annuity payments based on your total Purchase Payments and an Income Value during PLUS
annual increase of 5% on such Purchase Payments adjusted for each year; deducted 0.50% per year of average
withdrawals (called the "Protected Income Value"), regardless of the annually in arrears each Protected Income Value
impact of market performance on your Account Value. Annuity Year
LIFETIME FIVE INCOME BENEFIT**
We offer a program that guarantees your ability to withdraw amounts 0.60% of average daily 2.25%
equal to a percentage of an initial principal value, regardless of the net assets of the Sub-
impact of market performance on your Account Value, subject to our accounts
program rules regarding the timing and amount of withdrawals.
ENHANCED BENEFICIARY PROTECTION DEATH BENEFIT**
We offer an Optional Death Benefit that provides an enhanced level of 0.25% of average daily 1.90%
protection for your beneficiary(ies) by providing amounts in addition net assets of the Sub-
to the basic Death Benefit that can be used to offset federal and accounts
state taxes payable on any taxable gains in your Annuity at the time
of your death.
5
AMERICAN SKANDIA APEX II PROSPECTUS
Summary of Contract Fees and Charges continued
OPTIONAL
BENEFIT FEE/ TOTAL ANNUAL
OPTIONAL BENEFIT CHARGE CHARGE*
- -----------------------------------------------------------------------------------------------------------------------------
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT ("HAV")**
We offer an Optional Death Benefit that provides an enhanced level of 0.25% of average daily 1.90%
protection for your beneficiary(ies) by providing a death benefit net assets of the Sub-
equal to the greater of the basic Death Benefit and the Highest accounts
Anniversary Value, less proportional withdrawals.
COMBINATION 5% ROLL-UP AND HAV DEATH BENEFIT**
We offer an Optional Death Benefit that provides an enhanced level of 0.50% of average daily 2.15%
protection for your beneficiary(ies) by providing the greater of the net assets of the Sub-
Highest Anniversary Value Death Benefit and a 5% annual increase on accounts
Purchase Payments adjusted for withdrawals.
HIGHEST DAILY VALUE DEATH BENEFIT ("HDV")**
We offer an Optional Death Benefit that provides an enhanced level of 0.50% of average daily 2.15%
protection for your beneficiary(ies) by providing a death benefit net assets of the Sub-
equal to the greater of the basic Death Benefit and the Highest Daily accounts
Value, less proportional withdrawals.
PLEASE REFER TO THE SECTION OF THIS PROSPECTUS THAT DESCRIBES EACH OPTIONAL
BENEFIT FOR A COMPLETE DESCRIPTION OF THE BENEFIT, INCLUDING ANY RESTRICTIONS OR
LIMITATIONS THAT MAY APPLY.
* The Total Annual Charge includes the Insurance Charge assessed against the
average daily net assets allocated to the sub-accounts. If you elect more than
one optional benefit, the Total Annual Charge would be increased to include the
charge for each optional benefit.
** These optional benefits are not available under the Qualified BCO.
The following table provides the range (minimum and maximum) of the total annual
expenses for the underlying mutual funds ("Portfolios") as of December 31, 2004.
Each figure is stated as a percentage of the underlying Portfolio's average
daily net assets.
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES
MINIMUM MAXIMUM
- ------------------------------------------------------------
TOTAL PORTFOLIO OPERATING EXPENSE 0.63% 3.06%
The following are the investment management fees, other expenses, 12b-1 fees (if
applicable), and the total annual expenses for each underlying mutual fund
("Portfolio") as of December 31, 2004, except as noted. Each figure is stated as
a percentage of the underlying Portfolio's average daily net assets. For certain
of the underlying Portfolios, a portion of the management fee has been waived
and/or other expenses have been partially reimbursed. Any such fee waivers
and/or reimbursements have been reflected in the footnotes. The "Total Annual
Portfolio Operating Expenses" reflect the combination of the underlying
Portfolio's investment management fee, other expenses and any 12b-1 fees. The
following expenses are deducted by the underlying Portfolio before it provides
American Skandia with the daily net asset value. Any footnotes about expenses
appear after the list of all the Portfolios. The underlying Portfolio
information was provided by the underlying mutual funds and has not been
independently verified by us. See the prospectuses or statements of additional
information of the underlying Portfolios for further details. The current
prospectus and statement of additional information for the underlying Portfolios
can be obtained by calling 1-800-752-6342.
6
AMERICAN SKANDIA APEX II PROSPECTUS
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS)
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
AMERICAN SKANDIA TRUST:(2,3)
AST JPMorgan International Equity 1.00% 0.13% None 1.13%
AST William Blair International Growth 1.00% 0.22% None 1.22%
AST LSV International Value(4) 1.00% 0.37% None 1.37%
AST MFS Global Equity 1.00% 0.35% None 1.35%
AST Small-Cap Growth(5) 0.90% 0.24% None 1.14%
AST DeAM Small-Cap Growth 0.95% 0.22% None 1.17%
AST Federated Aggressive Growth 0.95% 0.24% None 1.19%
AST Small-Cap Value(6) 0.90% 0.18% None 1.08%
AST DeAM Small-Cap Value 0.95% 0.33% None 1.28%
AST Goldman Sachs Mid-Cap Growth 1.00% 0.25% None 1.25%
AST Neuberger Berman Mid-Cap Growth 0.90% 0.22% None 1.12%
AST Neuberger Berman Mid-Cap Value 0.90% 0.15% None 1.05%
AST Alger All-Cap Growth 0.95% 0.22% None 1.17%
AST Gabelli All-Cap Value 0.95% 0.26% None 1.21%
AST T. Rowe Price Natural Resources 0.90% 0.26% None 1.16%
AST AllianceBernstein Large-Cap Growth(7) 0.90% 0.23% None 1.13%
AST MFS Growth 0.90% 0.20% None 1.10%
AST Marsico Capital Growth 0.90% 0.14% None 1.04%
AST Goldman Sachs Concentrated Growth 0.90% 0.17% None 1.07%
AST DeAM Large-Cap Value 0.85% 0.26% None 1.11%
AST AllianceBernstein Growth + Value 0.90% 0.32% None 1.22%
AST AllianceBernstein Core Value(8) 0.75% 0.24% None 0.99%
AST Cohen & Steers Realty 1.00% 0.22% None 1.22%
AST AllianceBernstein Managed Index 500(9) 0.60% 0.17% None 0.77%
AST American Century Income & Growth 0.75% 0.24% None 0.99%
AST AllianceBernstein Growth & Income(10) 0.75% 0.15% None 0.90%
AST Hotchkis & Wiley Large-Cap Value 0.75% 0.19% None 0.94%
AST Global Allocation(11) 0.89% 0.26% None 1.15%
AST American Century Strategic Balanced 0.85% 0.27% None 1.12%
AST T. Rowe Price Asset Allocation 0.85% 0.27% None 1.12%
AST T. Rowe Price Global Bond 0.80% 0.27% None 1.07%
AST Goldman Sachs High Yield 0.75% 0.18% None 0.93%
AST Lord Abbett Bond-Debenture 0.80% 0.22% None 1.02%
AST PIMCO Total Return Bond 0.65% 0.16% None 0.81%
AST PIMCO Limited Maturity Bond 0.65% 0.17% None 0.82%
AST Money Market 0.50% 0.13% None 0.63%
GARTMORE VARIABLE INVESTMENT TRUST:
GVIT Developing Markets 1.15% 0.38% 0.25% 1.78%
7
AMERICAN SKANDIA APEX II PROSPECTUS
Summary of Contract Fees and Charges continued
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS)
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
WELLS FARGO VARIABLE TRUST:(12)
Advantage Equity Income 0.55% 0.23% 0.25% 1.00%
AIM VARIABLE INSURANCE FUNDS:(13)
AIM V.I. Dynamics Fund -- Series I shares 0.75% 0.39% None 1.14%
AIM V.I. Technology Fund -- Series I shares 0.75% 0.40% None 1.15%
AIM V.I. Health Sciences Fund -- Series I shares(14) 0.75% 0.36% None 1.11%
AIM V.I. Financial Services Fund -- Series I shares 0.75% 0.37% None 1.12%
EVERGREEN VARIABLE ANNUITY TRUST:
International Equity 0.42% 0.30% None 0.72%
Growth 0.70% 0.26% None 0.96%
Omega 0.52% 0.16% None 0.68%
PROFUND VP:(15)
Access High Yield 0.75% 1.02% 0.25% 1.98%
Bull 0.75% 0.78% 0.25% 1.78%
OTC 0.75% 0.87% 0.25% 1.87%
Large-Cap Value 0.75% 1.04% 0.25% 2.04%
Large-Cap Growth 0.75% 2.06% 0.25% 3.06%
Mid-Cap Value 0.75% 0.92% 0.25% 1.92%
Mid-Cap Growth 0.75% 0.94% 0.25% 1.94%
Small-Cap Value 0.75% 0.95% 0.25% 1.95%
Small-Cap Growth 0.75% 0.90% 0.25% 1.90%
Asia 30 0.75% 0.86% 0.25% 1.86%
Europe 30 0.75% 0.78% 0.25% 1.78%
Japan 0.75% 0.85% 0.25% 1.85%
UltraBull 0.75% 0.89% 0.25% 1.89%
UltraMid-Cap 0.75% 0.94% 0.25% 1.94%
UltraSmall-Cap 0.75% 0.94% 0.25% 1.94%
UltraOTC 0.75% 0.88% 0.25% 1.88%
Bear 0.75% 0.90% 0.25% 1.90%
Short Mid-Cap 0.75% 0.90% 0.25% 1.90%
Short Small-Cap 0.75% 1.28% 0.25% 2.28%
Short OTC 0.75% 0.86% 0.25% 1.86%
Banks 0.75% 0.98% 0.25% 1.98%
Basic Materials 0.75% 0.96% 0.25% 1.96%
Biotechnology 0.75% 0.98% 0.25% 1.98%
Consumer Goods 0.75% 0.99% 0.25% 1.99%
Consumer Services 0.75% 1.20% 0.25% 2.20%
Financials 0.75% 0.92% 0.25% 1.92%
Health Care 0.75% 0.91% 0.25% 1.91%
8
AMERICAN SKANDIA APEX II PROSPECTUS
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS)
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
PROFUND VP:(15) CONTINUED
Industrials 0.75% 0.99% 0.25% 1.99%
Internet 0.75% 0.94% 0.25% 1.94%
Oil & Gas 0.75% 0.92% 0.25% 1.92%
Pharmaceuticals 0.75% 0.97% 0.25% 1.97%
Precious Metals 0.75% 0.87% 0.25% 1.87%
Real Estate 0.75% 0.93% 0.25% 1.93%
Semiconductor 0.75% 0.99% 0.25% 1.99%
Technology 0.75% 0.87% 0.25% 1.87%
Telecommunications 0.75% 0.95% 0.25% 1.95%
Utilities 0.75% 0.95% 0.25% 1.95%
U.S. Government Plus 0.50% 0.86% 0.25% 1.61%
Rising Rates Opportunity 0.75% 0.75% 0.25% 1.75%
FIRST DEFINED PORTFOLIO FUND, LLC:(16),(17)
First Trust(R) 10 Uncommon Values 0.60% 0.76% 0.25% 1.61%
Target Managed VIP 0.60% 1.25% 0.25% 2.10%
The Dow(sm) DART 10 0.60% 1.53% 0.25% 2.38%
Global Dividend Target 15 0.60% 1.85% 0.25% 2.70%
S&P(R) Target 24 0.60% 1.58% 0.25% 2.43%
NASDAQ(R) Target 15 0.60% 1.75% 0.25% 2.60%
Value Line(R) Target 25 0.60% 1.48% 0.25% 2.33%
The Dow Target Dividend(18) 0.60% 0.62% 0.25% 1.47%
THE PRUDENTIAL SERIES FUND, INC.:
SP William Blair International Growth 0.85% 0.45% 0.25% 1.55%
(1) As noted above, shares of the Portfolios generally are purchased through
variable insurance products. Many of the Portfolios and/or their investment
advisers and/or distributors have entered into arrangements with us as the
issuer of the Annuity under which they compensate us for providing ongoing
services in lieu of the Trust providing such services. Amounts paid by a
Portfolio under those arrangements are included under "Other Expenses." For more
information see the prospectus for each underlying portfolio and, "Service Fees
payable to American Skandia," later in this prospectus.
9
AMERICAN SKANDIA APEX II PROSPECTUS
Summary of Contract Fees and Charges continued
(2) The Portfolios' total actual annual operating expenses for the year ended
December 31, 2004 were less than the amount shown in the table due to fee
waivers, reimbursement of expenses and expense offset arrangements. These
waivers, reimbursements, and offset arrangements are voluntary and may be
terminated by American Skandia Investment Services, Inc. and Prudential
Investments LLC at any time. After accounting for the waivers, reimbursements
and offset arrangements, the Portfolios' actual annual operating expenses were:
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
AST William Blair International Growth 1.11%
AST LSV International Value 1.22%
AST DeAM Small-Cap Growth 1.02%
AST DeAM Small-Cap Value 1.13%
AST Goldman Sachs Mid-Cap Growth 1.13%
AST Neuberger Berman Mid-Cap Growth 1.11%
AST Neuberger Berman Mid-Cap Value 1.04%
AST AllianceBernstein Large-Cap Growth 1.10%
AST MFS Growth 1.07%
AST Marsico Capital Growth 1.02%
AST Goldman Sachs Concentrated Growth 1.00%
AST DeAM Large-Cap Value 0.99%
AST Cohen & Steers Realty 1.11%
AST AllianceBernstein Growth & Income 0.87%
AST Hotchkis & Wiley Large-Cap Value 0.90%
AST American Century Strategic Balanced 1.09%
AST T. Rowe Price Asset Allocation 1.07%
AST Lord Abbett Bond-Debenture Portfolio 0.97%
AST PIMCO Total Return Bond 0.78%
AST PIMCO Limited Maturity Bond 0.79%
AST Money Market 0.58%
(3) Until November 18, 2004, the Trust had a Distribution Plan under Rule 12b-1
to permit an affiliate of the Trust's Investment Managers to receive brokerage
commissions in connection with purchases and sales of securities held by the
Portfolios, and to use these commissions to promote the sale of shares of the
Portfolio. The Distribution Plan was terminated effective November 18, 2004. The
total annual portfolio operating expenses do not reflect any brokerage
commissions paid pursuant to the Distribution Plan prior to the Plan's
termination.
(4) Effective November 18, 2004, LSV Asset Management became the Sub-advisor of
the Portfolio. Prior to November 18, 2004, Deutsche Asset Management, Inc.
served as Sub-advisor of the Portfolio, then named "AST DeAM International
Equity Portfolio."
(5) Effective May 1, 2005, Eagle Asset Management and Neuberger Berman
Management, Inc. became Co-Sub-advisors of the Portfolio. Prior to May 1, 2005,
State Street Research and Management Company served as Sub-advisor of the
Portfolio, then named "AST State Street Research Small-Cap Growth Portfolio."
(6) Effective November 18, 2004, Integrity Asset Management, Lee Munder Capital
Group, J.P. Morgan Fleming Asset Management became Co-Sub-advisors of the
Portfolio. Prior to November 18, 2004, GAMCO Advisors Inc. served as Sub-advisor
of the Portfolio, then named "AST Gabelli Small-Cap Value Portfolio."
(7) Effective May 1, 2005, the name of the Portfolio was changed from "AST
Alliance Growth Portfolio" to "AST AllianceBernstein Large-Cap Growth
Portfolio."
(8) Effective May 1, 2005, the name of the Portfolio was changed from "AST
Sanford Bernstein Core Value Portfolio" to "AST AllianceBernstein Core Value
Portfolio."
(9) Effective May 1, 2005, the name of the Portfolio was changed from "AST
Sanford Bernstein Managed Index 500 Portfolio" to "AST AllianceBernstein Managed
Index 500 Portfolio."
(10) Effective May 1, 2005, the name of the Portfolio was changed from "AST
Alliance Growth and Income Portfolio" to "AST AllianceBernstein Growth & Income
Portfolio."
(11) The Global Asset Allocation Portfolio invests primarily in shares of other
AST Portfolios (the "Underlying Portfolios").
(a) The only management fee directly paid by the Portfolio is a 0.10% fee
paid to American Skandia Investment Services, Inc. and Prudential
Investments LLC. The management fee shown in the chart for the Portfolio
is (i) that 0.10% management fee paid by the Portfolio plus (ii) an
estimate of the management fees paid by the Underlying Portfolios, which
are borne indirectly by investors in the Portfolio. The estimate was
calculated based on the percentage of the Portfolio invested in each
Underlying Portfolio as of December 31, 2004 using the management fee
rates shown in the chart above.
(b) The expense information shown in the chart for the Portfolio reflects
(i) the expenses of the Portfolio itself plus (ii) an estimate of the
expenses paid by the Underlying Portfolios, which are borne indirectly by
investors in the Portfolio. The estimate was calculated based on the
percentage of the Portfolio invested in each Underlying Portfolio as of
December 31, 2004 using the expense rates for the Underlying Portfolios
shown in the above chart.
(c) Effective May 1, 2005, Prudential Investment LLC provides day-to-day
management of the Portfolio. Prior to May 1, 2005, Deutsche Asset
Management, Inc. served as Sub-advisor of the Portfolio, then named "AST
DeAM Global Allocation Portfolio."
(12) (a) The Adviser of Wells Fargo Variable Trust has committed through April
30, 2006 to waive fees and/or reimburse expenses to the extent necessary
to maintain the Fund's net operating expenses as shown.
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
Advantage Equity Income 1.00%
(b) In addition, the following name change was made effective May 1, 2005:
OLD PORTFOLIO NAME NEW PORTFOLIO NAME
Equity Income Advantage Equity Income
10
AMERICAN SKANDIA APEX II PROSPECTUS
(13) The Fund's adviser is entitled to receive reimbursement from the Fund for
fees and expenses paid for by the Fund's adviser pursuant to expense limitation
commitments between the Fund's adviser and the Fund if such reimbursement does
not cause the Fund to exceed its then-current expense limitations and the
reimbursement is made within three years after the Fund's adviser incurred the
expense.
(14) Effective July 1, 2005, the "AIM V.I. Health Sciences Fund" will be renamed
"AIM V.I. Global Health Care Fund."
(15) ProFund Advisors LLC has contractually agreed to waive Investment Advisory
and Management Services Fees and to reimburse other expenses to the extent Total
Annual Portfolio Operating Expenses, as a percentage of average daily net
assets, exceed 1.98% (1.73% for ProFund VP U.S. Government Plus and 1.78% for
ProFund VP Rising Rates Opportunity) through December 31, 2005. After such date,
any of the expense limitations may be terminated or revised. Amounts waived or
reimbursed in a particular fiscal year may be repaid to ProFund Advisors LLC
within three years of the waiver or reimbursement to the extent that recoupment
will not cause the Portfolio's expenses to exceed any expense limitation in
place at that time. A waiver or reimbursement lowers the expense ratio and
increases overall returns to investors.
(16) The Funds' Board of Trustees reserve the right to suspend payments under
the 12b-1 Plan at any time. On May 1, 2003, 12b-1 payments were suspended for
all Funds except the First Trust 10 Uncommon Values Portfolio. Payments under
the 12b-1 Plan resumed effective May 1, 2004 for the Target Managed VIP
Portfolio, the Dow Dart 10 Portfolio, the Global Dividend Target 15 Portfolio,
the S&P Target 24 Portfolio, the Nasdaq Target 15 Portfolio and the Value Line
Target 25 Portfolio.
(17) For the period September 30, 2004 through December 31, 2007, First Trust
has contractually agreed to waive fees and reimburse expense expenses of the
Portfolios to limit the total annual fund operating expenses (excluding
brokerage expense and extraordinary expense) to 1.37% for the First Trust 10
Uncommon Values Portfolio and 1.47% for each of the other Portfolios' average
daily net assets. First Trust has entered into an agreement with First Defined
Portfolio Fund, LLC that will allow First Trust to recover from the Portfolios
any fees waived or reimbursed during the three year period of January 1, 2005
through December 31, 2007. However, First Trust's ability to recover such
amounts is limited to the extent that it would not exceed the amount reimbursed
or waived during such period.
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
First Trust(R) 10 Uncommon Values 1.37%
Target Managed VIP 1.47%
S&P Target 24 1.47%
The Dow(sm) DART 10 1.47%
Value Line(R) Target 25 1.47%
Global Dividend Target 15 1.47%
Nasdaq Target 15 1.47%
Dow Target Dividend 1.47%
(18) The Dow (SM) Target Dividend Portfolio is newly organized. Accordingly,
other expenses Other Expenses and Total Annual Fund Portfolio Operating Expenses
are based on estimated expenses for the current fiscal year.
11
Expense Examples
AMERICAN SKANDIA APEX II PROSPECTUS
These examples are designed to assist you in understanding the various expenses
you may incur with the Annuity over certain periods of time based on specific
assumptions. The examples reflect the Contingent Deferred Sales Charges (when
applicable), Annual Maintenance Fee, Insurance Charge, and the highest total
annual portfolio operating expenses for any underlying Portfolio (offered under
the product), as well as the maximum charges for the optional benefits that are
offered under the Annuity that can be elected in combination with one another.
Below are examples showing what you would pay in expenses at the end of the
stated time periods had you invested $10,000 in the Annuity and received a 5%
annual return on assets, and elected all optional benefits available.
The examples shown assume that: (a) you only allocate Account Value to the
Sub-account with the maximum total annual portfolio operating expenses for the
underlying Portfolio (shown above), not to a Fixed Allocation; (b) the Insurance
Charge is assessed as 1.65% per year; (c) the Annual Maintenance Fee is
reflected as an asset-based charge based on an assumed average contract size;
(d) you make no withdrawals of Account Value during the period shown; (e) you
make no transfers, or other transactions for which we charge a fee for during
the period shown; (f) no tax charge applies; (g) the highest total annual
portfolio operating expenses for any underlying Portfolio offered under the
product applies; and (h) the charge for each optional benefit is reflected as an
additional charge equal to 0.60% per year of the average daily net assets of the
Sub-accounts for the Lifetime Five Income Benefit, 0.50% per year of the average
daily net assets of the Sub-accounts for the Highest Daily Value Death Benefit
and 0.25% of the average daily net assets of the Sub-accounts for the Enhanced
Beneficiary Protection Death Benefits. Amounts shown in the examples are rounded
to the nearest dollar.
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 WILL BE LESS THAN THOSE SHOWN IF YOU ELECT A
DIFFERENT COMBINATION OF OPTIONAL BENEFITS THAN INDICATED IN THE EXAMPLES OR IF
YOU ALLOCATE ACCOUNT VALUE TO ANY OTHER AVAILABLE SUB-ACCOUNTS.
Expense Examples are provided as follows: 1.) if you surrender the Annuity at
the end of the stated time period; 2.) if you annuitize at the end of the stated
time period; and 3.) if you do not surrender your Annuity. A table of
accumulation values appears in Appendix A to this prospectus.
IF YOU SURRENDER YOUR ANNUITY AT IF YOU ANNUITIZE YOUR ANNUITY AT IF YOU DO NOT
THE END OF THE APPLICABLE TIME PERIOD: THE END OF THE APPLICABLE TIME PERIOD: SURRENDER YOUR ANNUITY:
- -------------------------------------------------------------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,533 $2,871 $3,632 $6,785 $768 $2,241 $3,632 $6,785 $768 $2,241 $3,632 $6,785
12
AMERICAN SKANDIA APEX II PROSPECTUS
Investment Options
WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE PORTFOLIOS?
Each variable investment option is a Sub-account of American Skandia Life
Assurance Corporation Variable Account B (see "What are Separate Accounts" for
more detailed information). Each Sub-account invests exclusively in one
Portfolio. You should carefully read the prospectus for any Portfolio in which
you are interested. The following chart classifies each of the Portfolios based
on our assessment of their investment style (as of the date of this Prospectus).
The chart also provides a description of each Portfolio's investment objective
(in italics) and a short, summary description of their key policies to assist
you in determining which Portfolios may be of interest to you. There is no
guarantee that any underlying Portfolio will meet its investment objective.
The name of the advisor/sub-advisor for each Portfolio appears next to the
description. Those Portfolios whose name includes the prefix "AST" are
Portfolios of American Skandia Trust. The investment managers for AST are
American Skandia Investment Services, Incorporated, a Prudential Financial
Company, and Prudential Investments LLC, affiliated companies of American
Skandia. However, a sub-advisor, as noted below, is engaged to conduct
day-to-day investment decisions.
The Portfolios are not publicly traded mutual funds. They are only
available as investment options in variable annuity contracts and variable life
insurance policies issued by insurance companies, or in some cases, to
participants in certain qualified retirement plans. However, some of the
Portfolios available as Sub-accounts under the Annuity are managed by the same
portfolio advisor or sub-advisor as a retail mutual fund of the same or similar
name that the Portfolio may have been modeled after at its inception. Certain
retail mutual funds may also have been modeled after a Portfolio. While the
investment objective and policies of the retail mutual funds and the Portfolios
may be substantially similar, the actual investments will differ to varying
degrees. Differences in the performance of the funds can be expected, and in
some cases could be substantial. You should not compare the performance of a
publicly traded mutual fund with the performance of any similarly named
Portfolio offered as a Sub-account. Details about the investment objectives,
policies, risks, costs and management of the Portfolios are found in the
prospectuses for the underlying mutual funds. The current prospectus and
statement of additional information for the underlying Portfolios can be
obtained by calling 1-800-752-6342.
Effective as of the close of business JUNE 28, 2002, the AST GOLDMAN SACHS
SMALL-CAP VALUE PORTFOLIO is no longer offered as a Sub-account under the
Annuity, except as follows: if at any time on or prior to June 28, 2002 you had
any portion of your Account Value allocated to the AST Goldman Sachs Small-Cap
Value Sub-account, you may continue to allocate Account Value and make transfers
into and/or out of the AST Goldman Sachs Small-Cap Value Sub-account, including
any bank drafting, dollar cost averaging, asset allocation and rebalancing
programs. If you never had a portion of your Account Value allocated to the AST
Goldman Sachs Small-Cap Value Sub-account on or prior to June 28, 2002 or if you
purchase your Annuity after June 28, 2002, you cannot allocate Account Value to
the AST Goldman Sachs Small-Cap Value Sub-Account.
Effective MAY 1, 2004, the SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO
(FORMERLY THE SP JENNISON INTERNATIONAL GROWTH PORTFOLIO) is no longer offered
as a Sub-account under the Annuity, except as follows: if at any time prior to
May 1, 2004 you had any portion of your Account Value allocated to the SP
William Blair International Growth Sub-account, you may continue to allocate
Account Value and make transfers into and/or out of the SP William Blair
International Growth Sub-account, including any bank drafting, dollar cost
averaging, asset allocation and rebalancing programs. If you never had a portion
of your Account Value allocated to the SP William Blair International Growth
Sub-account prior to May 1, 2004 or if you purchase your Annuity on or after May
1, 2004, you cannot allocate Account Value to the SP William Blair International
Growth Sub-account.
Either of the above Sub-accounts may be offered to new Owners at some
future date; however, at the present time, there is no intention to do so. We
also reserve the right to offer or close each of the above Sub-accounts to all
Owners that owned the Annuity prior to the respective close dates.
13
AMERICAN SKANDIA APEX II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------
INTERNATIONAL AST JPMORGAN INTERNATIONAL EQUITY: seeks long-term capital J.P. Morgan
EQUITY growth by investing in a diversified portfolio of Fleming Asset
international equity securities. The Portfolio seeks to meet Management
its objective by investing, under normal market conditions,
at least 80% of its assets in a diversified portfolio of
equity securities of companies located or operating in
developed non-U.S. countries and emerging markets of the
world.
INTERNATIONAL AST WILLIAM BLAIR INTERNATIONAL GROWTH seeks long-term William Blair &
EQUITY capital appreciation. The Portfolio invests primarily in Company, L.L.C.
stocks of large and medium-sized companies located in
countries included in the Morgan Stanley Capital
International All Country World Ex-U.S. Index.
INTERNATIONAL AST LSV INTERNATIONAL VALUE (formerly AST DeAM International Deutsche Asset
EQUITY Equity): seeks capital growth. The Portfolio pursues its Management, Inc.
objective by primarily investing at least 80% of the value of
its assets in the equity securities of companies in developed
non-U.S. countries that are represented in the MSCI EAFE
Index.
INTERNATIONAL AST MFS GLOBAL EQUITY: seeks capital growth. Under normal Massachusetts
EQUITY circumstances the Portfolio invests at least 80% of its Financial Services
assets in equity securities of U.S. and foreign issuers Company
(including issuers in developing countries). The Portfolio
generally seeks to purchase securities of companies with
relatively large market capitalizations relative to the
market in which they are traded.
SMALL CAP AST SMALL-CAP GROWTH (formerly AST State Street Research Eagle Asset
GROWTH Small-Cap Growth): seeks long-term capital growth. The Management,
Portfolio pursues its objective by primarily investing in the Neuberger Berman
common stocks of small-capitalization companies. Management, Inc.
SMALL CAP AST DEAM SMALL-CAP GROWTH: seeks maximum growth of investors' Deutsche Asset
GROWTH capital from a portfolio of growth stocks of smaller companies. Management, Inc.
The Portfolio pursues its objective, under normal circumstances,
by primarily investing at least 80% of its total assets in
the equity securities of small-sized companies included in
the Russell 2000 Growth(R) Index.
SMALL CAP AST FEDERATED AGGRESSIVE GROWTH: seeks capital growth. The Federated Equity
GROWTH Portfolio pursues its investment objective by investing Management
primarily in the stocks of small companies that are traded on Company of
national security exchanges, the NASDAQ stock exchange and Pennsylvania/
the over-the-counter-market. Federated Global
Investment
Management Corp.
SMALL CAP AST GOLDMAN SACHS SMALL-CAP VALUE: seeks long-term capital Goldman Sachs
VALUE appreciation. The Portfolio will seek its objective through Asset Management,
investments primarily in equity securities that are believed L.P.
to be undervalued in the marketplace. The Portfolio primarily
seeks companies that are small-sized, based on the value of
their outstanding stock.
14
AMERICAN SKANDIA APEX II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------
SMALL CAP AST SMALL-CAP VALUE (formerly AST Gabelli Small-Cap Value): Integrity Asset
VALUE seeks to provide long-term capital growth by investing Management, Lee
primarily in small-capitalization stocks that appear to be Munder Capital
undervalued. The Portfolio will have a non-fundamental policy Group, J.P. Morgan
to invest, under normal circumstances, at least 80% of the Fleming Asset
value of its assets in small capitalization companies. Management
SMALL CAP AST DEAM SMALL-CAP VALUE: seeks maximum growth of investors' Deutsche Asset
VALUE Capital. The Portfolio pursues its objective, under normal Management, Inc.
market conditions, by primarily investing at least 80% of its
total assets in the equity securities of small-sized
companies included in the Russell 2000(R) Value Index.
MID CAP AST GOLDMAN SACHS MID-CAP GROWTH: seeks long-term capital Goldman Sachs
GROWTH growth. The Portfolio pursues its investment objective, by Asset Management,
investing primarily in equity securities selected for their L.P.
growth potential, and normally invests at least 80% of the
value of its assets in medium capitalization companies.
MID-CAP AST NEUBERGER BERMAN MID-CAP GROWTH: seeks capital growth. Neuberger Berman
GROWTH Under normal market conditions, the Portfolio primarily Management Inc.
invests at least 80% of its net assets in the common stocks
of mid-cap companies. The Sub-advisor looks for fast-growing
companies that are in new or rapidly evolving industries.
MID CAP VALUE AST NEUBERGER BERMAN MID-CAP VALUE: seeks capital growth. Neuberger Berman
Under normal market conditions, the Portfolio primarily Management Inc.
invests at least 80% of its net assets in the common stocks
of mid-cap companies. Under the Portfolio's value-oriented
investment approach, the Sub-advisor looks for well-managed
companies whose stock prices are undervalued and that may
rise before other investors realize their worth.
SPECIALTY AST ALGER ALL-CAP GROWTH: seeks long-term capital growth. The Fred Alger
Portfolio invests primarily in equity securities, such as Management, Inc.
common or preferred stocks that are listed on U.S. exchanges
or in the over-the-counter market. The Portfolio may invest
in the equity securities of companies of all sizes, and may
emphasize either larger or smaller companies at a given time
based on the Sub-advisor's assessment of particular companies
and market conditions.
SPECIALTY AST GABELLI ALL-CAP VALUE: seeks capital growth. The GAMCO Investors,
Portfolio pursues its objective by investing primarily in Inc.
readily marketable equity securities including common stocks,
preferred stocks and securities that may be converted at a
later time into common stock. The Portfolio may invest in the
securities of companies of all sizes, and may emphasize
either larger or smaller companies at a given time based on
the Sub-advisor's assessment of particular companies and market
conditions.
SPECIALTY AST T. ROWE PRICE NATURAL RESOURCES: seeks long-term capital T. Rowe Price
growth primarily through the common stocks of companies that Associates, Inc.
own or develop natural resources (such as energy products,
precious metals and forest products) and other basic
commodities. The Portfolio normally invests primarily (at
least 80% of its total assets) in the common stocks of
natural resource companies whose earnings and tangible assets
could benefit from accelerating inflation.
15
AMERICAN SKANDIA APEX II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------
LARGE CAP AST ALLIANCEBERNSTEIN LARGE-CAP GROWTH (formerly, AST Alliance Capital
GROWTH Alliance Growth): seeks long-term capital growth. The Management, L.P.
Portfolio invests at least 80% of its total assets in the
equity securities of a limited number of large, carefully
selected, high-quality U.S. companies that are judged likely
to achieve superior earnings growth.
LARGE CAP AST MFS GROWTH: seeks long-term capital growth and future Massachusetts
GROWTH income. Under normal market conditions, the Portfolio invests Financial Services
at least 80% of its total assets in common stocks and related Company
securities, such as preferred stocks, convertible
securities and depositary receipts, of companies that the
Sub-advisor believes offer better than average prospects for
long-term growth.
LARGE CAP AST MARSICO CAPITAL GROWTH: seeks capital growth. Income Marsico Capital
GROWTH realization is not an investment objective and any income Management, LLC
realized on the Portfolio's investments, therefore, will be
incidental to the Portfolio's objective. The Portfolio will
pursue its object by investing primarily in common stocks of
larger, more established companies.
LARGE CAP AST GOLDMAN SACHS CONCENTRATED GROWTH: seeks growth of Goldman Sachs
GROWTH capital in a manner consistent with the preservation of Asset Management,
capital. Realization of income is not a significant L.P.
investment consideration and any income realized on the
investments, therefore, will be incidental to the Portfolio's
object. The Portfolio will pursue its objective by investing
primarily in equity securities of companies that the Sub-advisor
believes have potential to achieve capital appreciation over the
long-term.
LARGE CAP AST DEAM LARGE-CAP VALUE: seeks maximum growth of capital by Deutsche Asset
VALUE investing primarily in the value stocks of larger companies. Management, Inc.
The Portfolio pursues its objective, under normal market
conditions, by primarily investing at least 80% of the value
of its assets in the equity securities of large-sized
companies included in the Russell 1000(R) Value Index.
LARGE CAP AST ALLIANCEBERNSTEIN GROWTH + VALUE: seeks capital growth by Alliance Capital
BLEND investing approximately 50% of its assets in growth stocks of Management, L.P.
large companies and approximately 50% of its assets in value
stocks of large companies. The Portfolio will invest
primarily in common stocks of large U.S. companies included
in the Russell 1000(R) Index.
LARGE CAP AST ALLIANCEBERNSTEIN CORE VALUE (formerly AST Sanford Alliance Capital
GROWTH VALUE Bernstein Core Value): seeks long-term capital growth by Management, L.P.
investing primarily in common stocks. The Sub-advisor expects
that the majority of the Portfolio's invested in the common
stocks of large companies that appear to be undervalued.
SPECIALTY AST COHEN & STEERS REALTY: seeks to maximize total return Cohen & Steers
through investment in real estate securities. The Portfolio Capital
pursues its investment objective by investing, under normal Management, Inc.
circumstances, at least 80% of its net assets in securities
of real estate issuers.
16
AMERICAN SKANDIA APEX II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------
LARGE CAP AST ALLIANCEBERNSTEIN MANAGED INDEX 500 (formerly, AST Alliance Capital
BLEND Sanford Bernstein Managed Index 500): seeks to outperform the Management, L.P.
S&P 500 through stock selection resulting in different
weightings of common stocks relative to the index. The
Portfolio will invest, under normal circumstances, at least
80% of its net assets in securities included in the Standard
& Poor's 500 Composite Stock Price Index.
LARGE CAP AST AMERICAN CENTURY INCOME & GROWTH: seeks capital growth American Century
VALUE with current income as a secondary objective. The Portfolio Investment
invests primarily in common stocks that offer potential for Management, Inc.
capital growth, and may, consistent with its investment
objective, invest in stocks that offer potential for current
income.
LARGE CAP AST ALLIANCEBERNSTEIN GROWTH & INCOME: seeks long-term growth Alliance Capital
VALUE of capital and income while attempting to avoid excessive Management, L.P.
fluctuations in market value. The Portfolio normally will
invest in common stocks (and securities convertible into
common stocks).
LARGE CAP AST HOTCHKIS & WILEY LARGE-CAP VALUE: seeks current income Hotchkis and Wiley
VALUE and long-term growth of income, as well as capital Capital Management,
appreciation. The Portfolio invests, under normal LLC
circumstances, at least 80% of its net assets plus borrowings
for investment purposes in common stocks, of large cap U.S.
companies, that have a high cash dividend or payout yield
relative to the market.
ASSET AST GLOBAL ALLOCATION (formerly AST DeAM Global Allocation): Prudential
ALLOCATION/ seeks to obtain the highest potential total return consistent Investments LLC
BALANCED with a specified level of risk tolerance. The Portfolio seeks
to achieve its investment objective by investing in several
other AST Portfolios ("Underlying Portfolios"). The Portfolio
intends its strategy of investing in combinations of
Underlying Portfolios to result in investment diversification
that an investor could otherwise achieve only by holding
numerous investments.
ASSET AST AMERICAN CENTURY STRATEGIC BALANCED: seeks capital growth American Century
ALLOCATION/ and current income. The Sub-advisor intends to maintain Investment
BALANCED approximately 60% of the assets in equity securities and the Management, Inc.
remainder in bonds and other fixed income securities.
ASSET AST T. ROWE PRICE ASSET ALLOCATION: seeks a high level of T. Rowe Price
ALLOCATION/ total return by investing primarily in a diversified Associates, Inc.
BALANCED portfolio of fixed income and equity securities. The
Portfolio normally invests approximately 60% of its total
assets in equity securities and 40% in fixed income
securities. This mix may vary depending on the Sub-advisor's
outlook for the markets.
FIXED INCOME AST T. ROWE PRICE GLOBAL BOND: seeks to provide high current T. Rowe Price
income and capital growth by investing in high quality International, Inc.
foreign and U.S. dollar-denominated bonds. The Portfolio will
invest at least 80% of its total assets in fixed income
securities, including high quality bonds issued or guaranteed
by U.S. or foreign governments or their agencies and by
foreign authorities, provinces and municipalities as well as
investment grade corporate bonds and mortgage and
asset-backed securities of U.S. and foreign issuers.
17
AMERICAN SKANDIA APEX II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------
FIXED INCOME AST GOLDMAN SACHS HIGH YIELD: seeks a high level of current Goldman Sachs
income and may also consider the potential for capital Asset Management,
appreciation. The Portfolio invests, under normal L.P.
circumstances, at least 80% of its net assets plus any
borrowings for investment purposes (measured at time of
purchase) ("Net Assets") in high-yield, fixed-income
securities that, at the time of purchase, are non-investment
grade securities.
FIXED INCOME AST LORD ABBETT BOND-DEBENTURE: seeks high current income and Lord, Abbett & Co.
the opportunity for capital appreciation to produce a high LLC
total return. To pursue its objective, the Portfolio will
invest, under normal circumstances, at least 80% of the value
of its assets in fixed income securities and normally invests
primarily in high yield and investment grade debt securities,
securities convertible into common stock and preferred
stocks.
FIXED INCOME AST PIMCO TOTAL RETURN BOND: seeks to maximize total return Pacific Investment
consistent with preservation of capital and prudent Management
investment management. The Portfolio will invest in a Company LLC
diversified portfolio of fixed-income securities of varying (PIMCO)
maturities. The average portfolio duration of the Portfolio
generally will vary within a three- to six-year time
frame based on the Sub-advisor's forecast for interest rates.
FIXED INCOME AST PIMCO LIMITED MATURITY BOND: seeks to maximize total Pacific Investment
return consistent with preservation of capital and prudent Management
investment management. The Portfolio will invest in a Company LLC
diversified portfolio of fixed-income securities of varying (PIMCO)
maturities. The average portfolio duration of the Portfolio
generally will vary within a one- to three-year time frame
based on the Sub-advisor's forecast for interest rates.
FIXED INCOME AST MONEY MARKET: seeks high current income while maintaining Wells Capital
high levels of liquidity. The Portfolio attempts to Management, Inc.
accomplish its objective by maintaining a dollar-weighted
average maturity of not more than 90 days and by investing in
securities which have effective maturities of not more than
397 days.
INTERNATIONAL GVIT DEVELOPING MARKETS: seeks long-term capital Gartmore Global
EQUITY appreciation, under normal conditions by investing at least Asset Management
80% of its total assets in stocks of companies of any size Trust/Gartmore
based in the world's developing economies.Under normal market Global Partners
developing conditions, investments are maintained in at least
six countries at all times and no more than 35% of total assets
in any single one of them.
LARGE CAP ADVANTAGE EQUITY INCOME FUND (formerly Equity Income): Seeks Wells Fargo Funds
VALUE long-term capital appreciation and above-average dividend Management, LLC
income. The Portfolio invests in the common stocks of large
U.S. companies with strong return potential and above-average
dividend income. The Portfolio invests principally in
securities of companies with market capitalizations of $3
billion or more.
18
AMERICAN SKANDIA APEX II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- --------------------------------------------------------------------------------------------------------------
MID-CAP AIM VARIABLE INSURANCE FUNDS -- AIM V.I. DYNAMICS FUND -- A I M Advisors,
GROWTH SERIES I SHARES (formerly, an INVESCO fund): seeks long-term Inc.
capital growth. The Portfolio pursues its objective by
normally investing at least 65% of its assets in common
stocks of mid-sized companies that are included in the
Russell Midcap Growth(R) Index at the time of purchase.
SPECIALTY AIM VARIABLE INSURANCE FUNDS -- AIM V.I. TECHNOLOGY FUND -- A I M Advisors,
SERIES I SHARES (formerly, an INVESCO fund): seeks capital Inc.
growth. The Portfolio normally invests at least 80% of its
net assets in the equity securities and equity-related
instruments of companies engaged in technology-related
industries. These include, but are not limited to, various
applied technologies, hardware, software, semiconductors,
telecommunications equipment and services and service-related
companies in information technology.
SPECIALTY AIM VARIABLE INSURANCE FUNDS -- AIM V.I. HEALTH SCIENCES FUND A I M Advisors,
-- SERIES I SHARES (formerly, an INVESCO fund) (Effective Inc.
July 1, 2005, AIM V.I. Health Sciences Fund will be renamed
AIM V.I. Global Health Care Fund): seeks capital growth. The
Portfolio normally invests at least 80% of its net assets in
the equity securities and equity-related instruments of
companies related to health care.
SPECIALTY AIM VARIABLE INSURANCE FUNDS -- AIM V.I. FINANCIAL SERVICES A I M Advisors,
FUND -- SERIES I SHARES (formerly, an INVESCO fund): seeks Inc.
capital growth. The Portfolio normally invests at least 80%
of its net assets in the equity securities and equity-related
instruments of companies involved in the financial services
sector. These companies include, but are not limited to,
banks, insurance companies, investment and miscellaneous
industries, and suppliers to financial services companies.
INTERNATIONAL EVERGREEN VA INTERNATIONAL EQUITY (formerly Evergreen VA Evergreen
EQUITY International Growth): seeks long-term capital growth and Investment
secondarily, modest income. The Portfolio normally invests Management
80% of its assets in equity securities issued by established, Company, LLC
quality, non-U.S. companies located in countries with
developed markets and may purchase across all market
capitalizations. The Portfolio normally invests at least
65% of its assets in securities of companies in at least
three different countries (other than the U.S.).
SMALL CAP EVERGREEN VA GROWTH (formerly Evergreen VA Special Equity): Evergreen
GROWTH seeks long-term capital growth. The Portfolio invests at Investment
least 75% of its assets in common stocks of small- and Management
medium-sized companies (i.e., companies whose market Company, LLC
capitalizations fall within the range of the Russell 2000(R)
Growth Index, at the time of purchase).
SPECIALTY EVERGREEN VA OMEGA: seeks long-term capital growth. The Evergreen
Portfolio invests primarily, and under normal conditions, Investment
substantially all of its assets in common stocks and Management
securities convertible into common stocks of U.S. companies Company, LLC
across all market capitalizations.
19
AMERICAN SKANDIA APEX II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------
INTERNATIONAL PROFUND VP EUROPE 30: seeks daily investment results, before ProFund Advisors
EQUITY fees and expenses, that correspond to the daily performance LLC
of the ProFunds Europe 30 Index. The ProFunds Europe 30
Index, created by ProFund Advisors, is composed of 30
companies whose principal offices are located in Europe and
whose securities are traded on U.S. exchanges or on the
NASDAQ as depositary receipts or ordinary shares.
SPECIALTY PROFUND VP ASIA 30: seeks daily investment results, before ProFund Advisors
fees and expenses, that correspond to the daily performance LLC
of the ProFunds Asia 30 Index. The ProFunds Asia 30 Index,
created by ProFund Advisors, is composed of 30 companies
whose principal offices are located in the Asia/Pacific
region, excluding Japan, and whose securities are traded on
U.S. exchanges or on the NASDAQ as depository receipts or
ordinary shares.
SPECIALTY PROFUND VP JAPAN: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the LLC
Nikkei 225 Stock Average. Since the Japanese markets are not
open when ProFund VP Japan values its shares, ProFund VP
Japan determines its success in meeting this investment
objective by comparing its daily return on a given day with
the daily performance of related futures contracts traded in
the United States related to the Nikkei 225 Stock Average.
SPECIALTY PROFUND VP BANKS: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the LLC
Dow Jones U.S. Banks Index. The Dow Jones U.S. Banks Index
measures the performance of the banking industry portion of
the U.S. equity market.
SPECIALTY PROFUND VP BASIC MATERIALS: seeks daily investment results, ProFund Advisors
before fees and expenses, that correspond to the daily LLC
performance of the Dow Jones U.S. Basic Materials Sector
Index. The Dow Jones U.S. Basic Materials Sector Index
measures the performance of the basic materials economic
sector of the U.S. equity market.
SPECIALTY PROFUND VP BIOTECHNOLOGY: seeks daily investment results, ProFund Advisors
before fees and expenses, that correspond to the daily LLC
performance of the Dow Jones U.S. Biotechnology Index. The
Dow Jones U.S. Biotechnology Index measures the performance
of the biotechnology industry portion of the U.S. equity
market.
SPECIALTY PROFUND VP CONSUMER SERVICES (formerly, ProFund VP Consumer ProFund Advisors
Cyclical): seeks daily investment results, before fees and LLC
expenses, that correspond to the daily performance of the Dow
Jones U.S. Consumer Services Index. The Dow Jones U.S.
Consumer Services Index measures the performance of consumer
spending in the services industry of the U.S. equity market.
SPECIALTY PROFUND VP CONSUMER GOODS (formerly, ProFund VP Consumer ProFund Advisors
Non-Cyclical): seeks daily investment results, before fees LLC
and expenses, that correspond to the daily performance of the
Dow Jones U.S. Consumer Goods Index. The Dow Jones U.S.
Consumer Goods Index measures the performance of consumer
spending in the goods industry of the U.S. equity market.
20
AMERICAN SKANDIA APEX II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP OIL & GAS (formerly, ProFund VP Energy): seeks ProFund Advisors
daily investment results, before fees and expenses, that LLC
correspond to the daily performance of the Dow Jones U.S. Oil
& Gas Index. The Dow Jones U.S. Oil & Gas Sector Index
measures the performance of the energy sector of the U.S.
equity market.
SPECIALTY PROFUND VP FINANCIALS: seeks daily investment results, before ProFund Advisors
fees and expenses, that correspond to the daily performance LLC
of the Dow Jones U.S. Financials Sector Index. The Dow Jones
U.S. Financials Sector Index measures the performance of the
financial services economic sector of the U.S. equity market.
SPECIALTY PROFUND VP HEALTH CARE: seeks daily investment results, ProFund Advisors
before fees and expenses, that correspond to the daily LLC
performance of the Dow Jones U.S. Health Care Index. The Dow
Jones U.S. Health Care Index measures the performance of the
healthcare economic sector of the U.S. equity market.
SPECIALTY PROFUND VP INDUSTRIALS: seeks daily investment results, ProFund Advisors
before fees and expenses, that correspond to the daily LLC
performance of the Dow Jones U.S. Industrials Index. The Dow
Jones U.S. Industrials Index measures the performance of the
industrial economic sector of the U.S. equity market.
SPECIALTY PROFUND VP INTERNET: seeks daily investment results, before ProFund Advisors
fees and expenses, that correspond to the daily performance LLC
of the Dow Jones Composite Internet Index. The Dow Jones
Composite Internet Index measures the performance of stocks
in the U.S. equity markets that generate the majority of
their revenues from the Internet.
SPECIALTY PROFUND VP PHARMACEUTICALS: seeks daily investment results, ProFund Advisors
before fees and expenses, that correspond to the daily LLC
performance of the Dow Jones U.S. Pharmaceuticals Index. The
Dow Jones U.S. Pharmaceuticals Index measures the performance
of the pharmaceuticals industry portion of the U.S. equity
market.
SPECIALTY PROFUND VP PRECIOUS METALS: seeks daily investment results, ProFund Advisors
before fees and expenses, that correspond to the daily LLC
performance of the Dow Jones Precious Metals Index. The Dow
Jones Precious Metals Index measures the performance of the
precious metals mining industry.
SPECIALTY PROFUND VP REAL ESTATE: seeks daily investment results, ProFund Advisors
before fees and expenses, that correspond to the daily LLC
performance of the Dow Jones U.S. Real Estate Index. The Dow
Jones U.S. Real Estate Index measures the performance of the
real estate industry portion of the U.S. equity market.
SPECIALTY PROFUND VP SEMICONDUCTOR: seeks daily investment results, ProFund Advisors
before fees and expenses, that correspond to the daily LLC
performance of the Dow Jones U.S. Semiconductor Index. The
Dow Jones U.S. Semiconductor Index measures the performance
of the semiconductor industry portion of the U.S. equity
market.
SPECIALTY PROFUND VP TECHNOLOGY: seeks daily investment results, before ProFund Advisors
fees and expenses, that correspond to the daily performance LLC
of the Dow Jones U.S. Technology Sector Index. The Dow Jones
U.S. Technology Sector Index measures the performance of the
technology sector of the U.S. equity market.
21
AMERICAN SKANDIA APEX II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP TELECOMMUNICATIONS: seeks daily investment ProFund Advisors
results, before fees and expenses, that correspond to the LLC
daily performance of the Dow Jones U.S. Telecommunications
Sector Index. The Dow Jones U.S. Telecommunications Sector
Index measures the performance of the telecommunications
economic sector of the U.S. equity market.
SPECIALTY PROFUND VP UTILITIES: seeks daily investment results, before ProFund Advisors
fees and expenses, that correspond to the daily performance LLC
of the Dow Jones U.S. Utilities Sector Index. The Dow Jones
U.S. Utilities Sector Index measures the performance of the
utilities economic sector of the U.S. equity market.
SPECIALTY PROFUND VP BULL: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the LLC
S&P 500(R) Index.
SPECIALTY PROFUND VP BEAR: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the inverse (opposite) of LLC
the daily performance of the S&P 500(R) Index. If ProFund VP
Bear is successful in meeting its objective, its net asset
value should gain approximately the same, on a percentage
basis, as any decrease in the S&P 500(R) Index when the Index
declines on a given day. Conversely, its net asset value
should lose approximately the same, on a percentage basis, as
any increase in the Index when the Index rises on a given
day.
SPECIALTY PROFUND VP ULTRABULL: seeks daily investment results, before ProFund Advisors
fees and expenses, that correspond to twice (200%) the daily LLC
performance of the S&P 500(R) Index. Prior to May 1, 2003,
ProFund VP UltraBull was named "ProFund VP Bull Plus" and
sought daily investment results that corresponded to one and
one-half times (150%) the daily performance of the S&P 500(R)
Index. If ProFund VP UltraBull is successful in meeting its
objective, its net asset value should gain approximately
twice as much, on a percentage basis, as the S&P 500(R) Index
when the Index rises on a given day. Conversely, its net
asset value should lose approximately twice as much, on a
percentage basis, as the Index when the Index declines on a
given day.
SPECIALTY PROFUND VP OTC: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the LLC
NASDAQ-100 Index(R). "OTC" in the name of ProFund VP OTC refers
to securities that do not trade on a U.S. securities exchange
registered under the Securities Exchange Act of 1934.
SPECIALTY PROFUND VP SHORT OTC: seeks daily investment results, before ProFund Advisors
fees and expenses, that correspond to the inverse (opposite) LLC
of the daily performance of the NASDAQ-100 Index(R). If ProFund
VP Short OTC is successful in meeting its objective, its net
asset value should gain approximately the same, on a
percentage basis, as any decrease in the NASDAQ-100 Index(R)
when the Index declines on a given day. Conversely, its net
asset value should lose approximately the same, on a
percentage basis, as any increase in the Index when the Index
rises on a given day. "OTC" in the name of ProFund VP Short
OTC refers to securities that do not trade on a U.S.
securities exchange registered under the Securities Exchange
Act of 1934.
22
AMERICAN SKANDIA APEX II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP ULTRAOTC: seeks daily investment results, before ProFund Advisors
fees and expenses, that correspond to twice (200%) the daily LLC
performance of the NASDAQ-100 Index(R). If ProFund VP UltraOTC
is successful in meeting its objective, its net asset value
should gain approximately twice as much, on a percentage
basis, as the NASDAQ-100 Index(R) when the Index rises on a
given day. Conversely, its net asset value should lose
approximately twice as much, on a percentage basis, as the
Index when the Index declines on a given day. "OTC" in the
name of ProFund VP UltraOTC refers to securities that do not
trade on a U.S. securities exchange registered under the
Securities Exchange Act of 1934.
MID CAP VALUE PROFUND VP MID-CAP VALUE: seeks daily investment results, ProFund Advisors
before fees and expenses, that correspond to the daily LLC
performance of the S&P MidCap 400/ Barra Value Index(R). The
S&P MidCap400/Barra Value Index(R) is a float adjusted market
capitalization weighted index comprised of the stocks in the
S&P MidCap 400 Index that have comparatively low
price-to-book ratios as determined before each semiannual
rebalance date.
MID CAP PROFUND VP MID-CAP GROWTH: seeks daily investment results, ProFund Advisors
GROWTH before fees and expenses, that correspond to the daily LLC
performance of the S&P MidCap 400/ Barra Growth Index(R). The
S&P MidCap 400/Barra Growth Index(R) is a float adjusted market
capitalization weighted index comprised of the stocks in the
S&P MidCap 400 Index(R) that have comparatively high
price-to-book ratios as determined before each semiannual
rebalance date.
SPECIALTY PROFUND VP ULTRAMID-CAP: seeks daily investment results, ProFund Advisors
before fees and expenses, that correspond to twice (200%) the LLC
daily performance of the S&P MidCap 400 Index(R). If ProFund VP
UltraMid-Cap is successful in meeting its objective, its net
asset value should gain approximately twice as much, on a
percentage basis, as the S&P MidCap 400 Index(R) when the Index
rises on a given day. Conversely, its net asset value should
lose approximately twice as much, on a percentage basis, as
the Index when the Index declines on a given day.
SMALL CAP PROFUND VP SMALL-CAP VALUE: seeks daily investment results, ProFund Advisors
VALUE before fees and expenses, that correspond to the daily LLC
performance of the S&P SmallCap 600/ Barra Value Index(R). The
S&P SmallCap 600/Barra Value Index(R) is a float adjusted
market capitalization weighted index comprised of the stocks
in the S&P SmallCap 600/Barra Value Index(R) that have
comparatively low price-to-book ratios as determined before
each semiannual rebalance date.
SMALL CAP PROFUND VP SMALL-CAP GROWTH: seeks daily investment results, ProFund Advisors
GROWTH before fees and expenses, that correspond to the daily LLC
performance of the S&P SmallCap 600/Barra Growth Index(R). The
S&P SmallCap 600/Barra Growth Index(R) is a float adjusted
market capitalization weighted index comprised of the stocks
in the S&P SmallCap 600/Barra Growth Index(R) that have
comparatively high price-to- book ratios as determined before
each semiannual rebalance date.
23
AMERICAN SKANDIA APEX II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP ULTRASMALL-CAP: seeks daily investment results, ProFund Advisors
before fees and expenses, that correspond to twice (200%) the LLC
daily performance of the Russell 2000(R) Index. If ProFund VP
UltraSmall-Cap is successful in meeting its objective, its
net asset value should gain approximately twice as much, on a
percentage basis, as the Russell 2000 Index(R) when the Index
rises on a given day. Conversely, its net asset value should
lose approximately twice as much, on a percentage basis, as
the Index when the Index declines on a given day.
SPECIALTY PROFUND VP U.S. GOVERNMENT PLUS: seeks daily investment ProFund Advisors
results, before fees and expenses, that correspond to one and LLC
one-quarter times (125%) the daily price movement of the most
recently issued 30-year U.S. Treasury bond ("Long Bond"). In
accordance with its stated objective, the net asset value of
ProFund VP U.S. Government Plus generally should decrease as
interest rates rise. If ProFund VP U.S. Government Plus is
successful in meeting its objective, its net asset value
should gain approximately one and one-quarter times (125%) as
much, on a percentage basis, as any daily increase in the
price of the Long Bond on a given day. Conversely, its net
asset value should lose approximately one and one-quarter as
much, on a percentage basis, as any daily decrease in the
price of the Long Bond on a given day.
SPECIALTY PROFUND VP RISING RATES OPPORTUNITY: seeks daily investment ProFund Advisors
results, before fees and expenses, that correspond to one and LLC
one-quarter times (125%) the inverse (opposite) of the daily
price movement of the most recently issued 30-year U.S.
Treasury bond ("Long Bond"). In accordance with its stated
objective, the net asset value of ProFund VP Rising Rates
Opportunity generally should decrease as interest rates fall.
If ProFund VP Rising Rates Opportunity is successful in
meeting its objective, its net asset value should gain
approximately one and one-quarter times as much, on a
percentage basis, as any daily decrease in the Long Bond on a
given day. Conversely, its net asset value should lose
approximately one and one-quarter times as much, on a
percentage basis, as any daily increase in the Long Bond on a
given day.
LARGE CAP PROFUND VP LARGE-CAP GROWTH: seeks daily investment results, ProFund Advisors
GROWTH before fees and expenses, that correspond to the daily LLC
performance of the S&P 500/Barra Growth Index(R). The S&P
500/Barra Growth Index is a float adjusted market
capitalization weighted index comprised of the stocks in the
S&P 500 Index that have comparatively high price-to-book
ratios as determined before each semiannual rebalance date.
LARGE CAP PROFUND VP LARGE-CAP VALUE: seeks daily investment results, ProFund Advisors
VALUE before fees and expenses, that correspond to the daily LLC
performance of the S&P 500/Barra Value Index(R). The S&P
500/Barra Value Index is a float adjusted market
capitalization weighted index comprised of the stocks in the
S&P 500 Index that have comparatively low price-to-book
ratios as determined before each semiannual rebalance date.
24
AMERICAN SKANDIA APEX II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP SHORT SMALL-CAP: seeks daily investment results, ProFund Advisors
before fees and expenses, that correspond to the inverse LLC
(opposite) of the daily performance of the Russell 2000(R)
Index. If ProFund VP Short Small-Cap is successful in meeting
its objective, its net asset value should gain approximately
the same amount, on a percentage basis, as any decrease in
the Russell 2000 Index when the Index declines on a given
day. Conversely, its net asset value should lose
approximately the same amount, on a percentage basis, as any
increase in the Index when the Index rises on a given day.
SPECIALTY PROFUND VP SHORT MID-CAP: seeks daily investment results, ProFund Advisors
before fees and expenses, that correspond to the inverse LLC
(opposite) of the daily performance of the S&P MidCap 400
Index(R). If ProFund VP Short Mid-Cap is successful in meeting
its objective, its net asset value should gain approximately
the same amount, on a percentage basis, as any decrease in
the S&P MidCap 400 Index when the Index declines on a given
day. Conversely, its net asset value should lose
approximately the same amount, on a percentage basis, as any
increase in the Index when the Index rises on a given day.
SPECIALTY ACCESS VP HIGH YIELD: seeks to provide investment results ProFund Advisors
that correspond generally to the total return of the high LLC
yield market consistent with maintaining reasonable
liquidity. The Access VP High Yield, created by ProFund
Advisors, will achieve its high yield exposure primarily
through CDSs but may invest in high yield debt instruments
("junk bonds"), Interest rate swap agreements and futures
contracts, and other debt and money market instruments
without limitation, consistent with applicable regulations.
Under normal market conditions, the fund will invest at least
80% of its net assets in credit default swaps and other
financial instruments that in combination have economic
characteristics similar to the high yield debt market and/or
in high yield debt securities. The fund seeks to maintain
exposure to the high yield bond markets regardless of market
conditions and without taking defensive positions.
SPECIALTY FIRST TRUST(R) 10 UNCOMMON VALUES: seeks to provide First Trust Advisors
above-average capital appreciation. The Portfolio seeks to L.P.
achieve its objective by investing primarily in the ten
common stocks selected by the Investment Policy Committee of
Lehman Brothers Inc. ("Lehman Brothers") with the assistance
of the Research Department of Lehman Brothers which, in their
opinion have the greatest potential for capital appreciation
during the next year. The stocks included in the Portfolio
are adjusted annually on or about July 1st in accordance with
the selections of Lehman Brothers.
SPECIALTY TARGET MANAGED VIP: seeks to provide above-average total First Trust Advisors
return. The Portfolio seeks to achieve its objective by L.P.
investing in common stocks of the most attractive companies
that are identified by a model based on six uniquely
specialized strategies -- The Dow (sm) DART 5, the European
Target 20, the Nasdaq(R) Target 15, the S&P Target 24, the
Target Small Cap and the Value Line(R) Target 25.
25
AMERICAN SKANDIA APEX II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------
SPECIALTY THE DOW(SM) DART 10: seeks to provide above-average total First Trust Advisors
return. The Portfolio seeks to achieve its objective by L.P.
investing in common stocks issued by companies that are
expected to provide income and to have the potential for
capital appreciation. The Portfolio invests primarily in the
common stocks of the ten companies in the DJIA that have the
highest combined dividend yields and buyback ratios on or
about the applicable stock selection date.
SPECIALTY GLOBAL DIVIDEND TARGET 15 (formerly, Global Target 15): seeks First Trust Advisors
to provide above-average total return. The Portfolio seeks to L.P.
achieve its objective by investing in common stocks issued by
companies that are expected to provide income and to have the
potential for capital appreciation. The Portfolio invests
primarily in the common stocks of the companies which are
components of the DJIA, the Financial Times Industrial
Ordinary Share Index ("FT Index") and the Hang Seng Index.
The Portfolio primarily consists of common stocks of the five
companies with the lowest per share stock prices of the ten
companies in each of the DJIA, FT Index and Hang Seng Index,
respectively, that have the highest dividend yield in the
respective index on or about the applicable stock selection
date.
SPECIALTY S&P(R) TARGET 24: seeks to provide above-average total return. First Trust Advisors
The Portfolio seeks to achieve its objective by investing in L.P.
common stocks issued by companies that have the potential for
capital appreciation. The Portfolio invests primarily in the
common stocks of twenty-four companies selected from a subset
of the stocks included in the Standard & Poor's 500 Composite
Stock Price Index(R). The subset of stocks will be taken
from each of the eight largest economic sectors of the
S&P 500 Index(R) based on the sector's market capitalization.
SPECIALTY THE DOW(SM) TARGET DIVIDEND seeks to provide above-average First Trust Advisors
total return. The Portfolio seeks to achieve its objective by L.P.
investing in common stocks issued by companies that are
expected to provide income and to have the potential for
capital appreciation. The Portfolio invests primarily in the
20 common stocks from the Dow Jones Select Dividend Index (SM)
with the best overall ranking on both the change in return on
assets over the last 12 months and price-to-book ratio as of
the close of business on or about the applicable stock
selection date.
SPECIALTY VALUE LINE(R) TARGET 25: seeks to provide above-average capital First Trust Advisors
appreciation. The Portfolio seeks to achieve its objective by L.P.
investing in 25 of the 100 common stocks that Value Line(R)
gives a #1 ranking for Timeliness(TM) which have recently
exhibited certain positive financial attributes as of
the close of business on the applicable stock selection
date through a multi-step process.
SPECIALTY NASDAQ(R) TARGET 15: seeks to provide above-average total First Trust Advisors
return. The Portfolio seeks to achieve its objective by L.P.
investing in common stocks issued by companies that are
expected to have the potential for capital appreciation. The
Portfolio invests primarily in the common stocks of fifteen
companies selected from a pre-screened subset of the stocks
included in the Nasdaq-100 Index(R) on or about the applicable
stock selection date through a multi-step process.
26
AMERICAN SKANDIA APEX II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------
INTERNATIONAL THE PRUDENTIAL SERIES FUND, INC. -- SP WILLIAM BLAIR Prudential
EQUITY INTERNATIONAL GROWTH: Seeks long-term capital appreciation. Investments LLC/
The Portfolio invests primarily in stocks of large and William Blair &
medium-sized companies located in countries included in the Company, LLC
Morgan Stanley Capital International All Country World
Ex-U.S. Index. Under normal market conditions, the portfolio
invests at least 80% of its net assets in equity securities.
The Portfolio's assets fewer than six different countries and
will not concentrate investments in any particular industry.
"Standard & Poor's(R), "S&P(R)," "S&P 500(R)," "Standard & Poor's 500," and
"500" are trademarks of the McGraw-Hill Companies, Inc. and have been licensed
for use by American Skandia Investment Services, Incorporated. The Portfolio is
not sponsored, endorsed, sold or promoted by Standard & Poor's and Standard &
Poor's makes no representation regarding the advisability of investing in the
Portfolio.
"Dow Jones Industrial Average(sm)", "DJIA(sm)", "Dow Industrials(sm)", "Dow
Jones Select Dividend Index(sm)", and "The Dow 10(sm)", are service marks of Dow
Jones & Company, Inc. ("Dow Jones") and have been licensed for use for certain
purposes by First Trust Advisors L.P. ("First Trust"). The portfolios,
including, and in particular the Target Managed VIP portfolio The Dow(SM) DART
10 portfolio, and The Dow (SM) Target Dividend Portfolio are not endorsed, sold
or promoted by Dow Jones, and Dow Jones makes no representation regarding the
advisability of investing in such products.
"Standard & Poor's," "S&P," "S&P 500," "Standard & Poor's 500," and "500" are
trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by
First Trust on behalf of the S&P Target 24 Portfolio and the Target Managed VIP
Portfolio. The Portfolios are not sponsored, endorsed, managed, sold or promoted
by Standard & Poor's and Standard & Poor's makes no representation regarding the
advisability of investing in the Portfolio.
"The Nasdaq 100(R)", "Nasdaq-100 Index(R)", "Nasdaq Stock Market(R)", and
"Nasdaq(R)" are trade or service marks of The Nasdaq Stock Market, Inc. (which
with its affiliates are the "Corporations") and have been licensed for use by
First Trust. The Nasdaq Target 15 Portfolio and Target Managed VIP Portfolio
have not been passed on by the Corporations as to its legality or suitability.
The Nasdaq Target 15 Portfolio and Target Managed VIP Portfolio are not issued,
endorsed, sponsored, managed, sold or promoted by the Corporations. THE
CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE NASDAQ
TARGET 15 PORTFOLIO OR THE TARGET MANAGED VIP PORTFOLIO.
"Value Line(R)," "The Value Line Investment Survey," and "Value Line
Timeliness(TM) Ranking System" are registered trademarks of Value Line
Securities, Inc. or Value Line Publishing, Inc. The Target Managed VIP(R)
Portfolio is not sponsored, recommended, sold or promoted by Value Line
Publishing, Inc., Value Line, Inc. or Value Line Securities, Inc. ("Value
Line"). Value Line makes no representation regarding the advisability of
investing in the Portfolio.
The First Trust(R) 10 Uncommon Values portfolio is not sponsored or created by
Lehman Brothers, Inc. ("Lehman Brothers"). Lehman Brothers' only relationship to
First Trust is the licensing of certain trademarks and trade names of Lehman
Brothers and of the "10 Uncommon Values" which is determined, composed and
calculated by Lehman Brothers without regard to First Trust or the First
Trust(R) 10 Uncommon Values portfolio.
Dow Jones has no relationship to the ProFunds VP, other than the licensing of
the Dow Jones sector indices and its service marks for use in connection with
the ProFunds VP. The ProFunds VP are not sponsored, endorsed, sold, or promoted
by Standard & Poor's or NASDAQ, and neither Standard & Poor's nor NASDAQ makes
any representations regarding the advisability of investing in the ProFunds VP.
WHAT ARE THE FIXED ALLOCATIONS?
We offer Fixed Allocations of different durations during the accumulation
period. These "Fixed Allocations" earn a guaranteed fixed rate of interest for a
specified period of time, called the "Guarantee Period." In most states, we
offer Fixed Allocations with Guarantee Periods from 1 to 10 years. We may also
offer special purpose Fixed Allocations for use with certain optional investment
programs. We guarantee the fixed rate for the entire Guarantee Period. However,
if you withdraw or transfer Account Value before the end of the Guarantee
Period, we will adjust the value of your withdrawal or transfer based on a
formula, called a "Market Value Adjustment." The Market Value Adjustment can
either be positive or negative, depending on the movement of applicable interest
rates payable on Strips of the appropriate duration. Please refer to the section
entitled "How does the Market Value Adjustment Work?" for a description of the
formula along with examples of how it is calculated. You may allocate Account
Value to more than one Fixed Allocation at a time.
Fixed Allocations may not be available in all states. Availability of Fixed
Allocations is subject to change and may differ by state and by the annuity
product you purchase. Please call American Skandia at 1-800-752-6342 to
determine availability of Fixed Allocations in your state and for your annuity
product.
27
AMERICAN SKANDIA APEX II PROSPECTUS
Fees and Charges
The charges under the contracts are designed to cover, in the aggregate, our
direct and indirect costs of selling, administering and providing benefits under
the contracts. They are also designed, in the aggregate, to compensate us for
the risks of loss we assume pursuant to the contracts. If, as we expect, the
charges that we collect from the contracts exceed our total costs in connection
with the contracts, we will earn a profit. Otherwise we will incur a loss. For
example, American Skandia may make a profit on the Insurance Charge if, over
time, the actual costs of providing the guaranteed insurance obligations under
the Annuity are less than the amount we deduct for the Insurance Charge. To the
extent we make a profit on the Insurance Charge, such profit may be used for any
other corporate purpose, including payment of other expenses that American
Skandia incurs in promoting, distributing, issuing and administering the
Annuity.
The rates of certain of our charges have been set with reference to estimates of
the amount of specific types of expenses or risks that we will incur. In most
cases, this prospectus identifies such expenses or risks in the name of the
charge; however, the fact that any charge bears the name of, or is designed
primarily to defray a particular expense or risk does not mean that the amount
we collect from that charge will never be more than the amount of such expense
or risk, nor does it mean that we may not also be compensated for such expense
or risk out of any other charges we are permitted to deduct by the terms of the
contract. A portion of the proceeds that American Skandia receives from charges
that apply solely to the variable investment options may include amounts based
on market appreciation of the variable investment option values.
WHAT ARE THE CONTRACT FEES AND CHARGES?
CONTINGENT DEFERRED SALES CHARGE: We do not deduct a sales charge from Purchase
Payments you make to your Annuity. However, we may deduct a CDSC if you
surrender your Annuity or when you make a partial withdrawal. The CDSC
reimburses us for expenses related to sales and distribution of the Annuity,
including commissions, marketing materials and other promotional expenses. The
CDSC is calculated as a percentage of your Purchase Payment being surrendered or
withdrawn during the applicable Annuity Year. For purposes of calculating the
CDSC, we consider the year following the Issue Date of your Annuity as Year 1.
The amount of the CDSC decreases over time, measured from the Issue Date of the
Annuity. The CDSC percentages are shown below.
YEARS 1 2 3 4 5+
- ----------------------------------------------------------------------
CHARGE (%) 8.5% 8.0% 7.0% 6.0% 0.0%
THE CDSC PERIOD IS BASED ON THE ISSUE DATE OF THE ANNUITY, NOT ON THE DATE
EACH PURCHASE PAYMENT IS APPLIED TO THE ANNUITY. Purchase Payments applied to
the Annuity after the Issue Date do not have their own CDSC period. During the
first four (4) Annuity Years, under certain circumstances you can withdraw a
limited amount of Account Value without paying a CDSC. This is referred to as a
"Free Withdrawal." After four (4) complete Annuity Years, you can surrender your
Annuity or make a partial withdrawal without a CDSC being deducted from the
amount being withdrawn. Free Withdrawals are not treated as a withdrawal of
Purchase Payments for purposes of calculating the CDSC on a subsequent
withdrawal or surrender. Withdrawals of amounts greater than the maximum Free
Withdrawal amount are treated as a withdrawal of Purchase Payments and will be
assessed a CDSC during Annuity Years 1 through 4. For purposes of calculating
the CDSC on a surrender, the Purchase Payments being withdrawn may be greater
than your remaining Account Value or the amount of your withdrawal request. This
is most likely to occur if you have made prior withdrawals under the Free
Withdrawal provision or if your Account Value has declined in value due to
negative market performance.
We may waive the CDSC under certain medically-related circumstances or
when taking a Minimum Distribution from an Annuity purchased as a "qualified"
investment. Free Withdrawals, Medically-Related Surrenders and Minimum
Distributions are each explained more fully in the section entitled "Access to
Your Account Value".
TRANSFER FEE: Currently, you may make twenty (20) free transfers between
investment options each Annuity Year. We will charge $10.00 for each transfer
after the twentieth in each Annuity Year. We do not consider transfers made as
part of a dollar cost averaging, automatic rebalancing or asset allocation
program when we count the twenty free transfers. All transfers made on the same
day will be treated as one (1) transfer. Renewals or transfers of Account Value
from a Fixed Allocation at the end of its Guarantee Period are not subject to
the Transfer Fee and are not counted toward the twenty free transfers. We may
reduce the number of free transfers allowable each Annuity Year (subject to a
minimum of eight) without charging
28
AMERICAN SKANDIA APEX II PROSPECTUS
a Transfer Fee unless you make use of electronic means to transmit your transfer
requests. We may eliminate the Transfer Fee for transfer requests transmitted
electronically or through other means that reduce our processing costs. If
enrolled in any program that does not permit transfer requests to be transmitted
electronically, the Transfer Fee will not be waived.
ANNUAL MAINTENANCE FEE: During the accumulation period we deduct an Annual
Maintenance Fee. The Annual Maintenance Fee is $35.00 or 2% of your Account
Value invested in the variable investment options, whichever is less. This fee
will be deducted annually on the anniversary of the Issue Date of your Annuity
or, if you surrender your Annuity during the Annuity Year, the fee is deducted
at the time of surrender. Currently, the Annual Maintenance Fee is only deducted
if your Account Value is less than $100,000 on the anniversary of the Issue Date
or at the time of surrender. We may increase the Annual Maintenance Fee.
However, any increase will only apply to Annuities issued after the date of the
increase.
TAX CHARGE: Several states and some municipalities charge premium taxes or
similar taxes on annuities that we are required to pay. The amount of tax will
vary from jurisdiction to jurisdiction and is subject to change. The tax charge
currently ranges up to 3 1/2% of your premium and is designed to approximate the
taxes that we are required to pay. We generally will deduct the charge at the
time the tax is imposed, but may also decide to deduct the charge from each
Purchase Payment at the time of a withdrawal or surrender of your Annuity or at
the time you elect to begin receiving annuity payments. We may assess a charge
against the Sub-accounts and the Fixed Allocations equal to any taxes which may
be imposed upon the separate accounts.
We will pay company income taxes on the taxable corporate earnings created
by this separate account product. While we may consider company income taxes
when pricing our products, we do not currently include such income taxes in the
tax charges you pay under the contract. We will periodically review the issue of
charging for these taxes and may impose a charge in the future.
In calculating our corporate income tax liability, we derive certain
corporate income tax benefits associated with the investment of company assets,
including separate account assets, which are treated as company assets under
applicable income tax law. These benefits reduce our overall corporate income
tax liability. Under current law, such benefits may include foreign tax credits
and corporate dividends received deductions. We do not pass these tax benefits
through to holders of the separate account annuity contracts because (i) the
contract owners are not the owners of the assets generating these benefits under
applicable income tax law and (ii) we do not currently include company income
taxes in the tax charges you pay under the contract.
WHAT CHARGES APPLY SOLELY TO THE VARIABLE INVESTMENT OPTIONS?
INSURANCE CHARGE: We deduct an Insurance Charge daily. The charge is assessed
against the average daily assets allocated to the Sub-accounts and is equal to
1.65% on an annual basis. The Insurance Charge is a combination of the Mortality
& Expense Risk Charge (1.50%) and the Administration Charge (0.15%). The
Insurance Charge is intended to compensate American Skandia for providing the
insurance benefits under the Annuity, including the Annuity's basic death
benefit that provides guaranteed benefits to your beneficiaries even if the
market declines and the risk that persons we guarantee annuity payments to will
live longer than our assumptions. The charge also covers administrative costs
associated with providing the Annuity benefits, including preparation of the
contract, confirmation statements, annual account statements and annual reports,
legal and accounting fees as well as various related expenses. Finally, the
charge covers the risk that our assumptions about the mortality risks and
expenses under this Annuity are incorrect and that we have agreed not to
increase these charges over time despite our actual costs. We may increase the
portion of the total Insurance Charge that is deducted for administrative costs;
however, any increase will only apply to Annuities issued after the date of the
increase.
The Insurance Charge is not deducted against assets allocated to a Fixed
Allocation. However, the amount we credit to Fixed Allocations may also reflect
similar assumptions about the insurance guarantees provided under the Annuity.
OPTIONAL BENEFITS FOR WHICH WE ASSESS A CHARGE SOLELY AGAINST THE VARIABLE
INVESTMENT OPTIONS: If you elect to purchase certain optional benefits, we will
deduct an additional charge on a daily basis solely from your Account Value
allocated to the Sub-accounts. The additional charge is included in the daily
calculation of the Unit Price for each Sub-account. We may assess charges for
other optional benefits on a different basis as described elsewhere in the
prospectus.
29
AMERICAN SKANDIA APEX II PROSPECTUS
Fees and Charges continued
Please refer to the sections entitled "Living Benefit Programs" and "Death
Benefit" for a description of the charge for each Optional Benefit.
WHAT FEES AND EXPENSES ARE INCURRED BY THE PORTFOLIOS?
Each Portfolio incurs total annual operating expenses comprised of an investment
management fee, other expenses and any distribution and service (12b-1) fees
that may apply. These fees and expenses are reflected daily by each Portfolio
before it provides American Skandia with the net asset value as of the close of
business each day. More detailed information about fees and expenses can be
found in the prospectuses for the Portfolios.
WHAT CHARGES APPLY TO THE FIXED ALLOCATIONS?
No specific fee or expenses are deducted when determining the rate we credit to
a Fixed Allocation. However, for some of the same reasons that we deduct the
Insurance Charge against Account Value allocated to the Sub-accounts, we also
take into consideration mortality, expense, administration, profit and other
factors in determining the interest rates we credit to Fixed Allocations. Any
CDSC or Tax Charge applies to amounts that are taken from the variable
investment options or the Fixed Allocations. A Market Value Adjustment may also
apply to transfers, certain withdrawals, surrender or annuitization from a Fixed
Allocation.
WHAT CHARGES APPLY IF I CHOOSE AN ANNUITY PAYMENT OPTION?
If you select a fixed payment option, the amount of each fixed payment will
depend on the Account Value of your Annuity when you elected to annuitize. There
is no specific charge deducted from these payments; however, the amount of each
annuity payment reflects assumptions about our insurance expenses. If you select
a variable payment option that we may offer, then the amount of your benefits
will reflect changes in the value of your Annuity and will be subject to charges
that apply under the variable immediate annuity option. Also, a tax charge may
apply (see "Tax Charge" above).
EXCEPTIONS/REDUCTIONS TO FEES AND CHARGES
We may reduce or eliminate certain fees and charges or alter the manner in which
the particular fee or charge is deducted. For example, we may reduce the amount
of the CDSC or the length of time it applies, reduce or eliminate the amount of
the Annual Maintenance Fee or reduce the portion of the total Insurance Charge
that is deducted as an Administration Charge. Generally, these types of changes
will be based on a reduction to our sales, maintenance or administrative
expenses due to the nature of the individual or group purchasing the Annuity.
Some of the factors we might consider in making such a decision are: (a) the
size and type of group; (b) the number of Annuities purchased by an Owner; (c)
the amount of Purchase Payments or likelihood of additional Purchase Payments;
and/or (d) other transactions where sales, maintenance or administrative
expenses are likely to be reduced. We will not discriminate unfairly between
Annuity purchasers if and when we reduce any fees and charges.
30
AMERICAN SKANDIA APEX II PROSPECTUS
Purchasing Your Annuity
WHAT ARE OUR REQUIREMENTS FOR PURCHASING THE ANNUITY?
INITIAL PURCHASE PAYMENT: You must make a minimum initial Purchase Payment of
$10,000. However, if you decide to make payments under a systematic investment
or "bank drafting" program, we will accept a lower initial Purchase Payment
provided that, within the first Annuity Year, you make at least $10,000 in total
Purchase Payments.
Where allowed by law, we must approve any initial and additional Purchase
Payments of $1,000,000 or more. We may apply certain limitations and/or
restrictions on the Annuity as a condition of our acceptance, including limiting
the liquidity features or the Death Benefit protection provided under the
Annuity, limiting the right to make additional Purchase Payments, changing the
number of transfers allowable under the Annuity or restricting the Sub-accounts
or Fixed Allocations that are available. Other limitations and/or restrictions
may apply.
Except as noted below, Purchase Payments must be submitted by check drawn
on a U.S. bank, in U.S. dollars, and made payable to American Skandia. Purchase
Payments may also be submitted via 1035 exchange or direct transfer of funds.
Under certain circumstances, Purchase Payments may be transmitted to American
Skandia via wiring funds through your investment professional's broker-dealer
firm. Additional Purchase Payments may also be applied to your Annuity under an
arrangement called "bank drafting" where you authorize us to deduct money
directly from your bank account. We may reject any payment if it is received in
an unacceptable form. Our acceptance of a check is subject to our ability to
collect funds.
AGE RESTRICTIONS: The Owner must be age 85 or under as of the Issue Date
of the Annuity. If the Annuity is owned jointly, the oldest of the Owners must
be age 85 or under on the Issue Date. If the Annuity is owned by an entity, the
Annuitant must be age 85 or under as of the Issue Date. You should consider your
need to access your Account Value and whether the Annuity's liquidity features
will satisfy that need. If you take a distribution prior to age 591/2, you may
be subject to a 10% penalty in addition to ordinary income taxes on any gain.
The availability and level of protection of certain optional benefits may vary
based on the age of the Owner on the Issue Date of the Annuity or the date of
the Owner's death.
OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS:
We will ask you to name the Owner(s), Annuitant and one or more Beneficiaries
for your Annuity.
- - OWNER: The Owner(s) holds all rights under the Annuity. You may name up to
two Owners in which case all ownership rights are held jointly. Generally
joint owners are required to act jointly, however, if each owner provides
us with an instruction that we find acceptable, we will permit each owner
to act separately. All information and documents that we are required to
send you will be sent to the first named owner. This Annuity does not
provide a right of survivorship. Refer to the Glossary of Terms for a
complete description of the term "Owner."
- - ANNUITANT: The Annuitant is the person we agree to make annuity payments
to and upon whose life we continue to make such payments. You must name an
Annuitant who is a natural person. We do not accept a designation of joint
Annuitants during the accumulation period. Where allowed by law, you may
name one or more Contingent Annuitants. A Contingent Annuitant will become
the Annuitant if the Annuitant dies before the Annuity Date. Please refer
to the discussion of "Considerations for Contingent Annuitants" in the Tax
Considerations section of the Prospectus.
- - BENEFICIARY: The Beneficiary is the person(s) or entity you name to
receive the death benefit. Your beneficiary designation must be the exact
name of your beneficiary, not only a reference to the beneficiary's
relationship to you. For example, a designation of "surviving spouse"
would not be acceptable. If no beneficiary is named the death benefit will
be paid to you or your estate.
Your right to make certain designations may be limited if your Annuity is
to be used as an IRA or other "qualified" investment that is given
beneficial tax treatment under the Code. You should seek competent tax
advice on the income, estate and gift tax implications of your
designations.
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AMERICAN SKANDIA APEX II PROSPECTUS
Managing Your Annuity
MAY I CHANGE THE OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS?
You may change the Owner, Annuitant and Beneficiary designations by sending us a
request in writing. Upon an ownership change, any automated investment or
withdrawal programs will be canceled. The new owner must submit the applicable
program enrollment if they wish to participate in such a program. Where allowed
by law, such changes will be subject to our acceptance. Some of the changes we
will not accept include, but are not limited to:
- - a new Owner subsequent to the death of the Owner or the first of any joint
Owners to die, except where a spouse-Beneficiary has become the Owner as a
result of an Owner's death;
- - a new Annuitant subsequent to the Annuity Date;
- - for "non-qualified" investments, a new Annuitant prior to the Annuity Date
if the Annuity is owned by an entity; and
- - a change in Beneficiary if the Owner had previously made the designation
irrevocable.
SPOUSAL OWNERS/SPOUSAL BENEFICIARIES
If an Annuity is co-owned by spouses, we will assume that the sole primary
Beneficiary is the surviving spouse that was named as the co-owner unless you
elect an alternative Beneficiary designation. Unless you elect an alternative
Beneficiary designation, upon the death of either spousal Owner, the surviving
spouse may elect to assume ownership of the Annuity instead of taking the Death
Benefit payment. The Death Benefit that would have been payable will be the new
Account Value of the Annuity as of the date of due proof of death and any
required proof of a spousal relationship. As of the date the assumption is
effective, the surviving spouse will have all the rights and benefits that would
be available under the Annuity to a new purchaser of the same attained age. For
purposes of determining any future Death Benefit for the beneficiary of the
surviving spouse, the new Account Value will be considered as the initial
Purchase Payment. No CDSC will apply to the new Account Value. However, any
additional Purchase Payments applied after the date the assumption is effective
will be subject to all provisions of the Annuity, including the CDSC when
applicable.
SPOUSAL CONTINGENT ANNUITANT
If the Annuity is owned by an entity and the surviving spouse is named as a
Contingent Annuitant, upon the death of the Annuitant, the surviving spouse that
was named as the Contingent Annuitant will become the Annuitant. NO DEATH
BENEFIT IS PAYABLE UPON THE DEATH OF THE ANNUITANT. However, the Account Value
of the Annuity as of the date of due proof of death of the Annuitant (and any
required proof of the spousal relationship) will reflect the amount that would
have been payable had a Death Benefit been paid.
MAY I RETURN THE ANNUITY IF I CHANGE MY MIND?
If after purchasing your Annuity you change your mind and decide that you do not
want it, you may return it to us within a certain period of time known as a
right to cancel period. This is often referred to as a "free-look." Depending on
the state in which you purchased your Annuity and, in some states, if you
purchased the Annuity as a replacement for a prior contract, the right to cancel
period may be ten (10) days, twenty-one (21) days or longer, measured from the
time that you received your Annuity. If you return your Annuity during the
applicable period, we will refund your current Account Value plus any tax charge
deducted and, depending on your state's requirements, any applicable insurance
charges deducted. The amount returned to you may be higher or lower than the
original Purchase Payment(s) applied during the right to cancel period. Where
required by law, we will return your Purchase Payment(s) or the greater of your
current Account Value and the amount of your Purchase Payment(s) applied during
the right to cancel period.
MAY I MAKE ADDITIONAL PURCHASE PAYMENTS?
The minimum amount that we accept as an additional Purchase Payment is $100
unless you participate in American Skandia's Systematic Investment Plan or a
periodic purchase payment program. Unless you participate in an asset allocation
program, or unless you have provided us with other specific allocation
instructions for one, more than one, or all subsequent purchase payments, we
will allocate any additional Purchase Payments you make according to your
initial purchase payment allocation instructions. If you so instruct us, we will
allocate subsequent purchase payments according to any new allocation
instructions. Purchase Payments made while you participate in an asset
allocation program will be allocated in accordance with such program. Additional
Purchase Payments may be paid at any time before the Annuity Date.
MAY I MAKE SCHEDULED PAYMENTS DIRECTLY FROM MY BANK ACCOUNT?
You can make additional Purchase Payments to your Annuity by authorizing us to
deduct money directly from your bank account and applying it to your Annuity.
This type of program is often called "bank drafting". We call our bank drafting
program "American Skandia's Systematic Investment Plan." Purchase Payments made
through bank drafting may only be allocated to the variable investment options
when applied. Bank drafting allows you to invest in your Annuity with a lower
initial Purchase Payment, as long as you authorize payments that will equal at
least $10,000 during the first 12 months of your Annuity. We may suspend or
cancel bank drafting privileges if sufficient funds are not available from the
applicable financial institution on any date that a transaction is scheduled to
occur.
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AMERICAN SKANDIA APEX II PROSPECTUS
MAY I MAKE PURCHASE PAYMENTS THROUGH A SALARY REDUCTION PROGRAM?
These types of programs are only available with certain types of qualified
investments. If your employer sponsors such a program, we may agree to accept
periodic Purchase Payments through a salary reduction program as long as the
allocations are made only to variable investment options and the periodic
Purchase Payments received in the first year total at least $10,000.
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AMERICAN SKANDIA APEX II PROSPECTUS
Managing Your Account Value
HOW AND WHEN ARE PURCHASE PAYMENTS INVESTED?
(See "Valuing Your Investment" for a description of our procedure for pricing
initial and subsequent Purchase Payments.)
INITIAL PURCHASE PAYMENT: Once we accept your application, we invest your
net Purchase Payment in the Annuity. The net Purchase Payment is your initial
Purchase Payment minus any tax charges that may apply. On your application we
ask you to provide us with instructions for allocating your Account Value. You
can allocate Account Value to one or more variable investment options or Fixed
Allocations.
SUBSEQUENT PURCHASE PAYMENTS: Unless you participate in an asset
allocation program, or unless you have provided us with other specific
allocation instructions for one, more than one, or all subsequent Purchase
Payments, we will allocate any additional Purchase Payments you make according
to your initial purchase payment allocation instructions. If you so instruct us,
we will allocate subsequent Purchase Payments according to any new allocation
instructions. Unless you tell us otherwise, Purchase Payments made while you
participate in an asset allocation program will be allocated in accordance with
such program.
HOW DO I RECEIVE A LOYALTY CREDIT?
For annuitites issued on or after June 20, 2005 (subject to state availability),
we apply a Loyalty Credit to your Annuity's Account Value at the end of your
fifth Annuity Year ("fifth Annuity Anniversary"). The Loyalty Credit is equal to
2.25% of total Purchase Payments made during the first four Annuity years less
the cumulative amount of withdrawals made (including the deduction of any CDSC
amounts) through the fifth Annuity Anniversary. If the total Purchase Payments
made during the first four Annuity Years is less than the cumulative amount of
withdrawals made on or before the fifth Annuity Anniversary, no Loyalty Credit
will be applied to your Annuity. Also, no Loyalty Credit will be applied to your
Annuity if your Account Value is zero on the fifth Annuity Anniversary. This
would include any situation where the Annuity is still in force due to the fact
that payments are being made under an optional benefit such as Lifetime Five or
the Guaranteed Minimum Withdrawal Benefit. In addition, no Loyalty Credit will
be applied to your Annuity if before the fifth Annuity Anniversary: (i) you have
surrendered your Annuity; (ii) you have annuitized your Annuity; (iii) your
beneficiary has elected our Beneficiary Continuation Option; or (iv) we have
received due proof of your death (and there has been no spousal continuation
election made). If your spouse continues the contract under our spousal
continuance option, we will apply the Loyalty Credit to your Annuity only on the
fifth Annuity Anniversary measured from the date that we originally issued you
the Annuity. Since the Loyalty Credit is applied to the Account Value only, any
guarantees that are not based on Account Value will not reflect the Loyalty
Credit. Similarly, guarantees that are made against a loss in Account Value will
not be triggered in certain very limited circumstances where they otherwise
would have been, had no Loyalty Credit been applied to the Account Value.
HOW ARE LOYALTY CREDITS APPLIED TO MY ACCOUNT VALUE?
Any Loyalty Credit that is allocated to your Account Value on the fifth Annuity
Anniversary will be allocated to the Fixed Allocations and Variable Investment
Options in the same percentages as Purchase Payments are then being allocated to
your Annuity.
EXAMPLE OF APPLYING THE LOYALTY CREDIT
Assume you make an initial Purchase Payment of $10,000. During contract year
four (i.e., prior to the fourth Annuity Anniversary) you make an additional
$10,000 Purchase Payment. During the early part of Annuity year five (i.e.,
prior to the fifth Annuity Anniversary) you make a $10,000 Purchase Payment and
later in the year make a withdrawal of $5,000. The Loyalty Credit that we will
apply to your Annuity on the fifth Annuity Anniversary is equal to 2.25% of
$15,000 (this represents the $20,000 of Purchase Payments made during the first
four Annuity Years minus the $5,000 withdrawal made in the fifth Annuity Year.
The computation disregards the additional $10,000 Purchase Payment made in the
fifth Annuity Year.) Therefore, the Loyalty Credit amount would be equal to
$337.50.
ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?
During the accumulation period you may transfer Account Value between investment
options. Transfers are not subject to taxation on any gain. We may require a
minimum of $500 in each Sub-account you allocate Account Value to at the time of
any allocation or transfer. If you request a transfer and, as a result of the
transfer, there would be less than $500 in the Sub-account, we may transfer the
remaining Account Value in the Sub-account pro rata to the other investment
options to which you transferred.
We may impose specific restrictions on financial transactions (including
transfer requests) for certain Portfolios based on the Portfolio's investment
and/or transfer restrictions. We may do so to conform to any present or future
restriction that
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AMERICAN SKANDIA APEX II PROSPECTUS
is imposed by any portfolio available under this Annuity.
Currently, any purchase, redemption or transfer involving the ProFunds VP
Sub-accounts must be received by us no later than one hour prior to any
announced closing of the applicable securities exchange (generally, 3:00 p.m.
Eastern time) to be processed on the current Valuation Day. The "cut-off" time
for such financial transactions involving a ProFunds VP Sub-account will be
extended to 1/2 hour prior to any announced closing (generally, 3:30 p.m.
Eastern time) for transactions submitted electronically through American
Skandia's Internet website (www.americanskandia.prudential.com).
Currently, we charge $10.00 for each transfer after the twentieth (20th)
in each Annuity Year. Transfers made as part of a dollar cost averaging,
automatic rebalancing or asset allocation program do not count toward the twenty
free transfer limit. Renewals or transfers of Account Value from a Fixed
Allocation at the end of its Guarantee Period are not subject to the transfer
charge. We may reduce the number of free transfers allowable each Annuity Year
(subject to a minimum of eight) without charging a Transfer Fee unless you make
use of electronic means to transmit your transfer requests. We may also increase
the Transfer Fee that we charge to $15.00 for each transfer after the number of
free transfers has been used up. We may eliminate the Transfer Fee for transfer
requests transmitted electronically or through other means that reduce our
processing costs. If enrolled in any program that does not permit transfer
requests to be transmitted electronically, the Transfer Fee will not be waived.
Once you have made 20 transfers among the Sub-accounts during an Annuity
Year, we will accept any additional transfer request during that year only if
the request is submitted to us in writing with an original signature and
otherwise is in good order. For purposes of this 20 transfer limit, we (i) do
not view a facsimile transmission as a "writing", (ii) will treat multiple
transfer requests submitted on the same business day as a single transfer, and
(iii) do not count any transfer that solely involves Sub-accounts corresponding
to any ProFund Portfolio and/or the AST Money Market Portfolio, or any transfer
that involves one of our systematic programs, such as asset allocation and
automated withdrawals.
Frequent transfers among Sub-accounts in response to short-term
fluctuations in markets, sometimes called "market timing," can make it very
difficult for a Portfolio manager to manage a Portfolio's investments. Frequent
transfers may cause the Portfolio to hold more cash than otherwise necessary,
disrupt management strategies, increase transaction costs, or affect
performance. The Annuity offers Sub-accounts designed for Owners who wish to
engage in frequent transfers (i.e., one or more of the Sub-accounts
corresponding to the ProFund Portfolios and the AST Money Market Portfolio), and
we encourage Owners seeking frequent transfers to utilize those Sub-accounts.
In light of the risks posed to Owners and other investors by frequent
transfers, we reserve the right to limit the number of transfers in any Annuity
Year for all existing or new Owners and to take the other actions discussed
below. We also reserve the right to limit the number of transfers in any Annuity
Year or to refuse any transfer request for an Owner or certain Owners if: (a) we
believe that excessive transfer activity (as we define it) or a specific
transfer request or group of transfer requests may have a detrimental effect on
Unit Values or the share prices of the Portfolios; or (b) we are informed by a
Portfolio (e.g., by the Portfolio's portfolio manager) that the purchase or
redemption of shares in the Portfolio must be restricted because the Portfolio
believes the transfer activity to which such purchase and redemption relates
would have a detrimental effect on the share prices of the affected Portfolio.
Without limiting the above, the most likely scenario where either of the above
could occur would be if the aggregate amount of a trade or trades represented a
relatively large proportion of the total assets of a particular Portfolio. In
furtherance of our general authority to restrict transfers as described above,
and without limiting other actions we may take in the future, we have adopted
the following specific restrictions:
- - With respect to each Sub-account (other than the AST Money Market
Sub-account, or a Sub-account corresponding to a ProFund Portfolio), we
track amounts exceeding a certain dollar threshold that were transferred
into the Sub-account. If you transfer such amount into a particular
Sub-account, and within 30 calendar days thereafter transfer (the
"Transfer Out") all or a portion of that amount into another Sub-account,
then upon the Transfer Out, the former Sub-account becomes restricted (the
"Restricted Sub-account"). Specifically, we will not permit subsequent
transfers into the Restricted Sub-account for 90 calendar days after the
Transfer Out if the Restricted Sub-account invests in a non-international
Portfolio, or 180 calendar days after the Transfer Out if the Restricted
Sub-account invests in an international Portfolio. For purposes of this
rule, we (i) do not count transfers made in connection with one of our
systematic programs, such as asset allocation and automated withdrawals;
(ii) do not count any transfer that solely
35
AMERICAN SKANDIA APEX II PROSPECTUS
Managing Your Account Value continued
involves Sub-accounts corresponding to any ProFund Portfolio and/or the
AST Money Market Portfolio; and (iii) do not categorize as a transfer the
first transfer that you make after the Issue Date, if you make that
transfer within 30 calendar days after the Issue Date. Even if an amount
becomes restricted under the foregoing rules, you are still free to redeem
the amount from your Annuity at any time.
- - We reserve the right to effect exchanges on a delayed basis for all
contracts. That is, we may price an exchange involving the Sub-accounts on
the Valuation Day subsequent to the Valuation Day on which the exchange
request was received. Before implementing such a practice, we would issue
a separate written notice to Owners that explains the practice in detail.
- - If we deny one or more transfer requests under the foregoing rules, we
will inform you or your investment professional promptly of the
circumstances concerning the denial.
- - Contract owners in New York who purchased their contracts prior to March
15, 2004 are not subject to the specific restrictions outlined in bulleted
paragraphs immediately above. In addition, there are contract owners of
different variable annuity contracts that are funded through the same
Separate Account that are not subject to the above-referenced transfer
restrictions and, therefore, might make more numerous and frequent
transfers than contract owners who are subject to such limitations.
Finally there are contract owners of other variable annuity contracts or
variable life contracts that are issued by American Skandia as well as
other insurance companies that have the same underlying mutual fund
portfolios available to them. Since some contract owners are not subject
to the same transfer restrictions, unfavorable consequences associated
with such frequent trading within the underlying mutual fund (e.g.,
greater portfolio turnover, higher transaction costs, or performance or
tax issues) may affect all contract owners. Similarly, while contracts
managed by an investment professional or third party investment advisor
are subject to the restrictions on transfers between investment options
that are discussed above, if the advisor manages a number of contracts in
the same fashion unfavorable consequences may be associated with
management activity since it may involve the movement of a substantial
portion of an underlying mutual fund assets which may affect all contract
owners invested in the affected options. Apart from jurisdiction-specific
and contract differences in transfer restrictions, we will apply these
rules uniformly (including contracts managed by an investment professional
or third party investment advisor), and will not waive a transfer
restriction for any contract owner.
ALTHOUGH OUR TRANSFER RESTRICTIONS ARE DESIGNED TO PREVENT EXCESSIVE
TRANSFERS, THEY ARE NOT CAPABLE OF PREVENTING EVERY POTENTIAL OCCURRENCE OF
EXCESSIVE TRANSFER ACTIVITY.
DO YOU OFFER DOLLAR COST AVERAGING?
Yes. We offer Dollar Cost Averaging during the accumulation period. Dollar Cost
Averaging allows you to systematically transfer an amount periodically from one
investment option to one or more other investment options. You can choose to
transfer earnings only, principal plus earnings or a flat dollar amount. You may
elect a Dollar Cost Averaging program that transfers amounts monthly, quarterly,
semi-annually, or annually from variable investment options, or a program that
transfers amounts monthly from Fixed Allocations. By investing amounts on a
regular basis instead of investing the total amount at one time, Dollar Cost
Averaging may decrease the effect of market fluctuation on the investment of
your purchase payment. This may result in a lower average cost of units over
time. However, there is no guarantee that Dollar Cost Averaging will result in a
profit or protect against a loss in a declining market. There is no minimum
Account Value required to enroll in a Dollar Cost Averaging program and we do
not deduct a charge for participating in a Dollar Cost Averaging program.
You can Dollar Cost Average from variable investment options or Fixed
Allocations. Dollar Cost Averaging from Fixed Allocations is subject to a number
of rules that include, but are not limited to the following:
- - You may only use Fixed Allocations with Guarantee Periods of 1, 2 or 3
years.
- - You may only Dollar Cost Average earnings or principal plus earnings. If
transferring principal plus earnings, the program must be designed to last
the entire Guarantee Period for the Fixed Allocation.
- - Dollar Cost Averaging transfers from Fixed Allocations are not subject to
a Market Value Adjustment.
NOTE: When a Dollar Cost Averaging program is established from a Fixed
Allocation, the fixed rate of interest we credit to your Account Value is
applied to a declining balance due to the transfers of Account Value to the
Sub-accounts dur-
36
AMERICAN SKANDIA APEX II PROSPECTUS
ing the Guarantee Period. This will reduce the effective rate of return on the
Fixed Allocation over the Guarantee Period.
AMERICAN SKANDIA MAY OFFER FIXED ALLOCATIONS WITH GUARANTEE PERIODS OF 6 MONTHS
OR 12 MONTHS EXCLUSIVELY FOR USE WITH A DOLLAR COST AVERAGING PROGRAM ("DCA
FIXED ALLOCATIONS"). DCA FIXED ALLOCATIONS ARE DESIGNED TO AUTOMATICALLY
TRANSFER ACCOUNT VALUE IN EITHER 6 OR 12 PAYMENTS UNDER A DOLLAR COST AVERAGING
PROGRAM. DOLLAR COST AVERAGING TRANSFERS WILL BEGIN ON THE DAY FOLLOWING THE
DATE THE DCA FIXED ALLOCATION IS ESTABLISHED AND EACH MONTH FOLLOWING UNTIL THE
ENTIRE PRINCIPAL AMOUNT PLUS EARNINGS IS TRANSFERRED. DCA FIXED ALLOCATIONS MAY
ONLY BE ESTABLISHED WITH YOUR INITIAL PURCHASE PAYMENT OR ADDITIONAL PURCHASE
PAYMENTS. YOU MAY NOT TRANSFER EXISTING ACCOUNT VALUE TO A DCA FIXED ALLOCATION.
WE RESERVE THE RIGHT TO TERMINATE OFFERING THESE SPECIAL PURPOSE FIXED
ALLOCATIONS AT ANY TIME.
Account Value allocated to the DCA Fixed Allocation will be transferred to
the Sub-accounts you choose under the Dollar Cost Averaging program. If you
terminate the Dollar Cost Averaging program before the entire principal amount
plus earnings has been transferred to the Sub-account(s), you must transfer all
remaining Account Value to any other investment option. Unless you provide
alternate instructions at the time you terminate the Dollar Cost Averaging
program, Account Value will be transferred to the AST Money Market Sub-account.
Transfers from Fixed Allocations as part of a Dollar Cost Averaging program are
not subject to a Market Value Adjustment. However, a Market Value Adjustment
will apply if you terminate the Dollar Cost Averaging program before the entire
principal amount plus earnings has been transferred to the Sub-account(s).
The Dollar Cost Averaging program is not available if you elect the
Guaranteed Return Option Plus(SM), the Guaranteed Return Option or the automatic
rebalancing programs when it involves transfers out of the Fixed Allocations and
is also not available when you elect an asset allocation program.
DO YOU OFFER ANY AUTOMATIC REBALANCING PROGRAMS?
Yes. During the accumulation period, we offer automatic rebalancing among the
variable investment options you choose. You can choose to have your Account
Value rebalanced monthly, quarterly, semi-annually, or annually. On the
appropriate date, the variable investment options you chose are rebalanced to
the allocation percentages you requested. With automatic rebalancing, we
transfer the appropriate amount from the " overweighted" Sub-accounts to the
"underweighted" Sub-accounts to return your allocations to the percentages you
request. For example, over time the performance of the variable investment
options will differ, causing your percentage allocations to shift. Any transfer
to or from any variable investment option that is not part of your automatic
rebalancing program, will be made, however that variable investment option will
not become part of your rebalancing program unless we receive instructions from
you indicating that you would like such option to become part of the program.
There is no minimum Account Value required to enroll in automatic
rebalancing. All rebalancing transfers as part of an automatic rebalancing
program are not included when counting the number of transfers each year toward
the maximum number of free transfers. We do not deduct a charge for
participating in an automatic rebalancing program. Participation in the
automatic rebalancing program may be restricted if you are enrolled in certain
other optional programs.
ARE ANY ASSET ALLOCATION PROGRAMS AVAILABLE?
Yes. Certain "static asset allocation programs" are available for use with the
Annuity. These programs are considered static because once you have selected a
model portfolio, the Sub-accounts and the percentage of contract value allocated
to each Sub-account cannot be changed without your consent. The programs are
available at no additional charge. Under these programs, the Sub-account for
each asset class in each model portfolio is designated for you. Under the
programs, the values in the Sub-accounts will be rebalanced periodically back to
the indicated percentages for the applicable asset class within the model
portfolio that you have selected. For more information on the asset allocation
programs, see the Appendix entitled "Additional Information on the Asset
Allocation Programs."
Asset allocation is a sophisticated method of diversification, which
allocates assets among asset classes in order to manage investment risk and
enhance returns over the long term. However, asset allocation does not guarantee
a profit or protect against a loss. No personalized investment advice is
provided in connection with the asset allocation programs and you should not
rely on these programs as providing individualized investment recommendations to
you. The asset allocation programs do not guarantee better investment results.
We
37
AMERICAN SKANDIA APEX II PROSPECTUS
Managing Your Account Value continued
reserve the right to terminate or change the asset allocation programs at any
time. You should consult with your Investment Professional before electing any
asset allocation program.
DO YOU OFFER PROGRAMS DESIGNED TO GUARANTEE A "RETURN OF PREMIUM" AT A FUTURE
DATE?
Yes. We offer two different programs for investors who wish to invest in the
variable investment options but also wish to protect their principal, as of a
specific date in the future. They are the Balanced Investment Program and the
Guaranteed Return Option Plus(SM). (The Guaranteed Return Option Plus(SM) (GRO
Plus(SM)) is not available in all states. In some states where GRO Plus is not
available we offer the Guaranteed Return Option (GRO).) Both the Balanced
Investment Program and GRO Plus allow you to allocate a portion of your Account
Value to the available variable investment options while ensuring that your
Account Value will at least equal your contributions adjusted for withdrawals
and transfers on a specified date. Under GRO Plus, Account Value is allocated to
and maintained in Fixed Allocations to the extent we, in our sole discretion,
deem it is necessary to support our guarantee under the program. This differs
from the Balanced Investment Program where a set amount is allocated to a Fixed
Allocation regardless of the performance of the underlying Sub-accounts or the
interest rate environment after the amount is allocated to a Fixed Allocation.
Generally, more of your Account Value will be allocated to the variable
investment options under the GRO Plus program than under the Balanced Investment
Program (although in periods of poor market performance, low interest rates
and/or as the option progresses to its maturity date, this may not be the case).
You may not want to use either of these programs if you expect to begin taking
annuity payments before the program would be completed. In addition, as with
most return of premium programs, amounts that are available to allocate to the
variable investment options may be substantially less than they would be if you
did not elect a return of premium program. This means that, if investment
experience in the variable investment options were positive, your Account Value
would grow at a slower rate than if you did not elect a return of premium
program and allocated all of your Account Value to the variable investment
options.
BALANCED INVESTMENT PROGRAM
We offer a balanced investment program where a portion of your Account Value is
allocated to a Fixed Allocation and the remaining Account Value is allocated to
the variable investment options that you select. When you enroll in the Balanced
Investment Program, you choose the duration that you wish the program to last.
This determines the duration of the Guarantee Period for the Fixed Allocation.
Based on the fixed rate for the Guarantee Period chosen, we calculate the
portion of your Account Value that must be allocated to the Fixed Allocation to
grow to a specific "principal amount" (such as your initial Purchase Payment).
We determine the amount based on the rates then in effect for the Guarantee
Period you choose. If you continue the program until the end of the Guarantee
Period and make no withdrawals or transfers, at the end of the Guarantee Period,
the Fixed Allocation will have grown to equal the "principal amount".
Withdrawals or transfers from the Fixed Allocation before the end of the
Guarantee Period will terminate the program and may be subject to a Market Value
Adjustment. You can transfer the Account Value that is not allocated to the
Fixed Allocation between any of the Sub-accounts available under the Annuity.
Account Value you allocate to the variable investment options is subject to
market fluctuations and may increase or decrease in value. We do not deduct a
charge for participating in the Balanced Investment Program.
EXAMPLE
Assume you invest $100,000. You choose a 10-year program and allocate a
portion of your Account Value to a Fixed Allocation with a 10-year
Guarantee Period. The rate for the 10-year Guarantee Period is 2.50%*.
Based on the fixed interest rate for the Guarantee Period chosen, the
factor is 0.781198 for determining how much of your Account Value will be
allocated to the Fixed Allocation. That means that $78,120 will be
allocated to the Fixed Allocation and the remaining Account Value
($21,880) will be allocated to the variable investment options. Assuming
that you do not make any withdrawals or transfers from the Fixed
Allocation, it will grow to $100,000 at the end of the Guarantee Period.
Of course we cannot predict the value of the remaining Account Value that
was allocated to the variable investment options.
The GUARANTEED RETURN OPTION PLUS(SM) (GRO PLUS(SM)) guarantees that,
after a seven-year period following commencement of the program ("maturity
date") and on each anniversary of the maturity date thereafter, your Account
Value will not be less than the Account Value on the effective date of the
program. The program also offers you the option to elect a second, enhanced
guarantee amount at a higher Account Value
* The rate in this example is hypothetical and may not reflect the current rate
for Guarantee Periods of this duration.
38
AMERICAN SKANDIA APEX II PROSPECTUS
subject to a separate maturity period (and its anniversaries).
The GRO Plus(SM) program may be appropriate if you wish to protect a principal
amount (called the "Protected Principal Value") against market downturns as of a
specific date in the future, but also wish to exercise control of your available
Account Value among the variable investment options to participate in market
experience. Under the GRO Plus(SM) program, you give us the right to allocate
amounts to Fixed Allocations as needed to support the guarantees provided. The
available Account Value is the amount not allocated to the Fixed Allocations to
support the guarantees provided. There is a fee associated with this program.
See "Living Benefit Programs," later in this Prospectus, for more information
about this program.
MAY I GIVE MY INVESTMENT PROFESSIONAL PERMISSION TO MANAGE MY ACCOUNT VALUE?
Yes. Your Investment Professional may direct the allocation of your Account
Value and request financial transactions between investment options while you
are living, subject to our rules and unless you tell us otherwise. IF YOUR
INVESTMENT PROFESSIONAL HAS THIS AUTHORITY, WE DEEM THAT ALL TRANSACTIONS THAT
ARE DIRECTED BY YOUR INVESTMENT PROFESSIONAL WITH RESPECT TO YOUR ANNUITY HAVE
BEEN AUTHORIZED BY YOU. You must contact us immediately if and when you revoke
such authority. We will not be responsible for acting on instructions from your
investment professional until we receive notification of the revocation of such
person's authority. We may also suspend, cancel or limit these privileges at any
time. We will notify you if we do.
MAY I AUTHORIZE MY THIRD PARTY INVESTMENT ADVISOR TO MANAGE MY ACCOUNT?
Yes. You may engage your own investment advisor to manage your account. These
investment advisors may be firms or persons who also are appointed by us, or
whose affiliated broker-dealers are appointed by us, as authorized sellers of
the Annuity. EVEN IF THIS IS THE CASE, HOWEVER, PLEASE NOTE THAT THE INVESTMENT
ADVISOR YOU ENGAGE TO PROVIDE ADVICE AND/OR MAKE TRANSFERS FOR YOU, IS NOT
ACTING ON OUR BEHALF, BUT RATHER IS ACTING ON YOUR BEHALF. We do not offer
advice about how to allocate your Account Value under any circumstance. As such,
we are not responsible for any recommendations such investment advisors make,
any investment models or asset allocation programs they choose to follow or any
specific transfers they make on your behalf.
Any fee that is charged by your investment advisor is in addition to the
fees and expenses that apply under your Annuity. If you authorize your
investment advisor to withdraw amounts from your Annuity (to the extent
permitted) to pay for the investment advisor's fee, as with any other withdrawal
from your Annuity, you may incur adverse tax consequences, a CDSC and/or a
Market Value Adjustment. Withdrawals to pay your investment advisor generally
will also reduce the level of various living and death benefit guarantees
provided (e.g. the withdrawals will reduce proportionately the Annuity's
guaranteed minimum death benefit.) WE ARE NOT A PARTY TO THE AGREEMENT YOU HAVE
WITH YOUR INVESTMENT ADVISOR AND DO NOT VERIFY THAT AMOUNTS WITHDRAWN FROM YOUR
ANNUITY, INCLUDING AMOUNTS WITHDRAWN TO PAY FOR THE INVESTMENT ADVISOR'S FEE,
ARE WITHIN THE TERMS OF YOUR AGREEMENT WITH YOUR INVESTMENT ADVISOR. You will,
however, receive confirmations of transactions that affect your Annuity. If your
investment advisor has also acted as your Investment Professional with respect
to the sale of your Annuity, he or she may be receiving compensation for
services provided both as an Investment Professional and investment advisor.
Alternatively, the investment advisor may compensate the Investment Professional
from whom you purchased your Annuity for the referral that led you to enter into
your investment advisory relationship with the investment advisor. If you are
interested in the details about the compensation that your investment advisor
and/or your Investment Professional receive in connection with your Annuity, you
should ask them for more details.
We or an affiliate of ours may provide administrative support to licensed,
registered Investment Professionals or investment advisors who you authorize to
make financial transactions on your behalf. We may require Investment
Professionals or investment advisors, who are authorized by multiple contract
owners to make financial transactions, to enter into an administrative agreement
with American Skandia as a condition of our accepting transactions on your
behalf. The administrative agreement may impose limitations on the Investment
Professional's or investment advisor's ability to request financial transactions
on your behalf. These limitations are intended to minimize the detrimental
impact of an Investment Professional who is in a position to transfer large
amounts of money for multiple clients in a particular Portfolio or type of
portfolio or to comply with specific restrictions or limitations imposed by a
Portfolio(s) of American Skandia. Contracts managed by your investment
professional also are subject to the restrictions on
39
AMERICAN SKANDIA APEX II PROSPECTUS
Managing Your Account Value continued
transfers between investment options that are discussed in the section entitled
"ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?".
Since transfer activity under contracts managed by an investment professional or
third party investment advisor may result in unfavorable consequences to all
contract owners invested in the affected options we reserve the right to limit
the investment options available to a particular Owner whose contract is managed
by the advisor or impose other transfer restrictions we deem necessary. The
administrative agreement may limit the available investment options, require
advance notice of large transactions, or impose other trading limitations on
your investment professional. Your investment professional will be informed of
all such restrictions on an ongoing basis. We may also require that your
investment professional transmit all financial transactions using the electronic
trading functionality available through our Internet website
(www.americanskandia.prudential.com). LIMITATIONS THAT WE MAY IMPOSE ON YOUR
INVESTMENT PROFESSIONAL OR INVESTMENT ADVISOR UNDER THE TERMS OF THE
ADMINISTRATIVE AGREEMENT DO NOT APPLY TO FINANCIAL TRANSACTIONS REQUESTED BY AN
OWNER ON THEIR OWN BEHALF, EXCEPT AS OTHERWISE DESCRIBED IN THIS PROSPECTUS.
HOW DO THE FIXED ALLOCATIONS WORK?
We credit the fixed interest rate to the Fixed Allocation throughout a set
period of time called a "Guarantee Period." Fixed Allocations currently are
offered with Guarantee Periods from 1 to 10 years. We may make Fixed Allocations
of different durations available in the future, including Fixed Allocations
offered exclusively for use with certain optional investment programs. Fixed
Allocations may not be available in all states and may not always be available
for all Guarantee Periods depending on market factors and other considerations.
The interest rate credited to a Fixed Allocation is the rate in effect
when the Guarantee Period begins and does not change during the Guarantee
Period. The rates are an effective annual rate of interest. We determine the
interest rates for the various Guarantee Periods. At the time that we confirm
your Fixed Allocation, we will advise you of the interest rate in effect and the
date your Fixed Allocation matures. We may change the rates we credit new Fixed
Allocations at any time. Any change in interest rate does not affect Fixed
Allocations that were in effect before the date of the change. To inquire as to
the current rates for Fixed Allocations, please call 1-800-752-6342.
A Guarantee Period for a Fixed Allocation begins:
- - when all or part of a net Purchase Payment is allocated to that particular
Guarantee Period;
- - upon transfer of any of your Account Value to a Fixed Allocation for that
particular Guarantee Period; or
- - when you "renew" a Fixed Allocation by electing a new Guarantee Period.
To the extent permitted by law, we may establish different interest rates
for Fixed Allocations offered to a class of Owners who choose to participate in
various optional investment programs we make available. This may include, but is
not limited to, Owners who elect to use Fixed Allocations under a dollar cost
averaging program (see "Do You Offer Dollar Cost Averaging?") or a balanced
investment program (see "Do you offer programs designed to guarantee a "Return
of Premium" at a future date?"). The interest rate credited to Fixed Allocations
offered to this class of purchasers may be different than those offered to other
purchasers who choose the same Guarantee Period but who do not participate in an
optional investment program. Any such program is at our sole discretion.
AMERICAN SKANDIA MAY OFFER FIXED ALLOCATIONS WITH GUARANTEE PERIODS OF 3 MONTHS
OR 6 MONTHS EXCLUSIVELY FOR USE AS A SHORT-TERM FIXED ALLOCATION ("SHORT-TERM
FIXED ALLOCATIONS"). SHORT-TERM FIXED ALLOCATIONS MAY ONLY BE ESTABLISHED WITH
YOUR INITIAL PURCHASE PAYMENT OR ADDITIONAL PURCHASE PAYMENTS. YOU MAY NOT
TRANSFER EXISTING ACCOUNT VALUE TO A SHORT-TERM FIXED ALLOCATION. WE RESERVE THE
RIGHT TO TERMINATE OFFERING THESE SPECIAL PURPOSE FIXED ALLOCATIONS AT ANY TIME.
On the Maturity Date of the Short-term Fixed Allocation, the Account Value
will be transferred to the Sub-account(s) you choose at the inception of the
program. If no instructions are provided, such Account Value will be transferred
to the AST Money Market Sub-account. Short-term Fixed Allocations may not be
renewed on the Maturity Date. If you surrender the Annuity or transfer any
Account Value from the Short-term Fixed Allocation to any other investment
option before the end of the Guarantee Period, a Market Value Adjustment will
apply.
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AMERICAN SKANDIA APEX II PROSPECTUS
HOW DO YOU DETERMINE RATES FOR FIXED ALLOCATIONS?
We do not have a specific formula for determining the fixed interest rates for
Fixed Allocations. Generally the interest rates we offer for Fixed Allocations
will reflect the investment returns available on the types of investments we
make to support our fixed rate guarantees. These investment types may include
cash, debt securities guaranteed by the United States government and its
agencies and instrumentalities, money market instruments, corporate debt
obligations of different durations, private placements, asset-backed obligations
and municipal bonds. In determining rates we also consider factors such as the
length of the Guarantee Period for the Fixed Allocation, regulatory and tax
requirements, liquidity of the markets for the type of investments we make,
commissions, administrative and investment expenses, our insurance risks in
relation to the Fixed Allocations, general economic trends and competition. Some
of these considerations are similar to those we consider in determining the
Insurance Charge that we deduct from Account Value allocated to the
Sub-accounts.
We will credit interest on a new Fixed Allocation in an existing Annuity
at a rate not less than the rate we are then crediting to Fixed Allocations for
the same Guarantee Period selected by new Annuity purchasers in the same class.
The interest rate we credit for a Fixed Allocation is subject to a
minimum. Please refer to the Statement of Additional Information. In certain
states the interest rate may be subject to a minimum under state law or
regulation.
HOW DOES THE MARKET VALUE ADJUSTMENT WORK?
If you transfer or withdraw Account Value from a Fixed Allocation more than 30
days before the end of its Guarantee Period, we will adjust the value of your
investment based on a formula, called a "Market Value Adjustment" or "MVA". The
amount of any Market Value Adjustment can be either positive or negative,
depending on the movement of a combination of Strip Yields on Strips and an
Option-adjusted Spread (each as defined below) between the time that you
purchase the Fixed Allocation and the time you make a transfer or withdrawal.
The Market Value Adjustment formula compares the combination of Strip Yields for
Strips and the Option-adjusted Spreads as of the date the Guarantee Period began
with the combination of Strip Yields for Strips and the Option-adjusted Spreads
as of the date the MVA is being calculated. In certain states the amount of any
Market Value Adjustment may be limited under state law or regulation. If your
Annuity is governed by the laws of that state, any Market Value Adjustment that
applies will be subject to our rules for complying with such law or regulation.
- - "Strips" are a form of security where ownership of the interest portion of
United States Treasury securities are separated from ownership of the
underlying principal amount or corpus.
- - "Strip Yields" are the yields payable on coupon Strips of United States
Treasury securities.
- - "Option-adjusted Spread" is the difference between the yields on corporate
debt securities (adjusted to disregard options on such securities) and
government debt securities of comparable duration. We currently use the
Merrill Lynch 1 to 10 year Investment Grade Corporate Bond Index of
Option-adjusted Spreads.
MVA FORMULA
The MVA formula is applied separately to each Fixed Allocation to determine the
Account Value of the Fixed Allocation on a particular date. The formula is as
follows:
[(1+I) / (1+J+0.0010)]N/365
where:
I is the Strip Yield as of the start date of the Guarantee Period for
coupon Strips maturing at the end of the applicable Guarantee Period plus
the Option-adjusted Spread. If there are no Strips maturing at that time,
we will 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 being applied for
coupon Strips maturing at the end of the applicable Guarantee Period plus
the Option-adjusted Spread. If there are no Strips maturing at that time,
we will 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 the original Guarantee Period.
If you surrender your Annuity under the right to cancel provision, the MVA
formula is
[(1 + I)/(1 + J)]N/365
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AMERICAN SKANDIA APEX II PROSPECTUS
Managing Your Account Value continued
MVA EXAMPLES
The following hypothetical examples show the effect of the MVA in determining
Account Value. Assume the following:
- - You allocate $50,000 into a Fixed Allocation (we refer to this as the
"Allocation Date" in these examples) with a Guarantee Period of 5 years
(we refer to this as the "Maturity Date" in these examples).
- - The Strip Yields for coupon Strips beginning on the Allocation Date and
maturing on the Maturity Date plus the Option-adjusted Spread is 5.50% (I
= 5.50%).
- - You make no withdrawals or transfers until you decide to withdraw the
entire Fixed Allocation after exactly three (3) years, at which point 730
days remain before the Maturity Date (N = 730).
EXAMPLE OF POSITIVE MVA
Assume that at the time you request the withdrawal, the Strip Yields for Strips
maturing on the Maturity Date plus the Option-adjusted Spread is 4.00% (J =
4.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0010)]N/365 =
[1.055/1.041](2) = 1.027078
Interim Value = $57,881.25
Account Value after MVA = Interim Value x MVA
Factor = $59,448.56
EXAMPLE OF NEGATIVE MVA
Assume that at the time you request the withdrawal, the Strip Yields for Strips
maturing on the Maturity Date plus the Option-adjusted Spread is 7.00% (J =
7.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0010)]N/365 =
[1.055/1.071)](2) = 0.970345
Interim Value = $57,881.25
Account Value after MVA = Interim Value x MVA
Factor = $56,164.78.
WHAT HAPPENS WHEN MY GUARANTEE PERIOD MATURES?
The "Maturity Date" for a Fixed Allocation is the last day of the Guarantee
Period. Before the Maturity Date, you may choose to renew the Fixed Allocation
for a new Guarantee Period of the same or different length or you may transfer
all or part of that Fixed Allocation's Account Value to another Fixed Allocation
or to one or more Sub-accounts. We will not charge a MVA if you choose to renew
a Fixed Allocation on its Maturity Date or transfer the Account Value to one or
more variable investment options. We will notify you before the end of the
Guarantee Period about the fixed interest rates that we are currently crediting
to all Fixed Allocations that are being offered. The rates being credited to
Fixed Allocations may change before the Maturity Date.
IF YOU DO NOT SPECIFY HOW YOU WANT A FIXED ALLOCATION TO BE ALLOCATED ON
ITS MATURITY DATE, WE WILL THEN TRANSFER THE ACCOUNT VALUE OF THE FIXED
ALLOCATION TO THE AST MONEY MARKET SUB-ACCOUNT. You can then elect to allocate
the Account Value to any of the Sub-accounts or to a new Fixed Allocation.
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AMERICAN SKANDIA APEX II PROSPECTUS
Access To Account Value
WHAT TYPES OF DISTRIBUTIONS ARE AVAILABLE TO ME?
During the accumulation period you can access your Account Value through partial
withdrawals, Systematic Withdrawals, and where required for tax purposes,
Minimum Distributions. You can also surrender your Annuity at any time. We may
deduct a portion of the Account Value being withdrawn or surrendered as a CDSC.
The CDSC will be assessed on the amount of Purchase Payments, not on the Account
Value at the time of the withdrawal or surrender. If you surrender your Annuity,
in addition to any CDSC, we may deduct the Annual Maintenance Fee, any Tax
Charge that applies and the charge for any optional benefits. We may also apply
a Market Value Adjustment to any Fixed Allocations being withdrawn or
surrendered. Certain amounts may be available to you each Annuity Year that are
not subject to a CDSC. These are called "Free Withdrawals." In addition, under
certain circumstances, we may waive the CDSC for surrenders made for qualified
medical reasons or for withdrawals made to satisfy Minimum Distribution
requirements. Unless you notify us differently, withdrawals are taken pro-rata
based on the Account Value in the investment options at the time we receive your
withdrawal request. Each of these types of distributions is described more fully
below.
ARE THERE TAX IMPLICATIONS FOR DISTRIBUTIONS?
(For more information, see "Tax Considerations".)
DURING THE ACCUMULATION PERIOD
A distribution during the accumulation period is deemed to come first from any
"gain" in your Annuity and second as a return of your "tax basis", if any.
Distributions from your Annuity are generally subject to ordinary income
taxation on the amount of any investment gain unless the distribution qualifies
as a non-taxable exchange or transfer. If you take a distribution prior to the
taxpayer's age 591/2, you may be subject to a 10% penalty in addition to
ordinary income taxes on any gain. You may wish to consult a professional tax
advisor for advice before requesting a distribution.
DURING THE ANNUITIZATION PERIOD
During the annuitization period, a portion of each annuity payment is taxed as
ordinary income at the tax rate you are subject to at the time of the payment.
The Code and regulations have "exclusionary rules" that we use to determine what
portion of each annuity payment should be treated as a return of any tax basis
you have in the Annuity. Once the tax basis in the Annuity has been distributed,
the remaining annuity payments are taxable as ordinary income. The tax basis in
the Annuity may be based on the tax-basis from a prior contract in the case of a
1035 exchange or other qualifying transfer.
CAN I WITHDRAW A PORTION OF MY ANNUITY?
Yes, you can make a withdrawal during the accumulation period.
- - To meet liquidity needs, you can withdraw a limited amount from your
Annuity during each of Annuity Years 1-4 without a CDSC being applied. We
call this the "Free Withdrawal" amount. The Free Withdrawal amount is not
available if you choose to surrender your Annuity. Amounts withdrawn as a
Free Withdrawal do not reduce the amount of CDSC that may apply upon a
subsequent withdrawal or surrender of the Annuity. The minimum Free
Withdrawal you may request is $100.
- - You can also make withdrawals in excess of the Free Withdrawal amount. The
maximum amount will depend on the Annuity's Surrender Value as of the date
we process the withdrawal request. After any partial withdrawal, your
Annuity must have a Surrender Value of at least $1,000, or we may treat
the partial withdrawal request as a request to fully surrender your
Annuity. The minimum partial withdrawal you may request is $100.
When we determine if a CDSC applies to partial withdrawals and Systematic
Withdrawals, we will first determine what, if any, amounts qualify as a Free
Withdrawal. Those amounts are not subject to the CDSC. Partial withdrawals or
Systematic Withdrawals of amounts greater than the maximum Free Withdrawal
amount will be subject to a CDSC.
You may request a withdrawal for an exact dollar amount after deduction of
any CDSC that applies (called a "net withdrawal") or request a gross withdrawal
from which we will deduct any CDSC that applies, resulting in less money being
payable to you than the amount you requested. If you request a net withdrawal,
the amount deducted from your Account Value to pay the CDSC may also be subject
to a CDSC.
Partial withdrawals may also be available following annuitization but only
if you choose certain annuity payment options.
To request the forms necessary to make a withdrawal from your Annuity,
call 1-800-752-6342 or visit our Internet Website at
www.americanskandia.prudential.com.
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AMERICAN SKANDIA APEX II PROSPECTUS
Access To Account Value continued
HOW MUCH CAN I WITHDRAW AS A FREE WITHDRAWAL?
ANNUITY YEAR 1-4
The maximum Free Withdrawal amount during each of Annuity Year 1 through Annuity
Year 4 (when a CDSC would otherwise apply to a partial withdrawal or surrender
of your initial Purchase Payments) is 10% of all Purchase Payments. We may apply
a Market Value Adjustment to any Fixed Allocations. Withdrawals of amounts
greater than the maximum Free Withdrawal amount are treated as a withdrawal of
Purchase Payments and will be assessed a CDSC during Annuity Years 1 through 4.
If, during Annuity Years 1 through 4, all Purchase Payments withdrawn are
subject to a CDSC, then any subsequent withdrawals will be withdrawn from any
gain in the Annuity. If you do not make a Free Withdrawal during an Annuity
Year, you are not allowed to carry over the Free Withdrawal amount to the next
Annuity Year.
ANNUITY YEAR 5+
After Annuity Year 4, you can surrender your Annuity or make a partial
withdrawal without a CDSC being deducted from the amount being withdrawn.
NOTE: Amounts that you have withdrawn as a Free Withdrawal will not reduce
the amount of any CDSC that we deduct if, during the first four (4) Annuity
Years, you make a partial withdrawal or choose to surrender the Annuity.
EXAMPLES
1. Assume you make an initial Purchase Payment of $10,000 and make no
additional Purchase Payments. The maximum Free Withdrawal amount during
each of the first four Annuity Years would be 10% of $10,000, or $1,000.
2. Assume you make an initial Purchase Payment of $10,000 and make an
additional Purchase Payment of $5,000 in Annuity Year 2. The maximum Free
Withdrawal amount during Annuity Year 3 and 4 would be 10% of $15,000, or
$1,500. From Annuity Year 5 and thereafter, you can surrender your Annuity
or make a partial withdrawal without a CDSC being deducted from the amount
being withdrawn.
3. Assume you make an initial Purchase Payment of $10,000 and take a Free
Withdrawal of $500 in Annuity Year 2 and $1,000 in Annuity Year 3. If you
surrender your Annuity in Annuity Year 4, the CDSC will be assessed
against the initial Purchase Payment amount ($10,000), not the amount of
Purchase Payments reduced by the amounts that were withdrawn under the
Free Withdrawal provision.
IS THERE A CHARGE FOR A PARTIAL WITHDRAWAL?
A CDSC may be assessed against a partial withdrawal during the first four (4)
Annuity Years. Whether a CDSC applies and the amount to be charged depends on
whether the partial withdrawal exceeds any Free Withdrawal amount and, if so,
the number of years that have elapsed since the Issue Date of the Annuity.
1. If you request a partial withdrawal, we determine if the amount you
requested is available as a Free Withdrawal (in which case it would not be
subject to a CDSC);
2. If the amount requested exceeds the available Free Withdrawal amount, we
determine if a CDSC will apply to the partial withdrawal based on the
number of years that have elapsed since the Annuity was issued. The
maximum Free Withdrawal amount during each of Annuity Years 1 through 4 is
10% of all Purchase Payments. Withdrawals of amounts greater than the
maximum Free Withdrawal amount are treated as a withdrawal of Purchase
Payments and will be assessed a CDSC. If, during Annuity Years 1 through
4, all Purchase Payments are withdrawn subject to a CDSC, then any
subsequent withdrawals will be withdrawn from any gain in the Annuity.
CAN I MAKE PERIODIC WITHDRAWALS FROM THE ANNUITY DURING THE ACCUMULATION PERIOD?
Yes. We call these "Systematic Withdrawals." You can receive Systematic
Withdrawals of earnings only, principal plus earnings or a flat dollar amount.
Systematic Withdrawals during the first four (4) Annuity Years may be subject to
a CDSC. We will determine whether a CDSC applies and the amount in the same way
as we would for a partial withdrawal.
Systematic Withdrawals can be made from Account Value allocated to the
variable investment options or Fixed Allocations. Generally, Systematic
Withdrawals from Fixed Allocations are limited to earnings accrued after the
program of Systematic Withdrawals begins, or payments of fixed dollar amounts
that do not exceed such earnings. Systematic Withdrawals are available on a
monthly, quarterly, semi-annual or annual basis. The Surrender Value of your
Annuity must be at least $20,000 before we will allow you to begin a program of
Systematic Withdrawals.
The minimum amount for each Systematic Withdrawal is $100. If any
scheduled Systematic Withdrawal is for less than $100 (which may occur under a
program that provides payment of an amount equal to the earnings in the Annuity
for the period requested), we may postpone the withdrawal and add
44
AMERICAN SKANDIA APEX II PROSPECTUS
the expected amount to the amount that is to be withdrawn on the next scheduled
Systematic Withdrawal.
DO YOU OFFER A PROGRAM FOR WITHDRAWALS UNDER SECTION 72(t) OF THE INTERNAL
REVENUE CODE?
Yes. If your Annuity is used as a funding vehicle for certain retirement plans
that receive special tax treatment under Sections 401, 403(b) or 408 of the
Code, Section 72(t) of the Code may provide an exception to the 10% penalty tax
on distributions made prior to age 59 1/2 if you elect to receive distributions
as a series of "substantially equal periodic payments". Distributions received
under this provision in any Annuity Year that exceed the maximum amount
available as a free withdrawal will be subject to a CDSC. We may apply a Market
Value Adjustment to any Fixed Allocations. To request a program that complies
with Section 72(t), you must provide us with certain required information in
writing on a form acceptable to us. We may require advance notice to allow us to
calculate the amount of 72(t) withdrawals. The Surrender Value of your Annuity
must be at least $20,000 before we will allow you to begin a program for
withdrawals under Section 72(t). The minimum amount for any such withdrawal is
$100.
You may also annuitize your contract and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments before age 59 1/2 that are not subject to the 10% penalty.
WHAT ARE MINIMUM DISTRIBUTIONS AND WHEN WOULD I NEED TO MAKE THEM?
(See "Tax Considerations" for a further discussion of Minimum Distributions.)
Minimum Distributions are a type of Systematic Withdrawal we allow to meet
distribution requirements under Sections 401, 403(b) or 408 of the Code. Under
the Code, you may be required to begin receiving periodic amounts from your
Annuity. In such case, we will allow you to make Systematic Withdrawals in
amounts that satisfy the minimum distribution rules under the Code. We do not
assess a CDSC on Minimum Distributions from your Annuity if you are required by
law to take such Minimum Distributions from your Annuity at the time it is
taken. However, a CDSC may be assessed on that portion of a Systematic
Withdrawal that is taken to satisfy the minimum distribution requirements in
relation to other savings or investment plans under other qualified retirement
plans not maintained with American Skandia.
The amount of the required Minimum Distribution for your particular
situation may depend on other annuities, savings or investments. We will only
calculate the amount of your required Minimum Distribution based on the value of
your Annuity. We require three (3) days advance written notice to calculate and
process the amount of your payments. You may elect to have Minimum Distributions
paid out monthly, quarterly, semi-annually or annually. The $100 minimum amount
that applies to Systematic Withdrawals applies to monthly Minimum Distributions
but does not apply to Minimum Distributions taken out on a quarterly,
semi-annual or annual basis.
You may also annuitize your contract and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments and satisfying the Minimum Distribution requirements under the Code.
CAN I SURRENDER MY ANNUITY FOR ITS VALUE?
Yes. During the accumulation period you can surrender your Annuity at any time.
Upon surrender, you will receive the Surrender Value. Upon surrender of your
Annuity, you will no longer have any rights under the Annuity.
For purposes of calculating the CDSC on surrender, the Purchase Payments
being withdrawn may be greater than your remaining Account Value or the amount
of your withdrawal request. This is most likely to occur if you have made prior
withdrawals under the Free Withdrawal provision or if your Account Value has
declined in value due to negative market performance. We may apply a Market
Value Adjustment to any Fixed Allocations.
Under certain annuity payment options, you may be allowed to surrender
your Annuity for its then current value.
To request the forms necessary to surrender your Annuity, call
1-800-752-6342 or visit our Internet Website at
www.americanskandia.prudential.com.
WHAT IS A MEDICALLY-RELATED SURRENDER AND HOW DO I QUALIFY?
Where permitted by law, you may request to surrender your Annuity prior to the
Annuity Date without application of any CDSC upon occurrence of a
medically-related "Contingency Event". We may apply a Market Value Adjustment to
any Fixed Allocations. The amount payable will be your Account Value.
This waiver of any applicable CDSC is subject to our rules, including but
not limited to the following:
- - the Annuitant must have been named or any change of Annuitant must have
been accepted by us, prior to the
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AMERICAN SKANDIA APEX II PROSPECTUS
Access To Account Value continued
"Contingency Event" described below in order to qualify for a
medically-related surrender.
- - the Annuitant must be alive as of the date we pay the proceeds of such
surrender request;
- - if the Owner is one or more natural persons, all such Owners must also be
alive at such time;
- - we must receive satisfactory proof of the Annuitant's confinement in a
Medical Care Facility or Fatal Illness in writing on a form satisfactory
to us; and
- - this benefit is not available if the total Purchase Payments received
exceed $500,000 for all annuities issued by us with this benefit where the
same person is named as Annuitant.
A "Contingency Event" occurs if the Annuitant is:
- - first confined in a "Medical Care Facility" while your Annuity is in force
and remains confined for at least 90 days in a row; or
- - first diagnosed as having a "Fatal Illness" while your Annuity is in
force.
The definitions of "Medical Care Facility" and "Fatal Illness," as well as
additional terms and conditions, are provided in your Annuity. Specific details
and definitions in relation to this benefit may differ in certain jurisdictions.
WHAT TYPES OF ANNUITY OPTIONS ARE AVAILABLE?
We currently make annuity options available that provide fixed annuity payments,
variable payments or adjustable payments. Fixed options provide the same amount
with each payment. Variable options generally provide a payment which may
increase or decrease depending on the investment performance of the
Sub-accounts. However, currently, we also make a variable payment option that
has a guarantee feature. Adjustable options provide a fixed payment that is
periodically adjusted based on current interest rates. WE DO NOT GUARANTEE TO
MAKE ANY ANNUITY PAYMENT OPTIONS AVAILABLE IN THE FUTURE OTHER THAN THOSE FIXED
ANNUITIZATION OPTIONS GUARANTEED IN YOUR ANNUITY. Please refer to the
"Guaranteed Minimum Income Benefit" and the "Lifetime Five Income Benefit" under
"Living Benefits" below for a description of annuity options that are available
when you elect these benefits. For additional information on annuity payment
options you may request a Statement of Additional Information.
When you purchase an Annuity, or at a later date, you may choose an
Annuity Date, an annuity option and the frequency of annuity payments. You may
change your choices before the Annuity Date under the terms of your contract. A
maximum Annuity Date may be required by law. The Annuity Date may depend on the
annuity option you choose. Certain annuity options may not be available
depending on the age of the Annuitant.
Certain of these annuity options may be available to Beneficiaries who
choose to receive the Death Benefit proceeds as a series of payments instead of
a lump sum payment.
OPTION 1
PAYMENTS FOR LIFE: Under this option, income is payable periodically until the
death of the "key life". The "key life" (as used in this section) is the person
or persons upon whose life annuity payments are based. No additional annuity
payments are made after the death of the key life. Since no minimum number of
payments is guaranteed, this option offers the largest amount of periodic
payments of the life contingent annuity options. It is possible that only one
payment will be payable if the death of the key life occurs before the date the
second payment was due, and no other payments nor death benefits would be
payable. THIS OPTION IS CURRENTLY AVAILABLE ON A FIXED OR VARIABLE BASIS. Under
this option, you cannot make a partial or full surrender of the annuity.
OPTION 2
PAYMENTS BASED ON JOINT LIVES: Under this option, income is payable periodically
during the joint lifetime of two key lives, and thereafter during the remaining
lifetime of the survivor, ceasing with the last payment prior to the survivor's
death. No minimum number of payments is guaranteed under this option. It is
possible that only one payment will be payable if the death of all the key lives
occurs before the date the second payment was due, and no other payments or
death benefits would be payable. THIS OPTION IS CURRENTLY AVAILABLE ON A FIXED
OR VARIABLE BASIS. Under this option, you cannot make a partial or full
surrender of the annuity.
OPTION 3
PAYMENTS FOR LIFE WITH A CERTAIN PERIOD: Under this option, income is payable
until the death of the key life. However, if the key life dies before the end of
the period selected (5, 10 or 15 years), the remaining payments are paid to the
Beneficiary until the end of such period. THIS OPTION IS CURRENTLY AVAILABLE ON
A FIXED OR VARIABLE BASIS. If you elect to receive payments on a variable basis
under this option, you can request partial or full surrender of the annuity and
receive its then current cash value (if any) subject to our rules.
OPTION 4
FIXED PAYMENTS FOR A CERTAIN PERIOD: Under this option, income is payable
periodically for a specified number of years. If the payee dies before the end
of the specified number of years, the remaining payments are paid to the
Beneficiary until
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AMERICAN SKANDIA APEX II PROSPECTUS
the end of such period. Note that under this option, payments are not based on
any assumptions of life expectancy. Therefore, that portion of the Insurance
Charge assessed to cover the risk that key lives outlive our expectations
provides no benefit to an Owner selecting this option. Under this option, you
cannot make a partial or full surrender of the annuity.
OPTION 5
VARIABLE PAYMENTS FOR LIFE WITH A CASH VALUE: Under this option, benefits are
payable periodically until the death of the key life. Benefits may increase or
decrease depending on the investment performance of the Sub-accounts. This
option has a cash value that also varies with the investment performance of the
Sub-account. The cash value provides a "cushion" from volatile investment
performance so that negative investment performance does not automatically
result in a decrease in the annuity payment each month, and positive investment
performance does not automatically result in an increase in the annuity payment
each month. The cushion generally "stabilizes" monthly annuity payments. Any
cash value remaining on the death of the key life is paid to the Beneficiary in
a lump sum or as periodic payments. Under this option, you can request partial
or full surrender of the Annuity and receive its then current cash value (if
any) subject to our rules.
OPTION 6
VARIABLE PAYMENTS FOR LIFE WITH A CASH VALUE AND GUARANTEE: Under this option,
benefits are payable as described in Option 5; except that, while the key life
is alive, the annuity payment will not be less than a guaranteed amount, which
generally is equal to the first annuity payment. WE CHARGE AN ADDITIONAL AMOUNT
FOR THIS GUARANTEE. Under this option, any cash value remaining on the death of
the key life is paid to the Beneficiary in a lump sum or as periodic payments.
Under this option, you can request partial or full surrender of the Annuity and
receive its then current cash value (if any) subject to our rules.
We may make additional annuity payment options available in the future.
HOW AND WHEN DO I CHOOSE THE ANNUITY PAYMENT OPTION?
Unless prohibited by law, we require that you elect either a life annuity or an
annuity with a certain period of at least 5 years if any CDSC would apply were
you to surrender your Annuity on the Annuity Date. Therefore, choosing an
Annuity Date within four (4) years of the Issue Date of the Annuity may limit
the available annuity payment options. Certain annuity payment options may not
be available if your Annuity Date occurs during the period that a CDSC would
apply.
You have a right to choose your annuity start date. If you have not
provided us with your Annuity Date or annuity payment option in writing, then:
- - a default date for the Annuity Date will be the first day of the calendar
month following the later of the Annuitant's 85th birthday or the fifth
anniversary of our receipt of your request to purchase an Annuity; and
- - the annuity payments, where allowed by law, will be calculated on a fixed
basis under Option 3, Payments for Life with 10 years certain.
If you choose to defer the Annuity Date beyond the default date, the IRS
may not consider your Annuity to be an annuity under the tax law. If that should
occur, all gain in your Annuity at that time will become immediately taxable to
you. Further, each subsequent year's increase in Account Value would be taxable
in that year. By choosing to continue to defer after the default date, you will
assume the risk that your Annuity will not be considered an annuity for federal
income tax purposes.
HOW ARE ANNUITY PAYMENTS CALCULATED?
FIXED ANNUITY PAYMENTS (OPTIONS 1-4)
If you choose to receive fixed annuity payments, you will receive equal
fixed-dollar payments throughout the period you select. The amount of the fixed
payment will vary depending on the annuity payment option and payment frequency
you select. Generally, the first annuity payment is determined by multiplying
the Account Value, minus any state premium taxes that may apply, by the factor
determined from our table of annuity rates. The table of annuity rates differs
based on the type of annuity chosen and the frequency of payment selected. Our
rates will not be less than our guaranteed minimum rates. These guaranteed
minimum rates are derived from the a2000 Individual Annuity Mortality Table 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.
VARIABLE ANNUITY PAYMENTS
Generally, we offer three different types of variable annuity payment options.
The first annuity payment will be calculated based upon the assumed investment
return ("AIR"). You select the AIR before we start to make annuity payments. You
will not receive annuity payments until you choose an AIR. The remaining annuity
payments will fluctuate based on the performance of the Sub-accounts relative to
the AIR, as well as other factors described below. The greater the AIR, the
greater the first annuity payment.
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AMERICAN SKANDIA APEX II PROSPECTUS
Access To Account Value continued
A higher AIR may result in smaller potential growth in the annuity payments. A
lower AIR results in a lower initial annuity payment. Within payment options
1-3, if the Sub-accounts you choose perform exactly the same as the AIR, then
subsequent annuity payments will be the same as the first annuity payment. If
the Sub-accounts you choose perform better than the AIR, then subsequent annuity
payments will be higher than the first annuity payment. If the Sub-accounts you
choose perform worse than the AIR, then subsequent annuity payments will be
lower than the first. Within payment options 5 and 6, the cash value for the
Annuitant (while alive) and a variable period of time during which annuity
payments will be made whether or not the Annuitant is still alive are adjusted
based on the performance of the Sub-accounts relative to the AIR; however,
subsequent annuity payments do not always increase or decrease based on the
performance of the Sub-accounts relative to the AIR.
- VARIABLE PAYMENTS (OPTIONS 1-3)
We calculate each annuity payment amount by multiplying the number
of units scheduled to be redeemed under a schedule of units for each
Sub-account by the Unit Value of each Sub-account on the annuity
payment date. We determine the schedule of units based on your
Account Value (minus any premium tax that applies) at the time you
elect to begin receiving annuity payments. The schedule of units
will vary based on the annuity payment option selected, the length
of any certain period (if applicable), the Annuitant's age and
gender (if annuity payments are due for the life of the Annuitant)
and the Unit Value of the Sub-accounts you initially selected on the
Issue Date. The calculation is performed for each Sub-account, and
the sum of the Sub-account calculations equals the amount of your
annuity payment. Other than to fund annuity payments, the number of
units allocated to each Sub-account will not change unless you
transfer among the Sub-accounts or make a withdrawal (if allowed).
You can select one of three AIRs for these options: 3%, 5% or 7%.
- STABILIZED VARIABLE PAYMENTS (OPTION 5)
This option provides guaranteed payments for life, a cash value for
the Annuitant (while alive) and a variable period of time during
which annuity payments will be made whether or not the Annuitant is
still alive. We calculate the initial annuity payment amount by
multiplying the number of units scheduled to be redeemed under a
schedule of units by the Unit Values determined on the annuitization
date. The schedule of units is established for each Sub-account you
choose on the annuitization date based on the applicable benchmark
rate, meaning the AIR, and the annuity factors. The annuity factors
reflect our assumptions regarding the costs we expect to bear in
guaranteeing payments for the lives of the Annuitant and will depend
on the benchmark rate, the annuitant's attained age and gender
(where permitted). Unlike variable payments (described above) where
each payment can vary based on Sub-account performance, this payment
option cushions the immediate impact of Sub-account performance by
adjusting the length of the time during which annuity payments will
be made whether or not the Annuitant is alive while generally
maintaining a level annuity payment amount. Sub-account performance
that exceeds a benchmark rate will generally extend this time
period, while Sub-account performance that is less than a benchmark
rate will generally shorten the period. If the period reaches zero
and the Annuitant is still alive, Annuity Payments continue,
however, the annuity payment amount will vary depending on
Sub-account performance, similar to conventional variable payments.
The AIR for this option is 4%.
- STABILIZED VARIABLE PAYMENTS WITH A GUARANTEED MINIMUM (OPTION 6)
This option provides guaranteed payments for life in the same manner
as Stabilized Variable Payments (described above). In addition to
the stabilization feature, this option also guarantees that variable
annuity payments will not be less than the initial annuity payment
amount regardless of Sub-account performance. The AIR for this
option is 3%.
The variable annuity payment options are described in greater detail in a
separate prospectus which will be provided to you at the time you elect one of
the variable annuity payment options.
ADJUSTABLE ANNUITY PAYMENTS
We may make an adjustable annuity payment option available. Adjustable annuity
payments are calculated similarly to fixed annuity payments except that on every
fifth (5th) anniversary of receiving annuity payments, the annuity payment
amount is adjusted upward or downward depending on the rate we are currently
crediting to annuity payments. The adjustment in the annuity payment amount does
not affect the duration of remaining annuity payments, only the amount of each
payment.
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AMERICAN SKANDIA APEX II PROSPECTUS
Living Benefit Programs
DO YOU OFFER PROGRAMS DESIGNED TO PROVIDE INVESTMENT PROTECTION FOR OWNERS WHILE
THEY ARE ALIVE?
American Skandia offers different optional benefits, for an additional charge,
that can provide investment protection for Owners while they are alive.
Notwithstanding the additional protection provided under the optional Living
Benefit Programs, the additional cost has the impact of reducing net performance
of the investment options. Each optional benefit offers a distinct type of
guarantee, regardless of the performance of variable investment options, that
may be appropriate for you depending on the manner in which you intend to make
use of your annuity while you are alive. Depending on which optional benefit you
choose, you can have substantial flexibility to invest in variable investment
options while:
- - protecting a principal amount from decreases in value due to investment
performance as of specified future dates;
- - taking withdrawals with a guarantee that you will be able to withdraw not
less than a principal amount over time; or
- - guaranteeing a minimum amount of growth will be applied to your principal,
if it is to be used as the basis for lifetime income payments beginning
after a waiting period.
Below is a brief summary of the "living benefits" that American Skandia
offers. Please refer to the benefit description for a complete description of
the terms, conditions and limitations of each optional benefit. You should
consult with your investment professional to determine if any of these optional
benefits may be appropriate for you based on your financial needs. There are
many factors to consider, but we note that among them you may want to evaluate
the tax implications of these different approaches to meeting your needs, both
between these benefits and in comparison to other potential solutions to your
needs (e.g. comparing the tax implications of the withdrawal benefit and annuity
payments).
I. THE GUARANTEED RETURN OPTION PLUS(SM) (GRO PLUS(SM)) guarantees that,
after a seven-year period following commencement of the program ("maturity
date") and on each anniversary of the maturity date thereafter, your
Account Value will not be less than the Account Value on the effective
date of the program. The program also offers you the option to elect a
second, enhanced guarantee amount at a higher Account Value subject to a
separate maturity period (and its anniversaries). The GRO Plus(SM) program
may be appropriate if you wish to protect a principal amount (called the
"Protected Principal Value") against market downturns as of a specific
date in the future, but also wish to exercise control by allocating and
transferring your available Account Value among the variable investment
options to participate in market experience. Under the GRO Plus(SM)
program, you give us the right to allocate amounts to Fixed Allocations as
needed to support the guarantees provided. The available Account Value
that may be allocated among your variable investment options are those
amounts not allocated to the Fixed Allocations to support the guarantees
provided.
II. THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) guarantees your ability
to make cumulative withdrawals over time equal to an initial principal
value (called the "Protected Value"), regardless of decreases in your
Account Value due to market losses. The GMWB program may be appropriate if
you intend to make periodic withdrawals from your Annuity and wish to
ensure that market performance will not affect your ability to receive
guaranteed minimum withdrawals. Taking income as withdrawals, rather than
annuity payments, may be less tax efficient for non-qualified uses of the
Annuity, but provides greater control over the timing and amount of
withdrawals during the accumulation period, as well as continuing the
Annuity's other benefits, such as the death benefit.
III. The GUARANTEED MINIMUM INCOME BENEFIT (GMIB) guarantees your ability,
after a minimum seven-year waiting period, to begin receiving income from
the Annuity in the form of annuity payments based on your total purchase
payments under the Annuity and an annual increase of 5% on such Purchase
Payments, adjusted for withdrawals, regardless of the impact of market
performance on your Account Value. The GMIB program may be appropriate if
you anticipate using your Annuity as a future source of periodic fixed
income payments for the remainder of your life and wish to ensure that the
basis upon which your income payments will be calculated will achieve at
least a minimum amount despite fluctuations in market performance.
IV. THE LIFETIME FIVE INCOME BENEFIT guarantees your ability to withdraw
amounts equal to a percentage of a "Protected Withdrawal Value" regardless
of decreases in your Account Value due to market losses. The Lifetime Five
Benefit may be appropriate if you intend to make periodic withdrawals from
your Annuity and wish to ensure that market performance will not affect
your ability to receive guaranteed minimum withdrawals. Taking income as
withdrawals, rather than annuity payments, may be less tax efficient for
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AMERICAN SKANDIA APEX II PROSPECTUS
Living Benefit Programs continued
non-qualified uses of the Annuity, but provides greater control over the
timing and amount of withdrawals during the accumulation period, as well
as continuing the Annuity's other benefits, such as the death benefit.
GUARANTEED RETURN OPTION PLUS(SM) (GRO PLUS(SM))
THE GUARANTEED RETURN OPTION PLUS DESCRIBED BELOW IS ONLY BEING OFFERED IN THOSE
JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL, AND WILL BE OFFERED
SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY APPROVAL IN THOSE
JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS
ONCE APPROVED. THE PROGRAM CAN BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF
THEIR ANNUITY, AND CAN BE ELECTED BY EXISTING ANNUITY OWNERS ON EITHER THE
ANNIVERSARY OF THE ISSUE DATE OF THEIR ANNUITY OR ON A DATE OTHER THAN THAT
ANNIVERSARY, AS DESCRIBED BELOW UNDER "ELECTION OF THE PROGRAM". THE GUARANTEED
RETURN OPTION PLUS IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION
PROGRAM (AND IT IS CURRENTLY ACTIVE), THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT
RIDER, THE GUARANTEED MINIMUM INCOME BENEFIT RIDER, THE LIFETIME FIVE INCOME
BENEFIT RIDER, THE HIGHEST DAILY VALUE DEATH BENEFIT, OR THE DOLLAR COST
AVERAGING PROGRAM IF IT INVOLVES TRANSFERS OUT OF THE FIXED ALLOCATIONS.
We offer a program that, after a seven-year period following commencement
of the program (we refer to the end of that period and any applicable subsequent
period as the "maturity date") and on each anniversary of the maturity date
thereafter while the program remains in effect, guarantees your Account Value
will not be less than your Account Value on the effective date of your program
(called the "Protected Principal Value"). The program also offers you the
opportunity to elect a second, enhanced guaranteed amount at a later date if
your Account Value has increased, while preserving the guaranteed amount
established on the effective date of your program. The enhanced guaranteed
amount (called the "Enhanced Protected Principal Value") guarantees that, after
a separate period following election of the enhanced guarantee and on each
anniversary thereafter while this enhanced guarantee amount remains in effect,
your Account Value will not be less than your Account Value on the effective
date of your election of the enhanced guarantee.
The program monitors your Account Value daily and, if necessary,
systematically transfers amounts between variable investment options you choose
and Fixed Allocations used to support the Protected Principal Value(s). The
program may be appropriate if you wish to protect a principal amount against
market downturns as of a specific date in the future, but also wish to invest in
the variable investment options to participate in market performance. There is
an additional charge if you elect the Guaranteed Return Option Plus program.
The guarantees provided by the program exist only on the applicable
maturity date(s) and on each anniversary of the maturity date(s) thereafter.
However, due to the ongoing monitoring of your Account Value and the transfer of
Account Value between the variable investment options and the Fixed Allocations
to support our future guarantees, the program may provide some protection from
significant market losses if you choose to surrender the Annuity or begin
receiving annuity payments prior to a maturity date. For this same reason, the
program may limit your ability to benefit from market increases while it is in
effect.
KEY FEATURE -- PROTECTED PRINCIPAL
VALUE/ENHANCED PROTECTED PRINCIPAL VALUE
The Guaranteed Return Option Plus offers a base guarantee as well as the option
of electing an enhanced guarantee at a later date.
- - BASE GUARANTEE: Under the base guarantee, American Skandia guarantees that
on the maturity date and on each anniversary of the maturity date
thereafter that the program remains in effect, your Account Value will be
no less than the Protected Principal Value. On the maturity date and on
each anniversary after the maturity date that the program remains in
effect, if your Account Value is below the Protected Principal Value,
American Skandia will apply additional amounts to your Annuity from its
general account to increase your Account Value to be equal to the
Protected Principal Value.
- - ENHANCED GUARANTEE: On any anniversary following commencement of the
program, you can establish an enhanced guaranteed amount based on your
current Account Value. Under the enhanced guarantee, American Skandia
guarantees that at the end of a specified period following the election of
the enhanced guarantee (also referred to as its "maturity date"), and on
each anniversary of the maturity date thereafter that the enhanced
guaranteed amount remains in effect, your Account Value will be no less
than the Enhanced Protected Principal Value. YOU CAN ELECT AN ENHANCED
GUARANTEE
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AMERICAN SKANDIA APEX II PROSPECTUS
MORE THAN ONCE; HOWEVER, A SUBSEQUENT ELECTION SUPERSEDES THE PRIOR
ELECTION OF AN ENHANCED GUARANTEE. ELECTION OF AN ENHANCED GUARANTEE DOES
NOT IMPACT THE BASE GUARANTEE. IN ADDITION, YOU MAY ELECT AN "AUTO
STEP-UP" FEATURE THAT WILL AUTOMATICALLY CREATE AN ENHANCED GUARANTEE (OR
INCREASE YOUR ENHANCED GUARANTEE, IF PREVIOUSLY ELECTED) ON EACH
ANNIVERSARY OF THE PROGRAM (AND CREATE A NEW MATURITY PERIOD FOR THE NEW
ENHANCED GUARANTEE) IF THE ACCOUNT VALUE AS OF THAT ANNIVERSARY EXCEEDS
THE PROTECTED PRINCIPAL VALUE OR ENHANCED PROTECTED PRINCIPAL VALUE BY 7%
OR MORE. YOU MAY ALSO ELECT TO TERMINATE AN ENHANCED GUARANTEE. IF YOU
ELECT TO TERMINATE THE ENHANCED GUARANTEE, THE BASE GUARANTEE WILL REMAIN
IN EFFECT. If you have elected the enhanced guarantee, on the guarantee's
maturity date and on each anniversary of the maturity date thereafter that
the enhanced guarantee amount remains in effect, if your Account Value is
below the Enhanced Protected Principal Value, American Skandia will apply
additional amounts to your Annuity from its general account to increase
your Account Value to be equal to the Enhanced Protected Principal Value.
Any amounts added to your Annuity to support our guarantees under the
program will be applied to any Fixed Allocations first and then to the
sub-accounts pro rata, based on your most recent allocation instructions in
accordance with the allocation mechanism we use under the program. We will
notify you of any amounts added to your Annuity under the program. If our
assumptions are correct and the operations relating to the administration of the
program work properly, we do not expect that we will need to add additional
amounts to the Annuity. The Protected Principal Value is referred to as the
"Base Guarantee" and the Enhanced Protected Principal Value is referred to as
the "Step-up Guarantee" in the rider we issue for this benefit.
WITHDRAWALS UNDER YOUR ANNUITY
Withdrawals from your Annuity, while the program is in effect, will reduce the
base guarantee under the program as well as any enhanced guarantee. Cumulative
annual withdrawals up to 5% of the Protected Principal Value as of the effective
date of the program (adjusted for any subsequent Purchase Payments) will reduce
the applicable guaranteed amount by the actual amount of the withdrawal
(referred to as the "dollar-for-dollar limit"). If the amount withdrawn is
greater than the dollar-for-dollar limit, the portion of the withdrawal equal to
the dollar-for-dollar limit will be treated as described above, and the portion
of the withdrawal in excess of the dollar-for-dollar limit will reduce the base
guarantee and the enhanced guarantee proportionally, according to the formula as
described in the rider for this benefit (see the examples of this calculation
below). Withdrawals other than systematic withdrawals will be taken pro-rata
from the variable investment options and any Fixed Allocations. Systematic
withdrawals will be taken pro-rata from the Variable Investment Options and any
Fixed Allocations up to growth attributable to the Fixed Allocations and
thereafter pro-rata solely from the variable investment options. Withdrawals
will be subject to all other provisions of the Annuity, including any Contingent
Deferred Sales Charge and Market Value Adjustment that would apply.
Charges for other optional benefits under the Annuity that are deducted as
an annual charge in arrears will not reduce the applicable guaranteed amount
under the Guaranteed Return Option Plus program, however, any partial
withdrawals in payment of charges for the Plus40(TM) Optional Life Insurance
Rider (not currently offered for sale) and any third party investment advisory
service will be treated as withdrawals and will reduce the applicable guaranteed
amount.
The following examples of dollar-for-dollar and proportional reductions
assume that: 1.) the Issue Date and the effective date of the GRO Plus(SM)
program are October 13, 2004; 2.) an initial Purchase Payment of $250,000; 3.) a
base guarantee amount of $250,000; and 4.) a dollar-for-dollar limit of $12,500
(5% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 29, 2004 (in the first Annuity Year).
No prior withdrawals have been taken. As the amount withdrawn is less than the
Dollar-for-dollar Limit:
- - The base guarantee amount is reduced by the amount withdrawn (i.e., by
$10,000, from $250,000 to $240,000).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance
of the first Annuity Year is also reduced by the amount withdrawn (from
$12,500 to $2,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on December 18, 2004 (still within the
first Annuity Year). The Account Value immediately before the withdrawal is
$180,000. As the amount withdrawn exceeds the Remaining Limit of $2,500 from
Example 1:
- - the base guarantee amount is first reduced by the Remaining Limit (from
$240,000 to $237,500);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the Remaining Limit ($10,000 -
$2,500, or $7,500).
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AMERICAN SKANDIA APEX II PROSPECTUS
Living Benefit Programs continued
- B is the Account Value less the Remaining Limit ($180,000 - $2,500,
or $177,500).
The resulting base guarantee amount is: $237,500 x (1 - $7,500 /
$177,500), or $227,464.79.
- - The Remaining Limit is set to zero (0) for the balance of the first
Annuity Year.
EXAMPLE 3. RESET OF THE DOLLAR-FOR-DOLLAR LIMIT
A $10,000 withdrawal is made on December 19, 2005 (second Annuity Year). The
Remaining Limit has been reset to the dollar-for-dollar limit of $12,500. As the
amount withdrawn is less than the dollar-for-dollar limit:
- - The base guarantee amount is reduced by the amount withdrawn (i.e.,
reduced by $10,000, from $227,464.79 to $217,464.79).
- - The Remaining Limit for the balance of the second Annuity Year is also
reduced by the amount withdrawn (from $12,500 to $2,500).
KEY FEATURE -- ALLOCATION OF ACCOUNT VALUE
Account Value is transferred to and maintained in Fixed Allocations to the
extent we, in our sole discretion, deem it is necessary to support our
guarantee(s) under the program. We monitor fluctuations in your Account Value
each Valuation Day, as well as the prevailing interest rates on Fixed
Allocations, the remaining duration(s) until the applicable maturity date(s) and
the amount of Account Value allocated to Fixed Allocation(s) relative to a
"reallocation trigger", which determines whether Account Value must be
transferred to or from Fixed Allocation(s). While you are not notified when your
Account Value reaches a reallocation trigger, you will receive a confirmation
statement indicating the transfer of a portion of your Account Value either to
or from Fixed Allocation(s).
- - IF YOUR ACCOUNT VALUE IS GREATER THAN OR EQUAL TO THE REALLOCATION
TRIGGER, your Account Value in the variable investment options will remain
allocated according to your most recent instructions. If a portion of
Account Value was previously allocated to a Fixed Allocation to support
the applicable guaranteed amount, all or a portion of those amounts may be
transferred from the Fixed Allocation and re-allocated to the variable
investment options pro-rata according to your most recent allocation
instructions (including the model allocations under any asset allocation
program you may have elected). A Market Value Adjustment will apply when
we reallocate Account Value from a Fixed Allocation to the variable
investment options, which may result in a decrease or increase in your
Account Value.
- - IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER, a portion of
your Account Value in the variable investment options will be transferred
from your variable investment options pro rata according to your
allocations to a new Fixed Allocation(s) to support the applicable
guaranteed amount. The new Fixed Allocation(s) will have a Guarantee
Period equal to the time remaining until the applicable maturity date(s).
The Account Value allocated to the new Fixed Allocation(s) will be
credited with the fixed interest rate(s) then being credited to a new
Fixed Allocation(s) maturing on the applicable maturity date(s) (rounded
to the next highest yearly duration). The Account Value will remain
invested in each applicable Fixed Allocation until the applicable maturity
date unless, at an earlier date, your Account Value is greater than or
equal to the reallocation trigger and, therefore, amounts can be
transferred to the variable investment options while maintaining the
guaranteed protection under the program (as described above).
IF A SIGNIFICANT AMOUNT OF YOUR ACCOUNT VALUE IS SYSTEMATICALLY TRANSFERRED TO
FIXED ALLOCATIONS TO SUPPORT THE PROTECTED PRINCIPAL VALUE AND/OR THE ENHANCED
PROTECTED PRINCIPAL VALUE DURING PERIODS OF MARKET DECLINES, LOW INTEREST RATES,
AND/OR AS THE PROGRAM NEARS ITS MATURITY DATE, LESS OF YOUR ACCOUNT VALUE MAY BE
AVAILABLE TO PARTICIPATE IN THE INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT
OPTIONS IF THERE IS A SUBSEQUENT MARKET RECOVERY. DURING PERIODS CLOSER TO THE
MATURITY DATE OF THE BASE GUARANTEE OR ANY ENHANCED GUARANTEE, OR ANY
ANNIVERSARY OF SUCH MATURITY DATE(S), A SIGNIFICANT PORTION OF YOUR ACCOUNT
VALUE MAY BE ALLOCATED TO FIXED ALLOCATIONS TO SUPPORT ANY APPLICABLE GUARANTEED
AMOUNT(S). IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER AND NEW
FIXED ALLOCATIONS MUST BE ESTABLISHED DURING PERIODS WHERE THE INTEREST RATE(S)
BEING CREDITED TO SUCH FIXED ALLOCATIONS IS LOW, A LARGER PORTION OF YOUR
ACCOUNT VALUE MAY NEED TO BE TRANSFERRED TO FIXED ALLOCATIONS TO SUPPORT THE
APPLICABLE GUARANTEED AMOUNT(S), CAUSING LESS OF YOUR ACCOUNT VALUE TO BE
AVAILABLE TO PARTICIPATE IN THE INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT
OPTIONS.
Separate Fixed Allocations may be established in support of the Protected
Principal Value and the Enhanced Protected Principal
52
AMERICAN SKANDIA APEX II PROSPECTUS
Value (if elected). There may also be circumstances when a Fixed Allocation will
be established only in support of the Protected Principal Value or the Enhanced
Protected Principal Value. If you elect an enhanced guarantee, it is more likely
that a portion of your Account Value may be allocated to Fixed Allocations and
will remain allocated for a longer period of time to support the Enhanced
Protected Principal Value, even during a period of positive market performance
and/or under circumstances where Fixed Allocations would not be necessary to
support the Protected Principal Value. Further, there may be circumstances where
Fixed Allocations in support of the Protected Principal Value or Enhanced
Protected Principal Value are transferred to the variable investment options
differently than each other because of the different guarantees they support.
American Skandia uses an allocation mechanism based on assumptions of expected
and maximum market volatility, interest rates and time left to the maturity of
the program to determine the reallocation trigger. The allocation mechanism is
used to determine the allocation of Account Value between Fixed Allocations and
the Sub-accounts you choose. American Skandia reserves the right to change the
allocation mechanism and the reallocation trigger at its discretion, subject to
regulatory approval where required. Changes to the allocation mechanism and/or
the reallocation trigger may be applied to existing programs where allowed by
law.
ELECTION OF THE PROGRAM
The Guaranteed Return Option Plus program can be elected at the time that you
purchase your Annuity, or on any Valuation Day thereafter (prior to
annuitization). If you elect the program after the Issue Date of your Annuity,
the program will be effective as of the Valuation Day that we receive the
required documentation in good order at our home office, and the guaranteed
amount will be based on your Account Value as of that date. If you previously
elected the Guaranteed Return Option program and wish to elect the Guaranteed
Return Option Plus program, your prior Guaranteed Return Option program will be
terminated. Termination of the Guaranteed Return Option for the purpose of
electing the Guaranteed Return Option Plus, will be treated as any other
termination of the Guaranteed Return Option (see below), including the
termination of any guaranteed amount, and application of any applicable Market
Value Adjustment when amounts are transferred to the variable investment options
as a result of the termination. The Guaranteed Return Option Plus program will
then be added to your Annuity BASED ON THE CURRENT ACCOUNT VALUE.
TERMINATION OF THE PROGRAM
You can elect to terminate the enhanced guarantee but maintain the protection
provided by the base guarantee. You also can terminate the Guaranteed Return
Option Plus program entirely. If you terminate the program entirely you can
subsequently elect to participate in the program again (based on the Account
Value on that date) by furnishing the documentation we require. In a rising
market, you could, for example, terminate the program on a given Valuation Day
and two weeks later reinstate the program with a higher base guarantee (and a
new maturity date). However, your ability to reinstate the program is limited by
the following: (A) in any Annuity Year, we do not permit more than two program
elections (including any election made effective on the Annuity issue date and
any election made by a surviving spouse) and (B) a program reinstatement cannot
be effected on the same business day on which a program termination was
effected. Upon termination, any Account Value in the Fixed Allocations will be
transferred to the variable investment options pro-rata based on the Account
Values in such variable investment options, or in accordance with any effective
asset allocation program. A Market Value Adjustment will apply.
The program will terminate automatically upon: (a) the death of the Owner
or the Annuitant (in an entity owned contract); (b) as of the date Account Value
is applied to begin annuity payments; or (c) upon full surrender of the Annuity.
If you elect to terminate the program, the Guaranteed Return Option Plus will no
longer provide any guarantees. The surviving spouse may elect the benefit at any
time, subject to the limitations described above, after the death of the Annuity
Owner. The surviving spouse's election will be effective on the Valuation Day
that we receive the required documentation in good order at our home office, and
the Account Value on that Valuation Day will be the Protected Principal Value.
The charge for the Guaranteed Return Option Plus program will no longer be
deducted from your Account Value upon termination of the program.
SPECIAL CONSIDERATIONS UNDER THE GUARANTEED RETURN OPTION PLUS
This program is subject to certain rules and restrictions, including, but not
limited to the following:
- - Upon inception of the program, 100% of your Account Value must be
allocated to the variable investment options. No Fixed Allocations may be
in effect as of the date that you elect to participate in the program.
However, the reallocation trigger
53
AMERICAN SKANDIA APEX II PROSPECTUS
Living Benefit Programs continued
may transfer Account Value to Fixed Allocations as of the effective date
of the program under some circumstances.
- - You cannot allocate any portion of Purchase Payments or transfer Account
Value to or from a Fixed Allocation while participating in the program;
however, all or a portion of any Purchase Payments may be allocated by us
to Fixed Allocations to support the amount guaranteed. You cannot
participate in any dollar cost averaging program that transfers Account
Value from a Fixed Allocation to a variable investment option.
- - Transfers from Fixed Allocations made as a result of the allocation
mechanism under the program will be subject to the Market Value Adjustment
formula under the Annuity; however, the 0.10% liquidity factor in the
formula will not apply. A Market Value Adjustment may be either positive
or negative. Transfer amounts will be taken from the most recently
established Fixed Allocation.
- - Transfers from the Sub-accounts to Fixed Allocations or from Fixed
Allocations to the Sub-accounts under the program will not count toward
the maximum number of free transfers allowable under the Annuity.
- - Any amounts applied to your Account Value by American Skandia on the
maturity date or any anniversary of the maturity date will not be treated
as "investment in the contract" for income tax purposes.
- - Low interest rates may require allocation to Fixed Allocations even when
the current Account Value exceeds the guarantee.
- - As the time remaining until the applicable maturity date gradually
decreases the program will become increasingly sensitive to moves to Fixed
Allocations.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
CHARGES UNDER THE PROGRAM
We deduct a charge equal to 0.25% of the average daily net assets of the
sub-accounts for participation in the Guaranteed Return Option Plus program. The
annual charge is deducted daily. Account Value allocated to Fixed Allocations
under the program is not subject to the charge. The charge is deducted to
compensate American Skandia for: (a) the risk that your Account Value on the
maturity date is less than the amount guaranteed; and (b) administration of the
program.
GUARANTEED RETURN OPTION (GRO)
THE GUARANTEED RETURN OPTION DESCRIBED BELOW IS OFFERED ONLY IN THOSE
JURISDICTIONS WHERE WE HAVE NOT YET RECEIVED REGULATORY APPROVAL FOR THE
GUARANTEED RETURN OPTION PLUS AS OF THE DATE THE ELECTION OF THE OPTION IS MADE.
CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS. THE PROGRAM CAN
BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY, AND CAN BE
ELECTED BY EXISTING ANNUITY OWNERS ON EITHER THE ANNIVERSARY OF THE ISSUE DATE
OF THEIR ANNUITY OR ON A DATE OTHER THAN THAT ANNIVERSARY, AS DESCRIBED BELOW
UNDER "ELECTION OF THE PROGRAM". THE GUARANTEED RETURN OPTION IS NOT AVAILABLE
IF YOU ELECT THE GRO PLUS RIDER, THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT
RIDER, THE GUARANTEED MINIMUM INCOME BENEFIT RIDER, THE LIFETIME FIVE INCOME
BENEFIT RIDER, THE HIGHEST DAILY VALUE DEATH BENEFIT OR THE DOLLAR COST
AVERAGING PROGRAM IF IT INVOLVES TRANSFERS OUT OF THE FIXED ALLOCATIONS.
We offer a program that, after a seven-year period following commencement
of the program (we refer to the end of that period as the "maturity date")
guarantees your Account Value will not be less than your Account Value on the
effective date of your program (called the "Protected Principal Value").
The program monitors your Account Value daily and, if necessary,
systematically transfers amounts between variable investment options you choose
and the Fixed Allocation used to support the Protected Principal Value. The
program may be appropriate if you wish to protect a principal amount against
market downturns as of a specific date in the future, but also wish to invest in
the variable investment options to participate in market performance. There is
an additional charge if you elect the Guaranteed Return Option program.
The guarantees provided by the program exist only on the applicable
maturity date. However, due to the ongoing monitoring of your Account Value and
the transfer of Account Value between the variable investment options and the
Fixed Allocation to support our future guarantee, the program may provide some
protection from significant market losses if you choose to surrender the Annuity
or begin receiving annuity payments prior
54
AMERICAN SKANDIA APEX II PROSPECTUS
to a maturity date. For this same reason, the program may limit your ability to
benefit from market increases while it is in effect.
KEY FEATURE -- PROTECTED PRINCIPAL VALUE
- - Under the GRO option, American Skandia guarantees that on the maturity
date, your Account Value will be no less than the Protected Principal
Value. On the maturity date if your Account Value is below the Protected
Principal Value, American Skandia will apply additional amounts to your
Annuity from its general account to increase your Account Value to be
equal to the Protected Principal Value.
Any amounts added to your Annuity to support our guarantees under the
program will be applied to the Fixed Allocation first and then to the
Sub-accounts pro rata, based on your most recent allocation instructions in
accordance with the allocation mechanism we use under the program. We will
notify you of any amounts added to your Annuity under the program. If our
assumptions are correct and the operations relating to the administration of the
program work properly, we do not expect that we will need to add additional
amounts to the Annuity. The Protected Principal Value is generally referred to
as the "Guaranteed Amount" in the rider we issue for this benefit.
KEY FEATURE -- ALLOCATION OF ACCOUNT VALUE
Account Value is transferred to and maintained in a Fixed Allocation to the
extent we, in our sole discretion, deem it is necessary to support our guarantee
under the program. We monitor fluctuations in your Account Value each Valuation
Day, as well as the prevailing interest rates on the Fixed Allocation, the
remaining duration until the applicable maturity date and the amount of Account
Value allocated to the Fixed Allocation relative to a "reallocation trigger",
which determines whether Account Value must be transferred to or from the Fixed
Allocation. While you are not notified when your Account Value reaches a
reallocation trigger, you will receive a confirmation statement indicating the
transfer of a portion of your Account Value either to or from the Fixed
Allocation.
- - IF YOUR ACCOUNT VALUE IS GREATER THAN OR EQUAL TO THE REALLOCATION
TRIGGER, your Account Value in the variable investment options will remain
allocated according to your most recent instructions. If a portion of
Account Value was previously allocated to the Fixed Allocation to support
the guaranteed amount, all or a portion of those amounts may be
transferred from the Fixed Allocation and re-allocated to the variable
investment options pro-rata according to your most recent allocation
instructions (including the model allocations under any asset allocation
program you may have elected). A Market Value Adjustment will apply when
we reallocate Account Value from the Fixed Allocation to the variable
investment options, which may result in a decrease or increase in your
Account Value.
- - IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER, a portion of
your Account Value in the variable investment options will be transferred
from your variable investment options pro rata according to your
allocations to a new Fixed Allocation to support the guaranteed amount.
The new Fixed Allocation will have a Guarantee Period equal to the time
remaining until the applicable maturity date. The Account Value allocated
to the new Fixed Allocation will be credited with the fixed interest rate
then being credited to a new Fixed Allocation maturing on the applicable
maturity date (rounded to the next highest yearly duration). The Account
Value will remain invested in the Fixed Allocation until the maturity date
unless, at an earlier date, your Account Value is greater than or equal to
the reallocation trigger and, therefore, amounts can be transferred to the
variable investment options while maintaining the guaranteed protection
under the program (as described above).
IF A SIGNIFICANT AMOUNT OF YOUR ACCOUNT VALUE IS SYSTEMATICALLY TRANSFERRED TO
THE FIXED ALLOCATION TO SUPPORT THE PROTECTED PRINCIPAL VALUE DURING PERIODS OF
MARKET DECLINES, LOW INTEREST RATES, AND/OR AS THE PROGRAM NEARS ITS MATURITY
DATE, LESS OF YOUR ACCOUNT VALUE MAY BE AVAILABLE TO PARTICIPATE IN THE
INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS IF THERE IS A
SUBSEQUENT MARKET RECOVERY. DURING PERIODS CLOSER TO THE MATURITY DATE OF THE
GUARANTEE A SIGNIFICANT PORTION OF YOUR ACCOUNT VALUE MAY BE ALLOCATED TO THE
FIXED ALLOCATION TO SUPPORT ANY APPLICABLE GUARANTEED AMOUNT. IF YOUR ACCOUNT
VALUE IS LESS THAN THE REALLOCATION TRIGGER AND A NEW FIXED ALLOCATION MUST BE
ESTABLISHED DURING PERIODS WHERE THE INTEREST RATE BEING CREDITED TO SUCH FIXED
ALLOCATIONS IS LOW, A LARGER PORTION OF YOUR ACCOUNT VALUE MAY NEED TO BE
TRANSFERRED TO THE FIXED ALLOCATION TO SUPPORT THE GUARANTEED AMOUNT, CAUSING
LESS OF YOUR ACCOUNT VALUE TO BE AVAILABLE TO PARTICIPATE IN THE INVESTMENT
EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS.
American Skandia uses an allocation mechanism based on assumptions of
expected and maximum market volatility,
55
AMERICAN SKANDIA APEX II PROSPECTUS
Living Benefit Programs continued
interest rates and time left to the maturity of the program to determine the
reallocation trigger. The allocation mechanism is used to determine the
allocation of Account Value between Fixed Allocation and the Sub-accounts you
choose. American Skandia reserves the right to change the allocation mechanism
and the reallocation trigger at its discretion, subject to regulatory approval
where required. Changes to the allocation mechanism and/or the reallocation
trigger may be applied to existing programs where allowed by law.
ELECTION OF THE PROGRAM
The Guaranteed Return Option can be elected at the time that you purchase your
Annuity, or on any Valuation Day thereafter (prior to annuitization). If you
elect the program after the Issue Date of your Annuity, the program will be
effective as of the business day that we receive the required documentation in
good order at our home office, and the guaranteed amount will be based on your
Account Value as of that date.
TERMINATION OF THE PROGRAM
The Annuity Owner also can terminate the Guaranteed Return Option program. Upon
termination, any Account Value in the Fixed Allocations will be transferred to
the variable investment options pro rata based on the Account Values in such
variable investment options, or in accordance with any effective asset
allocation program. A Market Value Adjustment will apply.
The program will terminate automatically upon: (a) the death of the Owner
or the Annuitant (in an entity owned contract); (b) as of the date Account Value
is applied to begin annuity payments; or (c) upon full surrender of the Annuity.
If you elect to terminate the program, the Guaranteed Return Option will no
longer provide any guarantees. If the surviving spouse assumes the Annuity,
he/she may re-elect the benefit on any anniversary of the Issue Date of the
Annuity or, if the deceased Owner had not previously elected the benefit, may
elect the benefit at any time. The surviving spouse's election will be effective
on the Valuation Day that we receive the required documentation in good order at
our home office, and the Account Value on that Valuation Day will be the
Protected Principal Value.
The charge for the Guaranteed Return Option program will no longer be
deducted from your Account Value upon termination of the program.
SPECIAL CONSIDERATIONS UNDER THE GUARANTEED RETURN OPTION
This program is subject to certain rules and restrictions, including, but not
limited to the following:
- - Upon inception of the program, 100% of your Account Value must be
allocated to the variable investment options. The Fixed Allocations may
not be in effect as of the date that you elect to participate in the
program. However, the reallocation trigger may transfer Account Value to
the Fixed Allocation as of the effective date of the program under some
circumstances.
- - Annuity Owners cannot allocate any portion of Purchase Payments or
transfer Account Value to or from the Fixed Allocation while participating
in the program; however, all or a portion of any Purchase Payments may be
allocated by us to the Fixed Allocation to support the amount guaranteed.
You cannot participate in any dollar cost averaging program that transfers
Account Value from the Fixed Allocation to a variable investment option.
- - Transfers from the Fixed Allocation made as a result of the allocation
mechanism under the program will be subject to the Market Value Adjustment
formula under the Annuity; however, the 0.10% liquidity factor in the
formula will not apply. A Market Value Adjustment may be either positive
or negative. Transfer amounts will be taken from the most recently
established Fixed Allocation.
- - Transfers from the Sub-accounts to the Fixed Allocation or from the Fixed
Allocation to the Sub-accounts under the program will not count toward the
maximum number of free transfers allowable under the Annuity.
- - Any amounts applied to your Account Value by American Skandia on the
maturity date or any anniversary of the maturity date will not be treated
as "investment in the contract" for income tax purposes.
- - Low interest rates may require allocation to the Fixed Allocation even
when the current Account Value exceeds the guarantee.
- - As the time remaining until the applicable maturity date gradually
decreases the program will become increasingly sensitive to moves to the
Fixed Allocation.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be
56
AMERICAN SKANDIA APEX II PROSPECTUS
counted in determining the number of free transfers during an Annuity
Year. We may also require that you allocate your Account Value according
to an asset allocation model.
CHARGES UNDER THE PROGRAM
We deduct a charge equal to 0.25% of the average daily net assets of the
Sub-accounts for participation in the Guaranteed Return Option program. The
annual charge is deducted daily. In those states where the daily deduction of
the charge has not yet been approved, the annual charge is deducted annually, in
arrears. Account Value allocated to the Fixed Allocation under the program is
not subject to the charge. The charge is deducted to compensate American Skandia
for: (a) the risk that your Account Value on the maturity date is less than the
amount guaranteed; and (b) administration of the program.
Effective November 18, 2002, American Skandia changed the manner in which the
annual charge for the Guaranteed Return Option is deducted to the method
described above. The annual charge for the Guaranteed Return Option for Owners
who elected the benefit between January 17, 2002 and November 15, 2002 and
subsequent to November 19, 2002 in those states where the daily deduction of the
charge has not been approved, is deducted annually, in arrears, according to the
prospectus in effect as of the date the program was elected. Owners who
terminate and then re-elect the Guaranteed Return Option or elect to restart the
Guaranteed Return Option at any time after November 18, 2002 will be subject to
the charge method described above.
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL AND
WILL BE OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY
APPROVAL IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. CURRENTLY, THE PROGRAM CAN ONLY BE ELECTED BY NEW
PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY. WE MAY OFFER THE PROGRAM TO
EXISTING ANNUITY OWNERS IN THE FUTURE, SUBJECT TO OUR ELIGIBILITY RULES AND
RESTRICTIONS. THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT PROGRAM IS NOT AVAILABLE
IF YOU ELECT THE GUARANTEED RETURN OPTION, GUARANTEED RETURN OPTION PLUS, THE
GUARANTEED MINIMUM INCOME BENEFIT RIDER OR THE LIFETIME FIVE INCOME BENEFIT
RIDER.
We offer a program that guarantees your ability to withdraw amounts equal
to an initial principal value (called the "Protected Value"), regardless of the
impact of market performance on your Account Value, subject to our program rules
regarding the timing and amount of withdrawals. The program may be appropriate
if you intend to make periodic withdrawals from your Annuity and wish to ensure
that market performance will not affect your ability to protect your principal.
You are not required to make withdrawals as part of the program -- the guarantee
is not lost if you withdraw less than the maximum allowable amount of principal
each year under the rules of the program. There is an additional charge if you
elect the GMWB program; however, the charge may be waived under certain
circumstances described below.
KEY FEATURE -- PROTECTED VALUE
The Protected Value is the total amount that we guarantee will be available to
you through withdrawals from your Annuity and/or benefit payments, regardless of
the impact of market performance on your Account Value. The Protected Value is
reduced with each withdrawal you make until the Protected Value is reduced to
zero. When the Protected Value is reduced to zero due to your withdrawals, the
GMWB program terminates. Additionally, the Protected Value is used to determine
the maximum annual amount that you can withdraw from your Annuity, called the
Protected Annual Withdrawal Amount, without triggering an adjustment in the
Protected Value on a proportional basis. The Protected Value is referred to as
the "Benefit Base" in the rider we issue for this benefit.
The Protected Value is determined as of the date you make your first
withdrawal under the Annuity following your election of the GMWB program. The
initial Protected Value is equal to the greater of (A) the Account Value on the
date you elect the GMWB program, plus any additional Purchase Payments before
the date of your first withdrawal; or (B) the Account Value as of the date of
the first withdrawal from your Annuity. The Protected Value may be enhanced by
increases in your Account Value due to market performance during the period
between your election of the GMWB program and the date of your first withdrawal.
- - If you elect the GMWB program at the time you purchase your Annuity, the
Account Value will be your initial Purchase Payment.
- - IF WE OFFER THE GMWB PROGRAM TO EXISTING ANNUITY OWNERS, the Account Value
on the anniversary of the Issue Date of your Annuity following your
election of the GMWB program will be used to determine the initial
Protected Value.
57
AMERICAN SKANDIA APEX II PROSPECTUS
Living Benefit Programs continued
- - If you make additional Purchase Payments after your first withdrawal, the
Protected Value will be increased by the amount of the additional Purchase
Payment.
You may elect to step-up your Protected Value if, due to positive market
performance, your Account Value is greater than the Protected Value. You are
eligible to step-up the Protected Value on or after the 5th Annuity anniversary
following the first withdrawal under the GMWB program. The Protected Value can
be stepped up again on or after the 5th Annuity anniversary following the
preceding step-up. If you elect to step-up the Protected Value, you must do so
during the 30-day period prior to your eligibility date. If you elect to step-up
the Protected Value under the program, and on the date you elect to step-up, the
charges under the GMWB program have changed for new purchasers, your program may
be subject to the new charge going forward.
Upon election of the step-up, we reset the Protected Value to be equal to
the then current Account Value. For example, assume your initial Protected Value
was $100,000 and you have made cumulative withdrawals of $40,000, reducing the
Protected Value to $60,000. On the date you are eligible to step-up the
Protected Value, your Account Value is equal to $75,000. You could elect to
step-up the Protected Value to $75,000 on the date you are eligible. Upon
election of the step-up, we also reset the Protected Annual Withdrawal Amount
(discussed immediately below) to be equal to the greater of (A) the Protected
Annual Withdrawal Amount immediately prior to the reset; and (B) 7% of the
Protected Value immediately after the reset.
KEY FEATURE -- PROTECTED ANNUAL WITHDRAWAL AMOUNT
The initial Protected Annual Withdrawal Amount is equal to 7% of the Protected
Value. Under the GMWB program, if your cumulative withdrawals each Annuity Year
are less than or equal to the Protected Annual Withdrawal Amount, your Protected
Value will be reduced on a "dollar-for-dollar" basis (the Protected Value is
reduced by the actual amount of the withdrawal, including any CDSC or MVA that
may apply). Cumulative withdrawals in any Annuity Year that exceed the Protected
Annual Withdrawal Amount trigger a proportional adjustment to both the Protected
Value and the Protected Annual Withdrawal Amount, as described in the rider for
this benefit (see the examples of this calculation below). The Protected Annual
Withdrawal Amount is referred to as the "Maximum Annual Benefit" in the rider we
issue for this benefit.
THE GMWB PROGRAM DOES NOT AFFECT YOUR ABILITY TO MAKE WITHDRAWALS UNDER
YOUR ANNUITY OR LIMIT YOUR ABILITY TO REQUEST WITHDRAWALS THAT EXCEED THE
PROTECTED ANNUAL WITHDRAWAL AMOUNT. You are not required to withdraw all or any
portion of the Protected Annual Withdrawal Amount each Annuity Year.
- - If, cumulatively, you withdraw an amount less than the Protected Annual
Withdrawal Amount in any Annuity Year, you cannot carry-over the unused
portion of the Protected Annual Withdrawal Amount to subsequent Annuity
Years. However, because the Protected Value is only reduced by the actual
amount of withdrawals you make under these circumstances, any unused
Protected Annual Withdrawal Amount may extend the period of time until the
remaining Protected Value is reduced to zero.
- - Additional Purchase Payments will increase the Protected Annual Withdrawal
Amount by 7% of the applicable Purchase Payment.
- - If the Protected Annual Withdrawal Amount after an adjustment exceeds the
Protected Value, the Protected Annual Withdrawal Amount will be set equal
to the Protected Value.
The following examples of dollar-for-dollar and proportional reductions
and the reset of the Maximum Annual Benefit assume that: 1.) the Issue Date and
the effective date of the GMWB program are October 13, 2004; 2.) an initial
Purchase Payment of $250,000; 3.) a Protected Value of $250,000; and 4.) a
Protected Annual Withdrawal Amount of $17,500 (7% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 13, 2005 (in the first Annuity Year).
No prior withdrawals have been taken. As the amount withdrawn is less than the
Protected Annual Withdrawal Amount:
- - The Protected Value is reduced by the amount withdrawn (i.e., by $10,000,
from $250,000 to $240,000).
- - The remaining Protected Annual Withdrawal Amount for the balance of the
first Annuity Year is also reduced by the amount withdrawn (from $17,500
to $7,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on December 13, 2004 (still within the
first Annuity Year). The Account Value immediately before the withdrawal is
$220,000. As the amount
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AMERICAN SKANDIA APEX II PROSPECTUS
withdrawn exceeds the remaining Protected Annual Withdrawal Amount of $7,500
from Example 1:
- - the Protected Value is first reduced by the remaining Protected Annual
Withdrawal Amount (from $240,000 to $232,500);
- - The result is then further reduced by the ratio of A to B,
where:
- A is the amount withdrawn less the remaining Protected Annual
Withdrawal Amount ($10,000 - $7,500, or $2,500).
- B is the Account Value less the remaining Protected Annual
Withdrawal Amount ($220,000 - $7,500, or $212,500).
The resulting Protected Value is: $232,500 x (1 - $2,500 / $212,500), or
$229,764.71.
- - the Protected Annual Withdrawal Amount is also reduced by the ratio of A
to B: The resulting Protected Annual Withdrawal Amount is: $17,500 x (1 -
$2,500 / $212,500), or $17,294.12.
- - The remaining Protected Annual Withdrawal Amount is set to zero (0) for
the balance of the first Annuity Year.
EXAMPLE 3. RESET OF THE MAXIMUM ANNUAL BENEFIT
A $10,000 withdrawal is made on October 13, 2005 (second Annuity Year). The
remaining Protected Annual Withdrawal Amount has been reset to the Protected
Annual Withdrawal Amount of $17,294.12 from Example 2. As the amount withdrawn
is less than the remaining Protected Annual Withdrawal Amount:
- - the Protected Value is reduced by the amount withdrawn (i.e., reduced by
$10,000, from $229,764.71 to $219,764.71).
- - The remaining Protected Annual Withdrawal Amount for the balance of the
second Annuity Year is also reduced by the amount withdrawn (from
$17,294.12 to $7,294.12).
BENEFITS UNDER THE GMWB PROGRAM
- - In addition to any withdrawals you make under the GMWB program, market
performance may reduce your Account Value. If your Account Value is equal
to zero, and you have not received all of your Protected Value in the form
of withdrawals from your Annuity, we will continue to make payments equal
to the remaining Protected Value in the form of fixed, periodic payments
until the remainder of the Protected Value is paid, at which time the
rider terminates. The fixed, periodic payments will each be equal to the
Protected Annual Withdrawal Amount, except for the last payment which may
be equal to the remaining Protected Value. We will determine the duration
for which periodic payments will continue by dividing the Protected Value
by the Protected Annual Withdrawal Amount. You will not have the right to
make additional Purchase Payments or receive the remaining Protected Value
in a lump sum. You can elect the frequency of payments, subject to our
rules then in effect.
- - If the death benefit under the Annuity becomes payable before you have
received all of your Protected Value in the form of withdrawals from your
Annuity, your Beneficiary has the option to elect to receive the remaining
Protected Value as an alternate death benefit payout in lieu of the amount
payable under any other death benefit provided under the Annuity. The
remaining Protected Value will be payable in the form of fixed, periodic
payments. Your beneficiary can elect the frequency of payments, subject to
our rules then in effect. We will determine the duration for which
periodic payments will continue by dividing the Protected Value by the
Protected Annual Withdrawal Amount. THE PROTECTED VALUE IS NOT EQUAL TO
THE ACCOUNT VALUE FOR PURPOSES OF THE ANNUITY'S OTHER DEATH BENEFIT
OPTIONS. THE GMWB PROGRAM DOES NOT INCREASE OR DECREASE THE AMOUNT
OTHERWISE PAYABLE UNDER THE ANNUITY'S OTHER DEATH BENEFIT OPTIONS.
GENERALLY, THE GMWB PROGRAM WOULD BE OF VALUE TO YOUR BENEFICIARY ONLY
WHEN THE PROTECTED VALUE AT DEATH EXCEEDS ANY OTHER AMOUNT AVAILABLE AS A
DEATH BENEFIT.
- - If you elect to begin receiving annuity payments before you have received
all of your Protected Value in the form of withdrawals from your Annuity,
an additional annuity payment option will be available that makes fixed
annuity payments for a certain period, determined by dividing the
Protected Value by the Protected Annual Withdrawal Amount. If you elect to
receive annuity payments calculated in this manner, the assumed interest
rate used to calculate such payments will be 0%, which is less than the
assumed interest rate on other annuity payment options we offer. This 0%
assumed interest rate results in lower annuity payments than what would
have been paid if the assumed interest rate was higher than 0%. YOU CAN
ALSO ELECT TO TERMINATE THE GMWB PROGRAM AND BEGIN RECEIVING
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AMERICAN SKANDIA APEX II PROSPECTUS
Living Benefit Programs continued
ANNUITY PAYMENTS BASED ON YOUR THEN CURRENT ACCOUNT VALUE (NOT THE
REMAINING PROTECTED VALUE) UNDER ANY OF THE AVAILABLE ANNUITY PAYMENT
OPTIONS.
Other Important Considerations
- - Withdrawals under the GMWB program are subject to all of the terms and
conditions of the Annuity, including any CDSC and MVA that may apply.
- - Withdrawals made while the GMWB program is in effect will be treated, for
tax purposes, in the same way as any other withdrawals under the Annuity.
- - The GMWB program does not directly affect the Annuity's Account Value or
Surrender Value, but any withdrawal will decrease the Account Value by the
amount of the withdrawal. If you surrender your Annuity, you will receive
the current Surrender Value, not the Protected Value.
- - You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the GMWB program. The GMWB program
provides a guarantee that if your Account Value declines due to market
performance, you will be able to receive your Protected Value in the form
of periodic benefit payments.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
ELECTION OF THE PROGRAM
Currently, the GMWB program can only be elected at the time that you purchase
your Annuity. In the future, we may offer existing Annuity Owners the option to
elect the GMWB program after the Issue Date of their Annuity, subject to our
eligibility rules and restrictions. If you elect the GMWB program after the
Issue Date of your Annuity, the program will be effective as of the next
anniversary date. Your Account Value as of such anniversary date will be used to
calculate the initial Protected Value and the initial Protected Annual
Withdrawal Amount.
We reserve the right to restrict the maximum amount of Protected Value
that may be covered under the GMWB program under this Annuity or any other
annuities that you own that are issued by American Skandia or its affiliated
companies.
TERMINATION OF THE PROGRAM
The program terminates automatically when your Protected Value reaches zero
based on your withdrawals. You may terminate the program at any time by
notifying us. If you terminate the program, any guarantee provided by the
benefit will terminate as of the date the termination is effective. The program
terminates upon your surrender of the Annuity, upon due proof of death (unless
your surviving spouse elects to continue the Annuity and the GMWB program or
your Beneficiary elects to receive the amounts payable under the GMWB program in
lieu of the death benefit) or upon your election to begin receiving annuity
payments.
The charge for the GMWB program will no longer be deducted from your
Account Value upon termination of the program.
CHARGES UNDER THE PROGRAM
Currently, we deduct a charge equal to 0.35% of the average daily net assets of
the Sub-accounts per year to purchase the GMWB program. The annual charge is
deducted daily. Account Value allocated to Fixed Allocations under the program
is not subject to the charge.
- - If, during the seven years following the effective date of the program,
you do not make any withdrawals, and do not make any additional Purchase
Payments after a five-year period following the effective date of the
program, the program will remain in effect; however, we will waive the
annual charge going forward. If you make an additional Purchase Payment
following the waiver of the annual charge, we will begin charging for the
program. After year seven (7) following the effective date of the program,
withdrawals will not cause a charge to be re-imposed.
- - If you elect to step-up the Protected Value under the program, and on the
date you elect to step-up, the charges under the program have changed for
new purchasers, your program may be subject to the new charge level for
the benefit.
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS
If you purchase an Annuity as an investment vehicle for "qualified"
investments, including an IRA, SEP-IRA, Roth IRA or Tax Sheltered Annuity (or
403(b)), the minimum distribution rules under the Code require that you begin
receiving periodic amounts from your Annuity beginning after age 70-1/2. The
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AMERICAN SKANDIA APEX II PROSPECTUS
amount required under the Code may exceed the Protected Annual Withdrawal
Amount, which will cause us to recalculate the Protected Value and the Protected
Annual Withdrawal Amount, resulting in a lower amount payable in future Annuity
Years. In addition, the amount and duration of payments under the annuity
payment and death benefit provisions may be adjusted so that the payments do not
trigger any penalty or excise taxes due to tax considerations such as minimum
distribution requirements.
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
THE GUARANTEED MINIMUM INCOME BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL, AND
WILL BE OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY
APPROVAL IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. CURRENTLY, THE PROGRAM CAN ONLY BE ELECTED BY NEW
PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY. WE MAY OFFER THE PROGRAM TO
EXISTING ANNUITY OWNERS IN THE FUTURE, SUBJECT TO OUR ELIGIBILITY RULES AND
RESTRICTIONS. THE GUARANTEED MINIMUM INCOME BENEFIT PROGRAM IS NOT AVAILABLE IF
YOU ELECT THE GUARANTEED RETURN OPTION PROGRAM, GUARANTEED RETURN OPTION PLUS
PROGRAM, THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT RIDER OR THE LIFETIME FIVE
INCOME BENEFIT RIDER.
We offer a program that, after a seven-year waiting period, guarantees
your ability to begin receiving income from your Annuity in the form of annuity
payments based on a guaranteed minimum value (called the "Protected Income
Value") that increases after the waiting period begins, regardless of the impact
of market performance on your Account Value. The program may be appropriate for
you if you anticipate using your Annuity as a future source of periodic fixed
income payments for the remainder of your life and wish to ensure that the basis
upon which your income payments will be calculated will achieve at least a
minimum amount despite fluctuations in market performance. There is an
additional charge if you elect the GMIB program.
KEY FEATURE -- PROTECTED INCOME VALUE
The Protected Income Value is the minimum amount that we guarantee will be
available (net of any applicable tax charge), after a waiting period of at least
seven years, as a basis to begin receiving fixed annuity payments. The Protected
Income Value is initially established on the effective date of the GMIB program
and is equal to your Account Value on such date. Currently, since the GMIB
program may only be elected at issue, the effective date is the Issue Date of
the Annuity. The Protected Income Value is increased daily based on an annual
growth rate of 5%, subject to the limitations described below. The Protected
Income Value is referred to as the "Protected Value" in the rider we issue for
this benefit. The 5% annual growth rate is referred to as the "Roll-Up
Percentage" in the rider we issue for this benefit.
The Protected Income Value is subject to a limit of 200% (2x) of the sum
of the Protected Income Value established on the effective date of the GMIB
program, or the effective date of any step-up value, plus any additional
Purchase Payments made after the waiting period begins ("Maximum Protected
Income Value"), minus the sum of any reductions in the Protected Income Value
due to withdrawals you make from the Annuity after the waiting period begins.
- - Subject to the maximum age/durational limits described immediately below,
we will no longer increase the Protected Income Value by the 5% annual
growth rate once you reach the Maximum Protected Income Value. However, we
will increase the Protected Income Value by the amount of any additional
Purchase Payments after you reach the Maximum Protected Income Value.
Further, if you make withdrawals after you reach the Maximum Protected
Income Value, we will reduce the Protected Income Value and the Maximum
Protected Income Value by the proportional impact of the withdrawal on
your Account Value.
- - Subject to the Maximum Protected Income Value, we will no longer increase
the Protected Income Value by the 5% annual growth rate after the later of
the anniversary date on or immediately following the Annuitant's 80th
birthday or the 7th anniversary of the later of the effective date of the
GMIB program or the effective date of the most recent step-up. However, we
will increase the Protected Income Value by the amount of any additional
Purchase Payments. Further, if you make withdrawals after the Annuitant
reaches the maximum age/duration limits, we will reduce the Protected
Income Value and the Maximum Protected
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Living Benefit Programs continued
Income Value by the proportional impact of the withdrawal on your Account
Value.
- - Subject to the Maximum Protected Income Value, if you make an additional
Purchase Payment, we will increase the Protected Income Value by the
amount of the Purchase Payment and will apply the 5% annual growth rate on
the new amount from the date the Purchase Payment is applied.
- - As described below, after the waiting period begins, cumulative
withdrawals each Annuity Year that are up to 5% of the Protected Income
Value on the prior anniversary of the Annuity will reduce the Protected
Income Value by the amount of the withdrawal. Cumulative withdrawals each
Annuity Year in excess of 5% of the Protected Income Value on the prior
anniversary of the Annuity, will reduce the Protected Income Value
proportionately. All withdrawals after the Maximum Protected Income Value
is reached will reduce the Protected Income Value proportionately. The 5%
annual growth rate will be applied to the reduced Protected Income Value
from the date of the withdrawal.
Stepping-Up the Protected Income Value -- You may elect to "step-up" or
"reset" your Protected Income Value if your Account Value is greater than the
current Protected Income Value. Upon exercise of the step-up provision, your
initial Protected Income Value will be reset equal to your current Account
Value. From the date that you elect to step-up the Protected Income Value, we
will apply the 5% annual growth rate to the stepped-up Protected Income Value,
as described above. You can exercise the step-up provision twice while the GMIB
program is in effect, and only while the Annuitant is less than age 76.
- - A new seven-year waiting period will be established upon the effective
date of your election to step-up the Protected Income Value. You cannot
exercise your right to begin receiving annuity payments under the GMIB
program until the end of the new waiting period.
- - The Maximum Protected Income Value will be reset as of the effective date
of any step-up. The new Maximum Protected Income Value will be equal to
200% of the sum of the Protected Income Value as of the effective date of
the step-up plus any subsequent Purchase Payments, minus the impact of any
withdrawals after the date of the step-up.
- - When determining the guaranteed annuity purchase rates for annuity
payments under the GMIB program, we will apply such rates based on the
number of years since the most recent step-up.
- - If you elect to step-up the Protected Income Value under the program, and
on the date you elect to step-up, the charges under the GMIB program have
changed for new purchasers, your program may be subject to the new charge
going forward.
- - A step-up will increase the dollar for dollar limit on the anniversary of
the Issue Date of the Annuity following such step-up.
Impact of Withdrawals on the Protected Income Value -- Cumulative
withdrawals each Annuity Year up to 5% of the Protected Income Value will reduce
the Protected Income Value on a "dollar-for-dollar" basis (the Protected Income
Value is reduced by the actual amount of the withdrawal). Cumulative withdrawals
in any Annuity Year in excess of 5% of the Protected Income Value will reduce
the Protected Income Value proportionately (see the examples of this calculation
below). The 5% annual withdrawal amount is determined on each anniversary of the
Issue Date (or on the Issue Date for the first Annuity Year) and applies to any
withdrawals during the Annuity Year. This means that the amount available for
withdrawals each Annuity Year on a "dollar-for-dollar" basis is adjusted on each
Annuity anniversary to reflect changes in the Protected Income Value during the
prior Annuity Year.
The following examples of dollar-for-dollar and proportional reductions
assume that: 1.) the Issue Date and the effective date of the GMIB program are
October 13, 2005; 2.) an initial Purchase Payment of $250,000; 3.) an initial
Protected Income Value of $250,000; and 4.) a dollar-for-dollar limit of $12,500
(5% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 13, 2005 (in the first Annuity Year).
No prior withdrawals have been taken. Immediately prior to the withdrawal, the
Protected Income Value is $251,038.10 (the initial value accumulated for 31 days
at an annual effective rate of 5%). As the amount withdrawn is less than the
dollar-for-dollar limit:
- - the Protected Income Value is reduced by the amount withdrawn (i.e., by
$10,000, from $251,038.10 to $241,038.10).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance
of the first Annuity Year is also reduced by the amount withdrawn (from
$12,500 to $2,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on December 13, 2005 (still within the
first Annuity Year). Immediately before the
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withdrawal, the Account Value is $220,000 and the Protected Income Value is
$242,006.64. As the amount withdrawn exceeds the Remaining Limit of $2,500 from
Example 1:
- - the Protected Income Value is first reduced by the Remaining Limit (from
$242,006.64 to $239,506.64);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the Remaining Limit ($10,000 -
$2,500, or $7,500).
- B is the Account Value less the Remaining Limit ($220,000 - $2,500,
or $217,500).
The resulting Protected Income Value is: $239,506.64 x (1 - $7,500 /
$217,500), or $231,247.79.
- - The Remaining Limit is set to zero (0) for the balance of the first
Annuity Year.
EXAMPLE 3. RESET OF THE DOLLAR-FOR-DOLLAR LIMIT
A $10,000 withdrawal is made on the first anniversary of the Issue Date, October
13, 2006 (second Annuity Year). Prior to the withdrawal, the Protected Income
Value is $240,838.37. The Remaining Limit is reset to 5% of this amount, or
$12,041.92. As the amount withdrawn is less than the dollar-for-dollar limit:
- - the Protected Income Value is reduced by the amount withdrawn (i.e.,
reduced by $10,000, from $240,838.37 to $230,838.37).
- - The Remaining Limit for the balance of the second Annuity Year is also
reduced by the amount withdrawn (from $12,041.92 to $2,041.92).
KEY FEATURE -- GMIB ANNUITY PAYMENTS
You can elect to apply the Protected Income Value to one of the available GMIB
Annuity Payment Options on any anniversary date following the initial waiting
period, or any subsequent waiting period established upon your election to
step-up the Protected Income Value. Once you have completed the waiting period,
you will have a 30-day period each year, prior to the Annuity anniversary,
during which you may elect to begin receiving annuity payments under one of the
available GMIB Annuity Payment Options. You must elect one of the GMIB Annuity
Payment Options by the anniversary of the Annuity's Issue Date on or immediately
following the Annuitant's 95th birthday, except for Annuities used as a funding
vehicle for an IRA, SEP IRA or 403(b), in which case you must elect one of the
GMIB Annuity Payment Options by the anniversary of the Annuity's Issue Date on
or immediately following the Annuitant's 92nd birthday.
The amount of each GMIB Annuity Payment will be determined based on the
age and, where permitted by law, sex of the Annuitant by applying the Protected
Income Value (net of any applicable tax charge that may be due) to the GMIB
Annuity Payment Option you choose. We use special annuity purchase rates to
calculate the amount of each payment due under the GMIB Annuity Payment Options.
These special rates for the GMIB Annuity Payment Options are calculated using an
assumed interest rate factor that provides for lower growth in the value applied
to produce annuity payments than if you elected an annuity payment option that
is not part of the GMIB program. These special rates also are calculated using
other factors such as "age setbacks" (use of an age lower than the Annuitant's
actual age) that result in lower payments than would result if you elected an
annuity payment option that is not part of the GMIB program. Use of an age
setback entails a longer assumed life for the Annuitant which in turn results in
lower annuity payments.
ON THE DATE THAT YOU ELECT TO BEGIN RECEIVING GMIB ANNUITY PAYMENTS, WE
GUARANTEE THAT YOUR PAYMENTS WILL BE CALCULATED BASED ON YOUR ACCOUNT VALUE AND
OUR THEN CURRENT ANNUITY PURCHASE RATES IF THE PAYMENT AMOUNT CALCULATED ON THIS
BASIS WOULD BE HIGHER THAN IT WOULD BE BASED ON THE PROTECTED INCOME VALUE AND
THE SPECIAL GMIB ANNUITY PURCHASE RATES.
GMIB ANNUITY PAYMENT OPTION 1 -- PAYMENTS FOR LIFE WITH A CERTAIN PERIOD
Under this option, monthly annuity payments will be made until the death of the
Annuitant. If the Annuitant dies before having received 120 monthly annuity
payments, the remainder of the 120 monthly annuity payments will be made to the
Beneficiary.
GMIB ANNUITY PAYMENT OPTION 2 -- PAYMENTS FOR JOINT LIVES WITH A CERTAIN PERIOD
Under this option, monthly annuity payments will be made until the death of both
the Annuitant and the Joint Annuitant. If the Annuitant and the Joint Annuitant
die before having received 120 monthly annuity payments, the remainder of the
120 monthly annuity payments will be made to the Beneficiary.
- - If the Annuitant dies first, we will continue to make payments until the
later of the death of the Joint Annuitant and the end of the period
certain. However, if the Joint Annuitant is still receiving annuity
payments following the end of the certain period, we will reduce the
amount of each subsequent payment to 50% of the original payment amount.
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Living Benefit Programs continued
- - If the Joint Annuitant dies first, we will continue to make payments until
the later of the death of the Annuitant and the end of the period certain.
You cannot withdraw your Account Value or the Protected Income Value under
either GMIB Annuity Payment Option once annuity payments have begun. We may make
other payout frequencies available, such as quarterly, semi-annually or
annually.
OTHER IMPORTANT CONSIDERATIONS
- - YOU SHOULD NOTE THAT GMIB IS DESIGNED TO PROVIDE A TYPE OF INSURANCE THAT
SERVES AS A SAFETY NET ONLY IN THE EVENT YOUR ACCOUNT VALUE DECLINES
SIGNIFICANTLY DUE TO NEGATIVE INVESTMENT PERFORMANCE. IF YOUR CONTRACT
VALUE IS NOT SIGNIFICANTLY AFFECTED BY NEGATIVE INVESTMENT PERFORMANCE, IT
IS UNLIKELY THAT THE PURCHASE OF THE GMIB WILL RESULT IN YOUR RECEIVING
LARGER ANNUITY PAYMENTS THAN IF YOU HAD NOT PURCHASED GMIB. This is
because the assumptions that we use in computing the GMIB, such as the
annuity purchase rates, (which include assumptions as to age-setbacks and
assumed interest rates), are more conservative than the assumptions that
we use in computing annuity payout options outside of GMIB. Therefore, you
may generate higher income payments if you were to annuitize a lower
Account Value at the current annuity purchase rates, than if you were to
annuitize under the GMIB with a higher Protected Value than your Account
Value but, at the annuity purchase rates guaranteed under the GMIB. The
GMIB program does not directly affect the Annuity's Account Value,
Surrender Value or the amount payable under either the basic death benefit
provision of the Annuity or any optional death benefit provision. If you
surrender your Annuity, you will receive the current Surrender Value, not
the Protected Income Value. The Protected Income Value is only applicable
if you elect to begin receiving annuity payments under one of the GMIB
annuity options after the waiting period.
- - The Annuity offers other annuity payment options that you can elect which
do not impose an additional charge, but which do not offer to guarantee a
minimum value on which to make annuity payments.
- - Where allowed by law, we reserve the right to limit subsequent purchase
payments if we determine, at our sole discretion, that based on the timing
of your Purchase Payments and withdrawals, your Protected Income Value is
increasing in ways we did not intend. In determining whether to limit
Purchase Payments, we will look at Purchase Payments which are
disproportionately larger than your initial Purchase Payment and other
actions that may artificially increase the Protected Income Value.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
- - If you change the Annuitant after the effective date of the GMIB program,
the period of time during which we will apply the 5% annual growth rate
may be changed based on the age of the new Annuitant. If the new Annuitant
would not be eligible to elect the GMIB program based on his or her age at
the time of the change, then the GMIB program will terminate.
- - Annuity payments made under the GMIB program are subject to the same tax
treatment as any other annuity payment.
- - At the time you elect to begin receiving annuity payments under the GMIB
program or under any other annuity payment option we make available, the
protection provided by the Annuity's basic death benefit or any optional
death benefit provision you elected will no longer apply.
ELECTION OF THE PROGRAM
Currently, the GMIB program can only be elected at the time that you purchase
your Annuity. The Annuitant must be age 75 or less as of the effective date of
the GMIB program. In the future, we may offer existing Annuity Owners the option
to elect the GMIB program after the Issue Date of their Annuity, subject to our
eligibility rules and restrictions. If you elect the GMIB program after the
Issue Date of your Annuity, the program will be effective as of the date of
election. Your Account Value as of that date will be used to calculate the
Protected Income Value as of the effective date of the program.
TERMINATION OF THE PROGRAM
The GMIB program cannot be terminated by the Owner once elected. The GMIB
program automatically terminates as of the date the Annuity is fully
surrendered, on the date the death benefit is payable to your Beneficiary
(unless your surviving
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AMERICAN SKANDIA APEX II PROSPECTUS
spouse elects to continue the Annuity), or on the date that your Account Value
is transferred to begin making annuity payments. The GMIB program may also be
terminated if you designate a new Annuitant who would not be eligible to elect
the GMIB program based on his or her age at the time of the change.
Upon termination of the GMIB program we will deduct the charge from your
Account Value for the portion of the Annuity Year since the prior anniversary of
the Annuity's Issue Date (or the Issue Date if in the first Annuity Year).
CHARGES UNDER THE PROGRAM
Currently, we deduct a charge equal to 0.50% per year of the average Protected
Income Value for the period the charge applies. Because the charge is calculated
based on the average Protected Income Value, it does not increase or decrease
based on changes to the Annuity's Account Value due to market performance. The
dollar amount you pay each year will increase in any year the Protected Income
Value increases, and it will decrease in any year the Protected Income Value
decreases due to withdrawal, irrespective of whether your Account Value
increases or decreases.
The charge is deducted annually in arrears each Annuity Year on the
anniversary of the Issue Date of the Annuity. We deduct the amount of the charge
pro-rata from the Account Value allocated to the variable investment options and
the Fixed Allocations. No MVA will apply to Account Value deducted from a Fixed
Allocation. If you surrender your Annuity, begin receiving annuity payments
under the GMIB program or any other annuity payment option we make available
during an Annuity Year, or the GMIB program terminates, we will deduct the
charge for the portion of the Annuity Year since the prior anniversary of the
Annuity's Issue Date (or the Issue Date if in the first Annuity Year).
No charge applies after the Annuity Date.
LIFETIME FIVE INCOME BENEFIT (LIFETIME FIVE)
THE LIFETIME FIVE INCOME BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING OFFERED
IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL AND WILL BE
OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY APPROVAL
IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. CURRENTLY, LIFETIME FIVE CAN BE ELECTED ONLY ONCE
EACH ANNUITY YEAR, AND ONLY WHERE THE ANNUITANT AND THE OWNER ARE THE SAME
PERSON OR, IF THE ANNUITY OWNER IS AN ENTITY, WHERE THERE IS ONLY ONE ANNUITANT.
WE RESERVE THE RIGHT TO LIMIT THE ELECTION FREQUENCY IN THE FUTURE. BEFORE
MAKING ANY SUCH CHANGE TO THE ELECTION FREQUENCY, WE WILL PROVIDE PRIOR NOTICE
TO OWNERS WHO HAVE AN EFFECTIVE LIFETIME FIVE INCOME BENEFIT. THE ANNUITANT MUST
BE AT LEAST 45 YEARS OLD WHEN THE PROGRAM IS ELECTED. THE LIFETIME FIVE INCOME
BENEFIT PROGRAM IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION,
GUARANTEED RETURN OPTION PLUS, GUARANTEED MINIMUM WITHDRAWAL BENEFIT OR THE
GUARANTEED MINIMUM INCOME BENEFIT RIDER. AS LONG AS YOUR LIFETIME FIVE INCOME
BENEFIT IS IN EFFECT, YOU MUST ALLOCATE YOUR ACCOUNT VALUE IN ACCORDANCE WITH AN
ELIGIBLE MODEL UNDER OUR ASSET ALLOCATION PROGRAMS, WHICH ARE GENERALLY
DESCRIBED IN THE "ARE ANY ASSET ALLOCATION PROGRAMS AVAILABLE?" SECTION ABOVE.
FOR FURTHER INFORMATION ON ASSET ALLOCATION PROGRAMS, PLEASE CONSULT WITH YOUR
INVESTMENT PROFESSIONAL OR CALL 1-800-752-6342.
We offer a program that guarantees your ability to withdraw amounts equal
to a percentage of an initial principal value (called the "Protected Withdrawal
Value"), regardless of
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AMERICAN SKANDIA APEX II PROSPECTUS
Living Benefit Programs continued
the impact of market performance on your Account Value, subject to our program
rules regarding the timing and amount of withdrawals. There are two options --
one is designed to provide an annual withdrawal amount for life (the "Life
Income Benefit") and the other is designed to provide a greater annual
withdrawal amount as long as there is Protected Withdrawal Value (adjusted as
described below) (the "Withdrawal Benefit"). If there is no Protected Withdrawal
Value, the withdrawal benefit will be zero. You do not choose between these two
options; each option will continue to be available as long as the Annuity has an
Account Value and the Lifetime Five is in effect. Certain benefits under
Lifetime Five may remain in effect even if the Account Value of the Annuity is
zero. The program may be appropriate if you intend to make periodic withdrawals
from your Annuity and wish to ensure that market performance will not affect
your ability to receive annual payments. You are not required to make
withdrawals as part of the program -- the guarantees are not lost if you
withdraw less than the maximum allowable amount each year under the rules of the
program.
KEY FEATURE -- PROTECTED WITHDRAWAL VALUE
The Protected Withdrawal Value is initially used to determine the amount of each
initial annual payment under the Life Income Benefit and the Withdrawal Benefit.
The initial Protected Withdrawal Value is determined as of the date you make
your first withdrawal under the Annuity following your election of Lifetime
Five. The initial Protected Withdrawal Value is equal to the greater of (A) the
Account Value on the date you elect Lifetime Five, plus any additional Purchase
Payments each growing at 5% per year from the date of your election of the
program, or application of the Purchase Payment to your Annuity, as applicable,
until the date of your first withdrawal or the 10th anniversary of the benefit
effective date, if earlier (B) the Account Value as of the date of the first
withdrawal from your Annuity, prior to the withdrawal, and (C) the highest
Account Value on each Annuity anniversary prior to the first withdrawal or on
the first 10 Annuity anniversaries if earlier than the date of your first
withdrawal after the benefit effective date. Each value is increased by the
amount of any subsequent Purchase Payments.
- - If you elect the Lifetime Five program at the time you purchase your
Annuity, the Account Value will be your initial Purchase Payment.
- - For existing Owners who are electing the Lifetime Five benefit, the
Account Value on the date of your election of the Lifetime Five program
will be used to determine the initial Protected Withdrawal Value.
- - If you make additional Purchase Payments after your first withdrawal, the
Protected Withdrawal Value will be increased by the amount of each
additional Purchase Payment.
You may elect to step-up your Protected Withdrawal Value if, due to
positive market performance, your Account Value is greater than the Protected
Withdrawal Value. You are eligible to step-up the Protected Withdrawal Value on
or after the 5th anniversary of the first withdrawal under the Lifetime Five
program. The Protected Withdrawal Value can be stepped up again on or after the
5th anniversary following the preceding step-up. If you elect to step-up the
Protected Withdrawal Value under the program, and on the date you elect to
step-up, the charges under the Lifetime Five program have changed for new
purchasers, your program may be subject to the new charge going forward.
Upon election of the step-up, we increase the Protected Withdrawal Value
to be equal to the then current Account Value. For example, assume your initial
Protected Withdrawal Value was $100,000 and you have made cumulative withdrawals
of $40,000, reducing the Protected Withdrawal Value to $60,000. On the date you
are eligible to step-up the Protected Withdrawal Value, your Account Value is
equal to $75,000. You could elect to step-up the Protected Withdrawal Value to
$75,000 on the date you are eligible. If your current Annual Income Amount and
Annual Withdrawal Amount are less than they would be if we did not reflect the
step-up in Protected Withdrawal Value, then we will increase these amounts to
reflect the step-up as described below.
The Protected Withdrawal Value is reduced each time a withdrawal is made
on a dollar-for-dollar basis up to 7% per Annuity Year of the Protected
Withdrawal Value and on the greater of a dollar-for-dollar basis or a pro-rata
basis for withdrawals in an Annuity Year in excess of that amount until the
Protected Withdrawal Value is reduced to zero. At that point the Annual
Withdrawal Amount will be zero until such time (if any) as the Annuity reflects
a Protected Withdrawal Value (for example, due to a step-up or additional
Purchase Payments being made into the Annuity).
KEY FEATURE -- ANNUAL INCOME AMOUNT UNDER THE LIFE INCOME BENEFIT
The initial Annual Income Amount is equal to 5% of the initial Protected
Withdrawal Value. Under the Lifetime Five program,
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AMERICAN SKANDIA APEX II PROSPECTUS
if your cumulative withdrawals in an Annuity Year are less than or equal to the
Annual Income Amount, they will not reduce your Annual Income Amount in
subsequent Annuity Years. If your cumulative withdrawals are in excess of the
Annual Income Amount ("Excess Income"), your Annual Income Amount in subsequent
years will be reduced (except with regard to required minimum distributions) by
the result of the ratio of the Excess Income to the Account Value immediately
prior to such withdrawal (see examples of this calculation below). Reductions
include the actual amount of the withdrawal, including any CDSC that may apply.
A withdrawal can be considered Excess Income under the Life Income Benefit even
though it does not exceed the Annual Withdrawal Amount under the Withdrawal
Benefit. When you elect a step-up, your Annual Income Amount increases to equal
5% of your Account Value after the step-up if such amount is greater than your
Annual Income Amount. Your Annual Income Amount also increases if you make
additional Purchase Payments. The amount of the increase is equal to 5% of any
additional Purchase Payments. Any increase will be added to your Annual Income
Amount beginning on the day that the step-up is effective or the Purchase
Payment is made. A determination of whether you have exceeded your Annual Income
Amount is made at the time of each withdrawal; therefore a subsequent increase
in the Annual Income Amount will not offset the effect of a withdrawal that
exceeded the Annual Income Amount at the time the withdrawal was made.
KEY FEATURE -- ANNUAL WITHDRAWAL AMOUNT UNDER THE WITHDRAWAL BENEFIT
The initial Annual Withdrawal Amount is equal to 7% of the initial Protected
Withdrawal Value. Under the Lifetime Five program, if your cumulative
withdrawals each Annuity Year are less than or equal to the Annual Withdrawal
Amount, your Protected Withdrawal Value will be reduced on a dollar-for-dollar
basis. If your cumulative withdrawals are in excess of the Annual Withdrawal
Amount ("Excess Withdrawal"), your Annual Withdrawal Amount will be reduced
(except with regard to required minimum distributions) by the result of the
ratio of the Excess Withdrawal to the Account Value immediately prior to such
withdrawal (see the examples of this calculation below). Reductions include the
actual amount of the withdrawal, including any CDSC that may apply. When you
elect a step-up, your Annual Withdrawal Amount increases to equal 7% of your
Account Value after the step-up if such amount is greater than your Annual
Withdrawal Amount. Your Annual Withdrawal Amount also increases if you make
additional Purchase Payments. The amount of the increase is equal to 7% of any
additional Purchase Payments. A determination of whether you have exceeded your
Annual Withdrawal Amount is made at the time of each withdrawal; therefore, a
subsequent increase in the Annual Withdrawal Amount will not offset the effect
of a withdrawal that exceeded the Annual Withdrawal Amount at the time the
withdrawal was made.
The Lifetime Five program does not affect your ability to make withdrawals
under your Annuity or limit your ability to request withdrawals that exceed the
Annual Income Amount and the Annual Withdrawal Amount. You are not required to
withdraw all or any portion of the Annual Withdrawal Amount or Annual Income
Amount in each Annuity Year.
- - If, cumulatively, you withdraw an amount less than the Annual Withdrawal
Amount under the Withdrawal Benefit in any Annuity Year, you cannot
carry-over the unused portion of the Annual Withdrawal Amount to
subsequent Annuity Years. However, because the Protected Withdrawal Value
is only reduced by the actual amount of withdrawals you make under these
circumstances, any unused Annual Withdrawal Amount may extend the period
of time until the remaining Protected Withdrawal Value is reduced to zero.
- - If, cumulatively, you withdraw an amount less than the Annual Income
Amount under the Life Income Benefit in any Annuity Year, you cannot
carry-over the unused portion of the Annual Income Amount to subsequent
Annuity Years. However, because the Protected Withdrawal Value is only
reduced by the actual amount of withdrawals you make under these
circumstances, any unused Annual Income Amount may extend the period of
time until the remaining Protected Withdrawal Value is reduced to zero.
The following examples of dollar-for-dollar and proportional reductions and the
step-up of the Protected Withdrawal Value, Annual Withdrawal Amount and Annual
Income Amount assume: 1.) the Issue Date and the Effective Date of the Lifetime
Five program are February 1, 2005; 2.) an initial Purchase Payment of $250,000;
3.) the Account Value on February 1, 2006 is equal to $265,000; 4.) the first
withdrawal occurs
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AMERICAN SKANDIA APEX II PROSPECTUS
Living Benefit Programs continued
on March 1, 2006 when the Account Value is equal to $263,000; and 5.) the
Account Value on March 1, 2011 is equal to $240,000.
The initial Protected Withdrawal Value is calculated as the greatest of
(a), (b) and (c):
(a) Purchase payment accumulated at 5% per year from February 1, 2005
until March 1, 2006 (393 days) = $250,000 x 1.05(393/365) =
$263,484.33
(b) Account Value on March 1, 2006 (the date of the first withdrawal) =
$263,000
(c) Account Value on February 1, 2006 (the first Annuity Anniversary) =
$265,000
Therefore, the initial Protected Withdrawal Value is equal to $265,000.
The Annual Withdrawal Amount is equal to $18,550 under the Withdrawal Benefit
(7% of $265,000). The Annual Income Amount is equal to $13,250 under the Life
Income Benefit (5% of $265,000).
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
If $10,000 was withdrawn (less than both the Annual Income Amount and the Annual
Withdrawal Amount) on March 1, 2006, then the following values would result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 -
$10,000 = $8,550 Annual Withdrawal Amount for future Annuity Years remains
at $18,550
- - Remaining Annual Income Amount for current Annuity Year = $13,250 -
$10,000 = $3,250 Annual Income Amount for future Annuity Years remains at
$13,250
- - Protected Withdrawal Value is reduced by $10,000 from $265,000 to $255,000
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
(a) If $15,000 was withdrawn (more than the Annual Income Amount but
less than the Annual Withdrawal Amount) on March 1, 2006, then the
following values would result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 -
$15,000 = $3,550
Annual Withdrawal Amount for future Annuity Years remains at $18,550
- - Remaining Annual Income Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Income Amount ($15,000 - $13,250 =
$1,750) reduces Annual Income Amount for future Annuity Years.
- - Reduction to Annual Income Amount = Excess Income/ Account Value before
Excess Income x Annual Income Amount = $1,750 / ($263,000 - $13,250) x
$13,250 = $93
Annual Income Amount for future Annuity Years = $13,250 - $93 = $13,157
- - Protected Withdrawal Value is reduced by $15,000 from $265,000 to $250,000
(b) If $25,000 was withdrawn (more than both the Annual Income Amount
and the Annual Withdrawal Amount) on March 1, 2006, then the
following values would result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Withdrawal Amount ($25,000 - $18,550
= $6,450) reduces Annual Withdrawal Amount for future Annuity Years.
- - Reduction to Annual Withdrawal Amount = Excess Withdrawal/Account Value
before Excess Withdrawal x Annual Withdrawal Amount = $6,450 / ($263,000 -
$18,550) x $18,550 = $489
Annual Withdrawal Amount for future Annuity Years = $18,550 - $489 =
$18,061
- - Remaining Annual Income Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Income Amount ($25,000 - $13,250 =
$11,750) reduces Annual Income Amount for future Annuity Years.
- - Reduction to Annual Income Amount = Excess Income/ Account Value before
Excess Income x Annual Income Amount = $11,750 / ($263,000 - $13,250) x
$13,250 = $623 Annual Income Amount for future Annuity Years = $13,250 -
$623 = $12,627
- - Protected Withdrawal Value is first reduced by the Annual Withdrawal
Amount ($18,550) from $265,000 to $246,450. It is further reduced by the
greater of a dollar-for-dollar reduction or a proportional reduction.
Dollar-for-dollar reduction = $25,000 - $18,550 = $6,450
- - Proportional reduction = Excess Withdrawal / Account Value before Excess
Withdrawal x Protected Withdrawal Value = $6,450 / ($263,000 - $18,550) x
$246,450 = $6,503
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AMERICAN SKANDIA APEX II PROSPECTUS
Protected Withdrawal Value = $246,450 - max {$6,450, $6,503} = $239,947
EXAMPLE 3. STEP-UP OF THE PROTECTED WITHDRAWAL VALUE
If the Annual Income Amount ($13,250) is withdrawn each year starting on March
1, 2006 for a period of 5 years, the Protected Withdrawal Value on March 1, 2011
would be reduced to $198,750 {$265,000 - ($13,250 x 5)}. If a step-up is elected
on March 1, 2011, then the following values would result:
- - Protected Withdrawal Value = Account Value on March 1, 2011 = $240,000
- - Annual Income Amount is equal to the greater of the current Annual Income
Amount or 5% of the stepped-up Protected Withdrawal Value. Current Annual
Income Amount is $13,250. 5% of the stepped-up Protected Withdrawal Value
is 5% of $240,000, which is $12,000. Therefore, the Annual Income Amount
remains $13,250.
- - Annual Withdrawal Amount is equal to the greater of the current Annual
Withdrawal Amount or 7% of the stepped up Protected Withdrawal Value.
Current Annual Withdrawal Amount is $18,550. 7% of the stepped-up
Protected Withdrawal Value is 7% of $240,000, which is $16,800. Therefore
the Annual Withdrawal Amount remains $18,550.
BENEFITS UNDER THE LIFETIME FIVE PROGRAM
- - If your Account Value is equal to zero, and the cumulative withdrawals in
the current Annuity Year are greater than the Annual Withdrawal Amount,
the Lifetime Five program will terminate. To the extent that your Account
Value was reduced to zero as a result of cumulative withdrawals that are
equal to or less than the Annual Income Amount and amounts are still
payable under both the Life Income Benefit and the Withdrawal Benefit, you
will be given the choice of receiving the payments under the Life Income
Benefit or under the Withdrawal Benefit. Once you make this election we
will make an additional payment for that Annuity Year equal to either the
remaining Annual Income Amount or Annual Withdrawal Amount for the Annuity
Year, if any, depending on the option you choose. In subsequent Annuity
Years we make payments that equal either the Annual Income Amount or the
Annual Withdrawal Amount as described in this Prospectus. You will not be
able to change the option after your election and no further Purchase
Payments will be accepted under your Annuity. If you do not make an
election, we will pay you annually under the Life Income Benefit. To the
extent that cumulative withdrawals in the current Annuity Year that
reduced your Account Value to zero are more than the Annual Income Amount
but less than or equal to the Annual Withdrawal Amount and amounts are
still payable under the Withdrawal Benefit, you will receive the payments
under the Withdrawal Benefit. In the year of a withdrawal that reduced
your Account Value to zero, we will make an additional payment to equal
any remaining Annual Withdrawal Amount and make payments equal to the
Annual Withdrawal Amount in each subsequent year (until the Protected
Withdrawal Value is depleted). Once your Account Value equals zero no
further Purchase Payments will be accepted under your Annuity.
- - If annuity payments are to begin under the terms of your Annuity or if you
decide to begin receiving annuity payments and there is any Annual Income
Amount due in subsequent Annuity Years or any remaining Protected
Withdrawal Value, you can elect one of the following three options:
(1) apply your Account Value to any annuity option available; or
(2) request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We
make such annuity payments until the Annuitant's death; or
(3) request that, as of the date annuity payments are to begin, we pay
out any remaining Protected Withdrawal Value as annuity payments.
Each year such annuity payments will equal the Annual Withdrawal
Amount or the remaining Protected Withdrawal Value if less. We make
such annuity payments until the earlier of the Annuitant's death or
the date the Protected Withdrawal Value is depleted.
We must receive your request in a form acceptable to us at our office.
- - In the absence of an election when mandatory annuity payments are to
begin, we will make annual annuity payments as a single life fixed annuity
with five payments certain using the greater of the annuity rates then
currently available or the annuity rates guaranteed in your Annuity. The
amount that will be applied to provide such annuity payments will be the
greater of:
(1) the present value of future Annual Income Amount payments. Such
present value will be calculated using the greater of the single
life fixed annuity rates then currently available or the single life
fixed annuity rates guaranteed in your Annuity; and
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AMERICAN SKANDIA APEX II PROSPECTUS
Living Benefit Programs continued
(2) the Account Value.
- - If no withdrawal was ever taken, we will determine a Protected Withdrawal
Value and calculate an Annual Income Amount and an Annual Withdrawal
Amount as if you made your first withdrawal on the date the annuity
payments are to begin.
OTHER IMPORTANT CONSIDERATIONS
- - Withdrawals under the Lifetime Five program are subject to all of the
terms and conditions of the Annuity, including any CDSC.
- - Withdrawals made while the Lifetime Five program is in effect will be
treated, for tax purposes, in the same way as any other withdrawals under
the Annuity. The Lifetime Five program does not directly affect the
Annuity's Account Value or Surrender Value, but any withdrawal will
decrease the Account Value by the amount of the withdrawal (plus any
applicable CDSC). If you surrender your Annuity, you will receive the
current Surrender Value, not the Protected Withdrawal Value.
- - You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the Lifetime Five program. The
Lifetime Five program provides a guarantee that if your Account Value
declines due to market performance, you will be able to receive your
Protected Withdrawal Value or Annual Income Amount in the form of periodic
benefit payments.
- - You must allocate your Account Value in accordance with an eligible model
under an available asset allocation program or in accordance with other
options that we may permit in order to elect and maintain the Lifetime
Five program. Asset allocation programs are described generally in the
"Are Any Asset Allocation Programs Available?" section above. For further
information on asset allocation programs, please consult with your
Investment Professional or call 1-800-752-6342.
ELECTION OF THE PROGRAM
The Lifetime Five program can be elected at the time that you purchase your
Annuity. We also offer existing Owners the option to elect the Lifetime Five
program after the Issue Date of their Annuity, subject to our eligibility rules
and restrictions. Your Account Value as the date of election will be used as a
basis to calculate the initial Protected Withdrawal Value, the initial Protected
Annual Withdrawal Amount, and the Annual Income Amount.
TERMINATION OF THE PROGRAM
The program terminates automatically when your Protected Withdrawal Value and
Annual Income Amount equals zero. You may terminate the program at any time by
notifying us. If you terminate the program, any guarantee provided by the
benefit will terminate as of the date the termination is effective. The program
terminates upon your surrender of the Annuity, upon the death of the Annuitant
(but your surviving spouse may elect a new Lifetime Five if your spouse elects
the spousal continuance option and your spouse would then be eligible to elect
the benefit if he or she was a new purchaser), upon a change in ownership of the
Annuity that changes the tax identification number of the Owner, upon change in
the Annuitant or upon your election to begin receiving annuity payments.
The charge for the Lifetime Five program will no longer be deducted from
your Account Value upon termination of the program.
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS
If you purchase an Annuity as an investment vehicle for "qualified" investments,
including an IRA, SEP-IRA, or Tax Sheltered Annuity (or 403(b)), the minimum
distribution rules under the Code require that you begin receiving periodic
amounts from your Annuity beginning after age 701/2. The amount required under
the Code may exceed the Annual Withdrawal Amount and the Annual Income Amount,
which will cause us to increase the Annual Income Amount and the Annual
Withdrawal Amount in any Annuity Year that required minimum distributions due
from your Annuity are greater than such amounts. Any such payments will reduce
your Protected Withdrawal Value. In addition, the amount and duration of
payments under the annuity payment and death benefit provisions may be adjusted
so that the payments do not trigger any penalty or excise taxes due to tax
considerations such as minimum distribution requirements.
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AMERICAN SKANDIA APEX II PROSPECTUS
Death Benefit
WHAT TRIGGERS THE PAYMENT OF A DEATH BENEFIT?
The Annuity provides a Death Benefit during its accumulation period. IF THE
ANNUITY IS OWNED BY ONE OR MORE NATURAL PERSONS, THE DEATH BENEFIT IS PAYABLE
UPON THE FIRST DEATH OF AN OWNER. IF THE ANNUITY IS OWNED BY AN ENTITY, THE
DEATH BENEFIT IS PAYABLE UPON THE ANNUITANT'S DEATH, IF THERE IS NO CONTINGENT
ANNUITANT. If a Contingent Annuitant was designated before the Annuitant's death
and the Annuitant dies, then the Contingent Annuitant becomes the Annuitant and
a Death Benefit will not be paid at that time. The person upon whose death the
Death Benefit is paid is referred to below as the "decedent."
BASIC DEATH BENEFIT
The Annuity provides a basic Death Benefit at no additional charge. The
Insurance Charge we deduct daily from your Account Value allocated to the
Sub-accounts is used, in part, to pay us for the risk we assume in providing the
basic Death Benefit guarantee under the Annuity. The Annuity also offers three
different optional Death Benefits that can be purchased for an additional
charge. The additional charge is deducted to compensate American Skandia for
providing increased insurance protection under the optional Death Benefits.
NOTWITHSTANDING THE ADDITIONAL PROTECTION PROVIDED UNDER THE OPTIONAL DEATH
BENEFITS, THE ADDITIONAL COST HAS THE IMPACT OF REDUCING THE NET PERFORMANCE OF
THE INVESTMENT OPTIONS.
The BASIC DEATH BENEFIT is the greater of:
- - The sum of all Purchase Payments less the sum of all proportional
withdrawals.
- - The sum of your Account Value in the variable investment options and your
Interim Value in the Fixed Allocations.
"PROPORTIONAL WITHDRAWALS" are determined by calculating the percentage of your
Account Value that each prior withdrawal represented when withdrawn. For
example, a withdrawal of 50% of Account Value would be considered as a 50%
reduction in Purchase Payments for purposes of calculating the basic Death
Benefit.
OPTIONAL DEATH BENEFITS
Three optional Death Benefits are offered for purchase with your Annuity to
provide an enhanced level of protection for your beneficiaries.
CURRENTLY, THESE BENEFITS ARE ONLY OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE
RECEIVED REGULATORY APPROVAL AND MUST BE ELECTED AT THE TIME THAT YOU PURCHASE
YOUR ANNUITY. WE MAY, AT A LATER DATE, ALLOW EXISTING ANNUITY OWNERS TO PURCHASE
AN OPTIONAL DEATH BENEFIT SUBJECT TO OUR RULES AND ANY CHANGES OR RESTRICTIONS
IN THE BENEFITS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS
ONCE APPROVED AND IF YOU PURCHASE YOUR ANNUITY AS PART OF AN EXCHANGE,
REPLACEMENT OR TRANSFER, IN WHOLE OR IN PART, FROM ANY OTHER ANNUITY WE ISSUE.
THE "COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE" DEATH BENEFIT MAY
ONLY BE ELECTED INDIVIDUALLY, AND CANNOT BE ELECTED IN COMBINATION WITH ANY
OTHER OPTIONAL DEATH BENEFIT.
ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT
The Enhanced Beneficiary Protection Optional Death Benefit can provide
additional amounts to your Beneficiary that may be used to offset federal and
state taxes payable on any taxable gains in your Annuity at the time of your
death. Whether this benefit is appropriate for you may depend on your particular
circumstances, including other financial resources that may be available to your
Beneficiary to pay taxes on your Annuity should you die during the accumulation
period. No benefit is payable if death occurs on or after the Annuity Date.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT PROVIDES A
BENEFIT THAT IS PAYABLE IN ADDITION TO THE BASIC DEATH BENEFIT. If the Annuity
has one Owner, the Owner must be age 75 or less at the time the benefit is
purchased. If the Annuity has joint Owners, the oldest Owner must be age 75 or
less. If the Annuity is owned by an entity, the Annuitant must be age 75 or
less.
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AMERICAN SKANDIA APEX II PROSPECTUS
Death Benefit continued
CALCULATION OF ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT
If you purchase the Enhanced Beneficiary Protection Optional Death Benefit, the
Death Benefit is calculated as follows:
1. the BASIC DEATH BENEFIT described above;
PLUS
2. 40% of your "GROWTH" under the Annuity, as defined below.
"GROWTH" means the sum of your Account Value in the variable investment
options and your Interim Value in the Fixed Allocations, minus the total of all
Purchase Payments reduced by the sum of all proportional withdrawals.
"PROPORTIONAL WITHDRAWALS" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT IS SUBJECT TO A
MAXIMUM OF 100% OF ALL PURCHASE PAYMENTS APPLIED TO THE ANNUITY AT LEAST 12
MONTHS PRIOR TO THE DEATH OF THE DECEDENT THAT TRIGGERS THE PAYMENT OF THE DEATH
BENEFIT.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT DESCRIBED ABOVE IS
CURRENTLY BEING OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY
APPROVAL. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE
APPROVED. THE ENHANCED BENEFICIARY PROTECTION DEATH BENEFIT IS NOT AVAILABLE IF
YOU ELECT THE "COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE" DEATH
BENEFIT. PLEASE SEE APPENDIX D FOR A DESCRIPTION OF THE ENHANCED BENEFICIARY
PROTECTION OPTIONAL DEATH BENEFIT OFFERED BEFORE NOVEMBER 18, 2002 IN THOSE
JURISDICTIONS WHERE WE RECEIVED REGULATORY APPROVAL. PLEASE REFER TO THE SECTION
ENTITLED "TAX CONSIDERATIONS" FOR A DISCUSSION OF SPECIAL TAX CONSIDERATIONS FOR
PURCHASERS OF THIS BENEFIT.
See Appendix B for examples of how the Enhanced Beneficiary Protection
Optional Death Benefit is calculated.
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT ("HAV")
If the Annuity has one Owner, the Owner must be age 79 or less at the time
Highest Anniversary Value Optional Death Benefit is purchased. If the Annuity
has joint Owners, the oldest Owner must be age 79 or less. If the Annuity is
owned by an entity, the Annuitant must be age 79 or less.
CERTAIN OF THE PORTFOLIOS OFFERED AS SUB-ACCOUNTS UNDER THE ANNUITY ARE
NOT AVAILABLE IF YOU ELECT THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT. IN
ADDITION, WE RESERVE THE RIGHT TO REQUIRE YOU TO USE CERTAIN ASSET ALLOCATION
MODEL(S) IF YOU ELECT THIS DEATH BENEFIT.
CALCULATION OF HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
The HAV Death Benefit depends on whether death occurs before or after the Death
Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value as of the Owner's date of death.
If the Owner dies on or after the Death Benefit Target Date, the Death
Benefit equals the greater of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value on the Death Benefit Target Date plus
the sum of all Purchase Payments less the sum of all proportional
withdrawals since the Death Benefit Target Date.
THE AMOUNT DETERMINED BY THIS CALCULATION IS INCREASED BY ANY PURCHASE
PAYMENTS RECEIVED AFTER THE OWNER'S DATE OF DEATH AND DECREASED BY ANY
PROPORTIONAL WITHDRAWALS SINCE SUCH DATE.
THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT DESCRIBED ABOVE IS CURRENTLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL.
CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. THE
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT THE
"COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE" OR THE "HIGHEST DAILY
VALUE" DEATH BENEFIT.
Please refer to the definition of Death Benefit Target Date below. This
death benefit may not be an appropriate feature where the Owner's age is near
the age specified in the Death Benefit Target Date. This is because the benefit
may not have the same potential for growth as it otherwise would, since there
will be fewer contract anniversaries before the death benefit target date is
reached. The death benefit target date under this death benefit is earlier than
the death benefit target date under the Combination 5% Roll-up and Highest
Anniversary Value Death
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AMERICAN SKANDIA APEX II PROSPECTUS
Benefit for Owners who are age 76 or older when the Annuity is issued, which may
result in a lower value on the death benefit, since there will be fewer contract
anniversaries before the death benefit target date is reached.
See Appendix B for examples of how the Highest Anniversary Value Death Benefit
is calculated.
COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
If the Annuity has one Owner, the Owner must be age 79 or less at the time the
Combination 5% Roll-up and HAV Optional Death Benefit is purchased. If the
Annuity has joint Owners, the oldest Owner must be age 79 or less. If the
Annuity is owned by an entity, the Annuitant must be age 79 or less.
CERTAIN OF THE PORTFOLIOS OFFERED AS SUB-ACCOUNTS UNDER THE ANNUITY ARE
NOT AVAILABLE IF YOU ELECT THE COMBINATION 5% ROLL-UP AND HAV DEATH BENEFIT. IN
ADDITION, WE RESERVE THE RIGHT TO REQUIRE YOU TO USE CERTAIN ASSET ALLOCATION
MODEL(S) IF YOU ELECT THIS DEATH BENEFIT.
CALCULATION OF THE COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH
BENEFIT
The Combination 5% Roll-up and HAV Death Benefit equals the greatest of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value death benefit described above, and
3. 5% Roll-up described below.
The calculation of the 5% Roll-up depends on whether death occurs before
or after the Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date the 5% Roll up is
equal to:
- - all Purchase Payments increasing at an annual effective interest rate of
5% starting on the date that each Purchase Payment is made and ending on
the Owner's date of death;
MINUS
- - the sum of all withdrawals, dollar for dollar up to 5% of the death
benefit's value as of the prior contract anniversary (or issue date if the
withdrawal is in the first contract year). Any withdrawals in excess of
the 5% dollar for dollar limit are proportional.
If the Owner dies on or after the Death Benefit Target Date the 5% Roll-up
is equal to:
- - the 5% Roll-up value as of the Death Benefit Target Date increased by
total Purchase Payments made after the Death Benefit Target Date;
MINUS
- - the sum of all withdrawals which reduce the 5% Roll-up proportionally.
PLEASE REFER TO THE DEFINITIONS OF DEATH BENEFIT TARGET DATE BELOW. THIS
DEATH BENEFIT MAY NOT BE AN APPROPRIATE FEATURE WHERE THE OWNER'S AGE IS NEAR
THE AGE SPECIFIED IN THE DEATH BENEFIT TARGET DATE. THIS IS BECAUSE THE BENEFIT
MAY NOT HAVE THE SAME POTENTIAL FOR GROWTH AS IT OTHERWISE WOULD, SINCE THERE
WILL BE FEWER ANNUITY ANNIVERSARIES BEFORE THE DEATH BENEFIT TARGET DATE IS
REACHED.
THE COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT DESCRIBED
ABOVE IS CURRENTLY BEING OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED
REGULATORY APPROVAL. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. THE "COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY
VALUE" DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT ANY OTHER OPTIONAL DEATH
BENEFIT. PLEASE SEE APPENDIX D FOR A DESCRIPTION OF THE GUARANTEED MINIMUM DEATH
BENEFIT OFFERED BEFORE NOVEMBER 18, 2002 IN THOSE JURISDICTIONS WHERE WE
RECEIVED REGULATORY APPROVAL.
See Appendix B for examples of how the Combination 5% Roll-up and Highest
Anniversary Value Death Benefit is calculated.
Key Terms Used with the Highest Anniversary Value Death Benefit and the
Combination 5% Roll-up and Highest Anniversary Value Death Benefit:
- - The Death Benefit Target Date for the Highest Anniversary Value Death
Benefit is the contract anniversary on or after the 80th birthday of the
current Owner, the oldest of either joint Owner or the Annuitant, if
entity owned.
- - The Death Benefit Target Date for the Combination 5% Roll-up and HAV Death
Benefit is the later of the contract anniversary on or after the 80th
birthday of the current Owner, the oldest of either joint Owner or the
Annuitant, if entity owned, or five years after the Issue Date of the
Annuity.
- - The Highest Anniversary Value equals the highest of all previous
"Anniversary Values" less proportional withdrawals since such anniversary
and plus any Purchase Payments since such anniversary.
- - The Anniversary Value is the Account Value as of each anniversary of the
Issue Date of the Annuity. The Anniversary Value on the Issue Date is
equal to your Purchase Payment.
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AMERICAN SKANDIA APEX II PROSPECTUS
Death Benefit continued
- - Proportional withdrawals are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
Proportional withdrawals result in a reduction to the Highest Anniversary
Value or 5% Roll-up value by reducing such value in the same proportion as
the Account Value was reduced by the withdrawal as of the date the
withdrawal occurred. For example, if your Highest Anniversary Value or 5%
Roll-up value is $125,000 and you subsequently withdraw $10,000 at a time
when your Account Value is equal to $100,000 (a 10% reduction), when
calculating the optional Death Benefit we will reduce your Highest
Anniversary Value ($125,000) by 10% or $12,500.
HIGHEST DAILY VALUE DEATH BENEFIT ("HDV")
If the Annuity has one Owner, the Owner must be age 79 or less at the time the
Highest Daily Value Death Benefit is elected. If the Annuity has joint Owners,
the older Owner must be age 79 or less. If there are Joint Owners, death of the
Owner refers to the first to die of the Joint Owners. If the Annuity is owned by
an entity, the Annuitant must be age 79 or less and death of the Owner refers to
the death of the Annuitant.
IF YOU ELECT THIS BENEFIT, YOU MUST ALLOCATE YOUR ACCOUNT VALUE IN ACCORDANCE
WITH AN ELIGIBLE MODEL UNDER AN AVAILABLE ASSET ALLOCATION PROGRAM OR IN
ACCORDANCE WITH OTHER OPTIONS THAT WE MAY PERMIT. Because this benefit, once
elected, may not be terminated, you must keep your Account Value allocated to an
eligible model throughout the life of the Annuity. You may, however, switch from
one eligible model to another eligible model. Our asset allocation programs are
generally described in the "Are Any Asset Allocation Programs Available?"
section above. For further information on asset allocation programs, please
consult with your Investment Professional or call 1-800-752-6342.
The HDV Death Benefit depends on whether death occurs before or after the
Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the basic Death Benefit described above; and
2. the HDV as of the Owner's date of death.
If the Owner dies on or after the Death Benefit Target Date, the Death
Benefit equals the greater of:
1. the basic Death Benefit described above; and
2. the HDV on the Death Benefit Target Date plus the sum of all
Purchase Payments less the sum of all proportional withdrawals since
the Death Benefit Target Date.
The amount determined by this calculation is increased by any Purchase
Payments received after the Owner's date of death and decreased by any
proportional withdrawals since such date.
THE HIGHEST DAILY VALUE DEATH BENEFIT DESCRIBED ABOVE IS CURRENTLY BEING OFFERED
IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL. CERTAIN TERMS
AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. THE HIGHEST DAILY
VALUE DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION,
GUARANTEED RETURN OPTION PLUS, THE "COMBINATION 5% ROLL-UP AND HIGHEST
ANNIVERSARY VALUE" DEATH BENEFIT, OR THE HIGHEST ANNIVERSARY VALUE DEATH
BENEFIT.
KEY TERMS USED WITH THE HIGHEST DAILY VALUE DEATH BENEFIT:
- - The Death Benefit Target Date for the Highest Daily Value Death Benefit is
the later of the Annuity anniversary on or after the 80th birthday of the
current Owner, or the older of either the joint Owner or the Annuitant, if
entity owned, or five years after the Issue Date of the Annuity.
- - The Highest Daily Value equals the highest of all previous "Daily Values"
less proportional withdrawals since such date and plus any Purchase
Payments since such date.
- - The Daily Value is the Account Value as of the end of each Valuation Day.
The Daily Value on the Issue Date is equal to your Purchase Payment.
- - Proportional withdrawals are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
Proportional withdrawals result in a reduction to the Highest Daily Value
by reducing such value in the same proportion as the Account Value was
reduced by the withdrawal as of the date the withdrawal occurred. For
example, if your Highest Daily Value is $125,000 and you subsequently
withdraw $10,000 at a time when your Account Value is equal to $100,000 (a
10% reduction), when calculating the optional Death Benefit we will reduce
your Highest Daily Value ($125,000) by 10% or $12,500. Please see Appendix
B to this prospec-
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AMERICAN SKANDIA APEX II PROSPECTUS
tus for a hypothetical example of how the HDV Death Benefit is calculated.
ANNUITIES WITH JOINT OWNERS
For Annuities with Joint Owners, the Death Benefits are calculated as shown
above except that the age of the oldest of the Joint Owners is used to determine
the Death Benefit Target Date. NOTE: If you and your spouse own the Annuity
jointly, we will pay the Death Benefit to the Beneficiary. If the sole primary
Beneficiary is the surviving spouse, then the surviving spouse can elect to
assume ownership of the Annuity and continue the Annuity instead of receiving
the Death Benefit.
ANNUITIES OWNED BY ENTITIES
For Annuities owned by an entity, the Death Benefits are calculated as shown
above except that the age of the Annuitant is used to determine the Death
Benefit Target Date. Payment of the Death Benefit is based on the death of the
Annuitant (or Contingent Annuitant, if applicable).
CAN I TERMINATE THE OPTIONAL DEATH BENEFITS? DO THE OPTIONAL DEATH BENEFITS
TERMINATE UNDER OTHER CIRCUMSTANCES?
You can terminate the Enhanced Beneficiary Protection Death Benefit and Highest
Anniversary Value Death Benefit at any time. The "Combination 5% Roll-up and HAV
Death Benefit" and the HDV Death Benefit may not be terminated once elected. The
optional Death Benefits will terminate automatically on the Annuity Date. We may
also terminate any optional Death Benefit if necessary to comply with our
interpretation of the Code and applicable regulations.
WHAT ARE THE CHARGES FOR THE OPTIONAL DEATH BENEFITS?
We deduct a charge equal to 0.25% per year of the average daily net assets of
the Sub-accounts for each of the Highest Anniversary Value Death Benefit and the
Enhanced Beneficiary Protection Death Benefit and 0.50% per year of the average
daily net assets of the Sub-accounts for the "Combination 5% Roll-up and HAV
Death Benefit" and the HDV Death Benefit. We deduct the charge for each of these
benefits to compensate American Skandia for providing increased insurance
protection under the optional Death Benefits.
Please refer to the section entitled "Tax Considerations" for additional
considerations in relation to the optional Death Benefit.
AMERICAN SKANDIA'S ANNUITY REWARDS
WHAT IS THE ANNUITY REWARDS BENEFIT?
The Annuity Rewards Benefit offers Owners the ability to capture any market
gains since the Issue Date of their Annuity as an enhancement to their current
Death Benefit so their Beneficiaries will not receive less than the Annuity's
value as of the effective date of the benefit. Under the Annuity Rewards
Benefit, American Skandia guarantees that the Death Benefit will not be less
than:
- - your Account Value in the variable investment options plus the Interim
Value in any Fixed Allocations as of the effective date of the benefit
- - MINUS any proportional withdrawals* following the effective date of the
benefit
- - PLUS any additional Purchase Payments applied to the Annuity following the
effective date of the benefit.
The Annuity Rewards Death Benefit enhancement does not affect the basic Death
Benefit calculation and any Optional Death Benefits available under the Annuity.
If the Death Benefit amount payable under your Annuity's basic Death Benefit or
any Optional Death Benefits you purchase is greater than the enhanced Death
Benefit under the Annuity Rewards benefit on the date the Death Benefit is
calculated, your Beneficiary will receive the higher amount.
WHO IS ELIGIBLE FOR THE ANNUITY REWARDS BENEFIT?
Owners can elect the Annuity Rewards Death Benefit enhancement following the
fourth (4th) anniversary of the Annuity's Issue Date. However, on the date that
the Annuity Rewards Benefit is effective, the Account Value must be greater than
the amount that would be payable to the Beneficiary under the Death Benefit
(including any amounts payable under any optional death benefit then in effect).
The effective date must occur before annuity payments begin. There can only be
one effective date for the Annuity Rewards Death Benefit enhancement. There is
no additional charge for electing the Annuity Rewards Death Benefit enhancement.
PAYMENT OF DEATH BENEFITS
PAYMENT OF DEATH BENEFIT TO BENEFICIARY
Except in the case of a spousal assumption as described below, in the event of
your death, the death benefit must be distributed:
* "Proportional withdrawals" are determined by calculating the percentage of the
Account Value that each withdrawal represented when withdrawn. For example, a
withdrawal of 50% of your Account Value would be treated as a 50% reduction in
the amount payable under the Death Benefit.
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AMERICAN SKANDIA APEX II PROSPECTUS
Death Benefit continued
- - as a lump sum amount at any time within five (5) years of the date of
death; or
- - as a series of annuity payments not extending beyond the life expectancy
of the Beneficiary or over the life of the Beneficiary. Payments under
this option must begin within one year of the date of death.
Unless you have made an election prior to death benefit proceeds becoming
due, a Beneficiary can elect to receive the Death Benefit proceeds as a series
of fixed annuity payments (annuity payment options 1-4) or as a series of
variable annuity payments (annuity payment options 1-3 or 5 and 6). See the
section entitled "What Types of Annuity Options are Available."
SPOUSAL BENEFICIARY -- ASSUMPTION OF ANNUITY
You may name your spouse as your Beneficiary. If you and your spouse own the
Annuity jointly, we assume that the sole primary Beneficiary will be the
surviving spouse unless you elect an alternative Beneficiary designation. Unless
you elect an alternative Beneficiary designation, the spouse Beneficiary may
elect to assume ownership of the Annuity instead of taking the Death Benefit
payment. Any Death Benefit (including any optional Death Benefits) that would
have been payable to the Beneficiary will become the new Account Value as of the
date we receive due proof of death and any required proof of a spousal
relationship. As of the date the assumption is effective, the surviving spouse
will have all the rights and benefits that would be available under the Annuity
to a new purchaser of the same attained age. For purposes of determining any
future Death Benefit for the surviving spouse, the new Account Value will be
considered as the initial Purchase Payment. No CDSC will apply to the new
Account Value. However, any additional Purchase Payments applied after the date
the assumption is effective will be subject to all provisions of the Annuity,
including any CDSC that may apply to the additional Purchase Payments.
See the section entitled "Managing Your Annuity -- Spousal Contingent
Annuitant" for a discussion of the treatment of a spousal Contingent Annuitant
in the case of the death of the Annuitant in an entity owned Annuity.
QUALIFIED BENEFICIARY CONTINUATION OPTION
The Code provides for alternative death benefit payment options when an Annuity
is used as an IRA, 403(b) or other "qualified investment" that requires Minimum
Distributions. Upon the Owner's death under an IRA, 403(b) or other "qualified
investment", a Beneficiary may generally elect to continue the Annuity and
receive Minimum Distributions under the Annuity instead of receiving the death
benefit in a single payment. The available payment options will depend on
whether the Owner died on or before the date he or she was required to begin
receiving Minimum Distributions under the Code and whether the Beneficiary is
the surviving spouse.
- - If death occurs BEFORE the date Minimum Distributions must begin under the
Code, the Death Benefit can be paid out in either a lump sum, within five
years from the date of death, or over the life or life expectancy of the
designated Beneficiary (as long as payments begin by December 31st of the
year following the year of death). However, if the spouse is the
Beneficiary, the Death Benefit can be paid out over the life or life
expectancy of the spouse with such payments beginning no earlier than
December 31st of the year following the year of death or December 31st of
the year in which the deceased would have reached age 70 1/2, which ever
is later.
- - If death occurs AFTER the date Minimum Distributions must begin under the
Code, the Death Benefit must be paid out at least as rapidly as under the
method then in effect.
A Beneficiary has the flexibility to take out more each year than required
under the Minimum Distribution rules. Until withdrawn, amounts in an IRA, 403(b)
or other "qualified investment" continue to be tax deferred. Amounts withdrawn
each year, including amounts that are required to be withdrawn under the Minimum
Distribution rules, are subject to tax. You may wish to consult a professional
tax advisor for tax advice as to your particular situation.
Upon election of this Qualified Beneficiary Continuation option:
- - the Annuity contract will be continued in the Owner's name, for the
benefit of the Beneficiary.
- - the Beneficiary will be charged at an amount equal to 1.40% daily against
the average daily assets allocated to the Sub-accounts.
- - the Account Value will be equal to any Death Benefit (including any
optional Death Benefit) that would have been payable to the Beneficiary if
they had taken a lump sum distribution.
- - the Beneficiary may request transfers among Sub-accounts, subject to the
same limitations and restrictions that applied
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AMERICAN SKANDIA APEX II PROSPECTUS
to the Owner, except that the Sub-accounts offered will be those offered
under the Qualified Beneficiary Continuation option at the time the option
is elected.
- - the Fixed Allocations will be those offered under the Qualified
Beneficiary Continuation option at the time the option is elected.
- - no additional Purchase Payments can be applied to the Annuity.
- - other optional Benefits will be those offered under the Qualified
Beneficiary Continuation option at the time of election.
- - the basic Death Benefit and any optional Death Benefits elected by the
Owner will no longer apply to the Beneficiary.
- - the Beneficiary can request a withdrawal of all or a portion of the
Account Value at any time without application of a CDSC.
- - upon the death of the Beneficiary, any remaining Account Value will be
paid in a lump sum to the person(s) named by the Beneficiary.
- - all amounts in the Annuity must be paid out to the Beneficiary according
to the Minimum Distribution rules described above.
Your Beneficiary will be provided with a prospectus and settlement option that
will describe this option at the time he or she elects this option. Please
contact American Skandia for additional information on the availability,
restrictions and limitations that will apply to a Beneficiary under the
Qualified Beneficiary Continuation option.
ARE THERE ANY EXCEPTIONS TO THESE RULES FOR PAYING THE DEATH BENEFIT?
Yes, there are exceptions that apply no matter how your Death Benefit is
calculated. There are exceptions to the Death Benefit if the decedent was not
the Owner or Annuitant as of the Issue Date and did not become the Owner or
Annuitant due to the prior Owner's or Annuitant's death. Any Death Benefit
(including any optional Death Benefit) that applies will be suspended for a
two-year period from the date he or she first became Owner or Annuitant. After
the two-year suspension period is completed, the Death Benefit is the same as if
this person had been an Owner or Annuitant on the Issue Date.
WHEN DO YOU DETERMINE THE DEATH BENEFIT?
We determine the amount of the Death Benefit as of the date we receive "due
proof of death", any instructions we require to determine the method of payment
and any other written representations we require to determine the proper payment
of the Death Benefit to all Beneficiaries. "Due proof of death" may include a
certified copy of a death certificate, a certified copy of a decree of a court
of competent jurisdiction as to the finding of death or other satisfactory proof
of death. Upon our receipt of "due proof of death" we automatically transfer the
Death Benefit to the AST Money Market Sub-account until we further determine the
universe of eligible Beneficiaries. Once the universe of eligible Beneficiaries
has been determined each eligible Beneficiary may allocate his or her eligible
share of the Death Benefit to the Sub-accounts according to our rules.
Each Beneficiary must make an election as to the method they wish to
receive their portion of the Death Benefit. Absent an election of a Death
Benefit payment method, no Death Benefit can be paid to the Beneficiary. We may
require written acknowledgment of all named Beneficiaries before we can pay the
Death Benefit. DURING THE PERIOD FROM THE DATE OF DEATH UNTIL WE RECEIVE ALL
REQUIRED PAPER WORK, THE AMOUNT OF THE DEATH BENEFIT MAY BE SUBJECT TO MARKET
FLUCTUATIONS.
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AMERICAN SKANDIA APEX II PROSPECTUS
Valuing Your Investment
HOW IS MY ACCOUNT VALUE DETERMINED?
During the accumulation period, the Annuity has an Account Value. The Account
Value is determined separately for each Sub-account allocation and for each
Fixed Allocation. The Account Value is the sum of the values of each Sub-account
allocation and the value of each Fixed Allocation. The Account Value does not
reflect any CDSC that may apply to a withdrawal or surrender. The Account Value
includes any Loyalty credit we apply. When determining the Account Value on a
day more than 30 days prior to a Fixed Allocation's Maturity Date, the Account
Value may include any Market Value Adjustment that would apply to a Fixed
Allocation (if withdrawn or transferred) on that day.
WHAT IS THE SURRENDER VALUE OF MY ANNUITY?
The Surrender Value of your Annuity is the value available to you on any day
during the accumulation period. The Surrender Value is defined under "Glossary
of Terms" above.
HOW AND WHEN DO YOU VALUE THE SUB-ACCOUNTS?
When you allocate Account Value to a Sub-account, you are purchasing units of
the Sub-account. Each Sub-account invests exclusively in shares of an underlying
Portfolio. The value of the Units fluctuates with the market fluctuations of the
Portfolios. The value of the Units also reflects the daily accrual for the
Insurance Charge and if you elected one or more optional benefits whose annual
charge is deducted daily, the additional charge made for such benefits. There
may be several different Unit Prices for each Sub-account to reflect the
Insurance Charge and the charges for any optional benefits. The Unit Price for
the Units you purchase will be based on the total charges for the benefits that
apply to your Annuity. See the section entitled "What Happens to My Units When
There is a Change in Daily Asset-Based Charges?" for a detailed discussion of
how Units are purchased and redeemed to reflect changes in the daily charges
that apply to your Annuity.
Each Valuation Day, we determine the price for a Unit of each Sub-account,
called the "Unit Price." The Unit Price is used for determining the value of
transactions involving Units of the Sub-accounts. We determine the number of
Units involved in any transaction by dividing the dollar value of the
transaction by the Unit Price of the Sub-account as of the Valuation Day.
EXAMPLE
Assume you allocate $5,000 to a Sub-account. On the Valuation Day you make the
allocation, the Unit Price is $14.83. Your $5,000 buys 337.154 Units of the
Sub-account. Assume that later, you wish to transfer $3,000 of your Account
Value out of that Sub-account and into another Sub-account. On the Valuation Day
you request the transfer, the Unit Price of the original Sub-account has
increased to $16.79. To transfer $3,000, we sell 178.677 Units at the current
Unit Price, leaving you 158.477 Units. We then buy $3,000 of Units of the new
Sub-account at the Unit Price of $17.83. You would then have 168.255 Units of
the new Sub-account.
HOW DO YOU VALUE FIXED ALLOCATIONS?
During the Guarantee Period, we use the concept of an Interim Value. The Interim
Value can be calculated on any day and is equal to the initial value allocated
to a Fixed Allocation plus all interest credited to a Fixed Allocation as of the
date calculated. The Interim Value does not include the impact of any Market
Value Adjustment. If you made any transfers or withdrawals from a Fixed
Allocation, the Interim Value will reflect the withdrawal of those amounts and
any interest credited to those amounts before they were withdrawn. To determine
the Account Value of a Fixed Allocation on any day more than 30 days prior to
its Maturity Date, we multiply the Account Value of the Fixed Allocation times
the Market Value Adjustment factor.
WHEN DO YOU PROCESS AND VALUE TRANSACTIONS?
American Skandia is generally open to process financial transactions on those
days that the New York Stock Exchange (NYSE) is open for trading. There may be
circumstances where the NYSE does not open on a regularly scheduled date or time
or closes at an earlier time than scheduled (normally 4:00 p.m. EST). Financial
transactions requested before the close of the NYSE which meet our requirements
will be processed according to the value next determined following the close of
business. Financial transactions requested on a non-business day or after the
close of the NYSE will be processed based on the value next computed on the next
Valuation Day. There may be circumstances when the opening or closing time of
the NYSE is different than other major stock exchanges, such as NASDAQ or the
American Stock Exchange. Under such circumstances, the closing time of the NYSE
will be used when valuing and processing transactions.
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AMERICAN SKANDIA APEX II PROSPECTUS
There may be circumstances where the NYSE is open, however, due to
inclement weather, natural disaster or other circumstances beyond our control,
our offices may be closed or our business processing capabilities may be
restricted. Under those circumstances, your Account Value may fluctuate based on
changes in the Unit Values, but you may not be able to transfer Account Value,
or make a purchase or redemption request.
The NYSE is closed on the following nationally recognized holidays: New
Year's Day, Martin Luther King, Jr. Day, Washington's Birthday, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas. On those
dates, we will not process any financial transactions involving purchase or
redemption orders.
American Skandia will also not process financial transactions involving
purchase or redemption orders or transfers on any day that:
- - trading on the NYSE is restricted;
- - an emergency exists making redemption or valuation of securities held in
the separate account impractical; or
- - the SEC, by order, permits the suspension or postponement for the
protection of security holders.
INITIAL PURCHASE PAYMENTS: We are required to allocate your initial
Purchase Payment to the Sub-accounts within two (2) business days after we
receive all of our requirements at our office to issue the Annuity. If we do not
have all the required information to allow us to issue your Annuity, we may
retain the Purchase Payment while we try to reach you or your representative to
obtain all of our requirements. If we are unable to obtain all of our required
information within five (5) business days, we are required to return the
Purchase Payment to you at that time, unless you specifically consent to our
retaining the Purchase Payment while we gather the required information. Once we
obtain the required information, we will invest the Purchase Payment and issue
the Annuity within two (2) business days. During any period that we are trying
to obtain the required information, your money is not invested.
ADDITIONAL PURCHASE PAYMENTS: We will apply any additional Purchase
Payments on the Valuation Day that we receive the Purchase Payment at our office
with satisfactory allocation instructions. We will allocate any additional
Purchase Payments you make according to your most recent allocation instructions
if none are provided.
SCHEDULED TRANSACTIONS: "Scheduled" transactions include transfers under a
Dollar Cost Averaging, rebalancing, or asset allocation program, Systematic
Withdrawals, Minimum Distributions or annuity payments. Scheduled transactions
are processed and valued as of the date they are scheduled, unless the scheduled
day is not a Valuation Day. In that case, the transaction will be processed and
valued on the next Valuation Day, unless the next Valuation Day falls in the
subsequent calendar year, in which case the transaction will be processed and
valued on the prior Valuation Day.
UNSCHEDULED TRANSACTIONS: "Unscheduled" transactions include any other
non-scheduled transfers and requests for Partial Withdrawals or Free Withdrawals
or Surrenders. Unscheduled transactions are processed and valued as of the
Valuation Day we receive the request at our Office and have all of the required
information.
MEDICALLY-RELATED SURRENDERS & DEATH BENEFITS: Medically-related surrender
requests and Death Benefit claims require our review and evaluation before
processing. We price such transactions as of the date we receive at our Office
all supporting documentation we require for such transactions and that are
satisfactory to us.
TRANSACTIONS IN PROFUNDS VP SUB-ACCOUNTS: Generally, purchase or
redemption orders or transfer requests must be received by us by no later than
the close of the NYSE to be processed on the current Valuation Day. However, any
purchase or redemption order or transfer request involving the ProFunds VP
Sub-accounts must be received by us no later than one hour prior to any
announced closing of the applicable securities exchange (generally, 3:00 p.m.
Eastern time) to be processed on the current Valuation Day. The "cut-off" time
for such financial transactions involving a ProFunds VP Sub-account will be
extended to 1/2 hour prior to any announced closing (generally, 3:30 p.m.
Eastern time) for transactions submitted electronically through American
Skandia's Internet website (www.americanskandia.prudential.com). You cannot
request a transaction involving the purchase, redemption or transfer of units in
one of the ProFunds VP Sub-account between the applicable "cut-off" time and
4:00 p.m. Transactions received after 4:00 p.m. will be treated as received by
us on the next Valuation Day.
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AMERICAN SKANDIA APEX II PROSPECTUS
Valuing Your Investment continued
WHAT HAPPENS TO MY UNITS WHEN THERE IS A CHANGE IN DAILY ASSET-BASED CHARGES?
TERMINATION OF OPTIONAL BENEFITS: Except for the Guaranteed Minimum Income
Benefit, the Combination 5% Roll-up and Highest Anniversary Value Death Benefit
and the Highest Daily Value Death Benefit, which cannot be terminated by the
owner once elected, if any optional benefit terminates, we will no longer deduct
the charge we apply to purchase the optional benefit. Certain optional benefits
may be added after you have purchased your Annuity. On the date a charge no
longer applies or a charge for an optional benefit begins to be deducted, your
Annuity will become subject to a different daily asset-based charge. This change
may result in the number of Units attributed to your Annuity and the value of
those Units being different than it was before the charge, however, the
adjustment in the number of Units and Unit Price will not affect your Account
Value (although the change in charges that are deducted will affect your Account
Value).
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AMERICAN SKANDIA APEX II PROSPECTUS
Tax Considerations
The tax considerations associated with the Annuity vary depending on whether the
contract is (i) owned by an individual and not associated with a tax-favored
retirement plan (including contracts held by a non-natural person, such as a
trust acting as an agent for a natural person), or (ii) held under a tax-favored
retirement plan. We discuss the tax considerations for these categories of
contracts below. The discussion is general in nature and describes only federal
income tax law (not state or other tax laws). It is based on current law and
interpretations, which may change. The discussion includes a description of
certain spousal rights under the contract and under tax-qualified plans. Our
administration of such spousal rights and related tax reporting accords with our
understanding of the Defense of Marriage Act (which defines a "marriage" as a
legal union between a man and a woman and a "spouse" as a person of the opposite
sex). The information provided is not intended as tax advice. You should consult
with a qualified tax advisor for complete information and advice. References to
purchase payments below relates to your cost basis in your contract. Generally,
your cost basis in a contract not associated with a tax-favored retirement plan
is the amount you pay into your contract, or into annuities exchanged for your
contract, on an after-tax basis less any withdrawals of such payments.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA or 403(b) account, which can hold other permissible assets other than the
annuity. The terms and administration of the trust or custodial account in
accordance with the laws and regulations for IRAs or 403(b)s, as applicable, are
the responsibility of the applicable trustee or custodian.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
TAXES PAYABLE BY YOU
We believe the contract is an annuity contract for tax purposes. Accordingly, as
a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates)
to you during the same calendar year must be treated as one annuity contract for
purposes of determining the amount subject to tax under the rules described
below.
It is possible that the Internal Revenue Service (IRS) would assert that
some or all of the charges for the optional benefits under the contract should
be treated for federal income tax purposes as a partial withdrawal from the
contract. If this were the case, the charge for this benefit could be deemed a
withdrawal and treated as taxable to the extent there are earnings in the
contract. Additionally, for owners under age 591/2, the taxable income
attributable to the charge for the benefit could be subject to a tax penalty.
If the IRS determines that the charges for one or more benefits under the
contract are taxable withdrawals, then the sole or surviving owner will be
provided with a notice from us describing available alternatives regarding these
benefits.
If you choose to defer the Annuity Date beyond the default date for your
Annuity, the IRS may not consider your contract to be an annuity under the tax
law. For more information, see "How and When Do I Choose the Annuity Payment
Option?"
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn. You will
generally be taxed on any withdrawals from the contract while you are alive even
if the withdrawal is paid to someone else.
If you assign or pledge all or part of your contract as collateral for a
loan, the part assigned generally will be treated as a withdrawal.
If you transfer your contract for less than full consideration, such as by
gift, you will trigger tax on any gain in the contract. This rule does not apply
if you transfer the contract to your spouse or under most circumstances if you
transfer the contract incident to divorce.
TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment you receive by a fraction, the
numerator of which is your purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the contract.
After the full amount of your purchase payments have been recovered
tax-free, the full amount of the annuity payments will be taxable. If annuity
payments stop due to the death of
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AMERICAN SKANDIA APEX II PROSPECTUS
Tax Considerations continued
the annuitant before the full amount of your purchase payments have been
recovered, a tax deduction may be allowed for the unrecovered amount.
TAX PENALTY ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount you receive under your contract may be subject to a 10% tax
penalty. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59-1/2 or die;
- - the amount received is attributable to your becoming disabled;
- - generally the amount paid or received is in the form of substantially
equal payments not less frequently than annually (Please note that
substantially equal payments must continue until the later of reaching age
59-1/2 or 5 years. Modification of payments during that time period will
result in retroactive application of the 10% tax penalty.); or
- - the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
SPECIAL RULES IN RELATION TO TAX-FREE EXCHANGES UNDER SECTION 1035
Section 1035 of the Internal Revenue Code of 1986, as amended (Code) permits
certain tax-free exchanges of a life insurance, annuity or endowment contract
for an annuity. If the annuity is purchased through a tax-free exchange of a
life insurance, annuity or endowment contract that was purchased prior to August
14, 1982, then any purchase payments made to the original contract prior to
August 14, 1982 will be treated as made to the new contract prior to that date.
(See Federal Tax Status section in the Statement of Additional Information.)
Partial surrenders may be treated in the same way as tax-free 1035
exchanges of entire contracts, therefore avoiding current taxation of any gains
in the contract as well as the 10% tax penalty on pre-age 59 1/2 withdrawals.
The IRS has reserved the right to treat transactions it considers abusive as
ineligible for this favorable partial 1035 exchange treatment. We do not know
what transactions may be considered abusive. For example we do not know how the
IRS may view early withdrawals or annuitizations after a partial exchange. In
addition, it is unclear how the IRS will treat a partial exchange from a life
insurance, endowment, or annuity contract into an immediate annuity. As of the
date of this prospectus, we will accept a partial 1035 exchange from a
non-qualified annuity into an immediate annuity as a "tax-free" exchange for
future tax reporting purposes, except to the extent that we, as a reporting and
withholding agent, believe that we would be expected to deem the transaction to
be abusive. However, some insurance companies may not recognize these partial
surrenders as tax-free exchanges and may report them as taxable distributions to
the extent of any gain distributed as well as subjecting the taxable portion of
the distribution to the 10% tax penalty. We strongly urge you to discuss any
transaction of this type with your tax advisor before proceeding with the
transaction.
TAXES PAYABLE BY BENEFICIARIES
The death benefit options are subject to income tax to the extent the
distribution exceeds the cost basis in the contract. The value of the death
benefit, as determined under federal law, is also included in the owner's
estate.
Generally, the same tax rules described above would also apply to amounts
received by your beneficiary. Choosing any option other than a lump sum death
benefit may defer taxes. Certain minimum distribution requirements apply upon
your death, as discussed further below.
Tax consequences to the beneficiary vary among the death benefit payment
options.
- - Choice 1: the beneficiary is taxed on earnings in the contract.
- - Choice 2: the beneficiary is taxed as amounts are withdrawn (in this case
earnings are treated as being distributed first).
- - Choice 3: the beneficiary is taxed on each payment (part will be treated
as earnings and part as return of premiums).
CONSIDERATIONS FOR CONTINGENT ANNUITANTS: There may be adverse tax
consequences if a Contingent Annuitant succeeds an Annuitant when the Annuity is
owned by a trust that is neither tax exempt nor qualifies for preferred
treatment under certain sections of the Code. In general, the Code is designed
to prevent indefinite deferral of tax. Continuing the benefit of tax deferral by
naming one or more Contingent Annuitants when the Annuity is owned by a
non-qualified trust might be deemed an attempt to extend the tax deferral for an
indefinite period. Therefore, adverse tax treatment may depend on the terms of
the trust, who is named as Contingent Annuitant, as well as the particular facts
and circumstances. You should consult your tax advisor before naming a
Contingent Annuitant if you expect to use an Annuity in such a fashion.
REPORTING AND WITHHOLDING ON DISTRIBUTIONS
Taxable amounts distributed from your annuity contracts are subject to federal
and state income tax reporting and withholding.
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AMERICAN SKANDIA APEX II PROSPECTUS
In general, we will withhold federal income tax from the taxable portion of such
distribution based on the type of distribution. In the case of an annuity or
similar periodic payment, we will withhold as if you are a married individual
with 3 exemptions unless you designate a different withholding status. In the
case of all other distributions, we will withhold at a 10% rate. You may
generally elect not to have tax withheld from your payments. An election out of
withholding must be made on forms that we provide.
State income tax withholding rules vary and we will withhold based on the
rules of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident aliens
at a 30% rate. A different withholding rate may be applicable to a nonresident
alien based on the terms of an existing income tax treaty between the United
States and the nonresident alien's country. Please refer to the discussion below
regarding withholding rules for tax favored plans (for example, an IRA).
Regardless of the amount withheld by us, you are liable for payment of
federal and state income tax on the taxable portion of annuity distributions.
You should consult with your tax advisor regarding the payment of the correct
amount of these income taxes and potential liability if you fail to pay such
taxes.
ANNUITY QUALIFICATION
Diversification And Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the assets underlying the
variable investment options of the annuity contract must be diversified,
according to certain rules. We believe these diversification rules will be met.
An additional requirement for qualification for the tax treatment
described above is that we, and not you as the contract owner, must have
sufficient control over the underlying assets to be treated as the owner of the
underlying assets for tax purposes. While we also believe these investor control
rules will be met, 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. It is unclear whether such guidelines, if in fact
promulgated, would have retroactive effect. It is also unclear what effect, if
any, such guidelines may have on transfers between the investment options
offered pursuant to this Prospectus. We will take any action, including
modifications to your Annuity or the investment options, required to comply with
such guidelines if promulgated.
Please refer to the Statement of Additional information for further
information on these Diversification and Investor Control issues.
Required Distributions Upon Your Death. Upon your death, certain
distributions must be made under the contract. The required distributions depend
on whether you die before you start taking annuity payments under the contract
or after you start taking annuity payments under the contract.
If you die on or after the annuity date, the remaining portion of the
interest in the contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract
must be distributed within 5 years after the date of death. However, if a
periodic payment option is selected by your designated beneficiary and if such
payments begin within 1 year of your death, the value of the contract may be
distributed over the beneficiary's life or a period not exceeding the
beneficiary's life expectancy. Your designated beneficiary is the person to whom
benefit rights under the contract pass by reason of death, and must be a natural
person in order to elect a periodic payment option based on life expectancy or a
period exceeding five years.
If the contract is payable to (or for the benefit of) your surviving
spouse, that portion of the contract may be continued with your spouse as the
owner.
Changes In The Contract. We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract owners and you will be
given notice to the extent feasible under the circumstances.
ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
- - The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
- - Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
- - You transfer your contract to, or designate, a beneficiary who is either
37 1/2 years younger than you or a grandchild.
- - You purchased more than one annuity contract from the same insurer within
the same calendar year (other than contracts held by tax favored plans).
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AMERICAN SKANDIA APEX II PROSPECTUS
Tax Considerations continued
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
Currently, the contract may be purchased for use in connection with
individual retirement accounts and annuities (IRAs) which are subject to
Sections 408(a), 408(b) and 408A of the Code. In addition, this contract may be
purchased for use in connection with a corporate Pension and Profit-sharing plan
(subject to 401(a) of the Code), H.R. 10 plans (also known as Keogh Plans,
subject to 401(a) of the Code), Tax Sheltered Annuities (subject to 403(b) of
the Code, also known as Tax Deferred Annuities or TDAs), and Section 457 plans
(subject to 457 of the Code). This description assumes that you have satisfied
the requirements for eligibility for these products.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA or 403(b) account, which can hold other permissible assets other than the
annuity. The terms and administration of the trust or custodial account in
accordance with the laws and regulations for IRAs or 403(b)s, as applicable, are
the responsibility of the applicable trustee or custodian.
You should be aware that tax favored plans such as IRAs generally provide
income tax deferral regardless of whether they invest in annuity contracts. This
means that when a tax favored plan invests in an annuity contract, it generally
does not result in any additional taxbenefits (such as income tax deferral and
income tax free transfers).
TYPES OF TAX FAVORED PLANS
IRAs. If you buy a contract for use as an IRA, we will provide you a copy of the
prospectus and contract. The "IRA Disclosure Statement" contains information
about eligibility, contribution limits, tax particulars, and other IRA
information. In addition to this information (some of which is summarized
below), the IRS requires that you have a "free look" after making an initial
contribution to the contract. During this time, you can cancel the contract by
notifying us in writing, and we will refund all of the purchase payments under
the contract (or, if provided by applicable state law, the amount credited under
the contract, if greater), less any applicable federal and state income tax
withholding.
Contributions Limits/Rollovers. Because of the way the contract is
designed, you may purchase a contract for an IRA in connection with a "rollover"
of amounts from a qualified retirement plan or transfer from another IRA. In
2005 the limit is $4,000; increasing to $5,000; in 2008. After 2008 the
contribution amount will be indexed for inflation. The tax law also provides for
a catch-up provision for individuals who are age 50 and above. These taxpayers
will be permitted to contribute an additional $500, increasing to $1,000 in 2006
and years thereafter.
The "rollover" rules under the Code are fairly technical; however, an
individual (or his or her surviving spouse) may generally "roll over" certain
distributions from tax favored retirement plans (either directly or within 60
days from the date of these distributions) if he or she meets the requirements
for distribution. Once you buy the contract, you can make regular IRA
contributions under the contract (to the extent permitted by law). However, if
you make such regular IRA contributions, you should note that you will not be
able to treat the contract as a "conduit IRA," which means that you will not
retain possible favorable tax treatment if you subsequently "roll over" the
contract funds originally derived from a qualified retirement plan or TDA into
another Section 401(a) plan or TDA.
Required Provisions. Contracts that are IRAs (or endorsements that are
part of the contract) must contain certain provisions:
- - You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree
of divorce);
- - Your rights as owner are non-forfeitable;
- - You cannot sell, assign or pledge the contract;
- - The annual contribution you pay cannot be greater than the maximum amount
allowed by law, including catch-up contributions if applicable (which does
not include any rollover amounts);
- - The date on which annuity payments must begin cannot be later than April
1st of the calendar year after the calendar year you turn age 70 1/2; and
- - Death and annuity payments must meet "minimum distribution requirements"
described below.
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
- - A 10% "early distribution penalty" described below;
- - Liability for "prohibited transactions" if you, for example, borrow
against the value of an IRA; or
- - Failure to take a minimum distribution also described below.
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AMERICAN SKANDIA APEX II PROSPECTUS
SEPs. SEPs are a variation on a standard IRA, and contracts issued to a
SEP must satisfy the same general requirements described under IRAs (above).
There are, however, some differences:
- - If you participate in a SEP, you generally do not include in income any
employer contributions made to the SEP on your behalf up to the lesser of
(a) $42,000 in 2005 or (b) 25% of the employee's earned income (not
including contribution as "earned income" for these purposes). However,
for these purposes, compensation in excess of certain limits established
by the IRS will not be considered. In 2005, this limit is $210,000;
- - SEPs must satisfy certain participation and nondiscrimination requirements
not generally applicable to IRAs; and
- - SEPs for small employers permit salary deferrals up to $14,000 in 2005
with the employer making these contributions to the SEP. However, no new
"salary reduction" or "SAR-SEPs" can be established after 1996.
Individuals participating in a SARSEP who are age 50 or above by the end
of the year will be permitted to contribute an additional $4,000 in 2005,
increasing to $5,000 in 2006. Thereafter, the amount is indexed for
inflation.
You will also be provided the same information, and have the same "free
look" period, as you would have if you purchased the contract for a standard
IRA.
ROTH IRAs. Like standard IRAs, income within a Roth IRA accumulates
tax-free, and contributions are subject to specific limits. Roth IRAs have,
however, the following differences:
- - Contributions to a Roth IRA cannot be deducted from your gross income;
- - "Qualified distributions" from a Roth IRA are excludable from gross
income. A "qualified distribution" is a distribution that satisfies two
requirements: (1) the distribution must be made (a) after the owner of the
IRA attains age 591/2; (b) after the owner's death; (c) due to the owner's
disability; or (d) for a qualified first time homebuyer distribution
within the meaning of Section 72(t)(2)(F) of the Code; and (2) the
distribution must be made in the year that is at least five tax years
after the first year for which a contribution was made to any Roth IRA
established for the owner or five years after a rollover, transfer, or
conversion was made from a traditional IRA to a Roth IRA. Distributions
from a Roth IRA that are not qualified distributions will be treated as
made first from contributions and then from earnings, and taxed generally
in the same manner as distributions from a traditional IRA.
- - If eligible (including meeting income limitations and earnings
requirements), you may make contributions to a Roth IRA after attaining
age 701/2, and distributions are not required to begin upon attaining such
age or at any time thereafter.
Because of the way the contract is designed, you may purchase a contract
for a Roth IRA in connection with a "rollover" of amounts of another traditional
IRA, conduit IRA, SEP, SIMPLE-IRA or Roth IRA. The Code permits persons who meet
certain income limitations (generally, adjusted gross income under $100,000),
and who receive certain qualifying distributions from such non-Roth IRAs, to
directly rollover or make, within 60 days, a "rollover" of all or any part of
the amount of such distribution to a Roth IRA which they establish. This
conversion triggers current taxation (but is not subject to a 10% early
distribution penalty). Once the contract has been purchased, regular Roth IRA
contributions will be accepted to the extent permitted by law.
TDAs. You may own a TDA generally if you are either an employer or
employee of a tax-exempt organization (as defined under Code Section 501 (c)(3))
or a public educational organization, and you may make contributions to a TDA so
long as the employee's rights to the annuity are nonforfeitable. Contributions
to a TDA, and any earnings, are not taxable until distribution. You may also
make contributions to a TDA under a salary reduction agreement, generally up to
a maximum of $14,000 in 2005. Individuals participating in a TDA who are age 50
or above by the end of the year will be permitted to contribute an additional
$4,000 in 2005, increasing to $5,000 in 2006. Thereafter, the amount is indexed
for inflation. Further, you may roll over TDA amounts to another TDA or an IRA.
You may also roll over TDA amounts to a qualified retirement plan, a SEP and a
457 government plan. A contract may only qualify as a TDA if distributions
(other than "grandfathered" amounts held as of December 31, 1988) may be made
only on account of:
- - Your attainment of age 59 1/2;
- - Your severance of employment;
- - Your death;
- - Your total and permanent disability; or
- - Hardship (under limited circumstances, and only related to salary
deferrals and any earnings attributable to these amounts).
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AMERICAN SKANDIA APEX II PROSPECTUS
Tax Considerations continued
In any event, you must begin receiving distributions from your TDA by
April 1st of the calendar year after the calendar year you turn age 70-1/2 or
retire, whichever is later.
These distribution limits do not apply either to transfers or exchanges of
investments under the contract, or to any "direct transfer" of your interest in
the contract to another TDA or to a mutual fund "custodial account" described
under Code Section 403(b)(7).
Employer contributions to TDAs are subject to the same general
contribution, nondiscrimination, and minimum participation rules applicable to
"qualified" retirement plans.
MINIMUM DISTRIBUTION REQUIREMENTS AND PAYMENT OPTION
If you hold the contract under an IRA (or other tax-favored plan), IRS minimum
distribution requirements must be satisfied. This means that generally payments
must start by April 1 of the year after the year you reach age 70-1/2 and must
be made for each year thereafter. The amount of the payment must at least equal
the minimum required under the IRS rules. Several choices are available for
calculating the minimum amount. More information on the mechanics of this
calculation is available on request. Please contact us at a reasonable time
before the IRS deadline so that a timely distribution is made. Please note that
there is a 50% tax penalty on the amount of any minimum distribution not made in
a timely manner.
Effective in 2006, in accordance with recent changes in laws and
regulations, required minimum distributions will be calculated based on the sum
of the contract value and the actuarial value of any additional death benefits
and benefits from optional riders that you have purchased under the contract. As
a result, the required minimum distributions may be larger than if the
calculation were based on the contract value only, which may in turn result in
an earlier (but not before the required beginning date) distribution under the
Contract and an increased amount of taxable income distributed to the contract
owner, and a reduction of death benefits and the benefits of any optional
riders.
You can use the Minimum Distribution option to satisfy the IRS minimum
distribution requirements for this contract without either beginning annuity
payments or surrendering the contract. We will distribute to you this minimum
distribution amount, less any other partial withdrawals that you made during the
year.
Although the IRS rules determine the required amount to be distributed
from your IRA each year, certain payment alternatives are still available to
you. If you own more than one IRA, you can choose to satisfy your minimum
distribution requirement for each of your IRAs by withdrawing that amount from
any of your IRAs.
PENALTY FOR EARLY WITHDRAWALS
You may owe a 10% tax penalty on the taxable part of distributions received from
an IRA, SEP, Roth IRA, TDA or qualified retirement plan before you attain age
591/2. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled; or
- - generally the amount paid or received is in the form of substantially
equal payments not less frequently than annually (Please note that
substantially equal payments must continue until the later of reaching age
59 1/2 or 5 years. Modification of payments during that time period will
result in retroactive application of the 10% tax penalty.).
Other exceptions to this tax may apply. You should consult your tax
advisor for further details.
WITHHOLDING
Unless a distribution is an eligible rollover distribution that is "directly"
rolled over into another qualified plan, IRA (including the IRA variations
described above), SEP, 457 government plan or TDA, we will withhold federal
income tax at the rate of 20%. This 20% withholding does not apply to
distributions from IRAs and Roth IRAs. For all other distributions, unless you
elect otherwise, we will withhold federal income tax from the taxable portion of
such distribution at an appropriate percentage. The rate of withholding on
annuity payments where no mandatory withholding is required is determined on the
basis of the withholding certificate that you file with us. If you do not file a
certificate, we will automatically withhold federal taxes on the following
basis:
- - For any annuity payments not subject to mandatory withholding, you will
have taxes withheld by us as if you are a married individual, with 3
exemptions; and
- - For all other distributions, we will withhold at a 10% rate.
We will provide you with forms and instructions concerning the right to elect
that no amount be withheld from payments in the ordinary course. However, you
should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should consult with
your tax advisor to find out more information on your
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AMERICAN SKANDIA APEX II PROSPECTUS
potential liability if you fail to pay such taxes. There may be additional state
income tax withholding requirements.
ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevents a fiduciary and other "parties in interest" with respect to a plan
(and, for these purposes, an IRA would also constitute a "plan") from receiving
any benefit from any party dealing with the plan, as a result of the sale of the
contract. Administrative exemptions under ERISA generally permit the sale of
insurance/annuity products to plans, provided that certain information is
disclosed to the person purchasing the contract. This information has to do
primarily with the fees, charges, discounts and other costs related to the
contract, as well as any commissions paid to any agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found in the applicable sections of this Prospectus.
Information about sales representatives and commissions may be found in
the sections of this Prospectus addressing distribution of the Annuity.
Please consult your tax advisor if you have any additional questions.
SPOUSAL CONSENT RULES FOR RETIREMENT PLANS -- QUALIFIED CONTRACTS
If you are married at the time your payments commence, you may be required by
federal law to choose an income option that provides survivor annuity income to
your spouse, unless your spouse waives that right. Similarly, if you are married
at the time of your death, federal law may require all or a portion of the death
benefit to be paid to your spouse, even if you designated someone else as your
beneficiary. A brief explanation of the applicable rules follows. For more
information, consult the terms of your retirement arrangement.
Defined Benefit Plans and Money Purchase Pension Plans. If you are married
at the time your payments commence, federal law requires that benefits be paid
to you in the form of a "qualified joint and survivor annuity" (QJSA), unless
you and your spouse waive that right, in writing. Generally, this means that you
will receive a reduced payment during your life and, upon your death, your
spouse will receive at least one-half of what you were receiving for life. You
may elect to receive another income option if your spouse consents to the
election and waives his or her right to receive the QJSA. If your spouse
consents to the alternative form of payment, your spouse may not receive any
benefits from the plan upon your death. Federal law also requires that the plan
pay a death benefit to your spouse if you are married and die before you begin
receiving your benefit. This benefit must be available in the form of an annuity
for your spouse's lifetime and is called a "qualified pre-retirement survivor
annuity" (QPSA). If the plan pays death benefits to other beneficiaries, you may
elect to have a beneficiary other than your spouse receive the death benefit,
but only if your spouse consents to the election and waives his or her right to
receive the QPSA. If your spouse consents to the alternate beneficiary, your
spouse will receive no benefits from the plan upon your death. Any QPSA waiver
prior to your attaining age 35 will become null and void on the first day of the
calendar year in which you attain age 35, if still employed.
Defined Contribution Plans (including 401(k) Plans and ERISA 403(b)
Plans). Spousal consent to a distribution is generally not required. Upon your
death, your spouse will receive the entire death benefit, even if you designated
someone else as your beneficiary, unless your spouse consents in writing to
waive this right. Also, if you are married and elect an annuity as a periodic
income option, federal law requires that you receive a QJSA (as described
above), unless you and your spouse consent to waive this right.
IRAs, non-ERISA 403(b) Annuities, and 457 Plans. Spousal consent to a
distribution is not required. Upon your death, any death benefit will be paid to
your designated beneficiary.
ADDITIONAL INFORMATION
For additional information about federal tax law requirements applicable to tax
favored plans, see the IRA Disclosure Statement.
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AMERICAN SKANDIA APEX II PROSPECTUS
General Information
HOW WILL I RECEIVE STATEMENTS AND REPORTS?
We send any statements and reports required by applicable law or regulation to
you at your last known address of record. You should therefore give us prompt
notice of any address change. We reserve the right, to the extent permitted by
law and subject to your prior consent, to provide any prospectus, prospectus
supplements, confirmations, statements and reports required by applicable law or
regulation to you through our Internet Website at
http://www.americanskandia.prudential.com or any other electronic means,
including diskettes or CD ROMs. We send a confirmation statement to you each
time a transaction is made affecting Account Value, such as making additional
Purchase Payments, transfers, exchanges or withdrawals. We also send quarterly
statements detailing the activity affecting your Annuity during the calendar
quarter. We may confirm regularly scheduled transactions, such as the Annual
Maintenance Fee, systematic withdrawals (including 72(t) payments and required
minimum distributions), bank drafting, dollar cost averaging, and static
rebalancing, in quarterly statements instead of confirming them immediately. You
should review the information in these statements carefully. You may request
additional reports. We reserve the right to charge up to $50 for each such
additional report. We may also send an annual report and a semi-annual report
containing applicable financial statements for the Separate Account and the
Portfolios, as of December 31 and June 30, respectively, to Owners or, with your
prior consent, make such documents available electronically through our Internet
Website or other electronic means.
WHO IS AMERICAN SKANDIA?
American Skandia Life Assurance Corporation, a Prudential Financial Company
("American Skandia") is a stock life insurance company domiciled in Connecticut
with licenses in all 50 states, the District of Columbia and Puerto Rico.
American Skandia is a wholly-owned subsidiary of American Skandia, Inc. ("ASI"),
whose ultimate parent is Prudential Financial, Inc. American Skandia markets its
products to broker-dealers and financial planners through an internal field
marketing staff. In addition, American Skandia markets through and in
conjunction with financial institutions such as banks that are permitted
directly, or through affiliates, to sell annuities.
American Skandia is in the business of issuing annuity and life insurance
products. American Skandia currently offers the following products: (a) flexible
premium deferred annuities and single premium fixed deferred annuities that are
registered with the SEC; (b) certain other fixed deferred annuities that are not
registered with the SEC; and (c) both fixed and variable immediate adjustable
annuities.
Effective May 1, 2003, Skandia U.S. Inc., the sole shareholder of ASI,
which is the parent of American Skandia, was purchased by Prudential Financial,
Inc. Prudential Financial, Inc. is a New Jersey insurance holding company whose
subsidiary companies serve individual and institutional customers worldwide and
include The Prudential Insurance Company of America, one of the largest life
insurance companies in the U.S. These companies offer a variety of products and
services, including life insurance, property and casualty insurance, mutual
funds, annuities, pension and retirement related services and administration,
asset management, securities brokerage, banking and trust services, real estate
brokerage franchises, and relocation services.
No company other than American Skandia has any legal responsibility to pay
amounts that it owes under its annuity and variable life insurance contracts.
However, Prudential Financial exercises significant influence over the
operations and capital structure of American Skandia.
WHAT ARE SEPARATE ACCOUNTS?
The separate accounts are where American Skandia sets aside and invests the
assets of some of our annuities. In the accumulation period, assets supporting
Account Values of the Annuities are held in a separate account established under
the laws of the State of Connecticut. We are the legal owner of assets in the
separate accounts. In the payout period, assets supporting fixed annuity
payments and any adjustable annuity payments we make available are held in our
general account. Assets supporting variable annuity payment options may be
invested in our separate accounts. Income, gains and losses from assets
allocated to these separate accounts are credited to or charged against each
such separate account without regard to other income, gains or losses of
American Skandia or of any other of our separate accounts. These assets may only
be charged with liabilities which arise from the Annuities issued by American
Skandia. The amount of our obligation in relation to allocations to the
Sub-accounts is based on the investment performance of such Sub-accounts.
However, the obligations themselves are our general corporate obligations.
SEPARATE ACCOUNT B
During the accumulation period, the assets supporting obligations based on
allocations to the variable investment options are held in Sub-accounts of
American Skandia Life Assurance
88
AMERICAN SKANDIA APEX II PROSPECTUS
Corporation Variable Account B, also referred to as "Separate Account B".
Separate Account B was established by us pursuant to Connecticut law on November
25, 1987. 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.
Separate Account B consists of multiple Sub-accounts. Each Sub-account
invests only in a single mutual fund or mutual fund portfolio. The name of each
Sub-account generally corresponds to the name of the underlying Portfolio. Each
Sub-account in Separate Account B may have several different Unit Prices to
reflect the Insurance Charge and the charges for any optional benefits that are
offered under this Annuity and other annuities issued by us through Separate
Account B. Separate Account B is registered with the SEC under the Investment
Company Act of 1940 ("Investment Company Act") as a unit investment trust, which
is a type of investment company. The SEC does not supervise investment policies,
management or practices of Separate Account B.
Prior to November 18, 2002, Separate Account B was organized as a single
separate account with six different Sub-account classes, each of which was
registered as a distinct unit investment trust under the Investment Company Act.
Effective November 18, 2002 each Sub-account class of Separate Account B was
consolidated into the unit investment trust formerly named American Skandia Life
Assurance Corporation Variable Account B (Class 1 Sub-accounts), which was
subsequently renamed American Skandia Life Assurance Corporation Variable
Account B. Each Sub-account of Separate Account B has multiple Unit Prices to
reflect the daily charge deducted for each combination of the applicable
Insurance Charge, Distribution Charge (when applicable) and the charge for each
optional benefit offered under Annuity contracts funded through Separate Account
B. The consolidation of Separate Account B had no impact on Annuity Owners.
We reserve the right to make changes to the Sub-accounts available under
the Annuity as we determine appropriate. We may offer new Sub-accounts,
eliminate Sub-accounts, or combine Sub-accounts at our sole discretion. We may
also close Sub-accounts to additional Purchase Payments on existing Annuity
contracts or close Sub-accounts for Annuities purchased on or after specified
dates. We may also substitute an underlying mutual fund or portfolio of an
underlying mutual fund for another underlying mutual fund or portfolio of an
underlying mutual fund, subject to our receipt of any exemptive relief that we
are required to obtain under the Investment Company Act. We will notify Owners
of changes we make to the Sub-accounts available under the Annuity.
VALUES AND BENEFITS BASED ON ALLOCATIONS TO THE SUB-ACCOUNTS WILL VARY
WITH THE INVESTMENT PERFORMANCE OF THE UNDERLYING MUTUAL FUNDS OR FUND
PORTFOLIOS, AS APPLICABLE. WE DO NOT GUARANTEE THE INVESTMENT RESULTS OF ANY
SUB-ACCOUNT. YOUR ACCOUNT VALUE ALLOCATED TO THE SUB-ACCOUNTS MAY INCREASE OR
DECREASE. YOU BEAR THE ENTIRE INVESTMENT RISK. THERE IS NO ASSURANCE THAT THE
ACCOUNT VALUE OF YOUR ANNUITY WILL EQUAL OR BE GREATER THAN THE TOTAL OF THE
PURCHASE PAYMENTS YOU MAKE TO US.
SEPARATE ACCOUNT D
During the accumulation period, assets supporting our obligations based on Fixed
Allocations are held in American Skandia Life Assurance Corporation Separate
Account D, also referred to as "Separate Account D". Such obligations are based
on the fixed interest rates we credit to Fixed Allocations and the terms of the
Annuities. These obligations do not depend on the investment performance of the
assets in Separate Account D. Separate Account D was established by us pursuant
to Connecticut law.
There are no units in Separate Account D. The Fixed Allocations are
guaranteed by our general account. An Annuity Owner who allocates a portion of
their Account Value to Separate Account D does not participate in the investment
gain or loss on assets maintained in Separate Account D. Such gain or loss
accrues solely to us. We retain the risk that the value of the assets in
Separate Account D may drop below the reserves and other liabilities we must
maintain. Should the value of the assets in Separate Account D drop below the
reserve and other liabilities we must maintain in relation to the annuities
supported by such assets, we will transfer assets from our general account to
Separate Account D to make up the difference. We have the right to transfer to
our general account any assets of Separate Account D in excess of such reserves
and other liabilities. We maintain assets in Separate Account D supporting a
number of annuities we offer.
We currently employ investment managers to manage the assets maintained in
Separate Account D. Each manager we employ is responsible for investment
management of a different portion of Separate Account D. From time to time
additional investment managers may be employed or investment managers may cease
being employed. We are under no
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AMERICAN SKANDIA APEX II PROSPECTUS
General Information continued
obligation to employ or continue to employ any investment manager(s) and have
sole discretion over the investment managers we retain. We are not obligated to
invest according to specific guidelines or strategies except as may be required
by Connecticut and other state insurance laws.
WHAT IS THE LEGAL STRUCTURE OF THE UNDERLYING FUNDS?
Each underlying mutual fund is registered as an open-end management investment
company under the Investment Company Act. Shares of the underlying mutual fund
portfolios are sold to separate accounts of life insurance companies offering
variable annuity and variable life insurance products. The shares may also be
sold directly to qualified pension and retirement plans.
VOTING RIGHTS
We are the legal owner of the shares of the underlying mutual funds in which the
Sub-accounts invest. However, under SEC rules, you have voting rights in
relation to Account Value maintained in the Sub-accounts. If an underlying
mutual fund portfolio requests a vote of shareholders, we will vote our shares
based on instructions received from Owners with Account Value allocated to that
Sub-account. Owners have the right to vote an amount equal to the number of
shares attributable to their contracts. If we do not receive voting instructions
in relation to certain shares, we will vote those shares in the same manner and
proportion as the shares for which we have received instructions. We will
furnish those Owners who have Account Value allocated to a Sub-account whose
underlying mutual fund portfolio has requested a "proxy" vote with proxy
materials and the necessary forms to provide us with their voting instructions.
Generally, you will be asked to provide instructions for us to vote on matters
such as changes in a fundamental investment strategy, adoption of a new
investment advisory agreement, or matters relating to the structure of the
underlying mutual fund that require a vote of shareholders.
American Skandia Trust (the "Trust") has obtained an exemption from the
Securities and Exchange Commission that permits its co-investment advisers,
American Skandia Investment Services, Incorporated ("ASISI") and Prudential
Investments LLC, subject to approval by the Board of Trustees of the Trust, to
change sub-advisors for a Portfolio and to enter into new sub-advisory
agreements, without obtaining shareholder approval of the changes. This
exemption (which is similar to exemptions granted to other investment companies
that are organized in a similar manner as the Trust) is intended to facilitate
the efficient supervision and management of the sub-advisors by ASISI,
Prudential Investments LLC and the Trustees. The Trust is required, under the
terms of the exemption, to provide certain information to shareholders following
these types of changes. We may add new Sub-accounts that invest in a series of
underlying funds other than the Trust that is managed by an affiliate. Such
series of funds may have a similar order from the SEC. You also should review
the prospectuses for the other underlying funds in which various Sub-accounts
invest as to whether they have obtained similar orders from the SEC.
MATERIAL CONFLICTS
It is possible that differences may occur between companies that offer shares of
an underlying mutual fund portfolio to their respective separate accounts
issuing variable annuities and/or variable life insurance products. Differences
may also occur surrounding the offering of an underlying mutual fund portfolio
to variable life insurance policies and variable annuity contracts that we
offer. Under certain circumstances, these differences could be considered
"material conflicts," in which case we would take necessary action to protect
persons with voting rights under our variable annuity contracts and variable
life insurance policies against persons with voting rights under other insurance
companies' variable insurance products. If a "material conflict" were to arise
between owners of variable annuity contracts and variable life insurance
policies issued by us we would take necessary action to treat such persons
equitably in resolving the conflict. "Material conflicts" could arise due to
differences in voting instructions between owners of variable life insurance and
variable annuity contracts of the same or different companies. We monitor any
potential conflicts that may exist.
SERVICE FEES PAYABLE TO AMERICAN SKANDIA
American Skandia or our affiliates have entered into agreements with the
investment adviser or distributor of the underlying Portfolios. Under the terms
of these agreements, American Skandia may provide administrative and support
services to the Portfolios for which it receives a fee of up to 0.75%
(currently) of the average assets allocated to the Portfolios under the Annuity
from the investment adviser, distributor and/or the fund. These agreements may
be different for each underlying mutual fund whose portfolios are offered as
Sub-accounts.
In addition, the investment adviser, sub-advisor or distributor of the
underlying Portfolios may also compensate us by provid-
90
AMERICAN SKANDIA APEX II PROSPECTUS
ing reimbursement or paying directly for, among other things, marketing and/or
administrative services and/or other services they provide in connection with
the Annuity. These services may include, but are not limited to: co-sponsoring
various meetings and seminars attended by broker-dealer firms' registered
representatives and creating marketing material discussing the Annuity and the
available options.
WHO DISTRIBUTES ANNUITIES OFFERED BY AMERICAN SKANDIA?
American Skandia Marketing, Incorporated ("ASM"), a wholly-owned subsidiary of
American Skandia, Inc., is the distributor and principal underwriter of the
securities offered through this prospectus. ASM acts as the distributor of a
number of annuity and life insurance products we offer and co-distributor of
American Skandia Trust and American Skandia Advisor Funds, Inc., a family of
retail mutual funds. ASM also acts as an introducing broker-dealer through which
it receives a portion of brokerage commissions in connection with purchases and
sales of securities held by portfolios of American Skandia Trust which are
offered as underlying investment options under the Annuity.
ASM's principal business address is One Corporate Drive, Shelton,
Connecticut 06484. ASM is registered as broker-dealer under the Securities
Exchange Act of 1934 ("Exchange Act") and is a member of the National
Association of Securities Dealers, Inc. ("NASD").
The Annuity is offered on a continuous basis. ASM enters into distribution
agreements with broker-dealers who are registered under the Exchange Act and
with entities that may offer the Annuity but are exempt from registration
("firms"). Applications for the Annuity are solicited by registered
representatives of those firms. Such representatives will also be our appointed
insurance agents under state insurance law. In addition, ASM may offer the
Annuity directly to potential purchasers.
Commissions are paid to firms on sales of the Annuity according to one or
more schedules. The individual representative will receive a portion of the
compensation, depending on the practice of his or her firm. Commissions are
generally based on a percentage of Purchase Payments made, up to a maximum of
5.5%. Alternative compensation schedules are available that provide a lower
initial commission plus ongoing annual compensation based on all or a portion of
Account Value. We may also provide compensation to the distributing firm for
providing ongoing service to you in relation to the Annuity. Commissions and
other compensation paid in relation to the Annuity do not result in any
additional charge to you or to the Separate Account.
In addition, in an effort to promote the sale of our products (which may
include the placement of American Skandia and/or the Annuity on a preferred or
recommended company or product list and/or access to the firm's registered
representatives), we or ASM may enter into compensation arrangements with
certain broker-dealer firms with respect to certain or all registered
representatives of such firms under which such firms may receive separate
compensation or reimbursement for, among other things, training of sales
personnel and/or marketing and/or administrative services and/or other services
they provide. These services may include, but are not limited to: educating
customers of the firm on the Annuity's features; conducting due diligence and
analysis, providing office access, operations and systems support; holding
seminars intended to educate the firm's registered representatives and make them
more knowledgeable about the Annuity; providing a dedicated marketing
coordinator; providing priority sales desk support; and providing expedited
marketing compliance approval. To the extent permitted by NASD rules and other
applicable laws and regulations, ASM may pay or allow other promotional
incentives or payments in the form of cash or non-cash compensation. These
arrangements may not be offered to all firms and the terms of such arrangements
may differ between firms. A list of the firms to whom American Skandia pays an
amount of greater than $10,000 for these arrangements is provided in the
Statement of Additional Information, which is available upon request. You should
note that firms and individual registered representatives and branch managers
within some firms participating in one of these compensation arrangements might
receive greater compensation for selling the Annuity than for selling a
different annuity that is not eligible for these compensation arrangements.
While compensation is generally taken into account as an expense in considering
the charges applicable to an annuity product, any such compensation will be paid
by us or ASM and will not result in any additional charge to you. Overall
compensation paid to the distributing firm does not exceed, based on actuarial
assumptions, 8.5% of the total Purchase Payments made. Your registered
representative can provide you with more information about the compensation
arrangements that apply upon the sale of the Annuity.
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AMERICAN SKANDIA APEX II PROSPECTUS
General Information continued
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
American Skandia publishes annual and quarterly reports that are filed with the
SEC. These reports contain financial information about American Skandia that is
annually audited by an independent registered public accounting firm. American
Skandia's annual report for the year ended December 31, 2004, together with
subsequent periodic reports that American Skandia files with the SEC, are
incorporated by reference into this prospectus. You can obtain copies, at no
cost, of any and all of this information, including the American Skandia annual
report that is not ordinarily mailed to contract owners, the more current
reports and any subsequently filed documents at no cost by contacting us at
American Skandia -- Variable Annuities; P.O. Box 7960, Philadelphia, PA 19176
(Telephone: 203-926-1888). The SEC file number for American Skandia is 33-44202.
You may read and copy any filings made by American Skandia with the SEC at the
SEC's Public Reference Room at 450 Fifth Street, Washington, D.C. 20549-0102.
You can obtain information on the operation of the Public Reference Room by
calling (202) 942-8090. The SEC maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC at http://www.sec.gov.
FINANCIAL STATEMENTS
The financial statements of the separate account and American Skandia Life
Assurance Corporation are included in the Statement of Additional Information.
HOW TO CONTACT US
You can contact us by:
- - calling our Customer Service Team at 1-800-752-6342 during our normal
business hours, 8:30 a.m. EST to 8:00 p.m. EST, Monday through Friday, or
Skandia's telephone automated response system at 1-800-766-4530.
- - writing to us via regular mail at American Skandia -- Variable Annuities,
P.O. Box 7960, Philadelphia, PA 19176 OR for express mail American Skandia
-- Variable Annuities, 2101 Welsh Road, Dresher, PA 19025 NOTE: Failure to
send mail to the proper address may result in a delay in our receiving and
processing your request.
- - sending an email to CUSTOMERSERVICE@SKANDIA.COM or visiting our Internet
Website at www.americanskandia.com.
- - accessing information about your Annuity through our Internet Website at
www.americanskandia.com.
You can obtain account information by calling our automated response
system and at www.americanskandia.prudential.com, our Internet Website. Our
Customer Service representatives are also available during business hours to
provide you with information about your account. You can request certain
transactions through our telephone voice response system, our Internet Website
or through a customer service representative. You can provide authorization for
a third party, including your attorney-in-fact acting pursuant to a power of
attorney, to access your account information and perform certain transactions on
your account. You will need to complete a form provided by us which identifies
those transactions that you wish to authorize via telephonic and electronic
means and whether you wish to authorize a third party to perform any such
transactions. Please note that unless you tell us otherwise, we deem that all
transactions that are directed by your investment professional with respect to
your Annuity have been authorized by you. We require that you or your
representative provide proper identification before performing transactions over
the telephone or through our Internet Website. This may include a Personal
Identification Number (PIN) that will be provided to you upon issue of your
Annuity or you may establish or change your PIN by calling our automated
response system and at www.americanskandia.prudential.com, our Internet Website.
Any third party that you authorize to perform financial transactions on your
account will be assigned a PIN for your account.
Transactions requested via telephone are recorded. To the extent permitted
by law, we will not be responsible for any claims, loss, liability or expense in
connection with a transaction requested by telephone or other electronic means
if we acted on such transaction instructions after following reasonable
procedures to identify those persons authorized to perform transactions on your
Annuity using verification methods which may include a request for your Social
Security number, PIN or other form of electronic identification. We may be
liable for losses due to unauthorized or fraudulent instructions if we did not
follow such procedures.
American Skandia does not guarantee access to telephonic, facsimile,
Internet or any other electronic information or that we will be able to accept
transaction instructions via such means at all times. Regular and/or express
mail will be the only means by which we will accept transaction instructions
when telephonic,
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AMERICAN SKANDIA APEX II PROSPECTUS
facsimile, Internet or any other electronic means are unavailable or delayed.
American Skandia reserves the right to limit, restrict or terminate telephonic,
facsimile, Internet or any other electronic transaction privileges at any time.
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Securities Act") may be permitted to directors, officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
LEGAL PROCEEDINGS
As of the date of this Prospectus, American Skandia and its affiliates are not
involved in any legal proceedings outside of the ordinary course of business.
American Skandia and its affiliates are involved in pending and threatened legal
proceedings in the normal course of its business, however, we do not anticipate
that the outcome of any such legal proceedings will have a material adverse
affect on the Separate Account, or American Skandia's ability to meet its
obligations under the Annuity, or on the distribution of the Annuity.
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The following are the contents of the Statement of Additional Information:
General Information about American Skandia
- - American Skandia Life Assurance Corporation
- - American Skandia Life Assurance Corporation Variable Account B
- - American Skandia Life Assurance Corporation Separate Account D
Principal Underwriter/Distributor -- American Skandia Marketing, Incorporated
Payments Made to Promote Sale of Our Products
How the Unit Price is Determined
Additional Information on Fixed Allocations
- - How We Calculate the Market Value Adjustment
General Information
- - Voting Rights
- - Modification
- - Deferral of Transactions
- - Misstatement of Age or Sex
- - Ending the Offer
Annuitization
Experts
Legal Experts
Financial Statements
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APPENDIX A
Appendix A -- Condensed Financial Information About Separate Account B
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AMERICAN SKANDIA APEX II PROSPECTUS
Separate Account B consists of multiple Sub-accounts. Each Sub-account invests
only in a single mutual fund or mutual fund portfolio. All or some of these
Sub-accounts are available as investment options for other variable annuities
we offer pursuant to different prospectuses.
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 Sub-accounts of Separate
Account B that are being offered pursuant to this Prospectus; and (b) the
number of Units outstanding for each such Sub-account as of the dates shown.
Since November 18, 2002, we have been determining, on a daily basis, multiple
Unit Prices for each Sub-account of Separate Account B. We compute multiple
Unit Prices because several of our variable annuities invest in the same
Sub-accounts, and these annuities deduct varying charges that correspond to
each combination of the applicable Insurance Charge, Distribution Charge (when
applicable) and the charges for each optional benefit. Where an asset-based
charge corresponding to a particular Sub-account within a new annuity product
is identical to that in the same Sub-account within an existing annuity, the
Unit Price for the new annuity will be identical to that of the existing
annuity. In such cases, we will for reference purposes depict, in the condensed
financial information for the new annuity, Unit Prices of the existing annuity.
The year in which operations commenced in each such Sub-account is noted in
parentheses. To the extent a Sub-account commenced operations during a
particular calendar year, the Unit Price as of the end of the period reflects
only the partial year results from the commencement of operations until
December 31st of the applicable year. When a Unit Price was first calculated
for a particular Sub-account, we set the price of that Unit at $10.00 per Unit.
Thereafter, Unit Prices vary based on market performance. Unit Prices and Units
are provided for Sub-accounts that commenced operations prior to January 1,
2005.
A-1
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------
Sub-account 2004 2003 2002
- ---------------------------------------------- --------------- --------------- ---------------
AST JP Morgan International Equity Portfolio
With No Optional Benefits
Unit Price $ 12.67 $ 11.00 8.56
Number of Units 3,227,381 2,415,394 2,569,506
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.65 $ 12.75 9.95
Number of Units 2,064,681 936,678 90,759
With GMWB
Unit Value $ 14.62 $ 12.74 --
Number of Units 217,166 17,098 --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.57 $ 12.72 9.95
Number of Units 284,319 141,470 6,047
With any one of EBP or HAV and GMWB
Unit Value $ 7.86 $ 6.87 --
Number of Units 428,765 400,112 --
With HAV, EBP and GRO Plus
Unit Price $ 14.49 $ 12.68 --
Number of Units 38,292 13,590 --
With HAV, EBP and GMWB
Unit Price $ 12.32 -- --
Number of Units 20,718 -- --
- ------------------------------------------ -- ------------- ------------ ------------
AST William Blair International Growth (1997)
With No Optional Benefits
Unit Price $ 15.30 $ 13.39 9.72
Number of Units 11,265,469 5,547,558 835,523
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.21 $ 13.35 9.72
Number of Units 15,481,627 6,498,151 78,368
With GMWB
Unit Value $ 15.18 $ 13.34 --
Number of Units 1,821,923 103,740 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.13 $ 13.32 9.71
Number of Units 2,722,552 1,009,679 5,178
With any one of EBP or HAV and GMWB
Unit Value $ 15.74 $ 13.86 --
Number of Units 545,075 29,434 --
With HAV, EBP and GRO Plus
Unit Price $ 15.05 $ 13.28 --
Number of Units 325,809 32,626 --
With HAV, EBP and GMWB
Unit Price $ 11.94 -- --
Number of Units 135,829 -- --
- ------------------------------------------ -- ------------- ------------ ------------
A-2
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- --------------- --------------- -------------
AST LSV International Value (1994)
With No Optional Benefits
Unit Price $ 12.84 $ 10.79 8.19
Number of Units 1,897,469 1,201,268 269,995
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.27 $ 12.86 9.79
Number of Units 810,108 368,945 22,770
With GMWB
Unit Value $ 15.24 $ 12.85 --
Number of Units 69,494 5,504 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.19 $ 12.82 --
Number of Units 119,845 24,374 --
With any one of EBP or HAV and GMWB
Unit Value $ 6.69 $ 5.65 --
Number of Units 122,795 72,406 --
With HAV, EBP and GRO Plus
Unit Price $ 15.11 $ 12.79 --
Number of Units 16,366 1,767 --
With HAV, EBP and GMWB
Unit Value $ 12.70 -- --
Number of Units 5,736 -- --
- ------------------------------------ --- ------------ ------------ ----------
AST MFS Global Equity (1999)
With No Optional Benefits
Unit Price $ 13.16 $ 11.30 9.04
Number of Units 2,276,801 1,393,001 969,509
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.29 $ 12.31 9.87
Number of Units 1,897,254 916,888 32,306
With GMWB
Unit Value $ 14.26 $ 12.29 --
Number of Units 98,046 4,306 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.22 $ 12.27 --
Number of Units 219,580 62,490 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.48 $ 9.06 --
Number of Units 273,401 308,725 --
With HAV, EBP and GRO Plus
Unit Price $ 14.14 $ 12.24 --
Number of Units 26,943 6,069 --
With HAV, EBP and GMWB
Unit Value $ 12.40 -- --
Number of Units 5,188 -- --
- ------------------------------------ --- ------------ ------------ ----------
A-3
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------------- --------------- --------------- ---------------
AST State Street Research Small-Cap Growth(1)
With No Optional Benefits
Unit Price $ 9.05 $ 9.89 6.92
Number of Units 2,242,129 3,292,593 1,970,250
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.33 $ 13.50 9.48
Number of Units 1,200,247 1,059,046 47,261
With GMWB
Unit Value $ 12.30 $ 13.49 --
Number of Units 113,913 9,676 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.26 $ 13.46 9.47
Number of Units 136,313 138,936 6,595
With any one of EBP or HAV and GMWB
Unit Value $ 15.30 $ 16.82 --
Number of Units 67,370 64,850 --
With HAV, EBP and GRO Plus
Unit Price $ 12.19 $ 13.43 --
Number of Units 23,253 4,691 --
With HAV, EBP and GMWB
Unit Value $ 9.32 -- --
Number of Units 1,043 -- --
- ----------------------------------------- -- ------------ ------------ ------------
AST DeAM Small-Cap Growth (1999)
With No Optional Benefits
Unit Price $ 11.98 $ 11.13 7.67
Number of Units 1,618,719 1,682,193 639,695
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.10 $ 14.06 9.71
Number of Units 779,045 480,221 12,122
With GMWB
Unit Value $ 15.07 $ 14.05 --
Number of Units 56,414 1,850 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.02 $ 14.02 9.71
Number of Units 192,105 89,708 1,728
With any one of EBP or HAV and GMWB
Unit Value $ 7.07 $ 6.61 --
Number of Units 129,475 131,605 --
With HAV, EBP and GRO Plus
Unit Price $ 14.94 $ 13.98 --
Number of Units 18,825 3,753 --
With HAV, EBP and GMWB
Unit Value $ 11.03 -- --
Number of Units 3,398 -- --
- ----------------------------------------- -- ------------ ------------ ------------
A-4
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- --------------- --------------- ---------------
AST Federated Aggressive Growth (2000)
With No Optional Benefits
Unit Price $ 15.42 $ 12.74 7.64
Number of Units 4,808,453 3,085,373 1,255,415
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.79 $ 16.40 9.86
Number of Units 5,192,694 2,615,505 63,097
With GMWB
Unit Value $ 19.75 $ 16.38 --
Number of Units 562,771 37,078 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 19.69 $ 16.35 9.86
Number of Units 808,007 362,906 4,107
With any one of EBP or HAV and GMWB
Unit Value $ 9.70 $ 8.06 --
Number of Units 324,340 79,226 --
With HAV, EBP and GRO Plus
Unit Price $ 19.58 $ 16.30 --
Number of Units 95,514 20,181 --
With HAV, EBP and GMWB
Unit Value $ 12.64 -- --
Number of Units 53,866 -- --
- ------------------------------------- -- ------------ ------------ ------------
AST Goldman Sachs Small-Cap Value (1997)
With No Optional Benefits
Unit Price $ 15.19 $ 12.85 9.26
Number of Units 1,541,896 1,504,296 1,492,775
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.47 $ 13.97 10.09
Number of Units 222,905 102,500 624
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value $ 19.58 $ 16.67 --
Number of Units 61,521 73,852 --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------- -- ------------ ------------ ------------
A-5
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
-----------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- ---------------- ---------------- ---------------
AST Small-Cap Value (1997)
With No Optional Benefits
Unit Price $ 14.22 $ 12.42 9.30
Number of Units 10,785,030 10,183,346 6,141,523
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.34 $ 13.43 10.08
Number of Units 10,169,483 5,824,200 209,790
With GMWB
Unit Value $ 15.31 $ 13.41 --
Number of Units 1,007,926 100,155 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.26 $ 13.39 10.08
Number of Units 1,690,870 767,455 17,411
With any one of EBP or HAV and GMWB
Unit Value $ 15.87 $ 13.95 --
Number of Units 465,784 275,971 --
With HAV, EBP and GRO Plus
Unit Price $ 15.17 $ 13.35 --
Number of Units 166,852 34,978 --
With HAV, EBP and GMWB
Unit Value $ 12.11 -- --
Number of Units 91,011 -- --
- ------------------------------------ --- ------------- ------------- ------------
AST DeAM Small-Cap Value (2002)
With No Optional Benefits
Unit Price $ 12.99 $ 10.81 7.66
Number of Units 2,143,020 1,134,865 423,387
With any one of GRO Plus, EBP or HAV
Unit Price $ 17.00 $ 14.19 10.08
Number of Units 1,054,696 434,509 11,686
With GMWB
Unit Value $ 16.96 $ 14.17 --
Number of Units 236,402 10,756 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 16.90 $ 14.15 10.08
Number of Units 213,632 70,597 5,211
With any one of EBP or HAV and GMWB
Unit Value $ 12.78 $ 10.70 --
Number of Units 63,057 22,847 --
With HAV, EBP and GRO Plus
Unit Price $ 16.81 $ 14.11 --
Number of Units 14,277 879 --
With HAV, EBP and GMWB
Unit Value $ 12.71 -- --
Number of Units 634 -- --
- ------------------------------------ --- ------------- ------------- ------------
A-6
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------
Sub-account 2004 2003 2002
- ------------------------------------------- --------------- --------------- ---------------
AST Goldman Sachs Mid-Cap Growth (2000)
With No Optional Benefits
Unit Price $ 11.80 $ 10.31 7.97
Number of Units 4,375,813 3,027,057 1,273,118
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.55 $ 12.75 9.87
Number of Units 5,139,643 2,379,820 66,279
With GMWB
Unit Value $ 14.52 $ 12.73 --
Number of Units 516,261 37,400 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.47 $ 12.71 9.87
Number of Units 994,493 365,115 2,488
With any one of EBP or HAV and GMWB
Unit Value $ 4.24 $ 3.73 --
Number of Units 457,010 175,708 --
With HAV, EBP and GRO Plus
Unit Price $ 14.39 $ 12.68 --
Number of Units 124,672 12,201 --
With HAV, EBP and GMWB
Unit Value $ 11.91 -- --
Number of Units 33,665 -- --
- --------------------------------------- -- ------------ ------------ ------------
AST Neuberger Berman Mid-Cap Growth (1994)
With No Optional Benefits
Unit Price $ 10.86 $ 9.51 7.41
Number of Units 4,715,301 3,415,318 2,175,250
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.87 $ 12.18 9.51
Number of Units 2,211,800 1,089,649 44,760
With GMWB
Unit Value $ 13.84 $ 12.17 --
Number of Units 153,923 16,702 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.80 $ 12.15 9.51
Number of Units 377,548 96,879 1,311
With any one of EBP or HAV and GMWB
Unit Value $ 6.81 $ 6.01 --
Number of Units 369,234 294,816 --
With HAV, EBP and GRO Plus
Unit Price $ 13.72 $ 12.11 --
Number of Units 38,051 5,407 --
With HAV, EBP and GMWB
Unit Value $ 11.70 -- --
Number of Units 18,225 -- --
- --------------------------------------- -- ------------ ------------ ------------
A-7
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
----------------------------------------------------
Sub-account 2004 2003 2002
- ------------------------------------------ ---------------- --------------- ---------------
AST Neuberger Berman Mid-Cap Value (1994)
With No Optional Benefits
Unit Price $ 14.51 $ 12.01 8.96
Number of Units 11,461,684 8,530,129 5,118,558
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.08 $ 13.34 9.98
Number of Units 9,335,291 4,786,623 163,415
With GMWB
Unit Value $ 16.04 $ 13.33 --
Number of Units 937,314 87,253 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.99 $ 13.31 9.97
Number of Units 1,457,788 610,598 10,745
With any one of EBP or HAV and GMWB
Unit Value $ 15.99 $ 13.32 --
Number of Units 537,445 370,965 --
With HAV, EBP and GRO Plus
Unit Price $ 15.91 $ 13.27 --
Number of Units 154,749 21,843 --
With HAV, EBP and GMWB
Unit Value $ 12.97 -- --
Number of Units 95,076 -- --
- -------------------------------------- -- ------------- ------------ ------------
AST Alger All-Cap Growth (2000)
With No Optional Benefits
Unit Price $ 9.67 $ 9.07 6.80
Number of Units 1,798,457 2,002,166 658,419
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.25 $ 12.45 9.36
Number of Units 715,598 636,548 6,409
With GMWB
Unit Value $ 13.22 $ 12.43 --
Number of Units 119,566 10,356 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.17 $ 12.41 9.36
Number of Units 141,575 106,376 3,466
With any one of EBP or HAV and GMWB
Unit Value $ 6.19 $ 5.84 --
Number of Units 107,188 87,326 --
With HAV, EBP and GRO Plus
Unit Price $ 13.10 $ 12.38 --
Number of Units 22,732 4,810 --
With HAV, EBP and GMWB
Unit Value $ 10.73 -- --
Number of Units 6,346 -- --
- -------------------------------------- -- ------------- ------------ ------------
A-8
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------
Sub-account 2004 2003 2002
- ------------------------------------------- --------------- --------------- ---------------
AST Gabelli All-Cap Value (2000)
With No Optional Benefits
Unit Price $ 12.38 $ 10.91 8.17
Number of Units 2,587,064 2,513,413 1,200,225
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.14 $ 13.38 10.04
Number of Units 1,071,978 727,500 28,449
With GMWB
Unit Value $ 15.11 $ 13.37 --
Number of Units 116,474 12,627 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.06 $ 13.35 10.04
Number of Units 256,671 127,279 88
With any one of EBP or HAV and GMWB
Unit Value $ 11.15 $ 9.89 --
Number of Units 194,765 166,080 --
With HAV, EBP and GRO Plus
Unit Price $ 14.98 $ 13.31 --
Number of Units 8,849 1,455 --
With HAV, EBP and GMWB
Unit Value $ 12.11 -- --
Number of Units 7,555 -- --
- --------------------------------------- -- ------------ ------------ ------------
AST T. Rowe Price Natural Resources (1995)
With No Optional Benefits
Unit Price $ 16.25 $ 12.59 9.59
Number of Units 2,040,188 2,011,627 724,670
With any one of GRO Plus, EBP or HAV
Unit Price $ 17.60 $ 13.67 10.44
Number of Units 1,025,462 433,891 7,378
With GMWB
Unit Value $ 17.56 $ 13.66 --
Number of Units 172,186 24,634 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 17.50 $ 13.63 10.44
Number of Units 158,672 77,245 5,472
With any one of EBP or HAV and GMWB
Unit Value $ 14.40 $ 11.23 --
Number of Units 41,428 6,747 --
With HAV, EBP and GRO Plus
Unit Price $ 17.41 $ 13.60
Number of Units 37,779 1,035
With HAV, EBP and GMWB
Unit Value $ 14.36 -- --
Number of Units 13,775 -- --
- --------------------------------------- -- ------------ ------------ ------------
A-9
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- --------------- --------------- ---------------
AST Alliance Growth 2 (1996)
With No Optional Benefits
Unit Price $ 9.44 $ 9.08 7.46
Number of Units 2,378,881 2,098,873 1,869,353
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.76 $ 11.34 9.34
Number of Units 1,189,655 717,430 31,105
With GMWB
Unit Value $ 11.73 $ 11.32 --
Number of Units 84,417 2,206 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.70 $ 11.30 9.34
Number of Units 297,369 114,477 3,975
With any one of EBP or HAV and GMWB
Unit Value $ 5.91 $ 5.72 --
Number of Units 307,367 267,109 --
With HAV, EBP and GRO Plus
Unit Price $ 11.63 $ 11.27 --
Number of Units 15,562 8,067 --
With HAV, EBP and GMWB
Unit Value $ 10.57 -- --
Number of Units 4,945 -- --
- ------------------------------------ --- ------------ ------------ ------------
AST MFS Growth (1999)
With No Optional Benefits
Unit Price $ 9.97 $ 9.16 7.58
Number of Units 4,529,834 4,784,269 2,930,432
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.39 $ 11.41 9.47
Number of Units 2,897,175 2,222,614 134,574
With GMWB
Unit Value $ 12.37 $ 11.40 --
Number of Units 304,760 18,900 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.33 $ 11.38 9.46
Number of Units 442,758 207,063 2,437
With any one of EBP or HAV and GMWB
Unit Value $ 6.72 $ 6.21 --
Number of Units 387,463 262,995 --
With HAV, EBP and GRO Plus
Unit Price $ 12.26 $ 11.35 --
Number of Units 52,718 10,550 --
With HAV, EBP and GMWB
Unit Value $ 11.00 -- --
Number of Units 33,939 -- --
- ------------------------------------ --- ------------ ------------ ------------
A-10
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------------- ---------------- ---------------- ----------------
AST Marsico Capital Growth (1997)
With No Optional Benefits
Unit Price $ 12.26 $ 10.78 8.32
Number of Units 28,117,310 20,138,164 10,144,317
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.95 $ 12.30 9.51
Number of Units 30,793,077 14,975,841 457,013
With GMWB
Unit Value $ 13.92 $ 12.28 --
Number of Units 3,136,818 215,988 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.88 $ 12.26 9.51
Number of Units 4,692,895 2,031,583 30,465
With any one of EBP or HAV and GMWB
Unit Value $ 9.22 $ 8.16 --
Number of Units 2,016,277 925,591 --
With HAV, EBP and GRO Plus
Unit Price $ 13.80 $ 12.23 --
Number of Units 578,919 70,776 --
With HAV, EBP and GMWB
Unit Value $ 11.61 -- --
Number of Units 263,104 -- --
- ----------------------------------------- -- ------------- ------------- -------------
AST Goldman Sachs Concentrated Growth (1992)
With No Optional Benefits
Unit Price $ 9.64 $ 9.45 7.67
Number of Units 2,785,100 2,053,023 1,349,939
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.83 $ 11.63 9.46
Number of Units 1,641,544 715,845 41,632
With GMWB
Unit Value $ 11.80 $ 11.61 --
Number of Units 122,739 17,452 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.76 $ 11.59 --
Number of Units 277,607 49,620 --
With any one of EBP or HAV and GMWB
Unit Value $ 4.46 $ 4.40 --
Number of Units 541,661 395,905 --
With HAV, EBP and GRO Plus
Unit Price $ 11.70 $ 11.56 --
Number of Units 10,426 242 --
With HAV, EBP and GMWB
Unit Value $ 10.54 -- --
Number of Units 12,303 -- --
- ----------------------------------------- -- ------------- ------------- -------------
A-11
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------------- --------------- --------------- -------------
AST DeAM Large-Cap Value (2000)
With No Optional Benefits
Unit Price $ 12.53 $ 10.78 8.66
Number of Units 2,351,197 1,072,256 664,649
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.36 $ 12.39 9.98
Number of Units 1,347,344 583,969 18,250
With GMWB
Unit Value $ 14.33 $ 12.38 --
Number of Units 175,087 9,674 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.29 $ 12.36 9.97
Number of Units 234,446 58,333 4,906
With any one of EBP or HAV and GMWB
Unit Value $ 10.72 $ 9.28 --
Number of Units 199,601 137,247 --
With HAV, EBP and GRO Plus
Unit Price $ 14.21 $ 12.32 --
Number of Units 16,355 4,412 --
With HAV, EBP and GMWB
Unit Value $ 12.25 -- --
Number of Units 6,163 -- --
- ------------------------------------------- -- ------------ ------------ ----------
AST Alliance/Bernstein Growth + Value(3) (2001)
With No Optional Benefits
Unit Price $ 10.72 $ 9.91 7.99
Number of Units 1,620,391 1,387,072 965,912
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.07 $ 12.11 9.79
Number of Units 1,011,796 667,395 11,345
With GMWB
Unit Value $ 13.05 $ 12.09 --
Number of Units 72,365 5,118 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.00 $ 12.07 9.79
Number of Units 256,194 115,455 704
With any one of EBP or HAV and GMWB
Unit Value $ 9.31 $ 8.65 --
Number of Units 215,645 154,955 --
With HAV, EBP and GRO Plus
Unit Price $ 12.93 $ 12.04 --
Number of Units 7,165 1,041 --
With HAV, EBP and GMWB
Unit Value $ 11.15 -- --
Number of Units 1,191 -- --
- ------------------------------------------- -- ------------ ------------ ----------
A-12
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------
Sub-account 2004 2003 2002
- ------------------------------------------ --------------- --------------- ---------------
AST Sanford Bernstein Core Value(4) (2001)
With No Optional Benefits
Unit Price $ 12.39 $ 11.06 8.76
Number of Units 4,643,022 3,621,862 6,005,922
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.18 $ 12.69 10.08
Number of Units 3,959,115 2,277,726 386,259
With GMWB
Unit Value $ 14.15 $ 12.67 --
Number of Units 220,419 11,518 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.10 $ 12.65 10.08
Number of Units 534,389 328,567 30,510
With any one of EBP or HAV and GMWB
Unit Value $ 11.83 $ 10.62 --
Number of Units 303,689 216,416 --
With HAV, EBP and GRO Plus
Unit Price $ 14.03 $ 12.62 --
Number of Units 49,912 10,893 --
With HAV, EBP and GMWB
Unit Value $ 11.86 -- --
Number of Units 57,669 -- --
- -------------------------------------- -- ------------ ------------ ------------
AST Cohen & Steers Realty (1998)
With No Optional Benefits
Unit Price $ 18.49 $ 13.63 10.08
Number of Units 4,080,179 3,097,315 1,563,489
With any one of GRO Plus, EBP or HAV
Unit Price $ 18.84 $ 13.92 10.33
Number of Units 2,863,749 1,376,696 41,098
With GMWB
Unit Value $ 18.80 $ 13.91 --
Number of Units 184,027 13,615 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 18.74 $ 13.88 10.32
Number of Units 538,151 270,852 6,429
With any one of EBP or HAV and GMWB
Unit Value $ 14.12 $ 10.47 --
Number of Units 68,406 8,884 --
With HAV, EBP and GRO Plus
Unit Price $ 18.64 $ 13.84
Number of Units 17,014 8,189
With HAV, EBP and GMWB
Unit Value $ 14.07 -- --
Number of Units 5,246 -- --
- -------------------------------------- -- ------------ ------------ ------------
A-13
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------
Sub-account 2004 2003 2002
- ------------------------------------------------- --------------- --------------- ---------------
AST Sanford Bernstein Managed Index 500(5) (1998)
With No Optional Benefits
Unit Price $ 11.07 $ 10.23 8.17
Number of Units 6,845,369 5,442,511 3,662,406
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.22 $ 12.25 9.81
Number of Units 3,486,237 2,209,334 79,915
With GMWB
Unit Value $ 13.19 $ 12.24 --
Number of Units 389,368 16,957 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.15 $ 12.22 9.81
Number of Units 352,176 203,573 383
With any one of EBP or HAV and GMWB
Unit Value $ 8.58 $ 7.98 --
Number of Units 343,296 293,662 --
With HAV, EBP and GRO Plus
Unit Price $ 13.08 $ 12.18 --
Number of Units 9,296 4,899 --
With HAV, EBP and GMWB
Unit Value $ 11.31 -- --
Number of Units 43,627 -- --
- --------------------------------------------- -- ------------ ------------ ------------
AST American Century Income & Growth (1997)
With No Optional Benefits
Unit Price $ 11.57 $ 10.45 8.25
Number of Units 4,670,846 2,115,438 1,751,136
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.80 $ 12.50 9.89
Number of Units 2,219,323 846,118 36,829
With GMWB
Unit Value $ 13.77 $ 12.48 --
Number of Units 198,789 2,386 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.73 $ 12.46 9.89
Number of Units 368,328 124,008 8,874
With any one of EBP or HAV and GMWB
Unit Value $ 9.04 $ 8.22 --
Number of Units 372,540 195,232 --
With HAV, EBP and GRO Plus
Unit Price $ 13.65 $ 12.43 --
Number of Units 25,550 4,612 --
With HAV, EBP and GMWB
Unit Value $ 11.72 -- --
Number of Units 7,406 -- --
- --------------------------------------------- -- ------------ ------------ ------------
A-14
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
-----------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- ---------------- ---------------- ---------------
AST Alliance Growth and Income(6) (1992)
With No Optional Benefits
Unit Price $ 11.46 $ 10.50 8.06
Number of Units 25,850,506 21,264,670 6,667,373
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.91 $ 12.77 9.83
Number of Units 27,268,222 13,386,166 165,588
With GMWB
Unit Value $ 13.88 $ 12.76 --
Number of Units 2,899,917 187,011 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.83 $ 12.74 9.83
Number of Units 4,694,207 2,029,598 6,100
With any one of EBP or HAV and GMWB
Unit Value $ 10.72 $ 9.88 --
Number of Units 1,731,512 976,756 --
With HAV, EBP and GRO Plus
Unit Price $ 13.76 $ 12.70 --
Number of Units 564,502 69,435 --
With HAV, EBP and GMWB
Unit Value $ 11.50 -- --
Number of Units 228,955 -- --
- ------------------------------------ --- ------------- ------------- ------------
AST Hotchkis & Wiley Large-Cap Value
With No Optional Benefits
Unit Price $ 11.17 $ 9.83 8.34
Number of Units 3,717,848 2,647,064 2,110,071
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.19 $ 11.65 9.90
Number of Units 1,916,775 651,074 30,714
With GMWB
Unit Value $ 13.16 $ 11.63 --
Number of Units 173,888 21,961 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.12 $ 11.61 9.90
Number of Units 198,898 90,092 5,934
With any one of EBP or HAV and GMWB
Unit Value $ 9.78 $ 8.66 --
Number of Units 419,818 347,275 --
With HAV, EBP and GRO Plus
Unit Price $ 13.05 $ 11.58 --
Number of Units 37,159 332 --
With HAV, EBP and GMWB
Unit Value $ 11.75 -- --
Number of Units 23,032 -- --
- ------------------------------------ --- ------------- ------------- ------------
A-15
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------------- --------------- --------------- ---------------
AST DeAM Global Allocation(7) (1993)
With No Optional Benefits
Unit Price $ 11.19 $ 10.24 8.71
Number of Units 1,061,887 898,161 847,517
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.70 $ 11.65 9.94
Number of Units 278,657 155,865 3,088
With GMWB
Unit Value $ 12.67 $ 11.64 --
Number of Units 35,622 483 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.63 $ 11.62 9.93
Number of Units 52,110 34,914 94
With any one of EBP or HAV and GMWB
Unit Value $ 9.12 $ 8.40 --
Number of Units 290,887 303,295 --
With HAV, EBP and GRO Plus
Unit Price $ 12.56 $ 11.58 --
Number of Units 2,849 1,169 --
With HAV, EBP and GMWB
Unit Value $ 11.23 -- --
Number of Units 2,193 -- --
- ------------------------------------------- -- ------------ ------------ ---------
AST American Century Strategic Balanced (1997)
With No Optional Benefits
Unit Price $ 11.46 $ 10.69 $ 9.14
Number of Units 2,335,598 2,045,205 1,126,058
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.43 $ 11.62 $ 9.97
Number of Units 1,308,462 930,516 15,835
With GMWB
Unit Value $ 12.40 $ 11.61 --
Number of Units 175,763 18,977 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.36 $ 11.59 $ 9.97
Number of Units 186,307 58,741 2,760
With any one of EBP or HAV and GMWB
Unit Value $ 10.08 $ 9.46 --
Number of Units 218,686 196,909 --
With HAV, EBP and GRO Plus
Unit Price $ 12.29 $ 11.56 --
Number of Units 18,231 11,783 --
With HAV, EBP and GMWB
Unit Value $ 10.98 -- --
Number of Units 125 -- --
- ------------------------------------------- -- ------------ ------------ ------------
A-16
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------
Sub-account 2004 2003 2002
- ------------------------------------------ --------------- --------------- ---------------
AST T. Rowe Price Asset Allocation (1994)
With No Optional Benefits
Unit Price $ 12.13 $ 11.09 9.09
Number of Units 3,551,315 2,243,566 921,329
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.22 $ 12.12 9.96
Number of Units 2,109,855 955,716 21,928
With GMWB
Unit Value $ 13.19 $ 12.11 --
Number of Units 349,177 27,414 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.15 $ 12.09 9.96
Number of Units 464,055 160,339 150
With any one of EBP or HAV and GMWB
Unit Value $ 11.38 $ 10.48 --
Number of Units 39,231 2,741 --
With HAV, EBP and GRO Plus
Unit Price $ 13.08 $ 12.05
Number of Units 46,336 31,706
With HAV, EBP and GMWB
Unit Value $ 11.35 -- --
Number of Units 9,372 -- --
- -------------------------------------- -- ------------ ------------ ----------
AST T. Rowe Price Global Bond (1994)
With No Optional Benefits
Unit Price $ 13.45 $ 12.59 11.34
Number of Units 4,717,822 2,962,471 1,739,313
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.17 $ 11.42 10.31
Number of Units 6,387,666 1,827,606 36,822
With GMWB
Unit Value $ 12.14 $ 11.40 --
Number of Units 712,411 24,361 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.10 $ 11.38 10.31
Number of Units 1,195,848 279,110 3,700
With any one of EBP or HAV and GMWB
Unit Value $ 14.05 $ 13.23 --
Number of Units 191,816 148,319 --
With HAV, EBP and GRO Plus
Unit Price $ 12.04 $ 11.35 --
Number of Units 137,089 12,591 --
With HAV, EBP and GMWB
Unit Value $ 10.94 -- --
Number of Units 43,652 -- --
- -------------------------------------- -- ------------ ------------ ------------
A-17
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
-----------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- ---------------- ---------------- ---------------
AST Goldman Sachs High Yield Portfolio
With No Optional Benefits
Unit Price $ 12.69 $ 11.61 9.71
Number of Units 13,717,128 12,201,163 5,592,940
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.34 $ 12.24 10.26
Number of Units 4,901,936 3,684,174 74,022
With GMWB
Unit Value $ 13.31 $ 12.23 --
Number of Units 426,333 27,535 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.27 $ 12.21 10.26
Number of Units 707,876 379,114 6,524
With any one of EBP or HAV and GMWB
Unit Value $ 11.51 $ 10.60 --
Number of Units 545,726 346,126 --
With HAV, EBP and GRO Plus
Unit Price $ 13.20 $ 12.17 --
Number of Units 54,058 28,237 --
With HAV, EBP and GMWB
Unit Value $ 11.24 -- --
Number of Units 65,084 -- --
- ------------------------------------ --- ------------- ------------- ------------
AST Lord Abbett Bond-Debenture (2000)
With No Optional Benefits
Unit Price $ 12.26 $ 11.61 9.94
Number of Units 8,369,008 7,751,236 4,146,530
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.56 $ 11.92 10.23
Number of Units 7,337,467 4,628,945 162,571
With GMWB
Unit Value $ 12.53 $ 11.90 --
Number of Units 904,128 42,593 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.49 $ 11.88 10.23
Number of Units 1,314,641 624,019 7,474
With any one of EBP or HAV and GMWB
Unit Value $ 12.18 $ 11.60 --
Number of Units 732,155 423,485 --
With HAV, EBP and GRO Plus
Unit Price $ 12.42 $ 11.85 --
Number of Units 155,764 28,346 --
With HAV, EBP and GMWB
Unit Value $ 10.88 -- --
Number of Units 85,669 -- --
- ------------------------------------ --- ------------- ------------- ------------
A-18
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- ---------------- ---------------- ----------------
AST PIMCO Total Return Bond (1994)
With No Optional Benefits
Unit Price $ 11.31 $ 10.95 10.57
Number of Units 33,208,757 26,287,388 20,544,075
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.82 $ 10.51 10.17
Number of Units 30,067,867 16,012,778 604,147
With GMWB
Unit Value $ 10.79 $ 10.49 --
Number of Units 3,495,678 378,676 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.76 $ 10.48 10.17
Number of Units 4,319,279 2,192,336 36,236
With any one of EBP or HAV and GMWB
Unit Value $ 13.09 $ 12.76 --
Number of Units 2,344,332 1,558,557 --
With HAV, EBP and GRO Plus
Unit Price $ 10.70 $ 10.45 --
Number of Units 476,033 119,982 --
With HAV, EBP and GMWB
Unit Value $ 10.32 -- --
Number of Units 323,335 -- --
- ------------------------------------ --- ------------- ------------- -------------
AST PIMCO Limited Maturity Bond (1995)
With No Optional Benefits
Unit Price $ 10.55 $ 10.51 10.34
Number of Units 21,299,789 15,242,856 11,274,642
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.23 $ 10.22 10.08
Number of Units 19,103,280 5,152,783 215,314
With GMWB
Unit Value $ 10.21 $ 10.21 --
Number of Units 2,764,809 36,640 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.17 $ 10.19 10.08
Number of Units 2,785,690 636,860 80,547
With any one of EBP or HAV and GMWB
Unit Value $ 11.62 $ 11.65 --
Number of Units 1,143,298 329,629 --
With HAV, EBP and GRO Plus
Unit Price $ 10.12 $ 10.16 --
Number of Units 301,108 35,430 --
With HAV, EBP and GMWB
Unit Value $ 9.96 -- --
Number of Units 240,337 -- --
- ------------------------------------ --- ------------- ------------- -------------
A-19
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------------------------------------- ---------------- ---------------- ----------------
AST Money Market (1992)
With No Optional Benefits
Unit Price $ 9.78 $ 9.86 9.96
Number of Units 29,870,585 32,730,501 36,255,772
With any one of GRO Plus, EBP or HAV
Unit Price $ 9.75 $ 9.86 9.99
Number of Units 8,152,893 7,176,983 999,737
With GMWB
Unit Value $ 9.73 $ 9.85 --
Number of Units 1,312,018 81,304 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 9.70 $ 9.83 9.99
Number of Units 1,742,703 1,118,618 70,899
With any one of EBP or HAV and GMWB
Unit Value $ 9.98 $ 10.13 --
Number of Units 234,402 35,505 --
With HAV, EBP and GRO Plus
Unit Price $ 9.65 $ 9.80 --
Number of Units 432,144 149,705 --
With HAV, EBP and GMWB
Unit Value $ 9.79 -- --
Number of Units 61,321 -- --
- ----------------------------------------------------------------- -- ------------- ------------- -------------
Gartmore Variable Investment Trust -- GVIT Developing Markets (1996)
With No Optional Benefits
Unit Price $ 16.02 $ 13.60 8.66
Number of Units 2,103,950 1,763,660 283,466
With any one of GRO Plus, EBP or HAV
Unit Price $ 18.29 $ 15.56 9.93
Number of Units 934,258 415,864 21,816
With GMWB
Unit Value $ 18.25 $ 15.54 --
Number of Units 161,653 12,503 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 18.19 $ 15.52 9.93
Number of Units 141,365 44,993 442
With any one of EBP or HAV and GMWB
Unit Value $ 12.74 $ 10.88 --
Number of Units 25,630 843 --
With HAV, EBP and GRO Plus
Unit Price $ 18.09 $ 15.47 --
Number of Units 17,121 1,871 --
With HAV, EBP and GMWB
Unit Value $ 12.70 -- --
Number of Units 11,161 -- --
- ----------------------------------------------------------------- -- ------------- ------------- -------------
A-20
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------------------- ------------- ------------- -------------
Wells Fargo Variable Trust -- Equity Income(8) (1999)
With No Optional Benefits
Unit Price $ 11.18 $ 10.23 8.25
Number of Units 590,808 314,757 196,720
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.36 $ 12.26 9.90
Number of Units 285,526 251,071 10,707
With GMWB
Unit Value $ 13.33 $ 12.25 --
Number of Units 39,530 5,900 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.29 $ 12.23 9.90
Number of Units 63,454 15,983 91
With any one of EBP or HAV and GMWB
Unit Value $ 16.60 $ 15.29 --
Number of Units 14,303 15,958 --
With HAV, EBP and GRO Plus
Unit Price $ 13.22 -- --
Number of Units 480 -- --
With HAV, EBP and GMWB
Unit Value $ 11.61 -- --
Number of Units 13 -- --
- ------------------------------------------------- -- ---------- ---------- ----------
AIM V.I. -- Dynamics (1999)
With No Optional Benefits
Unit Price $ 10.72 $ 9.61 7.09
Number of Units 668,032 889,464 543,762
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.59 $ 13.12 9.70
Number of Units 590,157 634,308 32,635
With GMWB
Unit Value $ 14.56 $ 13.11 --
Number of Units 61,543 4,848 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.51 $ 13.08 9.70
Number of Units 55,199 38,518 576
With any one of EBP or HAV and GMWB
Unit Value $ 11.67 -- --
Number of Units 1,825 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.43 $ 13.05 --
Number of Units 4,253 3,083 --
With HAV, EBP and GMWB
Unit Value $ 11.63 -- --
Number of Units 13 -- --
- ------------------------------------------------- -- ---------- ---------- ----------
A-21
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- ------------ ------------ -------------
AIM V.I. -- Technology (1999)
With No Optional Benefits
Unit Price $ 8.09 $ 7.87 5.50
Number of Units 512,424 578,651 293,307
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.71 $ 13.35 --
Number of Units 5,184 3,695 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------ --- ---------- ---------- ----------
AIM V.I. -- Health Sciences (1999)
With No Optional Benefits
Unit Price $ 10.64 $ 10.05 8.00
Number of Units 937,586 698,364 475,873
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.58 $ 11.93 9.51
Number of Units 578,826 381,478 5,444
With GMWB
Unit Value $ 12.56 $ 11.91 --
Number of Units 87,037 2,077 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.52 $ 11.89 9.51
Number of Units 181,513 55,867 140
With any one of EBP or HAV and GMWB
Unit Value $ 11.41 $ 10.85 --
Number of Units 5,057 1,330 --
With HAV, EBP and GRO Plus
Unit Price $ 12.45 -- --
Number of Units 5,438 -- --
With HAV, EBP and GMWB
Unit Value $ 11.38 -- --
Number of Units 2,157 -- --
- ------------------------------------ --- ---------- ---------- ----------
A-22
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------
Sub-account 2004 2003 2002
- -------------------------------------------- ------------- ------------- -------------
AIM V.I. -- Financial Services (1999)
With No Optional Benefits
Unit Price $ 11.94 $ 11.17 8.76
Number of Units 585,185 607,265 366,258
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.44 $ 12.61 9.92
Number of Units 387,921 200,360 1,897
With GMWB
Unit Value $ 13.42 $ 12.60 --
Number of Units 67,581 20,268 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.37 $ 12.58 9.92
Number of Units 84,188 50,250 141
With any one of EBP or HAV and GMWB
Unit Value $ 11.11 $ 10.46 --
Number of Units 15,566 1,378 --
With HAV, EBP and GRO Plus
Unit Price $ 13.30 $ 12.54 --
Number of Units 8,806 751 --
With HAV, EBP and GMWB
Unit Value $ 11.08 -- --
Number of Units 468 -- --
- ---------------------------------------- -- ---------- ---------- ----------
Evergreen VA -- International Equity (1999)
With No Optional Benefits
Unit Price $ 13.66 $ 11.65 8.15
Number of Units 414,631 189,143 113,389
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.94 $ 12.78 9.67
Number of Units 195,986 76,749 3,669
With GMWB
Unit Value $ 12.21 $ 10.45 --
Number of Units 32,858 827 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.86 $ 12.74 --
Number of Units 67,201 6,492 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.40 $ 10.64 --
Number of Units 83,727 81,555 --
With HAV, EBP and GRO Plus
Unit Price $ 14.78 $ 12.71 --
Number of Units 7,362 1,395 --
With HAV, EBP and GMWB
Unit Value $ 12.36 -- --
Number of Units 2,878 -- --
- ---------------------------------------- -- ---------- ---------- ----------
A-23
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- ------------- ------------- -------------
Evergreen VA -- Special Equity(9) (1999)
With No Optional Benefits
Unit Price $ 11.58 $ 11.12 7.44
Number of Units 702,642 815,621 127,728
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.25 $ 14.69 9.85
Number of Units 509,734 293,794 12,520
With GMWB
Unit Value $ 15.22 $ 14.67 --
Number of Units 46,748 3,620 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.17 $ 14.65 9.85
Number of Units 177,731 58,548 533
With any one of EBP or HAV and GMWB
Unit Value $ 9.13 $ 8.83 --
Number of Units 114,259 23,503 --
With HAV, EBP and GRO Plus
Unit Price $ 15.09 -- --
Number of Units 3,411 -- --
With HAV, EBP and GMWB
Unit Value $ 10.53 -- --
Number of Units 26,034 -- --
- ------------------------------------ --- ---------- ---------- ----------
Evergreen VA -- Omega (2000)
With No Optional Benefits
Unit Price $ 11.29 $ 10.71 7.78
Number of Units 570,123 404,789 39,943
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.89 $ 13.21 --
Number of Units 387,492 56,002 --
With GMWB
Unit Value $ 13.86 $ 13.19 --
Number of Units 31,153 283 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.81 $ 13.17 --
Number of Units 108,796 25,003 --
With any one of EBP or HAV and GMWB
Unit Value $ 9.40 $ 8.97 --
Number of Units 84,876 19,658 --
With HAV, EBP and GRO Plus
Unit Price $ 13.74 $ 13.13 --
Number of Units 3,028 1,855 --
With HAV, EBP and GMWB
Unit Value $ 10.92 -- --
Number of Units 30,383 -- --
- ------------------------------------ --- ---------- ---------- ----------
A-24
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- --------------- --------------- -------------
ProFund VP -- Europe 30 (1999)
With No Optional Benefits
Unit Price $ 12.17 $ 10.83 7.93
Number of Units 1,812,435 2,116,400 292,396
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.80 $ 13.20 9.7
Number of Units 313,111 158,208 2,625
With GMWB
Unit Value $ 14.77 $ 13.18 --
Number of Units 99,557 13,365 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.72 $ 13.16 --
Number of Units 162,300 40,636 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.39 $ 11.09 --
Number of Units 17,205 3,060 --
With HAV, EBP and GRO Plus
Unit Price $ 14.64 -- --
Number of Units 7,739 -- --
With HAV, EBP and GMWB
Unit Value $ 12.35 -- --
Number of Units 7,758 -- --
- ------------------------------------ --- ------------ ------------ ----------
ProFund VP -- Asia 30 (2002)
With No Optional Benefits
Unit Price $ 12.30 $ 12.57 7.75
Number of Units 896,010 942,605 281,993
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.57 $ 15.96 9.86
Number of Units 253,337 131,276 6,995
With GMWB
Unit Value $ 15.54 $ 15.94 --
Number of Units 74,988 10,432 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.49 $ 15.91 --
Number of Units 67,805 33,050 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.14 $ 10.43 --
Number of Units 28,325 1,873 --
With HAV, EBP and GRO Plus
Unit Price $ 15.40 -- --
Number of Units 5,612 -- --
With HAV, EBP and GMWB
Unit Value $ 10.10 -- --
Number of Units 6,082 -- --
- ------------------------------------ --- ------------ ------------ ----------
A-25
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- ------------ ------------ -------------
ProFund VP -- Japan (2002)
With No Optional Benefits
Unit Price $ 9.55 $ 9.03 7.24
Number of Units 710,879 426,718 65,845
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.40 $ 12.70 10.21
Number of Units 137,584 76,553 351
With GMWB
Unit Value $ 13.38 $ 12.69 --
Number of Units 35,968 1,883 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.33 $ 12.67 --
Number of Units 62,668 10,769 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.35 -- --
Number of Units 8,278 -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.26 -- --
Number of Units 7,559 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------ --- ---------- ---------- ---------
ProFund VP -- Banks (2002)
With No Optional Benefits
Unit Price $ 11.98 $ 10.90 8.56
Number of Units 229,711 93,067 101,136
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.10 $ 12.86 10.13
Number of Units 171,696 34,962 3,422
With GMWB
Unit Value $ 14.07 -- --
Number of Units 8,847 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.03 $ 12.83 --
Number of Units 29,071 6,833 --
With any one of EBP or HAV and GMWB
Unit Value $ 11.58 -- --
Number of Units 20,936 -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.95 $ 12.79 --
Number of Units 788 1,039 --
With HAV, EBP and GMWB
Unit Value $ 11.54 -- --
Number of Units 582 -- --
- ------------------------------------ --- ---------- ---------- ----------
A-26
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
-----------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- ------------- --------------- -------------
ProFund VP -- Basic Materials (2002)
With No Optional Benefits
Unit Price $ 11.87 $ 10.95 8.46
Number of Units 529,237 1,512,864 76,331
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.43 $ 13.35 10.34
Number of Units 170,212 100,189 12
With GMWB
Unit Value $ 14.40 $ 13.33 --
Number of Units 23,555 8,054 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.35 $ 13.31 --
Number of Units 35,537 15,986 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.43 -- --
Number of Units 15,658 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.28 -- --
Number of Units 3,155 -- --
With HAV, EBP and GMWB
Unit Value $ 12.40 -- --
Number of Units 1,246 -- --
- ------------------------------------ --- ---------- ------------ ---------
ProFund VP -- Biotechnology (2001)
With No Optional Benefits
Unit Price $ 10.52 $ 9.75 7.09
Number of Units 757,678 208,971 130,082
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.56 $ 13.53 --
Number of Units 5,878 847 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------ --- ---------- ------------ ----------
A-27
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- ------------ ------------ -------------
ProFund VP -- Consumer Services (2002)
With No Optional Benefits
Unit Price $ 9.56 $ 9.04 7.25
Number of Units 430,620 136,269 128,022
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.31 $ 11.66 9.37
Number of Units 87,433 30,700 2,426
With GMWB
Unit Value $ 12.28 -- --
Number of Units 17,197 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.24 $ 11.62 --
Number of Units 8,198 5,655 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.69 -- --
Number of Units 2,087 -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.17 $ 11.59 --
Number of Units 1,211 3,817 --
With HAV, EBP and GMWB
Unit Value $ 10.66 -- --
Number of Units 14 -- --
- ------------------------------------ --- ---------- ---------- ----------
ProFund VP -- Consumer Goods (2002)
With No Optional Benefits
Unit Price $ 10.36 $ 9.64 8.28
Number of Units 369,007 58,425 148,446
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.33 $ 11.51 9.90
Number of Units 102,706 12,720 2,303
With GMWB
Unit Value $ 12.31 $ 11.49 --
Number of Units 8,437 954 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.27 -- --
Number of Units 54,297 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 11.40 $ 10.67 --
Number of Units 9,175 4,737 --
With HAV, EBP and GRO Plus
Unit Price $ 12.20 -- --
Number of Units 1,731 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------ --- ---------- ---------- ----------
A-28
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- --------------- --------------- -------------
ProFund VP -- Oil & Gas (2001)
With No Optional Benefits
Unit Price $ 13.33 $ 10.48 8.71
Number of Units 1,856,882 1,225,844 299,833
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.40 $ 12.14 10.12
Number of Units 888,111 114,553 1,660
With GMWB
Unit Value $ 15.37 $ 12.12 --
Number of Units 58,804 4,007 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.32 $ 12.10 --
Number of Units 174,913 25,623 --
With any one of EBP or HAV and GMWB
Unit Value $ 13.80 -- --
Number of Units 29,672 -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.23 $ 12.07 --
Number of Units 14,353 2,434 --
With HAV, EBP and GMWB
Unit Value $ 13.76 -- --
Number of Units 6,676 -- --
- ------------------------------------ --- ------------ ------------ ----------
ProFund VP -- Financials (2001)
With No Optional Benefits
Unit Price $ 12.19 $ 11.23 8.85
Number of Units 553,342 398,159 221,377
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.48 $ 12.45 9.84
Number of Units 323,190 134,420 2,066
With GMWB
Unit Value $ 13.45 $ 12.44 --
Number of Units 17,749 1,060 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.41 $ 12.42 --
Number of Units 35,528 27,402 --
With any one of EBP or HAV and GMWB
Unit Value $ 11.26 -- --
Number of Units 15,974 -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.33 -- --
Number of Units 1,103 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------ --- ------------ ------------ ----------
A-29
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
----------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- --------------- ------------ -------------
ProFund VP -- Health Care (2001)
With No Optional Benefits
Unit Price $ 9.23 $ 9.17 7.94
Number of Units 1,318,525 707,449 388,508
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.10 $ 11.05 9.59
Number of Units 518,389 244,228 6,831
With GMWB
Unit Value $ 11.07 $ 11.04 --
Number of Units 8,570 1,969 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.04 $ 11.02 --
Number of Units 139,890 56,392 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.65 -- --
Number of Units 5,322 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.98 $ 10.99 --
Number of Units 4,035 2,123 --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------ --- ------------ ---------- ----------
ProFund VP -- Industrials (2002)
With No Optional Benefits
Unit Price $ 11.15 $ 10.01 7.93
Number of Units 253,411 318,339 12,642
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.27 $ 12.85 --
Number of Units 88,729 20,601 --
With GMWB
Unit Value $ 14.24 -- --
Number of Units 4,426 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.20 $ 12.81 --
Number of Units 14,026 4,507 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.08 -- --
Number of Units 4,381 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.12 -- --
Number of Units 945 -- --
With HAV, EBP and GMWB
Unit Value $ 12.04 -- --
Number of Units 807 -- --
- ------------------------------------ --- ------------ ---------- ----------
A-30
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- ------------- ------------- -------------
ProFund VP -- Internet (2002)
With No Optional Benefits
Unit Price $ 17.89 $ 15.00 8.57
Number of Units 992,879 206,876 306,572
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.83 $ 16.67 --
Number of Units 3,806 1,210 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------ --- ---------- ---------- ----------
ProFund VP -- Pharmaceuticals (2002)
With No Optional Benefits
Unit Price $ 7.93 $ 8.89 8.56
Number of Units 527,336 266,978 136,559
With any one of GRO Plus, EBP or HAV
Unit Price $ 8.88 $ 9.97 9.63
Number of Units 246,789 77,105 2,545
With GMWB
Unit Value $ 8.86 $ 9.96 --
Number of Units 23,137 2,871 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 8.83 $ 9.94 --
Number of Units 70,946 6,346 --
With any one of EBP or HAV and GMWB
Unit Value $ 9.44 -- --
Number of Units 5,382 -- --
With HAV, EBP and GRO Plus
Unit Price $ 8.78 $ 9.91 --
Number of Units 3,939 1,646 --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------ --- ---------- ---------- ----------
A-31
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- --------------- --------------- ---------------
ProFund VP -- Precious Metals (2002)
With No Optional Benefits
Unit Price $ 11.77 $ 13.29 9.70
Number of Units 1,479,384 1,329,806 1,175,651
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.64 $ 15.44 11.30
Number of Units 457,761 390,896 19,964
With GMWB
Unit Value $ 13.61 -- --
Number of Units 42,627 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.57 $ 15.39 --
Number of Units 111,588 44,664 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.17 -- --
Number of Units 93,541 -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.49 $ 15.35 --
Number of Units 7,072 1,458 --
With HAV, EBP and GMWB
Unit Value $ 10.14 $ 11.55 --
Number of Units 11,671 23,284 --
- ------------------------------------ --- ------------ ------------ ------------
ProFund VP -- Real Estate (2001)
With No Optional Benefits
Unit Price $ 16.15 $ 12.91 9.86
Number of Units 1,816,706 462,906 441,318
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.63 $ 13.33 10.20
Number of Units 509,763 136,941 12,789
With GMWB
Unit Value $ 16.60 $ 13.31 --
Number of Units 58,062 3,835 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 16.54 $ 13.29 --
Number of Units 128,625 32,970 --
With any one of EBP or HAV and GMWB
Unit Value $ 13.06 -- --
Number of Units 22,857 -- --
With HAV, EBP and GRO Plus
Unit Price $ 16.45 -- --
Number of Units 629 -- --
With HAV, EBP and GMWB
Unit Value $ 13.02 -- --
Number of Units 1,198 -- --
- ------------------------------------ --- ------------ ------------ ------------
A-32
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- ------------ ------------ -------------
ProFund VP -- Semiconductor (2002)
With No Optional Benefits
Unit Price $ 7.15 $ 9.51 5.14
Number of Units 694,352 423,958 93,241
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.95 $ 15.93 --
Number of Units 3,639 3,475 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------ --- ---------- ---------- ---------
ProFund VP -- Technology (2001)
With No Optional Benefits
Unit Price $ 8.48 $ 8.66 6.03
Number of Units 727,580 497,972 254,131
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.99 $ 13.30 --
Number of Units 9,239 6,845 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------ --- ---------- ---------- ----------
A-33
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
----------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- --------------- ------------ -------------
ProFund VP -- Telecommunications (2001)
With No Optional Benefits
Unit Price $ 8.19 $ 7.21 7.15
Number of Units 460,848 398,350 272,408
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.43 $ 10.08 10.03
Number of Units 212,127 47,283 3,642
With GMWB
Unit Value $ 11.40 -- --
Number of Units 6,379 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.37 $ 10.05 --
Number of Units 34,691 13,783 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.54 -- --
Number of Units 4,099 -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.31 -- --
Number of Units 11,741 -- --
With HAV, EBP and GMWB
Unit Value $ 12.50 -- --
Number of Units 2,691 -- --
- ------------------------------------ --- ------------ ---------- ----------
ProFund VP -- Utilities (2001)
With No Optional Benefits
Unit Price $ 11.13 $ 9.34 7.83
Number of Units 1,060,939 618,427 521,419
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.00 $ 12.63 10.61
Number of Units 332,768 93,690 8,871
With GMWB
Unit Value $ 14.97 $ 12.62 --
Number of Units 57,208 8,137 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.92 $ 12.60 --
Number of Units 87,691 10,588 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.51 -- --
Number of Units 21,365 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.84 -- --
Number of Units 7,490 -- --
With HAV, EBP and GMWB
Unit Value $ 12.47 -- --
Number of Units 573 -- --
- ------------------------------------ --- ------------ ---------- ----------
A-34
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- --------------- --------------- ---------------
ProFund VP -- Bull (2002)
With No Optional Benefits
Unit Price $ 10.53 $ 9.84 7.97
Number of Units 8,215,357 3,563,562 954,792
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.82 $ 12.01 9.75
Number of Units 2,052,501 708,248 10,297
With GMWB
Unit Value $ 12.79 $ 12.00 --
Number of Units 171,187 1,179 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.75 $ 11.98 9.75
Number of Units 570,114 58,349 400
With any one of EBP or HAV and GMWB
Unit Value $ 11.25 $ 10.58 --
Number of Units 31,600 427 --
With HAV, EBP and GRO Plus
Unit Price $ 12.68 $ 11.94 --
Number of Units 88,697 10,714 --
With HAV, EBP and GMWB
Unit Value $ 11.21 -- --
Number of Units 12,971 -- --
- ------------------------------------ --- ------------ ------------ ----------
ProFund VP -- Bear (2001)
With No Optional Benefits
Unit Price $ 7.45 $ 8.44 11.38
Number of Units 1,202,243 1,886,515 1,532,543
With any one of GRO Plus, EBP or HAV
Unit Price $ 6.60 $ 7.49 10.13
Number of Units 289,105 716,467 28,618
With GMWB
Unit Value $ 6.58 -- --
Number of Units 41,480 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 6.56 $ 7.47 10.13
Number of Units 60,475 36,686 1,514
With any one of EBP or HAV and GMWB
Unit Value $ 8.15 $ 9.29 --
Number of Units 10,709 7,927 --
With HAV, EBP and GRO Plus
Unit Price $ 6.52 $ 7.45 --
Number of Units 14,578 13,622 --
With HAV, EBP and GMWB
Unit Value $ 8.12 $ 9.29 --
Number of Units 1,620 7,293 --
- ------------------------------------ --- ------------ ------------ ------------
A-35
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- --------------- --------------- ---------------
ProFund VP -- UltraBull (2001)
With No Optional Benefits
Unit Price $ 11.76 $ 10.20 6.78
Number of Units 2,817,803 1,431,345 297,435
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.58 $ 14.42 9.61
Number of Units 9,518 1,432 245
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------ --- ------------ ------------ ----------
ProFund VP -- OTC (2001)
With No Optional Benefits
Unit Price $ 9.94 $ 9.32 6.45
Number of Units 4,885,351 4,445,234 1,346,852
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.34 $ 13.47 9.36
Number of Units 1,807,904 810,005 13,113
With GMWB
Unit Value $ 14.31 $ 13.46 --
Number of Units 128,923 5,378 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.27 $ 13.44 --
Number of Units 225,055 34,480 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.92 -- --
Number of Units 28,507 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.19 -- --
Number of Units 32,376 -- --
With HAV, EBP and GMWB
Unit Value $ 10.88 -- --
Number of Units 14,308 -- --
- ------------------------------------ --- ------------ ------------ ------------
A-36
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- --------------- --------------- ---------------
ProFund VP -- Short OTC (2002)
With No Optional Benefits
Unit Price $ 5.93 $ 6.78 11.00
Number of Units 908,064 1,535,439 433,181
With any one of GRO Plus, EBP or HAV
Unit Price $ 5.60 $ 6.42 10.43
Number of Units 181,352 196,526 15,308
With GMWB
Unit Value $ 5.58 -- --
Number of Units 7,191 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 5.57 $ 6.40 --
Number of Units 65,148 20,167 --
With any one of EBP or HAV and GMWB
Unit Value -- $ 9.49 --
Number of Units -- 7,708 --
With HAV, EBP and GRO Plus
Unit Price $ 5.54 $ 6.38 --
Number of Units 16,306 16,907 --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------ --- ------------ ------------ ----------
ProFund VP -- UltraOTC (1999)
With No Optional Benefits
Unit Price $ 7.89 $ 7.03 3.53
Number of Units 6,592,447 3,410,589 1,003,123
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.36 $ 17.30 8.70
Number of Units 22,282 5,905 233
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------ --- ------------ ------------ ------------
A-37
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- --------------- --------------- -------------
ProFund VP -- Mid-Cap Value (2002)
With No Optional Benefits
Unit Price $ 11.67 $ 10.23 7.66
Number of Units 2,632,869 1,455,513 438,387
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.24 $ 13.40 10.06
Number of Units 626,618 462,172 4,777
With GMWB
Unit Value $ 15.21 $ 13.39 --
Number of Units 110,312 4,164 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.16 $ 13.36 10.06
Number of Units 304,648 99,189 4,799
With any one of EBP or HAV and GMWB
Unit Value $ 12.20 $ 10.77 --
Number of Units 39,454 3,516 --
With HAV, EBP and GRO Plus
Unit Price $ 15.08 $ 13.33 --
Number of Units 12,473 916 --
With HAV, EBP and GMWB
Unit Value $ 12.17 -- --
Number of Units 3,507 -- --
- ------------------------------------ --- ------------ ------------ ----------
ProFund VP -- Mid-Cap Growth (2002)
With No Optional Benefits
Unit Price $ 10.58 $ 9.69 7.70
Number of Units 2,220,901 1,009,867 439,054
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.42 $ 12.32 9.82
Number of Units 579,666 295,528 1,587
With GMWB
Unit Value $ 13.39 $ 12.31 --
Number of Units 53,472 2,028 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.35 $ 12.28 9.81
Number of Units 163,302 47,141 1,583
With any one of EBP or HAV and GMWB
Unit Value $ 11.12 $ 10.24 --
Number of Units 21,341 3,933 --
With HAV, EBP and GRO Plus
Unit Price $ 13.28 $ 12.25 --
Number of Units 6,489 1,274 --
With HAV, EBP and GMWB
Unit Value $ 11.09 -- --
Number of Units 9,859 -- --
- ------------------------------------ --- ------------ ------------ ----------
A-38
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- --------------- --------------- -------------
ProFund VP -- UltraMid-Cap (2002)
With No Optional Benefits
Unit Price $ 11.99 $ 9.55 5.71
Number of Units 3,106,849 1,112,311 477,953
With any one of GRO Plus, EBP or HAV
Unit Price $ 20.62 $ 16.46 9.86
Number of Units 338,303 136,523 1,673
With GMWB
Unit Value $ 20.57 $ 16.44 --
Number of Units 101,493 3,746 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 20.51 $ 16.41 --
Number of Units 150,540 88,028 --
With any one of EBP or HAV and GMWB
Unit Value $ 13.86 -- --
Number of Units 27,449 -- --
With HAV, EBP and GRO Plus
Unit Price $ 20.40 $ 16.37 --
Number of Units 2,161 557 --
With HAV, EBP and GMWB
Unit Value $ 13.81 -- --
Number of Units 14,660 -- --
- ------------------------------------ --- ------------ ------------ ----------
ProFund VP -- Small-Cap Value (2002)
With No Optional Benefits
Unit Price $ 11.10 $ 9.39 7.09
Number of Units 4,088,760 5,144,632 994,778
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.80 $ 13.41 10.15
Number of Units 2,597,154 1,218,990 19,019
With GMWB
Unit Value $ 15.76 $ 13.39 --
Number of Units 163,443 24,769 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.71 $ 13.37 --
Number of Units 596,413 207,523 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.53 $ 10.67 --
Number of Units 31,732 4,223 --
With HAV, EBP and GRO Plus
Unit Price $ 15.63 $ 13.33 --
Number of Units 29,856 28,687 --
With HAV, EBP and GMWB
Unit Value $ 12.49 -- --
Number of Units 6,158 -- --
- ------------------------------------ --- ------------ ------------ ----------
A-39
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
-------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- --------------- --------------- -------------
ProFund VP -- Small-Cap Growth (2002)
With No Optional Benefits
Unit Price $ 11.98 $ 10.16 7.69
Number of Units 4,677,820 3,868,951 772,260
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.34 $ 13.05 9.91
Number of Units 1,611,060 1,289,398 10,572
With GMWB
Unit Value $ 15.31 $ 13.04 --
Number of Units 170,800 21,997 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.26 $ 13.01 --
Number of Units 285,725 210,595 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.23 $ 10.44 --
Number of Units 42,134 2,529 --
With HAV, EBP and GRO Plus
Unit Price $ 15.17 $ 12.98 --
Number of Units 9,388 30,164 --
With HAV, EBP and GMWB
Unit Value $ 12.19 -- --
Number of Units 13,290 -- --
- ------------------------------------ --- ------------ ------------ ----------
ProFund VP -- UltraSmall-Cap (1999)
With No Optional Benefits
Unit Price $ 15.52 $ 12.04 6.14
Number of Units 5,098,565 1,702,558 212,085
With any one of GRO Plus, EBP or HAV
Unit Price $ 24.98 $ 19.43 --
Number of Units 32,780 13,082 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------ --- ------------ ------------ ----------
A-40
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------
Sub-account 2004 2003 2002
- ---------------------------------------------- --------------- --------------- ---------------
ProFund VP -- U.S. Government Plus (2002)
With No Optional Benefits
Unit Price $ 11.79 $ 11.08 11.56
Number of Units 1,051,158 731,470 2,486,854
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.34 $ 9.75 10.19
Number of Units 372,142 291,892 22,148
With GMWB
Unit Value $ 10.32 $ 9.73 --
Number of Units 120,311 14,956 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.29 $ 9.72 10.19
Number of Units 111,072 32,854 609
With any one of EBP or HAV and GMWB
Unit Value $ 10.80 -- --
Number of Units 4,588 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.23 -- --
Number of Units 13,114 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------------ -- ------------ ------------ ------------
ProFund VP -- Rising Rates Opportunity (2002)
With No Optional Benefits
Unit Price $ 6.63 $ 7.56 8.02
Number of Units 5,314,528 1,817,924 165,792
With any one of GRO Plus, EBP or HAV
Unit Price $ 7.97 $ 9.12 9.69
Number of Units 2,060,525 445,486 9,028
With GMWB
Unit Value $ 7.95 $ 9.11 --
Number of Units 333,355 4,991 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 7.93 $ 9.09 --
Number of Units 588,490 82,598 --
With any one of EBP or HAV and GMWB
Unit Value $ 8.31 -- --
Number of Units 219,942 -- --
With HAV, EBP and GRO Plus
Unit Price $ 7.89 $ 9.07 --
Number of Units 52,002 10,876 --
With HAV, EBP and GMWB
Unit Value $ 8.28 -- --
Number of Units 14,108 -- --
- ------------------------------------------ -- ------------ ------------ ------------
A-41
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- ------------- ------- -------
ProFund VP -- Large-Cap Growth
With No Optional Benefits
Unit Price $ 10.37 -- --
Number of Units 72,725 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.37 -- --
Number of Units 18,860 -- --
With GMWB
Unit Value $ 10.37 -- --
Number of Units 2,860 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.37 -- --
Number of Units 6,286 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.37 -- --
Number of Units 554 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.37 -- --
Number of Units 84 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------ --- ---------- ----- -----
ProFund VP -- Large-Cap Value
With No Optional Benefits
Unit Price $ 10.37 -- --
Number of Units 159,605 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.36 -- --
Number of Units 36,170 -- --
With GMWB
Unit Value $ 10.36 -- --
Number of Units 3,802 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.36 -- --
Number of Units 1,123 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.36 -- --
Number of Units 554 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.36 -- --
Number of Units 84 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------ --- ---------- ----- -----
A-42
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
--------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- ------------ ------- -------
ProFund VP -- Short Mid-Cap
With No Optional Benefits
Unit Price $ 9.70 -- --
Number of Units 39,360 -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------ --- --------- ----- -----
ProFund VP -- Short Small-Cap
With No Optional Benefits
Unit Price $ 9.54 -- --
Number of Units 136,809 -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------ --- --------- ----- -----
A-43
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------------- ------------- ------------ -----------
First Trust[RegTM] 10 Uncommon Values (2000)
With No Optional Benefits
Unit Price $ 10.03 $ 9.16 6.80
Number of Units 91,924 66,435 19,826
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.39 $ 13.17 --
Number of Units 28 467 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ----------------------------------------- -- ---------- --------- ---------
First Trust Global Target 15 10
With No Optional Benefits
Unit Price $ 11.85 -- --
Number of Units 311,233 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.83 -- --
Number of Units 303,452 -- --
With GMWB
Unit Value $ 11.82 -- --
Number of Units 108,014 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.81 -- --
Number of Units 65,909 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 11.80 -- --
Number of Units 6,777 -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.79 -- --
Number of Units 4,718 -- --
With HAV, EBP and GMWB
Unit Value $ 11.78 -- --
Number of Units 3,816 -- --
- ----------------------------------------- -- ---------- --------- ---------
A-44
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
-----------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- --------------- ------- -------
First Trust Target Managed VIP
With No Optional Benefits
Unit Price $ 11.32 -- --
Number of Units 1,777,316 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.30 -- --
Number of Units 1,562,079 -- --
With GMWB
Unit Value $ 11.30 -- --
Number of Units 1,057,901 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.28 -- --
Number of Units 429,320 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 11.28 -- --
Number of Units 40,194 -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.27 -- --
Number of Units 217,324 -- --
With HAV, EBP and GMWB
Unit Value $ 11.26 -- --
Number of Units 23,730 -- --
- ------------------------------------ --- ------------ ----- -----
First Trust NASDAQ Target 15
With No Optional Benefits
Unit Price $ 10.66 -- --
Number of Units 82,809 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.64 -- --
Number of Units 1,635 -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------ --- ------------ ----- -----
A-45
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- ------------- ------- -------
First Trust S&P Target 24
With No Optional Benefits
Unit Price $ 10.75 -- --
Number of Units 173,851 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.73 -- --
Number of Units 152,355 -- --
With GMWB
Unit Value $ 10.72 -- --
Number of Units 38,677 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.71 -- --
Number of Units 72,575 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.70 -- --
Number of Units 11,933 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.69 -- --
Number of Units 3,409 -- --
With HAV, EBP and GMWB
Unit Value $ 10.68 -- --
Number of Units 2,359 -- --
- ------------------------------------ --- ---------- ----- -----
First Trust The DowSM DART 10
With No Optional Benefits
Unit Price $ 10.48 -- --
Number of Units 155,695 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.46 -- --
Number of Units 160,820 -- --
With GMWB
Unit Value $ 10.46 -- --
Number of Units 78,082 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.45 -- --
Number of Units 82,728 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.44 -- --
Number of Units 3,913 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.43 -- --
Number of Units 10,531 -- --
With HAV, EBP and GMWB
Unit Value $ 10.42 -- --
Number of Units 105 -- --
- ------------------------------------ --- ---------- ----- -----
A-46
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
--------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- ------------- ------- ------
First Trust Value Line[RegTM] Target 25
With No Optional Benefits
Unit Price $ 12.59 -- --
Number of Units 389,792 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.57 -- --
Number of Units 4,909 -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------ --- ---------- ----- -----
SP William Blair International Growth
With No Optional Benefits
Unit Price $ 10.53 -- --
Number of Units 269,671 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.53 -- --
Number of Units 172,859 -- --
With GMWB
Unit Value $ 10.53 -- --
Number of Units 73,031 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.52 -- --
Number of Units 23,863 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.52 -- --
Number of Units 6,604 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.52 -- --
Number of Units 4,127 -- --
With HAV, EBP and GMWB
Unit Value $ 10.52 -- --
Number of Units 806 -- --
- ------------------------------------ --- ---------- ----- -----
A-47
APPENDIX A
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
1. Effective May 2, 2005 the name of the AST State Street Research Small-Cap
Growth Portfolio has changed to AST Small-Cap Growth Portfolio.
2. Effective May 2, 2005 the name of the AST Alliance Growth Portfolio has
changed to AST AllianceBernstein Large-Cap Growth Portfolio.
3. Effective May 2, 2005 the name of the AST Alliance/Bernstein Growth + Value
Portfolio has changed to AST AllianceBernstein Growth + Value Portfolio.
4. Effective May 2, 2005 the name of the AST Sanford Bernstein Core Value
Portfolio has changed to AST AllianceBernstein Core Value Portfolio.
5. Effective May 2, 2005 the name of the AST Sanford Bernstein Managed Index
500 Portfolio has changed to AST AllianceBernstein Managed Index 500 Portfolio.
6. Effective May 2, 2005 the name of the AST Alliance Growth and Income
Appendix A -- Condensed Financial Information About Separate Account.
7. Effective May 2, 2005 the name of the AST DeAM Global Allocation Portfolio
has changed to AST Global Allocation Portfolio.
8. Effective May 2, 2005 the name of the Wells Fargo Variable Trust Equity
Income Portfolio has changed to Wells Fargo Variable Trust Advantage Equity
Income Portfolio.
9. Effective April 15, 2005 the name of the Evergreen VA--Special Equity
Portfolio has changed to Evergreen VA Growth Portfolio.
10. Effective May 2, 2005 the name of the First Trust Global Target 15
Portfolio has changed to First Trust Global Dividend Target 15 Portfolio.
A-48
APPENDIX B
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits
EXAMPLES OF ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT CALCULATION
The following are examples of how the Enhanced Beneficiary Protection Optional
Death Benefit is calculated. Each example assumes that a $50,000 initial
Purchase Payment is made. Each example assumes that there is one Owner who is
age 50 on the Issue Date and that all Account Value is maintained in the
variable investment options. The formula for determining the Enhanced
Beneficiary Protection Optional Death Benefit is as follows:
Account Value of variable
investment options plus Interim Purchase Payments -
Growth = Value of Fixed Allocations minus proportional withdrawals
(no MVA applies)
Example with market increase
Assume that the Owner has made no withdrawals and that the Account Value has
been increasing due to positive market performance. On the date we receive due
proof of death, the Account Value is $75,000. The basic Death Benefit is
calculated as Purchase Payments minus proportional withdrawals, or Account
Value, which ever is greater. Therefore, the basic Death Benefit is equal to
$75,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to
the amount payable under the basic Death Benefit ($75,000) PLUS 40% of the
"Growth" under the Annuity.
Growth = $75,000 - [$50,000 - $0]
= $ 25,000
Benefit Payable under Enhanced Beneficiary Optional Death Benefit = 40% of
Growth
= $25,000 x 0.40
= $ 10,000
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $ 85,000
Examples with market decline
Assume that the Owner has made no withdrawals and that the Account Value has
been decreasing due to declines in market performance. On the date we receive
due proof of death, the Account Value is $45,000. The basic Death Benefit is
calculated as Purchase Payments minus proportional withdrawals, or Account
Value, which ever is greater. Therefore, the basic Death Benefit is equal to
$50,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to
the amount payable under the basic Death Benefit ($50,000) PLUS the "Growth"
under the Annuity.
Growth = $45,000 - [$50,000 - $0]
= $ -5,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit
= 40% of Growth
NO BENEFIT IS PAYABLE
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $ 50,000
B-1
APPENDIX B
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits continued
In this example you would receive no additional benefit from purchasing the
Enhanced Beneficiary Protection Optional Death Benefit.
Example with market increase and withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 5 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $90,000. The basic Death Benefit is calculated as Purchase
Payments minus proportional withdrawals, or Account Value, which ever is
greater. Therefore, the basic Death Benefit is equal to $90,000. The Enhanced
Beneficiary Protection Optional Death Benefit is equal to the amount payable
under the basic Death Benefit ($90,000) PLUS 40% of the "Growth" under the
Annuity.
Growth = $90,000 - [$50,000 - ($50,000 x $15,000/$75,000)]
= $90,000 - [$50,000 - $10,000]
= $90,000 - $40,000
= $50,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit
= 40% of Growth
= $50,000 x 0.40
= $20,000
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary
Protection Optional Death Benefit
= $ 110,000
EXAMPLES OF HIGHEST ANNIVERSARY VALUE DEATH BENEFIT CALCULATION
The following are examples of how the Highest Anniversary Value Death Benefit is
calculated. Each example assumes an initial Purchase Payment of $50,000. Each
example assumes that there is one Owner who is age 70 on the Issue Date and that
all Account Value is maintained in the variable investment options.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the date
we receive due proof of death, the Account Value is $75,000; however, the
Anniversary Value on the 5th anniversary of the Issue Date was $90,000. Assume
as well that the Owner has died before the Death Benefit Target Date. The Death
Benefit is equal to the greater of the Highest Anniversary Value or the basic
Death Benefit. The Death Benefit would be the Highest Anniversary Value
($90,000) because it is greater than the amount that would have been payable
under the basic Death Benefit ($75,000).
Example with withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $80,000; however, the Anniversary Value on the 5th anniversary
of the Issue Date was $90,000. Assume as well that the Owner has died before the
Death Benefit Target Date. The Death Benefit is equal to the greater of the
Highest Anniversary Value or the basic Death Benefit.
Highest Anniversary Value = $90,000 - [$90,000 x $15,000/$75,000]
= $90,000 - $18,000
= $72,000
Basic Death Benefit = max [$80,000, $50,000 - ($50,000 x
$15,000/$75,000)]
= max [$80,000, $40,000]
= $80,000
The Death Benefit therefore is $80,000.
B-2
APPENDIX B
AMERICAN SKANDIA APEX II PROSPECTUS
Example with death after Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals had been made prior to the
Death Benefit Target Date. Further assume that the Owner dies after the Death
Benefit Target Date, when the Account Value is $75,000. The Highest Anniversary
Value on the Death Benefit Target Date was $80,000; however, following the Death
Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had
taken a withdrawal of $5,000 when the Account Value was $70,000. The Death
Benefit is equal to the greater of the Highest Anniversary Value plus Purchase
Payments minus proportional withdrawals after the Death Benefit Target Date or
the basic Death Benefit.
Highest Anniversary Value = $80,000 + $15,000 - [($80,000 + $15,000) x
$5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $88,214
Basic Death Benefit = max [$75,000, ($50,000 + $15,000) - {($50,000 +
$15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $75,000
The Death Benefit therefore is $88,214.
EXAMPLES OF COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
CALCULATION
The following are examples of how the Combination 5% Roll-Up and Highest
Anniversary Value Death Benefit are calculated. Each example assumes an initial
Purchase Payment of $50,000. Each example assumes that there is one Owner who is
age 70 on the Issue Date and that all Account Value is maintained in the
variable investment options.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the 7th
anniversary of the Issue Date we receive due proof of death, at which time the
Account Value is $75,000; however, the Anniversary Value on the 5th anniversary
of the Issue Date was $90,000. Assume as well that the Owner has died before the
Death Benefit Target Date. The Roll-Up Value is equal to initial Purchase
Payment accumulated at 5% for 6 years, or $67,005. The Death Benefit is equal to
the greatest of the Roll-Up Value, Highest Anniversary Value or the basic Death
Benefit. The Death Benefit would be the Highest Anniversary Value ($90,000)
because it is greater than both the Roll-Up Value ($67,005) and the amount that
would have been payable under the basic Death Benefit ($75,000).
Example with withdrawals
Assume that the Owner made a withdrawal of $5,000 on the 6th anniversary of the
Issue Date when the Account Value was $45,000. The Roll-Up Value on the 6th
anniversary of the Issue Date is equal to initial Purchase Payment accumulated
at 5% for 6 years, or $67,005. The 5% Dollar-for-Dollar Withdrawal Limit for the
7th annuity year is equal to 5% of the Roll-Up Value as of the 6th anniversary
of the Issue Date, or $3,350. Therefore, the remaining $1,650 of the withdrawal
results in a proportional reduction to the Roll-Up Value. On the 7th anniversary
of the Issue Date we receive due proof of death, at which time the Account Value
is $43,000; however, the Anniversary Value on the 2nd anniversary of the Issue
Date was $70,000. Assume as well that the Owner has died before the Death
Benefit Target Date. The Death Benefit is equal to the greatest of the Roll-Up
Value, Highest Anniversary Value or the basic Death Benefit.
B-3
APPENDIX B
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits continued
Roll-Up Value = {($67,005 - $3,350) - [($67,005 - $3,350)
x $1,650/($45,000 - $3,350)]} x 1.05
= ($63,655 - $2,522) x 1.05
= $64,190
Highest Anniversary Value = $70,000 - [$70,000 x $5,000/$45,000]
= $70,000 - $7,778
= $62,222
Basic Death Benefit = max [$43,000, $50,000 - ($50,000 x
$5,000/$45,000)]
= max [$43,000, $44,444]
= $44,444
The Death Benefit therefore is $64,190.
Example with death after Death Benefit Target Date
Assume that the Owner has not made any withdrawals prior to the Death Benefit
Target Date. Further assume that the Owner dies after the Death Benefit Target
Date, when the Account Value is $75,000. The Roll-Up Value on the Death Benefit
Target Date (the contract anniversary on or following the Owner's 80th birthday)
is equal to initial Purchase Payment accumulated at 5% for 10 years, or $81,445.
The Highest Anniversary Value on the Death Benefit Target Date was $85,000;
however, following the Death Benefit Target Date, the Owner made a Purchase
Payment of $15,000 and later had taken a withdrawal of $5,000 when the Account
Value was $70,000. The Death Benefit is equal to the greatest of the Roll-Up
Value, Highest Anniversary Value or the basic Death Benefit as of the Death
Benefit Target Date; each increased by subsequent purchase payments and reduced
proportionally for subsequent withdrawals.
Roll-Up Value = $81,445 + $15,000 - [($81,445 + 15,000) x
$5,000/$70,000]
= $81,445 + $15,000 - $6,889
= $89,556
Highest Anniversary Value = $85,000 + $15,000 - [($85,000 + 15,000) x
$5,000/$70,000]
= $85,000 + $15,000 - $7,143
= $92,857
Basic Death Benefit = max [$75,000, $50,000 + $15,000 - {(50,000
+ $15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $75,000
The Death Benefit therefore is $92,857.
EXAMPLES OF HIGHEST DAILY VALUE DEATH BENEFIT CALCULATION
The following are examples of how the HDV Death Benefit is calculated. Each
example assumes an initial Purchase Payment of $50,000. Each example assumes
that there is one Owner who is age 70 on the Issue Date.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the date
we receive due proof of death, the Account Value is $75,000; however, the
Highest Daily Value was $90,000. Assume as well that the Owner has died before
the Death Benefit Target Date. The Death Benefit is equal to the greater of the
Highest Daily Value or the basic Death Benefit. The Death Benefit would be the
HDV ($90,000) because it is greater than the amount that would have been payable
under the basic Death Benefit ($75,000).
B-4
APPENDIX B
AMERICAN SKANDIA APEX II PROSPECTUS
Example with withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $80,000; however, the Highest Daily Value ($90,000) was
attained during the fifth Annuity Year. Assume as well that the Owner has died
before the Death Benefit Target Date. The Death Benefit is equal to the greater
of the Highest Daily Value (proportionally reduced by the subsequent withdrawal)
or the basic Death Benefit.
Highest Daily Value = $90,000 - [$90,000 x $15,000/$75,000]
= $90,000 - $18,000
= $72,000
Basic Death Benefit = max [$80,000, $50,000 - ($50,000 x $15,000/$75,000)]
= max [$80,000, $40,000]
= $80,000
The Death Benefit therefore is $80,000.
Example with death after Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals had been made prior to the
Death Benefit Target Date. Further assume that the Owner dies after the Death
Benefit Target Date, when the Account Value is $75,000. The Highest Daily Value
on the Death Benefit Target Date was $80,000; however, following the Death
Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had
taken a withdrawal of $5,000 when the Account Value was $70,000. The Death
Benefit is equal to the greater of the Highest Daily Value on the Death Benefit
Target Date plus Purchase Payments minus proportional withdrawals after the
Death Benefit Target Date or the basic Death Benefit.
Highest Daily Value = $80,000 + $15,000 - [($80,000 + $15,000) x
$5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $88,214
Basic Death Benefit = max [$75,000, ($50,000 + $15,000) - {($50,000 +
$15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $75,000
The Death Benefit therefore is $88,214.
B-5
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APPENDIX C
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix C -- Plus40(TM) Optional Life Insurance Rider
AMERICAN SKANDIA'S PLUS40(TM) OPTIONAL LIFE INSURANCE RIDER WAS OFFERED, IN
THOSE STATES WHERE APPROVED, BETWEEN JANUARY 17, 2002 AND MAY 1, 2003. THE
DESCRIPTION BELOW OF THE PLUS40(TM) BENEFIT APPLIES TO THOSE CONTRACT OWNERS WHO
PURCHASED AN ANNUITY DURING THAT TIME PERIOD AND ELECTED THE PLUS40(TM) BENEFIT.
THE LIFE INSURANCE COVERAGE PROVIDED UNDER THE PLUS40(TM) OPTIONAL LIFE
INSURANCE RIDER ("PLUS40(TM) RIDER" OR THE "RIDER") IS SUPPORTED BY AMERICAN
SKANDIA'S GENERAL ACCOUNT AND IS NOT SUBJECT TO, OR REGISTERED AS A SECURITY
UNDER, EITHER THE SECURITIES ACT OF 1933 OR THE INVESTMENT COMPANY ACT OF 1940.
INFORMATION ABOUT THE PLUS40(TM) RIDER IS INCLUDED AS AN APPENDIX TO THIS
PROSPECTUS TO HELP YOU UNDERSTAND THE RIDER AND THE RELATIONSHIP BETWEEN THE
RIDER AND THE VALUE OF YOUR ANNUITY. IT IS ALSO INCLUDED BECAUSE YOU CAN ELECT
TO PAY FOR THE RIDER WITH TAXABLE WITHDRAWALS FROM YOUR ANNUITY. THE STAFF OF
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT REVIEWED THIS INFORMATION.
HOWEVER, THE INFORMATION MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE
PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING ACCURACY AND COMPLETENESS.
THE INCOME TAX-FREE LIFE INSURANCE PAYABLE TO YOUR BENEFICIARY(IES) UNDER
THE PLUS40(TM) RIDER IS EQUAL TO 40% OF THE ACCOUNT VALUE OF YOUR ANNUITY AS OF
THE DATE WE RECEIVE DUE PROOF OF DEATH, SUBJECT TO CERTAIN ADJUSTMENTS,
RESTRICTIONS AND LIMITATIONS DESCRIBED BELOW.
ELIGIBILITY
The Plus40(TM) rider may be purchased as a rider on your Annuity. The Rider must
cover those persons upon whose death the Annuity's death benefit becomes payable
- -- the Annuity's owner or owners, or the Annuitant (in the case of an entity
owned Annuity). If the Annuity has two Owners, the Rider's death benefit is
payable upon the first death of such persons. If the Annuity is owned by an
entity, the Rider's death benefit is payable upon the death of the Annuitant,
even if a Contingent Annuitant is named.
The minimum allowable age to purchase the Plus40(TM) rider is 40; the
maximum allowable age is 75. If the Rider is purchased on two lives, both
persons must meet the age eligibility requirements. The Plus40(TM) rider is not
available to purchasers who use their Annuity as a funding vehicle for a Tax
Sheltered Annuity (or 403(b)) or as a funding vehicle for a qualified plan under
Section 401 of the Internal Revenue Code ("Code").
ADJUSTMENTS, RESTRICTIONS & LIMITATIONS
- If you die during the first 24 months following the effective date
of the Plus40(TM) rider (generally, the Issue Date of your Annuity),
the death benefit will be limited to the amount of any charges paid
for the Rider while it was in effect. While we will return the
charges you have paid during the applicable period as the death
benefit, your Beneficiary(ies) will receive no additional life
insurance benefit from the Plus40(TM) rider if you die within 24
months of its effective date.
- If you make a Purchase Payment within 24 months prior to the date of
death, the Account Value used to determine the amount of the death
benefit will be reduced by the amount of such Purchase Payment(s).
If we reduce the death benefit payable under the Plus40(TM) rider
based on this provision, we will return 50% of any charges paid for
the Rider based on those Purchase Payments as an additional amount
included in the death benefit under the Rider.
- If we apply Credits to your Annuity based on Purchase Payments, such
Credits are treated as Account Value for purposes of determining the
death benefit payable under the Plus40(TM) rider. However, if
Credits were applied to Purchase Payments made within 24 months
prior to the date of death, the Account Value used to determine the
amount of the death benefit will be reduced by the amount of such
Credits. If we reduce the death benefit payable under the Plus40(TM)
rider based on this provision, we will return 50% of any charges
paid for the Rider based on such Credits as an additional amount
included in the death benefit under the Rider.
- If you become terminally ill (as defined in the Rider) and elect to
receive a portion of the Plus40(TM) rider's death benefit under the
Accelerated Death Benefit provision, the amount that will be payable
under the Rider upon your death will be reduced. Please refer to the
Accelerated Death Benefit provision described below.
- If charges for the Plus40(TM) rider are due and are unpaid as of the
date the death benefit is being determined, such charges will be
deducted from the amount paid to your Beneficiary(ies).
C-1
APPENDIX C
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix C -- Plus40(TM) Optional Life Insurance Rider continued
- If the age of any person covered under the Plus40(TM) rider is
misstated, we will adjust any coverage under the Rider to conform to
the facts. For example, if, due to the misstatement, we overcharged
you for coverage under the Rider, we will add any additional charges
paid to the amount payable to your Beneficiary(ies). If, due to the
misstatement, we undercharged you for coverage under the Rider, we
will reduce the death benefit in proportion to the charges not paid
as compared to the charges that would have been paid had there been
no misstatement.
- On or after an Owner reaches the expiry date of the Rider (the
anniversary of the Annuity's Issue Date on or immediately after the
95th birthday), coverage will terminate. No charge will be made for
an Owner following the expiry date. If there are two Owners, the
expiry date applies separately to each Owner; therefore, coverage
may continue for one Owner and terminate as to the other Owner.
MAXIMUM BENEFIT
The Plus40(TM) rider is subject to a Maximum Death Benefit Amount based on the
Purchase Payments applied to your Annuity. The Plus40(TM) rider may also be
subject to a Per Life Maximum Benefit that is based on all amounts paid under
any annuity contract we issue to you under which you have elected the Plus40(TM)
rider or similar life insurance coverage.
- The Maximum Death Benefit Amount is 100% of the Purchase Payments
increasing at 5% per year following the date each Purchase Payment
is applied to the Annuity until the date of death. If Purchase
Payments are applied to the Annuity within 24 months prior to the
date of death, the Maximum Death Benefit Amount is decreased by the
amount of such Purchase Payments.
- The Per Life Maximum Benefit applies to Purchase Payments applied to
any such annuity contracts more than 24 months from the date of
death that exceed $1,000,000. If you make Purchase Payments in
excess of $1,000,000, we will reduce the aggregate death benefit
payable under all Plus40(TM) riders, or similar riders issued by us,
based on the combined amount of Purchase Payments in excess of
$1,000,000 multiplied by 40%. If the Per Life Maximum Benefit
applies, we will reduce the amount payable under each applicable
Plus40(TM) rider on a pro-rata basis. If the Per Life Maximum
Benefit applies upon your death, we will return any excess charges
that you paid on the portion of your Account Value on which no
benefit is payable. The Per Life Maximum Benefit does not limit the
amount of Purchase Payments that you may apply to your Annuity.
ACCELERATED DEATH BENEFIT PROVISION
If you become terminally ill, you may request that a portion of the death
benefit payable under the Plus40(TM) rider be prepaid instead of being paid to
your Beneficiary(ies) upon your death. Subject to our requirements and where
allowed by law, we will make a one time, lump sum payment. Our requirements
include proof satisfactory to us, in writing, of terminal illness after the
Rider's Effective Date.
The maximum we will pay, before any reduction, is the lesser of 50% of the
Rider's death benefit or $100,000. If you elect to accelerate payment of a
portion of the death benefit under the Plus40(TM) rider, the amount of the
remaining death benefit is reduced by the prepaid amount accumulating at an
annualized interest rate of 6.0%. Eligibility for an accelerated payout of a
portion of your Plus40(TM) rider death benefit may be more restrictive than any
medically-related surrender provision that may be applicable to you under the
Annuity.
CHARGES FOR THE PLUS40(TM) RIDER
The Plus40(TM) rider has a current charge and a guaranteed maximum charge. The
current charge for the Plus40(TM) rider is based on a percentage of your Account
Value as of the anniversary of the Issue Date of your Annuity. The applicable
percentages differ based on the attained age, last birthday of the Owner(s) or
Annuitant (in the case of an entity owned Annuity) as of the date the charge is
due. We reserve the right to change the current charge, at any time, subject to
regulatory approval where required. If there are two Owners, we calculate the
current charge that applies to each Owner individually and deduct the combined
amount as the charge for the Rider. There is no charge based on a person's life
after coverage expires as to that person. However, a charge will still apply to
the second of two Owners (and coverage will continue for such Owner) if such
Owner has not reached the expiry date.
C-2
APPENDIX C
AMERICAN SKANDIA APEX II PROSPECTUS
PERCENTAGE OF
ATTAINED AGE ACCOUNT VALUE
Age 40-75 .80%
Age 76-80 1.60%
Age 81-85 3.20%
Age 86-90 4.80%
Age 91 6.50%
Age 92 7.50%
Age 93 8.50%
Age 94 9.50%
Age 95 10.50%
The charge for the Plus40(TM) rider may also be subject to a guaranteed
maximum charge that will apply if the current charge, when applied to the
Account Value, exceeds the guaranteed maximum charge. The guaranteed maximum
charge is based on a charge per $1,000 of insurance.
We determine the charge for the Rider annually, in arrears. We deduct the
charge: (1) upon your death; (2) on each anniversary of the Issue Date; (3) on
the date that you begin receiving annuity payments; (4) if you surrender your
Annuity other than a medically-related surrender; or (5) if you choose to
terminate the Rider. If the Rider terminates for any of the preceding reasons on
a date other than the anniversary of the Annuity's Issue Date, the charge will
be prorated. During the first year after the Annuity's Issue Date, the charge
will be prorated from the Issue Date. In all subsequent years, the charge will
be prorated from the last anniversary of the Issue Date.
You can elect to pay the annual charge through a redemption from your
Annuity's Account Value or through funds other than those within the Annuity. If
you do not elect a method of payment, we will automatically deduct the annual
charge from your Annuity's Account Value. The manner in which you elect to pay
for the Rider may have tax implications.
- If you elect to pay the charge through a redemption of your
Annuity's Account Value, the withdrawal will be treated as a taxable
distribution, and will generally be subject to ordinary income tax
on the amount of any investment gain withdrawn. If you are under age
59 1/2, the distribution may also be subject to a 10% penalty on any
gain withdrawn, in addition to ordinary income taxes. We first
deduct the amount of the charge pro-rata from the Account Value in
the variable investment options. We only deduct the charge pro-rata
from the Fixed Allocations to the extent there is insufficient
Account Value in the variable investment options to pay the charge.
- If you elect to pay the charge through funds other than those from
your Annuity, we require that payment be made electronically in U.S.
currency through a U.S. financial institution. If you elect to pay
the charge through electronic transfer of funds and payment has not
been received within 31 days from the due date, we will deduct the
charge as a redemption from your Annuity, as described above.
TERMINATION
You can terminate the Plus40(TM) rider at any time. Upon termination, you will
be required to pay a pro-rata portion of the annual charge for the Rider. The
Plus40(TM) rider will terminate automatically on the date your Account Value is
applied to begin receiving annuity payments, on the date you surrender the
Annuity or, on the expiry date with respect to such person who reaches the
expiry date. We may also terminate the Plus40(TM) rider, if necessary, to comply
with our interpretation of the Code and applicable regulations. Once terminated,
you may not reinstate your coverage under the Plus40(TM) rider.
CHANGES IN ANNUITY DESIGNATIONS
Changes in ownership and annuitant designations under the Annuity may result in
changes in eligibility and charges under the Plus40(TM) rider. These changes may
include termination of the Rider. Please refer to the Rider for specific
details.
C-3
APPENDIX C
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix C -- Plus40(TM) Optional Life Insurance Rider continued
SPOUSAL ASSUMPTION
A spousal beneficiary may elect to assume ownership of the Annuity instead of
taking the Annuity's Death Benefit. However, regardless of whether a spousal
beneficiary assumes ownership of the Annuity, THE DEATH BENEFIT UNDER THE
PLUS40(TM) RIDER WILL BE PAID DESPITE THE FACT THAT THE ANNUITY WILL CONTINUE.
The spousal beneficiary can apply the death benefit proceeds under the
Plus40(TM) rider to the Annuity as a new Purchase Payment, can purchase a new
annuity contract or use the death benefit proceeds for any other purpose.
Certain restrictions may apply to an Annuity that is used as a qualified
investment. Spousal beneficiaries may also be eligible to purchase the
Plus40(TM) rider, in which case the Annuity's Account Value, as of the date the
assumption is effective, will be treated as the initial Purchase Payment under
applicable provisions of the Rider.
TAX CONSIDERATION
The Plus40(TM) rider was designed to qualify as a life insurance contract under
the Code. As life insurance, under most circumstances, the Beneficiary(ies) does
not pay any Federal income tax on the death benefit payable under the Rider.
If your Annuity is being used as an Individual Retirement Annuity (IRA),
we consider the Plus40(TM) rider to be outside of your IRA, since premium for
the Rider is paid for either with funds outside of your Annuity or with
withdrawals previously subject to tax and any applicable tax penalty.
We believe payments under the accelerated payout provision of the Rider
will meet the requirements of the Code and the regulations in order to qualify
as tax-free payments. To the extent permitted by law, we will change our
procedures in relation to the Rider, or the definition of terminally ill, or any
other applicable term in order to maintain the tax-free status of any amounts
paid out under the accelerated payout provision.
C-4
APPENDIX D
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix D -- Description and Calculation of Previously Offered Optional Death
Benefits
IF YOU PURCHASED YOUR ANNUITY BEFORE NOVEMBER 18, 2002 AND WERE NOT A RESIDENT
OF THE STATE OF NEW YORK, THE FOLLOWING OPTIONAL DEATH BENEFITS WERE OFFERED:
ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT
The Enhanced Beneficiary Protection Optional Death Benefit can provide
additional amounts to your Beneficiary that may be used to offset federal and
state taxes payable on any taxable gains in your Annuity at the time of your
death. Whether this benefit is appropriate for you may depend on your particular
circumstances, including other financial resources that may be available to your
Beneficiary to pay taxes on your Annuity should you die during the accumulation
period. No benefit is payable if death occurs on or after the Annuity Date.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT PROVIDES A
BENEFIT THAT IS PAYABLE IN ADDITION TO THE BASIC DEATH BENEFIT. If the Annuity
has one Owner, the Owner must be age 75 or less at the time the benefit is
purchased. If the Annuity has joint Owners, the oldest Owner must be age 75 or
less. If the Annuity is owned by an entity, the Annuitant must be age 75 or
less.
CALCULATION OF ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT
If you purchase the Enhanced Beneficiary Protection Optional Death Benefit, the
Death Benefit is calculated as follows:
1: the BASIC DEATH BENEFIT described above;
PLUS
2: 50% of the "DEATH BENEFIT AMOUNT" less Purchase Payments reduced by
proportional withdrawals.
"DEATH BENEFIT AMOUNT" includes your Account Value and any amounts added
to your Account Value under the Annuity's basic Death Benefit when the Death
Benefit is calculated. Under the basic Death Benefit, amounts are added to your
Account Value when the Account Value is less than Purchase Payments minus
proportional withdrawals.
"PROPORTIONAL WITHDRAWALS" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT IS SUBJECT TO A
MAXIMUM OF 50% OF ALL PURCHASE PAYMENTS APPLIED TO THE ANNUITY AT LEAST 12
MONTHS PRIOR TO THE DEATH OF THE DECEDENT THAT TRIGGERS THE PAYMENT OF THE DEATH
BENEFIT.
PLEASE REFER TO THE SECTION ENTITLED "TAX CONSIDERATIONS" FOR A DISCUSSION OF
SPECIAL TAX CONSIDERATIONS FOR PURCHASERS OF THIS BENEFIT.
NOTE: YOU MAY NOT ELECT THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH
BENEFIT IF YOU HAVE ELECTED ANY OTHER OPTIONAL DEATH BENEFIT.
GUARANTEED MINIMUM DEATH BENEFIT
If the Annuity has one Owner, the Owner must be age 80 or less at the time the
optional Death Benefit is purchased. If the Annuity has joint Owners, the oldest
Owner must be age 80 or less. If the Annuity is owned by an entity, the
Annuitant must be age 80 or less.
D-1
APPENDIX D
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix D -- Description and Calculation of Previously Offered Optional Death
Benefits continued
KEY TERMS USED WITH THE GUARANTEED MINIMUM DEATH BENEFIT
- - The Death Benefit Target Date is the contract anniversary on or after the
80th birthday of the current Owner, the oldest of either joint Owner or
the Annuitant, if entity owned.
- - The Highest Anniversary Value equals the highest of all previous
"Anniversary Values" on or before the earlier of the Owner's date of death
and the "Death Benefit Target Date".
- - The Anniversary Value is the Account Value as of each anniversary of the
Issue Date plus the sum of all Purchase Payments on or after such
anniversary less the sum of all "Proportional Reductions" since such
anniversary.
CALCULATION OF GUARANTEED MINIMUM DEATH BENEFIT
The Guaranteed Minimum Death Benefit depends on whether death occurs before or
after the Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit equals
the greatest of:
1. the Account Value in the Sub-accounts plus the Interim Value of any Fixed
Allocations (no MVA) as of the date we receive in writing "due proof of
death"; and
2. the sum of all Purchase Payments minus the sum of all Proportional
Reductions, each increasing daily until the Owner's date of death at a
rate of 5.0%, subject to a limit of 200% of the difference between the sum
of all Purchase Payments and the sum of all withdrawals as of the Owner's
date of death; and
3. the "Highest Anniversary Value" on or immediately preceding the Owner's
date of death.
The amount determined by this calculation is increased by any Purchase Payments
received after the Owner's date of death and decreased by any Proportional
Reductions since such date.
If the Owner dies on or after the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the Account Value as of the date we receive in writing "due proof of
death" (an MVA may be applicable to amounts in any Fixed Allocations); and
2. the greater of Item 2 & 3 above on the Death Benefit Target Date plus the
sum of all Purchase Payments less the sum of all Proportional Reductions
since the Death Benefit Target Date.
ANNUITIES WITH JOINT OWNERS
For Annuities with Joint Owners, the Death Benefit is calculated as shown above
except that the age of the oldest of the Joint Owners is used to determine the
Death Benefit Target Date. NOTE: If you and your spouse own the Annuity jointly,
we will pay the Death Benefit to the Beneficiary. If the sole primary
Beneficiary is the surviving spouse, then the surviving spouse can elect to
assume ownership of the Annuity and continue the contract instead of receiving
the Death Benefit.
ANNUITIES OWNED BY ENTITIES
For Annuities owned by an entity, the Death Benefit is calculated as shown above
except that the age of the Annuitant is used to determine the Death Benefit
Target Date. Payment of the Death Benefit is based on the death of the Annuitant
(or Contingent Annuitant, if applicable).
CAN I TERMINATE THE OPTIONAL DEATH BENEFITS? DO THE OPTIONAL DEATH BENEFITS
TERMINATE UNDER OTHER CIRCUMSTANCES?
You can terminate the Enhanced Beneficiary Protection Optional Death Benefit and
the Guaranteed Minimum Death Benefit at any time. Upon termination, you will be
required to pay a pro-rata portion of the annual charge for the benefit. Both
optional Death Benefits will terminate automatically on the Annuity Date. We may
also terminate any optional Death Benefit if necessary to comply with our
interpretation of the Code and applicable regulations.
WHAT ARE THE CHARGES FOR THE OPTIONAL DEATH BENEFITS?
We deduct a charge from your Account Value if you elect to purchase either
optional Death Benefit. The Enhanced Beneficiary Protection Death Benefit costs
0.25% of Account Value. The Guaranteed Minimum Death Benefit costs 0.30% of the
current Death Benefit. The charges for these death benefits are deducted in
arrears each Annuity Year. No charge applies after the Annuity Date. We deduct
the charge:
1. on each anniversary of the Issue Date;
D-2
APPENDIX D
AMERICAN SKANDIA APEX II PROSPECTUS
2. when Account Value is transferred to our general account prior to
the Annuity Date;
3. if you surrender your Annuity; and
4. if you choose to terminate the benefit (Enhanced
Beneficiary Protection Optional Death Benefit only)
If you surrender the Annuity, elect to begin receiving
annuity payments or terminate the benefit on a date
other than an anniversary of the Issue Date, the charge
will be prorated. During the first year after the Issue
Date, the charge will be prorated from the Issue Date.
In all subsequent years, it would be prorated from the
last anniversary of the Issue Date.
We first deduct the amount of the charge pro-rata from
the Account Value in the variable investment options. We
only deduct the charge pro-rata from the Fixed
Allocations to the extent there is insufficient Account
Value in the variable investment options to pay the
charge. If your Annuity's Account Value is insufficient
to pay the charge, we may deduct your remaining Account
Value and terminate your Annuity. We will notify you if
your Account Value is insufficient to pay the charge and
allow you to submit an additional Purchase Payment to
continue your Annuity. Please refer to the section
entitled "Tax Considerations" for additional
considerations in relation to the optional Death
Benefit.
ADDITIONAL CALCULATIONS
EXAMPLES OF ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT CALCULATION
The following are examples of how the Enhanced Beneficiary Protection Optional
Death Benefit is calculated. Each example assumes that a $50,000 initial
Purchase Payment is made and that no withdrawals are made prior to the Owner's
death. Each example assumes that there is one Owner who is age 50 on the Issue
Date and that all Account Value is maintained in the variable investment
options.
Example with market increase
Assume that the Owner's Account Value has been increasing due to positive market
performance. On the date we receive due proof of death, the Account Value is
$75,000. The basic Death Benefit is calculated as Purchase Payments minus
proportional withdrawals, or Account Value, which ever is greater. Therefore,
the basic Death Benefit is equal to $75,000. The Enhanced Beneficiary Protection
Optional Death Benefit is equal to the amount payable under the basic Death
Benefit ($75,000) PLUS 50% of the "Death Benefit Amount" less Purchase Payments
reduced by proportional withdrawals.
Purchase Payments = $50,000
Account Value = $75,000
Basic Death Benefit = $75,000
Death Benefit Amount = $75,000 - $50,000 = $25,000
Amount Payable Under Enhanced Beneficiary Protection Optional Death
Benefit = $75,000 + $12,500 = $87,500
Examples with market decline
Assume that the Owner's Account Value has been decreasing due to declines in
market performance. On the date we receive due proof of death, the Account Value
is $45,000. The basic Death Benefit is calculated as Purchase Payments minus
proportional withdrawals, or Account Value, which ever is greater. Therefore,
the basic Death Benefit is equal to $50,000. The Enhanced Beneficiary Protection
Optional Death Benefit is equal to the amount payable under the basic Death
Benefit ($50,000) PLUS 50% of the "Death Benefit Amount" less Purchase Payments
reduced by proportional withdrawals.
Purchase Payments = $50,000
Account Value = $40,000
Basic Death Benefit = $50,000
Death Benefit Amount = $50,000 - $50,000 = $0
Amount Payable Under Enhanced Beneficiary Protection Optional Death
Benefit = $50,000 + $0 = $50,000
IN THIS EXAMPLE YOU WOULD RECEIVE NO ADDITIONAL BENEFIT FROM PURCHASING
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT.
D-3
APPENDIX D
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix D -- Description and Calculation of Previously Offered Optional Death
Benefits continued
EXAMPLES OF GUARANTEED MINIMUM DEATH BENEFIT CALCULATION
The following are examples of how the Guaranteed Minimum Death Benefit is
calculated. Each example assumes that a $50,000 initial Purchase Payment is made
and that no withdrawals are made prior to the Owner's death. Each example
assumes that there is one Owner who is age 50 on the Issue Date and that all
Account Value is maintained in the variable investment options.
Example of market increase
Assume that the Owner's Account Value has generally been increasing due to
positive market performance. On the date we receive due proof of death, the
Account Value is $90,000. The Highest Anniversary Value at the end of any
previous period is $72,000. The Death Benefit would be the Account Value
($90,000) because it is greater than the Highest Anniversary Value ($72,000) or
the sum of prior Purchase Payments increased by 5.0% annually ($73,872.77).
Example of market decrease
Assume that the Owner's Account Value generally increased until the fifth
anniversary but generally has been decreasing since the fifth contract
anniversary. On the date we receive due proof of death, the Account Value is
$48,000. The Highest Anniversary Value at the end of any previous period is
$54,000. The Death Benefit would be the sum of prior Purchase Payments increased
by 5.0% annually ($73,872.77) because it is greater than the Highest Anniversary
Value ($54,000) or the Account Value ($48,000).
Example of market increase followed by decrease
Assume that the Owner's Account Value increased significantly during the first
six years following the Issue Date. On the sixth anniversary date the Account
Value is $90,000. During the seventh Annuity Year, the Account Value increases
to as high as $100,000 but then subsequently falls to $80,000 on the date we
receive due proof of death. The Death Benefit would be the Highest Anniversary
Value at the end of any previous period ($90,000), which occurred on the sixth
anniversary, although the Account Value was higher during the subsequent period.
The Account Value on the date we receive due proof of death ($80,000) is lower,
as is the sum of all prior Purchase Payments increased by 5.0% annually
($73,872.77).
D-4
APPENDIX E
AMERICAN SKANDIA APEX II PROSPECTUS
Appendix E -- Additional Information on Asset Allocation Programs
PROGRAM RULES
- - You can elect an asset allocator program where the Sub-accounts for each
asset class in each model portfolio are designated based on an evaluation
of available Sub-accounts. If you elect the Lifetime Five Benefit ("LT5")
or the Highest Daily Value Death Benefit ("HDV"), you must enroll in one
of the eligible model portfolios. Asset allocation is a sophisticated
method of diversification that allocates assets among asset classes in
order to manage investment risk and potentially enhance returns over the
long term. However, asset allocation does not guarantee a profit or
protect against a loss.
HOW THE ASSET ALLOCATION PROGRAM WORKS
- - Amounts will automatically be allocated in accordance with the percentages
and to Sub-accounts indicated for the model portfolio that you choose. If
you allocate your Account Value or transfer your Account Value among any
Sub-accounts that are outside of your model portfolio, we will allocate
these amounts according to the allocation percentages of the applicable
model portfolio upon the next rebalancing. You may only choose one model
portfolio at a time. When you enroll in the asset allocation program and
upon each rebalance thereafter, 100% of your Account Value allocated to
the variable Sub-accounts will be allocated to the asset allocation
program. Any Account Value not invested in the Sub-accounts will not be
part of the program.
- - ADDITIONAL PURCHASE PAYMENTS: Unless otherwise requested, any additional
Purchase Payments applied to the variable Sub-accounts in the Annuity will
be allocated to the Sub-accounts according to the allocation percentages
for the model portfolio you choose. Allocation of additional Purchase
Payments outside of your model portfolio but into a Sub-account, will be
reallocated according to the allocation percentages of the applicable
model portfolio upon the next rebalancing.
- - REBALANCING YOUR MODEL PORTFOLIO: Changes in the value of the Sub-account
will cause your Account Value allocated to the Sub-accounts to vary from
the percentage allocations of the model portfolio you select. By selecting
the asset allocation program, you have directed us to periodically (e.g.,
quarterly) rebalance your Account Value allocated to the Sub-accounts in
accordance with the percentage allocations assigned to each Sub-account
within your model portfolio at the time you elected the program or as
later modified with your consent. Some asset allocation programs will only
require that a rebalancing occur when the percent of your Account Value
allocated to the Sub-accounts are outside of the acceptable range
permitted under such asset allocation program. Note -- Any Account Value
not invested in the Sub-accounts will not be affected by any rebalance.
- - SUB-ACCOUNT CHANGES WITHIN THE MODEL PORTFOLIOS: From time to time you may
be notified of a suggested change in a Sub-account or percentage allocated
to a Sub-account within your model portfolio. If you consent (in the
manner that is then permitted or required) to the suggested change, then
it will be implemented upon the next rebalance. If you do not consent then
rebalancing will continue in accordance with your unchanged model
portfolio, unless the Sub-account is no longer available under your
Annuity, in which case your lack of consent will be deemed a request to
terminate the asset allocation program and the provisions under
"Termination or Modification of the Asset Allocation Program" will apply.
- - OWNER CHANGES IN CHOICE OF MODEL PORTFOLIO: You may change from the model
portfolio that you have elected to any other currently available model
portfolio at any time. The change will be implemented on the date we
receive all required information in the manner that is then permitted or
required.
TERMINATION OR MODIFICATION OF THE ASSET ALLOCATION PROGRAM:
- - You may request to terminate your asset allocation program at any time.
Any termination will be effective on the date that American Skandia
receives your termination request in good order. If you are enrolled in
HDV or LT5, termination of your asset allocation program must coincide
with enrollment in a then currently available and approved asset
allocation program or other approved option. However, if you are enrolled
in LT5 you may terminate the LT5 benefit in order to then terminate your
asset allocation program. American Skandia reserves the right to terminate
or modify the asset allocation program at any time with respect to any
programs.
RESTRICTIONS ON ELECTING THE ASSET ALLOCATION:
- - You cannot participate in auto-rebalancing or a DCA program while enrolled
in an asset allocation program. Upon election of an asset allocation
program, American Skandia will automatically terminate your enrollment in
any auto-rebalancing or DCA program. Finally, Systematic Withdrawals can
only be made as flat dollar amounts.
E-1
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Please send me a statement of additional information that contains further
details about the american skandia annuity described in prospectus asapexii-pros
(05/2005).
______________________________________
(print your name)
______________________________________
(address)
______________________________________
(city/state/zip code)
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Variable Annuity Issued by: Variable Annuity Distributed by:
AMERICAN SKANDIA LIFE AMERICAN SKANDIA
ASSURANCE CORPORATION MARKETING, INCORPORATED
A Prudential Financial Company A Prudential Financial Company
One Corporate Drive One Corporate Drive
Shelton, Connecticut 06484 Shelton, Connecticut 06484
Telephone: 1-800-766-4530 Telephone: 203-926-1888
http://www.americanskandia.prudential.com http://www.americanskandia.prudential.com
MAILING ADDRESSES:
AMERICAN SKANDIA -- VARIABLE ANNUITIES
P.O. Box 7960
Philadelphia, PA 19176
EXPRESS MAIL:
AMERICAN SKANDIA -- VARIABLE ANNUITIES
2101 Welsh Rd.
Dresher, PA 19025
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
A Prudential Financial Company
One Corporate Drive, Shelton, Connecticut 06484
AMERICAN SKANDIA
STAGECOACH(TM) APEX(SM) II
Flexible Premium Deferred Annuity
PROSPECTUS: MAY 2, 2005
This Prospectus describes Stagecoach(TM) APEX(SM) II, a flexible premium
deferred annuity (the "Annuity") offered by American Skandia Life Assurance
Corporation ("American Skandia", "we", "our" or "us") exclusively through Wells
Fargo Bank, N.A. The Annuity may be offered as an individual annuity contract or
as an interest in a group annuity. This Prospectus describes the important
features of the Annuity and what you should consider before purchasing the
Annuity. THE ANNUITY OR CERTAIN OF ITS INVESTMENT OPTIONS AND/OR FEATURES MAY
NOT BE AVAILABLE IN ALL STATES. VARIOUS RIGHTS AND BENEFITS MAY DIFFER BETWEEN
STATES TO MEET APPLICABLE LAWS AND/OR REGULATIONS. For more information about
variations applicable to your state, please refer to your Annuity contract or
consult your Investment Professional. Certain terms are capitalized in this
Prospectus. Those terms are either defined in the Glossary of Terms or in the
context of the particular section.
American Skandia offers several different annuities which your investment
professional may be authorized to offer to you. Each annuity has different
features and benefits that may be appropriate for you based on your
financial situation, your age and how you intend to use the annuity. The
different features and benefits include variations in death benefit
protection and the ability to access your annuity's account value. The
fees and charges you pay and compensation paid to your investment
professional may also be different between each annuity. For more
information please refer to the Appendix entitled "Selecting the Variable
Annuity That's Right for You."
The Variable Investment Options
The variable investment options, each a Sub-account of American Skandia Life
Assurance Corporation Variable Account B, invest in an underlying mutual fund
portfolio. Currently, portfolios of the following underlying mutual funds are
being offered: Wells Fargo Variable Trust, American Skandia Trust, Gartmore
Variable Investment Trust, A I M Advisors, Inc., Evergreen Variable Annuity
Trust, ProFunds VP, First Defined Portfolio Fund LLC and The Prudential Series
Fund, Inc.
Please Read This Prospectus
PLEASE READ THIS PROSPECTUS AND THE CURRENT PROSPECTUS FOR THE UNDERLYING MUTUAL
FUNDS. KEEP THEM FOR FUTURE REFERENCE. If you are purchasing the Annuity as a
replacement for existing variable annuity or variable life coverage, you should
consider any surrender or penalty charges you may incur when replacing your
existing coverage and that this Annuity may be subject to a contingent deferred
sales charge if you elect to surrender the Annuity or take a partial withdrawal.
You should consider your need to access the Annuity's Account Value and whether
the annuity's liquidity features will satisfy that need.
Available Information
We have also filed a Statement of Additional Information that is available from
us, without charge, upon your request. The contents of the Statement of
Additional Information are described on page 97. This Prospectus is part of the
registration statement we filed with the SEC regarding this offering. Additional
information on us and this offering is available in the registration statement
and the exhibits thereto. You may review and 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. These documents, as well as documents
incorporated by reference, may also be obtained through the SEC's Internet
Website (http://www.sec.gov) for this registration statement as well as for
other registrants that file electronically with the SEC.
For Further Information call:
- - 1-800-752-6342
THESE ANNUITIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ISSUED, GUARANTEED OR
ENDORSED BY, ANY BANK, OR BANK SUBSIDIARY OF WELLS FARGO BANK, N.A., ARE NOT
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC), THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. AN INVESTMENT
IN THIS ANNUITY INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF VALUE,
EVEN WITH RESPECT TO AMOUNTS ALLOCATED TO THE AST MONEY MARKET SUB-ACCOUNT.
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.
AMERICAN SKANDIA STAGECOACHTM APEX(SM) II ARE REGISTERED TRADEMARKS/SERVICEMARKS
OF A WELLS FARGO BANK, N.A. AND THE PRUDENTIAL INSURANCE COMPANY OF AMERICA,
RESPECTIVELY.
Prospectus Dated: May 2, 2005
WFAPX2PR505
Statement of Additional Information Dated: May 2, 2005
WFVAPEXIIPROS
PLEASE SEE OUR PRIVACY POLICY AND IRA DISCLOSURE STATEMENT ATTACHED TO THE BACK
COVER OF THIS PROSPECTUS.
Contents
Introduction ............................................................................. 1
Why Would I Choose to Purchase This Annuity? ........................................... 1
What Are Some of the Key Features of This Annuity? ..................................... 1
How Do I Purchase This Annuity? ........................................................ 1
Glossary of Terms ........................................................................ 2
Summary of Contract Fees and Charges ..................................................... 3
Expense Examples ......................................................................... 12
Investment Options ....................................................................... 13
What Are the Investment Objectives and Policies of the Portfolios? ..................... 13
What Are the Fixed Allocations? ........................................................ 29
Fees and Charges ......................................................................... 30
What Are the Contract Fees and Charges? ................................................ 30
What Charges Apply Solely to the Variable Investment Options? .......................... 31
What Fees and Expenses Are Incurred by the Portfolios? ................................. 32
What Charges Apply to the Fixed Allocations? ........................................... 32
What Charges Apply if I Choose an Annuity Payment Option? .............................. 32
Exceptions/Reductions to Fees and Charges .............................................. 32
Purchasing Your Annuity .................................................................. 33
What Are Our Requirements for Purchasing the Annuity? .................................. 33
Managing Your Annuity .................................................................... 34
May I Change the Owner, Annuitant and Beneficiary Designations? ........................ 34
May I Return the Annuity if I Change My Mind? .......................................... 34
May I Make Additional Purchase Payments? ............................................... 34
May I Make Scheduled Payments Directly From My Bank Account? ........................... 34
May I Make Purchase Payments Through a Salary Reduction Program? ....................... 35
Managing Your Account Value .............................................................. 36
How and When Are Purchase Payments Invested? ........................................... 36
Are There Restrictions or Charges on Transfers Between Investment Options? ............. 36
Do You Offer Dollar Cost Averaging? .................................................... 38
Do You Offer Any Automatic Rebalancing Programs? ....................................... 39
Are Any Asset Allocation Programs Available? ........................................... 39
Do You Offer Programs Designed to Guarantee a "Return of Premium" at a Future Date? .... 39
May I Give My Investment Professional Permission to Manage My Account Value? ........... 40
May I Authorize My Third Party Investment Advisor to Manage My Account? ................ 41
How Do the Fixed Allocations Work? ..................................................... 41
How Do You Determine Rates For Fixed Allocations? ...................................... 42
How Does the Market Value Adjustment Work? ............................................. 43
What Happens When My Guarantee Period Matures? ......................................... 44
Access To Account Value .................................................................. 45
What Types of Distributions Are Available to Me? ....................................... 45
Are There Tax Implications for Distributions? .......................................... 45
Can I Withdraw a Portion of My Annuity? ................................................ 45
How Much Can I Withdraw as a Free Withdrawal? .......................................... 46
Is There a Charge for a Partial Withdrawal? ............................................ 46
Can I Make Periodic Withdrawals from the Annuity During the Accumulation Period? ....... 46
Do You Offer a Program for Withdrawals Under Section 72(t) of the Internal Revenue
Code? .................................................................................. 47
What are Minimum Distributions and When Would I Need to Make Them? ..................... 47
Can I Surrender My Annuity for its Value? .............................................. 47
What is a Medically-Related Surrender and How Do I Qualify? ............................ 47
What Types of Annuity Options Are Available? ........................................... 48
How and When Do I Choose the Annuity Payment Option? ................................... 49
How Are Annuity Payments Calculated? ................................................... 49
(i)
Contents
Living Benefit Programs .................................................................. 52
Do You Offer Programs Designed to Provide Investment Protection for Owners While They
Are Alive? ........................................................................... 52
Guaranteed Return Option Plus(SM) (GRO Plus(SM)) ....................................... 53
Guaranteed Return Option (GRO) ......................................................... 58
Guaranteed Minimum Withdrawal Benefit (GMWB) ........................................... 60
Guaranteed Minimum Income Benefit (GMIB) ............................................... 64
Lifetime Five Income Benefit (Lifetime Five) ........................................... 69
Death Benefit ............................................................................ 75
What Triggers the Payment of a Death Benefit? .......................................... 75
Basic Death Benefit .................................................................... 75
Optional Death Benefits ................................................................ 75
American Skandia's Annuity Rewards ..................................................... 79
Payment of Death Benefits .............................................................. 79
Valuing Your Investment .................................................................. 82
How is My Account Value Determined? .................................................... 82
What is the Surrender Value of My Annuity? ............................................. 82
How and When Do You Value the Sub-Accounts? ............................................ 82
How Do You Value Fixed Allocations? .................................................... 82
When Do You Process and Value Transactions? ............................................ 82
What Happens to My Units When There is a Change in Daily Asset-Based Charges? .......... 83
Tax Considerations ....................................................................... 85
General Information ...................................................................... 92
How Will I Receive Statements and Reports? ............................................. 92
Who is American Skandia? ............................................................... 92
What are Separate Accounts? ............................................................ 92
What is the Legal Structure of the Underlying Funds? ................................... 94
Who Distributes Annuities Offered by American Skandia? ................................. 95
Incorporation of Certain Documents by Reference ........................................ 95
Financial Statements ................................................................... 96
How to Contact Us ...................................................................... 96
Indemnification ........................................................................ 96
Legal Proceedings ...................................................................... 97
Contents of the Statement of Additional Information .................................... 97
Appendix A -- Condensed Financial Information About Separate Account B ................... A-1
Appendix B -- Calculation of Optional Death Benefits ..................................... B-1
Appendix C -- Additional Information on Asset Allocation Programs ........................ C-1
(ii)
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Introduction
Why Would I Choose to Purchase This Annuity?
This Annuity is frequently used for retirement planning because it allows you to
accumulate retirement savings and also offers annuity payment options when you
are ready to begin receiving income. The Annuity also offers a choice of
different optional benefits, for an additional charge, that can provide
principal protection or guaranteed minimum income protection for Owners while
they are alive and one or more death benefits that can protect your retirement
savings if you die during a period of declining markets. It may be used as an
investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Roth
IRA, Section 401(a) plans (defined benefit plans and defined contribution plans
such as 401(k), profit sharing and money purchase plans) or Tax Sheltered
Annuity (or 403(b)). It may also be used as an investment vehicle for
"non-qualified" investments. The Annuity allows you to invest your money in a
number of variable investment options as well as in one or more fixed
allocations.
When an Annuity is purchased as a "NON-QUALIFIED" investment, you generally are
not taxed on any investment gains the Annuity earns until you make a withdrawal
or begin to receive annuity payments. This feature, referred to as
"tax-deferral", can be beneficial to the growth of your Account Value because
money that would otherwise be needed to pay taxes on investment gains each year
remains invested and can earn additional money. However, because the Annuity is
designed for long-term retirement savings, a 10% penalty tax may be applied on
withdrawals you make before you reach age 591/2. Annuities purchased as a
non-qualified investment are not subject to the maximum contribution limits that
may apply to a qualified investment, and are not subject to required minimum
distributions after age 701/2.
When an Annuity is purchased as a "QUALIFIED" investment, you should consider
that the Annuity does not provide any tax advantages in addition to the
preferential treatment already available through your retirement plan under the
Internal Revenue Code. An Annuity may offer features and benefits in addition to
providing tax deferral that other investment vehicles may not offer, including
death benefit protection for your beneficiaries, lifetime income options, and
the ability to make transfers between numerous variable investment options
offered under the Annuity. You should consult with your investment professional
as to whether the overall benefits and costs of the Annuity are appropriate
considering your overall financial plan.
What Are Some of the Key Features of This Annuity?
- - This Annuity is a "flexible premium deferred annuity." It is called
"flexible premium" because you have considerable flexibility in the timing
and amount of premium payments. Generally, investors "defer" receiving
annuity payments until after an accumulation period.
- - This Annuity offers both variable investment options and Fixed
Allocations. If you allocate your Account Value to variable investment
options, the value of your Annuity will vary daily to reflect the
investment performance of the underlying investment options. Fixed
Allocations of different durations are offered that are guaranteed by us,
but may have a Market Value Adjustment if you withdraw or transfer your
Account Value before the Maturity Date.
- - The Annuity features two distinct periods -- the accumulation period and
the payout period. During the accumulation period your Account Value is
allocated to one or more investment options.
- - During the payout period, commonly called "annuitization," you can elect
to receive annuity payments (1) for life; (2) for life with a guaranteed
minimum number of payments; (3) based on joint lives; or (4) for a
guaranteed number of payments. We currently make annuity payments
available on a fixed or variable basis.
- - For annuities issued on or after June 20, 2005, this Annuity offers a
Loyalty Credit which we add to your Account Value after it has been in
effect for five full contract years (i.e., on your fifth Contract
Anniversary), subject to our rules and state availability.
- - This Annuity offers optional benefits, for an additional charge, that can
provide principal protection or guaranteed minimum income protection for
Owners while they are alive.
- - This Annuity offers a basic Death Benefit. It also offers optional Death
Benefits that provide an enhanced level of protection for your
beneficiary(ies) for an additional charge.
- - You are allowed to withdraw a limited amount of money from your Annuity on
an annual basis without any charges, although any optional guaranteed
benefit you elect may be reduced. Other product features allow you to
access your Account Value as necessary, although a charge may apply. After
Annuity Year 4, you are allowed to make unlimited withdrawals from your
Annuity without any charges.
- - Transfers between investment options are tax-free. Currently, you may make
twenty transfers each year free of charge. We also offer several programs
that enable you to manage your Account Value as your financial needs and
investment performance change.
How Do I Purchase This Annuity?
We sell the Annuity through licensed, registered investment professionals. You
must complete an application and submit a minimum initial purchase payment of
$10,000. We may allow you to make a lower initial purchase payment provided you
establish a bank drafting program under which purchase payments received in the
first Annuity Year total at least $10,000. If the Annuity is owned by an
individual or individuals, the oldest of those Owners must be age 85 or under,
as of the Issue Date of the Annuity. If the Annuity is owned by an entity, the
annuitant must be age 85 or under, as of the Issue Date of the Annuity. The
availability and level of protection of certain optional benefits may vary based
on the age of the Owner, on the Issue Date of the Annuity or the date of the
Owner's death.
1
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Glossary of Terms
Many terms used within this Prospectus are described within the text where they
appear. The description of those terms are not repeated in this Glossary of
Terms.
ACCOUNT VALUE
The value of each allocation to a Sub-account (also referred to as "variable
investment option") or a Fixed Allocation prior to the Annuity Date, plus any
earnings, and/or less any losses, distributions and charges. The Account Value
is calculated before we assess any applicable Contingent Deferred Sales Charge
("CDSC" or "surrender charge") and/or, other than on a contract anniversary, any
fee that is deducted from the contract annually in arrears. The Account Value
includes any Loyalty Credit we apply. The Account Value is determined separately
for each Sub-account and for each Fixed Allocation, and then totaled to
determine the Account Value for your entire Annuity. The Account Value of each
Fixed Allocation on other than its Maturity Date may be calculated using a
market value adjustment.
ANNUITIZATION
The application of Account Value (or Protected Income Value for the Guaranteed
Minimum Income Benefit, if applicable) to one of the available annuity options
for the Annuitant to begin receiving periodic payments for life, for a
guaranteed minimum number of payments or for life with a guaranteed minimum
number of payments.
ANNUITY DATE
The date you choose for annuity payments to commence. A maximum Annuity Date
may apply.
ANNUITY YEAR
A 12-month period commencing on the Issue Date of the Annuity and each
successive 12-month period thereafter.
CODE
The Internal Revenue Code of 1986, as amended from time to time.
FIXED ALLOCATION
An allocation of Account Value that is to be credited a fixed rate of interest
for a specified Guarantee Period during the accumulation period.
GUARANTEE PERIOD
A period of time during the accumulation period where we credit a fixed rate of
interest on a Fixed Allocation.
INTERIM VALUE
The value of a Fixed Allocation on any date other than the Maturity Date. The
Interim Value is equal to the initial value allocated to the Fixed Allocation
plus all interest credited to the Fixed Allocation as of the date calculated,
less any transfers or withdrawals from the Fixed Allocation.
ISSUE DATE
The effective date of your Annuity.
MVA
A market value adjustment used in the determination of Account Value of each
Fixed Allocation on any day more than 30 days prior to the Maturity Date of
such Fixed Allocation.
OWNER
With an Annuity issued as an individual annuity contract, the Owner is either an
eligible entity or person named as having ownership rights in relation to the
Annuity. With an Annuity issued as a certificate under a group annuity contract,
the "Owner" refers to the person or entity who has the rights and benefits
designated as to the "Participant" in the certificate.
SURRENDER VALUE
The value of your Annuity available upon surrender prior to the Annuity Date. It
equals the Account Value as of the date we price the surrender minus any
applicable CDSC, Annual Maintenance Fee, Tax Charge, the charge for any optional
benefits and any additional amounts we applied to your Purchase Payments that we
may be entitled to recover under certain circumstances. The surrender value may
be calculated using a Market Value Adjustment with respect to amounts in any
Fixed Allocation.
UNIT
A measure used to calculate your Account Value in a Sub-account during the
accumulation period.
VALUATION DAY
Every day the New York Stock Exchange is open for trading or any other day the
Securities and Exchange Commission requires mutual funds or unit investment
trusts to be valued.
2
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Summary of Contract Fees and Charges
Below is a summary of the fees and charges for the Annuity. Some fees and
charges are assessed against your Annuity while others are assessed against
assets allocated to the variable investment options. The fees and charges that
are assessed against the Annuity include the Contingent Deferred Sales Charge,
Transfer Fee, Tax Charge and Annual Maintenance Fee. The charges that are
assessed against the variable investment options are the mortality and expense
risk charge, the charge for administration of the Annuity, and the charge for
certain optional benefits you elect, other than the Guaranteed Minimum Income
Benefit, which is assessed against the Protected Income Value. Each underlying
mutual fund portfolio assesses a charge for investment management, other
expenses and with some mutual funds, a 12b-1 charge. The prospectus for each
underlying mutual fund provides more detailed information about the expenses for
the underlying mutual funds.
The following table provides a summary of the fees and charges you will pay if
you surrender the Annuity or transfer Account Value among investment options.
These fees and charges are described in more detail within this Prospectus.
YOUR TRANSACTION FEES AND CHARGES
(ASSESSED AGAINST THE ANNUITY)
FEE/CHARGE AMOUNT DEDUCTED
- --------------------------------------------------------------------------------------------------------
8.5%
The charge is a percentage of each applicable Purchase Payment
deducted upon surrender or withdrawal. The period during which a
particular percentage applies is measured from the Issue Date of the
Contingent Deferred Sales Charge* Annuity.
$10.00 (Currently, $15.00 maximum)
(Currently we deduct the fee after the 20th transfer each Annuity
Year. We guarantee that the number of charge free transfers
Transfer Fee per Annuity Year will never be less than 8.)
Up to 3.5% of the value that is annuitized, depending on the
requirements of the applicable jurisdiction. This charge is deducted
Tax Charge generally at the time you annuitize your contract.
* The following are the Contingent Deferred Sales Charges (as a percentage of
each applicable Purchase Payment) upon surrender or withdrawal. For purposes of
calculating this charge we consider the year following the Issue Date of your
Annuity as Year 1.
Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5+
- ----- ----- ----- ----- ------
8.5% 8.0% 7.0% 6.0% 0.0%
3
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Summary of Contract Fees and Charges continued
The following table provides a summary of the periodic fees and charges you will
pay while you own the Annuity, excluding the underlying mutual fund Portfolio
annual expenses. These fees and charges are described in more detail within this
Prospectus.
YOUR PERIODIC FEES AND CHARGES
ANNUAL FEES/CHARGES ASSESSED AGAINST THE ANNUITY
FEE/CHARGE AMOUNT DEDUCTED
- --------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee Smaller of $35 or 2% of Account Value
(Only applicable if Account Value is less than $100,000)
(Assessed annually on the Annuity's anniversary date or upon
surrender)
ANNUAL FEES/CHARGES OF THE SUB-ACCOUNTS(1)
(AS A PERCENTAGE OF THE AVERAGE DAILY NET ASSETS OF THE SUB-ACCOUNTS)
FEE/CHARGE AMOUNT DEDUCTED
- --------------------------------------------------------------------------------------------------------------------
Mortality & Expense Risk Charge (2) 1.50%
Administration Charge (2) 0.15%
Settlement Service Charge (3) 1.40% per year of the value of each Sub-account if the Owner's
beneficiary elects the Qualified Beneficiary Continuation
Option(4) ("Qualified BCO")
Total Annual Charges of the Sub-accounts 1.65% per year of the value of each Sub-account
(1.40% per year if you are a beneficiary electing the Qualified BCO)
1: These charges are deducted daily and apply to Variable Investment Options
only.
2: The combination of the Mortality and Expense Risk Charge and Administration
Charge is referred to as the "Insurance Charge" elsewhere in this Prospectus.
3: The Mortality & Expense Risk Charge and the Administration Charge do not
apply if you are a beneficiary under the Qualified Beneficiary Continuation
Option. The Settlement Service Charge applies only if your beneficiary elects
the Qualified Beneficiary Continuation Option.
4: When an Annuity is used as an IRA, 403(b) or other "qualified investment",
upon the Owner's death a beneficiary may generally elect to continue the Annuity
and receive Minimum Distributions under the Annuity instead of receiving the
death benefit in a single payment. If a beneficiary elects this option, the
beneficiary will incur the Settlement Service Charge. Please refer to the
section of this prospectus that describes the Qualified Beneficiary Continuation
Option for more detailed information about this option, including certain
restrictions and limitations that may apply.
4
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
The following table provides a summary of the fees and charges you will pay if
you elect any of the following optional benefits. Not all optional benefits may
be purchased in combination with one another. You may only elect one optional
living benefit. The optional living benefits are the Guaranteed Return Option
Plus program (and where not available, Guaranteed Return Option), the Guaranteed
Minimum Withdrawal Benefit, the Guaranteed Minimum Income Benefit and the
Lifetime Five(SM) Income Benefit. For the optional death benefits, you may elect
the Highest Anniversary Value Death Benefit or the Highest Daily Value Death
Benefit together with the Enhanced Beneficiary Protection Death Benefit, or any
of these three benefits individually, but the Combination 5% Roll-up and HAV
Death Benefit may only be purchased individually. The fees and charges and each
of the optional benefits are described in more detail within this Prospectus.
YOUR OPTIONAL BENEFIT FEES AND CHARGES
OPTIONAL
BENEFIT FEE/ TOTAL ANNUAL
OPTIONAL BENEFIT CHARGE CHARGE*
- -----------------------------------------------------------------------------------------------------------------------------------
GUARANTEED RETURN OPTION Plus(SM) (GRO Plus(SM))/GUARANTEED RETURN OPTION
We offer a program that guarantees a "return of premium" at a future date, 0.25% of average daily 1.90%;
while allowing you to allocate all or a portion of your Account Value to net assets of the Sub- 1.65% for
certain Sub-accounts. accounts Qualified BCO
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
We offer a program that guarantees your ability to withdraw amounts over 0.35% of average daily 2.00%;
time equal to an initial principal value, regardless of the impact of market net assets of the Sub- 1.75% for Qualified BCO
performance on your Account Value. accounts
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)**
We offer a program that, after a seven-year waiting period, guarantees your 0.50% per year of the 1.65% PLUS
ability to begin receiving income from your Annuity in the form of annuity average Protected 0.50% per year of
payments based on your total Purchase Payments and an annual increase of Income Value during average Protected
5% on such Purchase Payments adjusted for withdrawals (called the each year; deducted Income Value
"Protected Income Value"), regardless of the impact of market performance annually in arrears each
on your Account Value. Annuity Year
LIFETIME FIVE INCOME BENEFIT**
We offer a program that guarantees your ability to withdraw amounts equal 0.60% of average daily 2.25%
to a percentage of an initial principal value, regardless of the impact of net assets of the Sub-
market performance on your Account Value, subject to our program rules accounts
regarding the timing and amount of withdrawals.
ENHANCED BENEFICIARY PROTECTION DEATH BENEFIT**
We offer an Optional Death Benefit that provides an enhanced level of 0.25% of average 1.90%
protection for your beneficiary(ies) by providing amounts in addition to the daily net assets of
basic Death Benefit that can be used to offset federal and state taxes the Sub-accounts
payable on any taxable gains in your Annuity at the time of your death.
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT ("HAV")**
We offer an Optional Death Benefit that provides an enhanced level of 0.25% of average daily 1.90%
protection for your beneficiary(ies) by providing a death benefit equal to the net assets of the Sub-
greater of the basic Death Benefit and the Highest Anniversary Value, less accounts
proportional withdrawals.
5
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Summary of Contract Fees and Charges continued
OPTIONAL
BENEFIT FEE/ TOTAL ANNUAL
OPTIONAL BENEFIT CHARGE CHARGE*
- ----------------------------------------------------------------------------------------------------------------------
COMBINATION 5% ROLL-UP AND HAV DEATH BENEFIT**
We offer an Optional Death Benefit that provides an enhanced level of 0.50% of average daily 2.15%
protection for your beneficiary(ies) by providing the greater of the Highest net assets of the Sub-
Anniversary Value Death Benefit and a 5% annual increase on Purchase accounts
Payments adjusted for withdrawals.
HIGHEST DAILY VALUE DEATH BENEFIT ("HDV")**
We offer an Optional Death Benefit that provides an enhanced level of 0.50% of average daily 2.15%
protection for your beneficiary(ies) by providing a death benefit equal to the net assets of the Sub-
greater of the basic Death Benefit and the Highest Daily Value, less accounts
proportional withdrawals.
PLEASE REFER TO THE SECTION OF THIS PROSPECTUS THAT DESCRIBES EACH OPTIONAL
BENEFIT FOR A COMPLETE DESCRIPTION OF THE BENEFIT, INCLUDING ANY RESTRICTIONS OR
LIMITATIONS THAT MAY APPLY.
* The Total Annual Charge includes the Insurance Charge assessed against the
average daily net assets allocated to the Sub-accounts. If you elect more than
one optional benefit, the Total Annual Charge would be increased to include the
charge for each optional benefit.
** These optional benefits are not available under the Qualified BCO.
The following table provides the range (minimum and maximum) of the total
annual expenses for the underlying mutual funds ("Portfolios") as of December
31, 2004. Each figure is stated as a percentage of the underlying Portfolio's
average daily net assets.
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES
MINIMUM MAXIMUM
- -------------------------------------------------------------
Total Portfolio Operating Expense 0.63% 3.06%
The following are the investment management fees, other expenses, 12b-1 fees (if
applicable), and the total annual expenses for each underlying mutual fund
("Portfolio") as of December 31, 2004, except as noted. Each figure is stated as
a percentage of the underlying Portfolio's average daily net assets. For certain
of the underlying Portfolios, a portion of the management fee has been waived
and/or other expenses have been partially reimbursed. Any such fee waivers
and/or reimbursements have been reflected in the footnotes. The "Total Annual
Portfolio Operating Expenses" reflect the combination of the underlying
Portfolio's investment management fee, other expenses and any 12b-1 fees. The
following expenses are deducted by the underlying Portfolio before it provides
American Skandia with the daily net asset value. Any footnotes about expenses
appear after the list of all the Portfolios. The underlying Portfolio
information was provided by the underlying mutual funds and has not been
independently verified by us. See the prospectuses or statements of additional
information of the underlying Portfolios for further details. The current
prospectus and statement of additional information for the underlying Portfolios
can be obtained by calling 1-800-752-6342.
6
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS)
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
-------------------- ---------- ---------- ---- ---------
AMERICAN SKANDIA TRUST: (2,3)
AST JPMorgan International Equity 1.00% 0.13% None 1.13%
AST William Blair International Growth 1.00% 0.22% None 1.22%
AST LSV International Value(4) 1.00% 0.37% None 1.37%
AST MFS Global Equity 1.00% 0.35% None 1.35%
AST Small-Cap Growth(5) 0.90% 0.24% None 1.14%
AST DeAM Small-Cap Growth 0.95% 0.22% None 1.17%
AST Federated Aggressive Growth 0.95% 0.24% None 1.19%
AST Small-Cap Value(6) 0.90% 0.18% None 1.08%
AST DeAM Small-Cap Value 0.95% 0.33% None 1.28%
AST Goldman Sachs Mid-Cap Growth 1.00% 0.25% None 1.25%
AST Neuberger Berman Mid-Cap Growth 0.90% 0.22% None 1.12%
AST Neuberger Berman Mid-Cap Value 0.90% 0.15% None 1.05%
AST Alger All-Cap Growth 0.95% 0.22% None 1.17%
AST Gabelli All-Cap Value 0.95% 0.26% None 1.21%
AST T. Rowe Price Natural Resources 0.90% 0.26% None 1.16%
AST AllianceBernstein Large-Cap Growth(7) 0.90% 0.23% None 1.13%
AST MFS Growth 0.90% 0.20% None 1.10%
AST Marsico Capital Growth 0.90% 0.14% None 1.04%
AST Goldman Sachs Concentrated Growth 0.90% 0.17% None 1.07%
AST DeAM Large-Cap Value 0.85% 0.26% None 1.11%
AST AllianceBernstein Growth + Value 0.90% 0.32% None 1.22%
AST AllianceBernstein Core Value(8) 0.75% 0.24% None 0.99%
AST Cohen & Steers Realty 1.00% 0.22% None 1.22%
AST AllianceBernstein Managed Index 500(9) 0.60% 0.17% None 0.77%
AST American Century Income & Growth 0.75% 0.24% None 0.99%
AST AllianceBernstein Growth & Income(10) 0.75% 0.15% None 0.90%
AST Hotchkis & Wiley Large-Cap Value 0.75% 0.19% None 0.94%
AST Global Allocation(11) 0.89% 0.26% None 1.15%
AST American Century Strategic Balanced 0.85% 0.27% None 1.12%
AST T. Rowe Price Asset Allocation 0.85% 0.27% None 1.12%
AST T. Rowe Price Global Bond 0.80% 0.27% None 1.07%
AST Goldman Sachs High Yield 0.75% 0.18% None 0.93%
AST Lord Abbett Bond-Debenture 0.80% 0.22% None 1.02%
AST PIMCO Total Return Bond 0.65% 0.16% None 0.81%
AST PIMCO Limited Maturity Bond 0.65% 0.17% None 0.82%
AST Money Market 0.50% 0.13% None 0.63%
GARTMORE VARIABLE INVESTMENT TRUST:
GVIT Developing Markets 1.15% 0.38% 0.25% 1.78%
7
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Summary of Contract Fees and Charges continued
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
-------------------- ---------- ---------- ----- ---------
WELLS FARGO VARIABLE TRUST ADVANTAGE: (12)
Advantage C&B Large Cap Value 0.55% 0.39% 0.25% 1.19%
Advantage Equity Income 0.55% 0.23% 0.25% 1.03%
Advantage International Core 0.75% 0.42% 0.25% 1.42%
Advantage Small Cap Growth 0.75% 0.24% 0.25% 1.24%
Advantage Large Company Core 0.55% 0.33% 0.25% 1.13%
Advantage Large Company Growth 0.55% 0.25% 0.25% 1.05%
Advantage Asset Allocation 0.55% 0.22% 0.25% 1.02%
Advantage Total Return Bond 0.45% 0.26% 0.25% 0.96%
AIM VARIABLE INSURANCE FUNDS: (13)
AIM V.I. Dynamics Fund -- Series I shares 0.75% 0.39% None 1.14%
AIM V.I. Technology Fund -- Series I shares 0.75% 0.40% None 1.15%
AIM V.I. Health Sciences Fund -- Series I shares(14) 0.75% 0.36% None 1.11%
AIM V.I. Financial Services Fund -- Series I shares 0.75% 0.37% None 1.12%
EVERGREEN VARIABLE ANNUITY TRUST:
International Equity 0.42% 0.30% None 0.72%
Growth 0.70% 0.26% None 0.96%
Omega 0.52% 0.16% None 0.68%
PROFUND VP: (15)
Access High Yield 0.75% 1.02% 0.25% 1.98%
Bull 0.75% 0.78% 0.25% 1.78%
OTC 0.75% 0.87% 0.25% 1.87%
Large-Cap Value 0.75% 1.04% 0.25% 2.04%
Large-Cap Growth 0.75% 2.06% 0.25% 3.06%
Mid-Cap Value 0.75% 0.92% 0.25% 1.92%
Mid-Cap Growth 0.75% 0.94% 0.25% 1.94%
Small-Cap Value 0.75% 0.95% 0.25% 1.95%
Small-Cap Growth 0.75% 0.90% 0.25% 1.90%
Asia 30 0.75% 0.86% 0.25% 1.86%
Europe 30 0.75% 0.78% 0.25% 1.78%
Japan 0.75% 0.85% 0.25% 1.85%
UltraBull 0.75% 0.89% 0.25% 1.89%
UltraMid-Cap 0.75% 0.94% 0.25% 1.94%
UltraSmall-Cap 0.75% 0.94% 0.25% 1.94%
UltraOTC 0.75% 0.88% 0.25% 1.88%
Bear 0.75% 0.90% 0.25% 1.90%
Short Mid-Cap 0.75% 0.90% 0.25% 1.90%
Short Small-Cap 0.75% 1.28% 0.25% 2.28%
Short OTC 0.75% 0.86% 0.25% 1.86%
Banks 0.75% 0.98% 0.25% 1.98%
8
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
-------------------- ---------- ----------- ---- --------
PROFUND VP: (15) CONTINUED
Basic Materials 0.75% 0.96% 0.25% 1.96%
Biotechnology 0.75% 0.98% 0.25% 1.98%
Consumer Goods 0.75% 0.99% 0.25% 1.99%
Consumer Services 0.75% 1.20% 0.25% 2.20%
Financials 0.75% 0.92% 0.25% 1.92%
Health Care 0.75% 0.91% 0.25% 1.91%
Industrials 0.75% 0.99% 0.25% 1.99%
Internet 0.75% 0.94% 0.25% 1.94%
Oil & Gas 0.75% 0.92% 0.25% 1.92%
Pharmaceuticals 0.75% 0.97% 0.25% 1.97%
Precious Metals 0.75% 0.87% 0.25% 1.87%
Real Estate 0.75% 0.93% 0.25% 1.93%
Semiconductor 0.75% 0.99% 0.25% 1.99%
Technology 0.75% 0.87% 0.25% 1.87%
Telecommunications 0.75% 0.95% 0.25% 1.95%
Utilities 0.75% 0.95% 0.25% 1.95%
U.S. Government Plus 0.50% 0.86% 0.25% 1.61%
Rising Rates Opportunity 0.75% 0.75% 0.25% 1.75%
FIRST DEFINED PORTFOLIO FUND, LLC: (16, 17)
First Trust(R) 10 Uncommon Values 0.60% 0.76% 0.25% 1.61%
Target Managed VIP 0.60% 1.25% 0.25% 2.10%
The Dowsm DART 10 0.60% 1.53% 0.25% 2.38%
Global Dividend Target 15 0.60% 1.85% 0.25% 2.70%
S&P(R) Target 24 0.60% 1.58% 0.25% 2.43%
NASDAQ(R) Target 15 0.60% 1.75% 0.25% 2.60%
Value Line(R) Target 25 0.60% 1.48% 0.25% 2.33%
The Dow Target Dividend(18) 0.60% 0.62% 0.25% 1.47%
THE PRUDENTIAL SERIES FUND, INC.:
SP William Blair International Growth 0.85% 0.45% 0.25% 1.55%
(1) As noted above, shares of the Portfolios generally are purchased through
variable insurance products. Many of the Portfolios and/or their investment
advisers and/or distributors have entered into arrangements with us as the
issuer of the Annuity under which they compensate us for providing ongoing
services in lieu of the Trust providing such services. Amounts paid by a
Portfolio under those arrangements are included under "Other Expenses." For more
information see the prospectus for each underlying portfolio and, "Service Fees
payable to American Skandia," later in this prospectus.
9
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Summary of Contract Fees and Charges continued
(2) The Portfolios' total actual annual operating expenses for the year ended
December 31, 2004 were less than the amount shown in the table due to fee
waivers, reimbursement of expenses and expense offset arrangements. These
waivers, reimbursements, and offset arrangements are voluntary and may be
terminated by American Skandia Investment Services, Inc. and Prudential
Investments LLC at any time. After accounting for the waivers, reimbursements
and offset arrangements, the Portfolios' actual annual operating expenses were:
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
- -------------- ---------------------------
AST William Blair International Growth 1.11%
AST LSV International Value 1.22%
AST DeAM Small-Cap Growth 1.02%
AST DeAM Small-Cap Value 1.13%
AST Goldman Sachs Mid-Cap Growth 1.13%
AST Neuberger Berman Mid-Cap Growth 1.11%
AST Neuberger Berman Mid-Cap Value 1.04%
AST AllianceBernstein Large-Cap Growth 1.10%
AST MFS Growth 1.07%
AST Marsico Capital Growth 1.02%
AST Goldman Sachs Concentrated Growth 1.00%
AST DeAM Large-Cap Value 0.99%
AST Cohen & Steers Realty 1.11%
AST AllianceBernstein Growth & Income 0.87%
AST Hotchkis & Wiley Large-Cap Value 0.90%
AST American Century Strategic Balanced 1.09%
AST T. Rowe Price Asset Allocation 1.07%
AST Lord Abbett Bond-Debenture Portfolio 0.97%
AST PIMCO Total Return Bond 0.78%
AST PIMCO Limited Maturity Bond 0.79%
AST Money Market 0.58%
(3) Until November 18, 2004, the Trust had a Distribution Plan under Rule 12b-1
to permit an affiliate of the Trust's Investment Managers to receive brokerage
commissions in connection with purchases and sales of securities held by the
Portfolios, and to use these commissions to promote the sale of shares of the
Portfolio. The Distribution Plan was terminated effective November 18, 2004. The
total annual portfolio operating expenses do not reflect any brokerage
commissions paid pursuant to the Distribution Plan prior to the Plan's
termination.
(4) Effective November 18, 2004, LSV Asset Management became the Sub-advisor of
the Portfolio. Prior to November 18, 2004, Deutsche Asset Management, Inc.
served as Sub-advisor of the Portfolio, then named "AST DeAM International
Equity Portfolio."
(5) Effective May 1, 2005, Eagle Asset Management and Neuberger Berman
Management, Inc. became Co-Sub-advisors of the Portfolio. Prior to May 1, 2005,
State Street Research and Management Company served as Sub-advisor of the
Portfolio, then named "AST State Street Research Small-Cap Growth Portfolio."
(6) Effective November 18, 2004, Integrity Asset Management, Lee Munder Capital
Group, J.P. Morgan Fleming Asset Management became Co-Sub-advisors of the
Portfolio. Prior to November 18, 2004, GAMCO Advisors Inc. served as Sub-advisor
of the Portfolio, then named "AST Gabelli Small-Cap Value Portfolio."
(7) Effective May 1, 2005, the name of the Portfolio was changed from "AST
Alliance Growth Portfolio" to "AST AllianceBernstein Large-Cap Growth
Portfolio."
(8) Effective May 1, 2005, the name of the Portfolio was changed from "AST
Sanford Bernstein Core Value Portfolio" to "AST AllianceBernstein Core Value
Portfolio."
(9) Effective May 1, 2005, the name of the Portfolio was changed from "AST
Sanford Bernstein Managed Index 500 Portfolio" to "AST AllianceBernstein Managed
Index 500 Portfolio."
(10) Effective May 1, 2005, the name of the Portfolio was changed from "AST
Alliance Growth and Income Portfolio" to "AST AllianceBernstein Growth & Income
Portfolio."
(11) The AST Global Allocation Portfolio invests primarily in shares of other
AST Portfolios (the "Underlying Portfolios").
(a) The only management fee directly paid by the Portfolio is a 0.10% fee
paid to American Skandia Investment Services, Inc. and Prudential
Investments LLC. The management fee shown in the chart for the Portfolio
is (i) that 0.10% management fee paid by the Portfolio plus (ii) an
estimate of the management fees paid by the Underlying Portfolios, which
are borne indirectly by investors in the Portfolio. The estimate was
calculated based on the percentage of the Portfolio invested in each
Underlying Portfolio as of December 31, 2004 using the management fee
rates shown in the chart above.
(b) The expense information shown in the chart for the Portfolio reflects
(i) the expenses of the Portfolio itself plus (ii) an estimate of the
expenses paid by the Underlying Portfolios, which are borne indirectly by
investors in the Portfolio. The estimate was calculated based on the
percentage of the Portfolio invested in each Underlying Portfolio as of
December 31, 2004 using the expense rates for the Underlying Portfolios
shown in the above chart.
(c) Effective May 1, 2005, Prudential Investment LLC provides day-to-day
management of the Portfolio. Prior to May 1, 2005, Deutsche Asset
Management, Inc. served as Sub-advisor of the Portfolio, then named "AST
DeAM Global Allocation Portfolio."
10
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
(12) (a) The Adviser of Wells Fargo Variable Trust has committed through April
30, 2006 to waive fees and/or reimburse expenses to the extent necessary to
maintain the Fund's net operating expenses as shown.
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
- -------------- ---------------------------
Advantage C&B Large Cap Value 1.00%
Advantage Equity Income 1.00%
Advantage International Core 1.00%
Advantage Small Cap Growth 1.20%
Advantage Large Company Core 1.00%
Advantage Large Company Growth 1.00%
Advantage Asset Allocation 1.00%
Advantage Total Return Bond 0.90%
(b) In addition, the following name changes were made effective May 1,
2005:
OLD PORTFOLIO NAME NEW PORTFOLIO NAME
- ------------------ ------------------
Equity Value Advantage C&B Large Cap Value
Equity Income Advantage Equity Income
International Equity Advantage International Core
Small Cap Growth Advantage Small Cap Growth
Growth Advantage Large Company Core
Large Company Growth Advantage Large Company Growth
Asset Allocation Advantage Asset Allocation
Total Return Bond Advantage Total Return Bond
(13) The Fund's adviser is entitled to receive reimbursement from the Fund for
fees and expenses paid for by the Fund's adviser pursuant to expense limitation
commitments between the Fund's adviser and the Fund if such reimbursement does
not cause the Fund to exceed its then-current expense limitations and the
reimbursement is made within three years after the Fund's adviser incurred the
expense.
(14) Effective July 1, 2005, the "AIM V.I. Health Sciences Fund" will be
renamed "AIM V.I. Global Health Care Fund."
(15) ProFund Advisors LLC has contractually agreed to waive Investment Advisory
and Management Services Fees and to reimburse other expenses to the extent Total
Annual Portfolio Operating Expenses, as a percentage of average daily net
assets, exceed 1.98% (1.73% for ProFund VP U.S. Government Plus and 1.78% for
ProFund VP Rising Rates Opportunity) through December 31, 2005. After such date,
any of the expense limitations may be terminated or revised. Amounts waived or
reimbursed in a particular fiscal year may be repaid to ProFund Advisors LLC
within three years of the waiver or reimbursement to the extent that recoupment
will not cause the Portfolio's expenses to exceed any expense limitation in
place at that time. A waiver or reimbursement lowers the expense ratio and
increases overall returns to investors.
(16) The Funds' Board of Trustees reserves the right to suspend payments under
the 12b-1 Plan at any time. On May 1, 2003, 12b-1 payments were suspended for
all Funds except the First Trust 10 Uncommon Values Portfolio. Payments under
the 12b-1 Plan resumed effective May 1, 2004 for the Target Managed VIP
Portfolio, the Dow Dart 10 Portfolio, the Global Dividend Target 15 Portfolio,
the S&P Target 24 Portfolio, the Nasdaq Target 15 Portfolio and the Value Line
Target 25 Portfolio.
(17) For the period September 30, 2004 through December 31, 2007, First Trust
has contractually agreed to waive fees and reimburse expenses of the Portfolios
to limit the total annual fund operating expenses (excluding brokerage expense
and extraordinary expense) to 1.37% for the First Trust 10 Uncommon Values
Portfolio and 1.47% for each of the other Portfolios' average daily net assets.
First Trust has entered into an agreement with First Defined Portfolio Fund, LLC
that will allow First Trust to recover from the Portfolios any fees waived or
reimbursed during the three year period of January 1, 2005 through December 31,
2007. However, First Trust's ability to recover such amounts is limited to the
extent that it would not exceed the amount reimbursed or waived during such
period.
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
- -------------- ---------------------------
First Trust(R) 10 Uncommon Values 1.37%
Target Managed VIP 1.47%
S&P Target 24 1.47%
The Dow(SM) DART 10 1.47%
Value Line(R) Target 25 1.47%
Global Dividend Target 15 1.47%
Nasdaq Target 15 1.47%
Dow Target Dividend 1.47%
(18) The Dow(SM) Target Dividend Portfolio is newly organized. Accordingly,
Other Expenses and Total Annual Portfolio Operating Expenses are based on
estimated expenses for the current fiscal year.
11
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Expense Examples
These examples are designed to assist you in understanding the various expenses
you may incur with the Annuity over certain periods of time based on specific
assumptions. The examples reflect the Contingent Deferred Sales Charges (when
applicable), Annual Maintenance Fee (when applicable), Insurance Charge, and the
highest total annual portfolio operating expenses for any underlying Portfolio
offered under the product, as well as the maximum charges for the optional
benefits that are offered under the Annuity that can be elected in combination
with one another.
Below are examples showing what you would pay in expenses at the end of the
stated time periods had you invested $10,000 in the Annuity and received a 5%
annual return on assets, and elected all optional benefits available.
The examples shown assume that: (a) you only allocate Account Value to the
Sub-account with the maximum total annual portfolio operating expenses for the
underlying Portfolio (shown above), not to a Fixed Allocation; (b) the Insurance
Charge is assessed as 1.65% per year; (c) the Annual Maintenance Fee is
reflected as an asset-based charge based on an assumed average contract size;
(d) you make no withdrawals of Account Value during the period shown; (e) you
make no transfers or other transactions for which we charge a fee for during the
period shown; (f) no tax charge applies; (g) the highest total annual portfolio
operating expenses for any underlying Portfolio offered under the product
applies; and (h) the charge for each optional benefit is reflected as an
additional charge equal to 0.60% per year of the average daily net assets of the
Sub-accounts for the Lifetime Five Income Benefit and 0.50% per year of the
average daily net assets of the Sub-accounts for the Highest Daily Value Death
Benefit and 0.25% of the average daily net assets of the Sub-accounts for the
Enhanced Beneficiary Protection Death Benefit. Amounts shown in the examples are
rounded to the nearest dollar.
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 will be less than those shown if you elect a
different combination of optional benefits than indicated in the examples or if
you allocate account value to any other available sub-accounts.
Expense Examples are provided as follows: 1.) if you surrender the Annuity at
the end of the stated time period; 2.) if you annuitize at the end of the stated
time period; and 3.) if you do not surrender your Annuity. A table of
accumulation values appears in Appendix A to this prospectus.
IF YOU SURRENDER YOUR ANNUITY AT IF YOU ANNUITIZE YOUR ANNUITY AT IF YOU DO NOT SURRENDER
THE END OF THE APPLICABLE TIME PERIOD: THE END OF THE APPLICABLE TIME PERIOD: YOUR ANNUITY:
- ---------------------------------------------------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,528 $2,858 $3,613 $6,758 $763 $2,228 $3,613 $6,758 $763 $2,228 $3,613 $6,758
12
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
INVESTMENT OPTIONS
WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE PORTFOLIOS?
Each variable investment option is a Sub-account of American Skandia Life
Assurance Corporation Variable Account B (see "What are Separate Accounts" for
more detailed information). Each Sub-account invests exclusively in one
Portfolio. You should carefully read the prospectus for any Portfolio in which
you are interested. The following chart classifies each of the Portfolios based
on our assessment of their investment style (as of the date of this Prospectus).
The chart also provides a description of each Portfolio's investment objective
(in italics) and a short, summary description of their key policies to assist
you in determining which Portfolios may be of interest to you. There is no
guarantee that any underlying Portfolio will meet its investment objective.
The name of the advisor/sub-advisor for each Portfolio appears next to the
description. Those Portfolios whose name includes the prefix "AST" are
Portfolios of American Skandia Trust. The investment managers for AST are
American Skandia Investment Services, Incorporated, a Prudential Financial
Company, and Prudential Investments LLC, affiliated companies of American
Skandia. However, a sub-advisor, as noted below, is engaged to conduct
day-to-day investment decisions.
The Portfolios are not publicly traded mutual funds. They are only
available as investment options in variable annuity contracts and variable life
insurance policies issued by insurance companies, or in some cases, to
participants in certain qualified retirement plans. However, some of the
Portfolios available as Sub-accounts under the Annuity are managed by the same
portfolio advisor or sub-advisor as a retail mutual fund of the same or similar
name that the Portfolio may have been modeled after at its inception. Certain
retail mutual funds may also have been modeled after a Portfolio. While the
investment objective and policies of the retail mutual funds and the Portfolios
may be substantially similar, the actual investments will differ to varying
degrees. Differences in the performance of the funds can be expected, and in
some cases could be substantial. You should not compare the performance of a
publicly traded mutual fund with the performance of any similarly named
Portfolio offered as a Sub-account. Details about the investment objectives,
policies, risks, costs and management of the Portfolios are found in the
prospectuses for the underlying mutual funds. The current prospectus and
statement of additional information for the underlying Portfolios can be
obtained by calling 1-800-752-6342.
Effective May 1, 2004, the SP William Blair International Growth Portfolio
(formerly the SP Jennison International Growth Portfolio) is no longer offered
as a Sub-account under the Annuity, except as follows: if at any time prior to
May 1, 2004 you had any portion of your Account Value allocated to the SP
William Blair International Growth Sub-account, you may continue to allocate
Account Value and make transfers into and/or out of the SP William Blair
International Growth Sub-account, including any bank drafting, dollar cost
averaging, asset allocation and rebalancing programs. If you never had a portion
of your Account Value allocated to the SP William Blair International Growth
Sub-account prior to May 1, 2004 or if you purchase your Annuity on or after May
1, 2004, you cannot allocate Account Value to the SP William Blair International
Growth Sub-Account.
This Sub-account may be offered to new Owners at some future date;
however, at the present time, there is no intention to do so. We also reserve
the right to offer or close this Sub-account to all Owners that owned the
Annuity prior to the close date.
13
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- --------------------------------------------------------------------------------------------------------------------
INTERNATIONAL AST JPMORGAN INTERNATIONAL EQUITY: seeks long-term capital growth by J.P. Morgan
EQUITY investing in a diversified portfolio of international equity securities. The Fleming Asset
Portfolio seeks to meet its objective by investing, under normal market Management
conditions, at least 80% of its assets in a diversified portfolio of equity
securities of companies located or operating in developed non-U.S.
countries and emerging markets of the world.
INTERNATIONAL AST WILLIAM BLAIR INTERNATIONAL GROWTH: Seeks long-term capital William Blair &
EQUITY appreciation. The Portfolio invests primarily in stocks of large and Company, L.L.C.
medium-sized companies located in countries included in the Morgan
Stanley Capital International All Country World Ex-U.S. Index.
INTERNATIONAL AST LSV INTERNATIONAL VALUE (formerly AST DeAM International Equity): Deutsche Asset
EQUITY seeks capital growth. The Portfolio pursues its objective by primarily Management, Inc.
investing at least 80% of the value of its assets in the equity securities of
companies in developed non-U.S. countries that are represented in the
MSCI EAFE Index.
INTERNATIONAL AST MFS GLOBAL EQUITY: seeks capital growth. Under normal Massachusetts
EQUITY circumstances the Portfolio invests at least 80% of its assets in equity Financial Services
securities of U.S. and foreign issuers (including issuers in developing Company
countries). The Portfolio generally seeks to purchase securities of
companies with relatively large market capitalizations relative to the
market in which they are traded.
SMALL CAP AST SMALL-CAP GROWTH (FORMERLY AST STATE STREET RESEARCH SMALL- Eagle Asset
GROWTH CAP GROWTH): seeks long-term capital growth. The Portfolio pursues Management,
its objective by primarily investing in the common stocks of small- Neuberger Berman
capitalization companies. Management, Inc.
SMALL CAP AST DEAM SMALL-CAP GROWTH: seeks maximum growth of investors' Deutsche Asset
GROWTH capital from a portfolio of growth stocks of smaller companies. The Management, Inc.
Portfolio pursues its objective, under normal circumstances, by primarily
investing at least 80% of its total assets in the equity securities of small-
sized companies included in the Russell 2000 Growth(R) Index.
SMALL CAP AST FEDERATED AGGRESSIVE GROWTH: seeks capital growth. The Portfolio Federated Equity
GROWTH pursues its investment objective by investing primarily in the stocks of Management
small companies that are traded on national security exchanges, the Company of
NASDAQ stock exchange and the over-the-counter market. Pennsylvania/
Federated Global
Investment
Management Corp.
SMALL CAP AST SMALL-CAP VALUE (formerly AST Gabelli Small-Cap Value): seeks to Integrity Asset
VALUE provide long-term capital growth by investing primarily in small- Management, Lee
capitalization stocks that appear to be undervalued. The Portfolio will Munder Capital
have a non-fundamental policy to invest, under normal circumstances, at Group, J.P. Morgan
least 80% of the value of its assets in small capitalization companies. Fleming Asset
Management
14
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- --------------------------------------------------------------------------------------------------------------------
SMALL CAP AST DEAM SMALL-CAP VALUE: seeks maximum growth of investors' capital. Deutsche Asset
VALUE The Portfolio pursues its objective under normal market conditions, by Management, Inc.
primarily investing at least 80% of its total assets in the equity securities
of small-sized companies included in the Russell 2000(R) Value Index.
MID CAP AST GOLDMAN SACHS MID-CAP GROWTH: seeks long-term capital growth. Goldman Sachs
GROWTH The Portfolio pursues its investment objective by investing primarily in Asset Management,
equity securities selected for their growth potential, and normally invests L.P.
at least 80% of the value of its assets in medium capitalization
companies.
MID CAP AST NEUBERGER BERMAN MID-CAP GROWTH: seeks capital growth. Under Neuberger Berman
GROWTH normal market conditions, the Portfolio primarily invests at least 80% of Management Inc.
its net assets in the common stocks of mid-cap companies. The Sub-
advisor looks for fast growing companies that are in new or rapidly
evolving industries.
MID CAP VALUE AST NEUBERGER BERMAN MID-CAP VALUE: seeks capital growth. Under Neuberger Berman
normal market conditions, the Portfolio primarily invests at least 80% of Management Inc.
its net assets in the common stocks of mid-cap companies. Under the
Portfolio's value-oriented investment approach, the Sub-advisor looks for
well-managed companies whose stock prices are undervalued and that
may rise before other investors realize their worth.
SPECIALTY AST ALGER ALL-CAP GROWTH: seeks long-term capital growth. The Portfolio Fred Alger
invests primarily in equity securities, such as common or preferred stocks Management, Inc.
that are listed on U.S. exchanges or in the over-the-counter market. The
Portfolio may invest in the equity securities of companies of all sizes, and
may emphasize either larger or smaller companies at a given time based
on the Sub-advisor's assessment of particular companies and market
conditions.
SPECIALTY AST GABELLI ALL-CAP VALUE: seeks capital growth. The Portfolio pursues GAMCO Investors,
its objective by investing primarily in readily marketable equity securities Inc.
including common stocks, preferred stocks and securities that may be
converted at a later time into common stock. The Portfolio may invest in
the securities of companies of all sizes, and may emphasize either larger
or smaller companies at a given time based on the Sub-advisor's
assessment of particular companies and market conditions.
SPECIALTY AST T. ROWE PRICE NATURAL RESOURCES: seeks long-term capital growth T. Rowe Price
primarily through the common stocks of companies that own or develop Associates, Inc.
natural resources (such as energy products, precious metals and forest
products) and other basic commodities. The Portfolio normally invests
primarily (at least 80% of its total assets) in the common stocks of natural
resource companies whose earnings and tangible assets could benefit
from accelerating inflation.
15
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- --------------------------------------------------------------------------------------------------------------------
LARGE CAP AST ALLIANCEBERNSTEIN LARGE-CAP GROWTH (formerly AST Alliance Growth): Alliance Capital
Growth seeks long-term capital growth. The Portfolio invests at least 80% of its Management, L.P.
total assets in the equity securities of a limited number of large, carefully
selected, high-quality U.S. companies that are judged likely to achieve
superior earnings growth.
LARGE CAP AST MFS GROWTH: seeks long-term capital growth and future income. Massachusetts
GROWTH Under normal market conditions, the Portfolio invests at least 80% of its Financial Services
total assets in common stocks and related securities, such as preferred Company
stocks, convertible securities and depositary receipts, of companies that
the Sub-advisor believes offer better than average prospects for long-
term growth.
LARGE CAP AST MARSICO CAPITAL GROWTH: seeks capital growth. Income realization is Marsico Capital
GROWTH not an investment objective and any income realized on the Portfolio's Management, LLC
investments, therefore, will be incidental to the Portfolio's objective. The
Portfolio will pursue its objective by investing primarily in common stocks
of larger, more established companies.
LARGE CAP AST GOLDMAN SACHS CONCENTRATED GROWTH: seeks growth of capital in a Goldman Sachs
GROWTH manner consistent with the preservation of capital. Realization of income Asset Management,
is not a significant investment consideration and any income realized on L.P.
the Portfolio's investments, therefore, will be incidental to the Portfolio's
objective. The Portfolio will pursue its objective by investing primarily in
equity securities of companies that the Sub-advisor believes have
potential to achieve capital appreciation over the long-term.
LARGE CAP AST DEAM LARGE-CAP VALUE: seeks maximum growth of capital by Deutsche Asset
Value investing primarily in the value stocks of larger companies. The Portfolio Management, Inc.
pursues its objective, under normal market conditions, by primarily
investing at least 80% of the value of its assets in the equity securities of
large-sized companies included in the Russell 1000(R) Value Index.
LARGE CAP AST ALLIANCEBERNSTEIN GROWTH + VALUE: seeks capital growth by investing Alliance Capital
BLEND approximately 50% of its assets in growth stocks of large companies and Management, L.P.
approximately 50% of its assets in value stocks of large companies. The
Portfolio will invest primarily in common stocks of large U.S. companies
included in the Russell 1000(R) Index.
LARGE CAP AST ALLIANCEBERNSTEIN CORE VALUE (formerly AST Sanford Bernstein Core Alliance Capital
VALUE Value): seeks long-term capital growth by investing primarily in common Management, L.P.
stocks. The Sub-advisor expects that the majority of the Portfolio's assets will
be invested in the common stocks of large companies that appear to be
undervalued.
SPECIALTY AST COHEN & STEERS REALTY: seeks to maximize total return through Cohen & Steers
investment in real estate securities. The Portfolio pursues its investment Capital
objective by investing, under normal circumstances, at least 80% of its Management, Inc.
net assets in securities of real estate issuers.
16
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- --------------------------------------------------------------------------------------------------------------------
LARGE CAP AST ALLIANCEBERNSTEIN MANAGED INDEX 500 (formerly AST Sanford Alliance Capital
BLEND Bernstein Managed Index 500): seeks to outperform the S&P 500 through Management, L.P.
stock selection resulting in different weightings of common stocks
relative to the index. The Portfolio will invest, under normal
circumstances, at least 80% of its net assets in securities included
in the Standard & Poor's 500 Composite Stock Price Index.
LARGE CAP AST AMERICAN CENTURY INCOME & GROWTH: seeks capital growth with American Century
VALUE current income as a secondary objective. The Portfolio invests primarily Investment
in common stocks that offer potential for capital growth, and may, Management, Inc.
consistent with its investment objective, invest in stocks that offer
potential for current income.
LARGE CAP AST ALLIANCEBERNSTEIN GROWTH & INCOME: seeks long-term growth of Alliance Capital
VALUE capital and income while attempting to avoid excessive fluctuations in Management, L.P.
market value. The Portfolio normally will invest in common stocks (and
securities convertible into common stocks).
LARGE CAP AST HOTCHKIS & WILEY LARGE-CAP VALUE: seeks current income and Hotchkis and Wiley
VALUE long-term growth of income, as well as capital appreciation. The Portfolio Capital
invests, under normal circumstances, at least 80% of its net assets plus Management, LLC
borrowings for investment purposes in common stocks of large cap U.S.
companies that have a high cash dividend or payout yield relative to
the market.
ASSET AST GLOBAL ALLOCATION (formerly AST DeAM Global Allocation): seeks to Prudential
ALLOCATION/ obtain the highest potential total return consistent with a specified level Investments LLC
BALANCED of risk tolerance. The Portfolio seeks to achieve its investment objective
by investing in several other AST Portfolios ("Underlying Portfolios"). The
Portfolio intends its strategy of investing in combinations of Underlying
Portfolios to result in investment diversification that an investor could
otherwise achieve only by holding numerous investments.
ASSET AST AMERICAN CENTURY STRATEGIC BALANCED: seeks capital growth and American Century
ALLOCATION/ current income. The Sub-advisor intends to maintain approximately 60% Investment
BALANCED of the Portfolio's assets in equity securities and the remainder in bonds Management, Inc.
and other fixed income securities.
ASSET AST T. ROWE PRICE ASSET ALLOCATION: seeks a high level of total return by T. Rowe Price
ALLOCATION/ investing primarily in a diversified portfolio of fixed income and equity Associates, Inc.
BALANCED securities. The Portfolio normally invests approximately 60% of its total
assets in equity securities and 40% in fixed income securities. This mix
may vary depending on the Sub-advisor's outlook for the markets.
17
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST T. ROWE PRICE GLOBAL BOND: seeks to provide high current income T. Rowe Price
and capital growth by investing in high quality foreign and U.S. dollar- International, Inc.
denominated bonds. The Portfolio will invest at least 80% of its total
assets in fixed income securities, including high quality bonds issued or
guaranteed by U.S. or foreign governments or their agencies and by
foreign authorities, provinces and municipalities as well as investment
grade corporate bonds and mortgage and asset-backed securities of U.S.
and foreign issuers.
FIXED INCOME AST GOLDMAN SACHS HIGH YIELD: seeks a high level of current income Goldman Sachs
and may also consider the potential for capital appreciation. The Portfolio Asset Management,
invests, under normal circumstances, at least 80% of its net assets plus L.P.
any borrowings for investment purposes (measured at time of purchase)
("Net Assets") in high-yield, fixed-income securities that, at the time of
purchase, are non-investment grade securities.
FIXED INCOME AST LORD ABBETT BOND-DEBENTURE: seeks high current income and the Lord, Abbett & Co.
opportunity for capital appreciation to produce a high total return. To LLC
pursue its objective, the Portfolio will invest, under normal circumstances,
at least 80% of the value of its assets in fixed income securities and
normally invests primarily in high yield and investment grade debt
securities, securities convertible into common stock and preferred stocks.
FIXED INCOME AST PIMCO TOTAL RETURN BOND: seeks to maximize total return consistent Pacific Investment
with preservation of capital and prudent investment management. The Management
Portfolio will invest in a diversified portfolio of fixed-income securities Company LLC
of varying maturities. The average portfolio duration of the Portfolio (PIMCO)
generally will vary within a three- to six-year time frame based on the
Sub-advisor's forecast for interest rates.
FIXED INCOME AST PIMCO LIMITED MATURITY BOND: seeks to maximize total return Pacific Investment
consistent with preservation of capital and prudent investment Management
management. The Portfolio will invest in a diversified portfolio of fixed- Company LLC
income securities of varying maturities. The average portfolio duration of (PIMCO)
the Portfolio generally will vary within a one- to three-year time frame
based on the Sub-advisor's forecast for interest rates.
FIXED INCOME AST MONEY MARKET: seeks high current income while maintaining high Wells Capital
levels of liquidity. The Portfolio attempts to accomplish its objective by Management, Inc.
maintaining a dollar-weighted average maturity of not more than 90 days
and by investing in securities which have effective maturities of not more
than 397 days.
INTERNATIONAL GVIT DEVELOPING MARKETS: seeks long-term capital appreciation, under Gartmore Global
EQUITY normal conditions by investing at least 80% of its total assets in stocks of Asset Management
companies of any size based in the world's developing economies. Under Trust/Gartmore
normal market conditions, investments are maintained in at least six Global Partners
countries at all times and no more than 35% of total assets in any single
one of them.
18
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------
LARGE CAP ADVANTAGE C&B LARGE CAP VALUE FUND (formerly Equity Value): Seeks Wells Fargo Funds
VALUE maximum long-term total return, consistent with minimizing risk to Management, LLC
principal. The Portfolio will principally invest in large-capitalization
securities, which the Sub-advisor defines as securities of companies
with market capitalizations of $1 billion or more.
LARGE CAP ADVANTAGE EQUITY INCOME FUND (formerly Equity Income): Seeks long-term Wells Fargo Funds
VALUE capital appreciation and above-average dividend income. The Portfolio Management, LLC
invests in the common stocks of large U.S. companies with strong return
potential and above-average dividend income. The Portfolio invests
principally in securities of companies with market capitalizations of
$3 billion or more.
INTERNATIONAL ADVANTAGE INTERNATIONAL CORE FUND (formerly International Equity): Seeks Wells Fargo Funds
EQUITY long-term capital appreciation. The Portfolio will principally invest in Management, LLC
non-U.S. securities. The Portfolio will focus on companies with strong
growth potential that offer good relative values.
SMALL CAP ADVANTAGE SMALL CAP GROWTH FUND (formerly Small Cap Growth): Seeks Wells Fargo Funds
GROWTH long-term capital appreciation. The Portfolio focuses on companies that Management, LLC
the Sub-advisor believes have above-average growth potential, or that
may be involved in new or innovative products, services and processes.
LARGE CAP ADVANTAGE LARGE COMPANY CORE FUND (formerly Growth): Seeks total Wells Fargo Funds
BLEND return comprised of long-term capital appreciation and current income. Management, LLC
The Portfolio will invest at least 80% of the Fund's assets in securities of
large-capitalization companies, which are defined as those with market
capitalizations of $3 billion or more.
LARGE CAP ADVANTAGE LARGE COMPANY GROWTH FUND (formerly Large Company Wells Fargo Funds
GROWTH Growth): Seeks long-term capital appreciation. The Portfolio invests in the Management, LLC
common stocks of large U.S. companies that the Sub-advisor believes
have superior growth potential. The Portfolio invests principally in
securities of companies with market capitalizations of $3 billion or more.
ASSET ADVANTAGE ASSET ALLOCATION FUND (formerly Asset Allocation): Seeks Wells Fargo Funds
ALLOCATION/ long-term total return, consistent with reasonable risk. The Portfolio Management, LLC
BALANCED invests in equity and fixed-income securities in varying proportions, with
an emphasis on equity securities. The Portfolio does not select individual
securities for investment, rather, it buys substantially all of the securities
of various indexes to replicate such indexes.
FIXED INCOME ADVANTAGE TOTAL RETURN BOND FUND (formerly Total Return Bond): Seeks Wells Fargo Funds
total return consisting of income and capital appreciation. The Portfolio Management, LLC
invests principally in investment-grade debt securities, which include U.S.
Government obligations, corporate bonds, mortgage- and other asset-
backed securities and money market instruments. Under normal
circumstances, the Portfolio is expected to maintain an overall effective
duration between 4 and 5.5 years.
19
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------
MID CAP AIM VARIABLE INSURANCE FUNDS -- AIM V.I. DYNAMICS FUND -- SERIES I A I M Advisors,
GROWTH SHARES (formerly an INVESCO fund): seeks long-term capital growth. The Inc.
Portfolio pursues its objective by normally investing at least 65% of its
assets in common stocks of mid-sized companies that are included in the
Russell Midcap Growth(R) Index at the time of purchase.
SPECIALTY AIM VARIABLE INSURANCE FUNDS -- AIM V.I. TECHNOLOGY FUND -- SERIES I A I M Advisors,
SHARES (formerly an INVESCO fund): seeks capital growth. The Portfolio Inc.
normally invests at least 80% of its net assets in the equity securities and
equity-related instruments of companies engaged in technology-related
industries. These include, but are not limited to, various applied
technologies, hardware, software, semiconductors, telecommunications
equipment and services and service-related companies in information
technology.
SPECIALTY AIM VARIABLE INSURANCE FUNDS -- AIM V.I. HEALTH SCIENCES FUND -- A I M Advisors,
SERIES I SHARES (formerly an INVESCO fund) (Effective July 1, 2005, AIM Inc.
V.I. Health Sciences Fund will be renamed AIM V.I. Global Health Care
Fund): seeks capital growth. The Portfolio normally invests at least 80% of
its net assets in the equity securities and equity-related instruments of
companies related to health care.
SPECIALTY AIM VARIABLE INSURANCE FUNDS -- AIM V.I. FINANCIAL SERVICES FUND -- A I M Advisors,
SERIES I SHARES (formerly an INVESCO fund): seeks capital growth. The Inc.
Portfolio normally invests at least 80% of its net assets in the equity
securities and equity-related instruments of companies involved in the
financial services sector. These companies include, but are not limited to,
banks, insurance companies, investment and miscellaneous industries,
and suppliers to financial services companies.
INTERNATIONAL EVERGREEN VA INTERNATIONAL EQUITY (formerly Evergreen VA International Evergreen
EQUITY Growth): seeks long-term capital growth and secondarily, modest income. Investment
The Portfolio normally invests 80% of its assets in equity securities issued Management
by established, quality, non-U.S. companies located in countries with Company, LLC
developed markets and may purchase across all market capitalizations.
The Portfolio normally invests at least 65% of its assets in securities of
companies in at least three different countries (other than the U.S.).
SMALL CAP EVERGREEN VA GROWTH (formerly Evergreen VA Special Equity): seeks Evergreen
GROWTH long-term capital growth. The Portfolio invests at least 75% of its assets Investment
in common stocks of small- and medium-sized companies (i.e., companies Management
whose market capitalizations fall within the range of the Russell 2000(R) Company, LLC
Growth Index, at the time of purchase).
SPECIALTY EVERGREEN VA OMEGA: seeks long-term capital growth. The Portfolio Evergreen
invests primarily, and under normal conditions, substantially all of its Investment
assets in common stocks and securities convertible into common stocks Management
of U.S. companies across all market capitalizations. Company, LLC
20
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ------------------------------------------------------------------------------------------------------------------
INTERNATIONAL PROFUND VP EUROPE 30: seeks daily investment results, before fees and ProFund Advisors
EQUITY expenses, that correspond to the daily performance of the ProFunds LLC
Europe 30 Index. The ProFunds Europe 30 Index, created by ProFund
Advisors, is composed of 30 companies whose principal offices are
located in Europe and whose securities are traded on U.S. exchanges or
on the NASDAQ as depositary receipts or ordinary shares.
SPECIALTY PROFUND VP ASIA 30: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the ProFunds Asia LLC
30 Index. The ProFunds Asia 30 Index, created by ProFund Advisors, is
composed of 30 companies whose principal offices are located in the
Asia/Pacific region, excluding Japan, and whose securities are traded
on U.S. exchanges or on the NASDAQ as depository receipts or ordinary
shares.
SPECIALTY PROFUND VP JAPAN: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Nikkei 225 LLC
Stock Average. Since the Japanese markets are not open when ProFund
VP Japan values its shares, ProFund VP Japan determines its success in
meeting this investment objective by comparing its daily return on a given
day with the daily performance of related futures contracts traded in the
United States related to the Nikkei 225 Stock Average.
SPECIALTY PROFUND VP BANKS: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones LLC
U.S. Banks Index. The Dow Jones U.S. Banks Index measures the
performance of the banking industry portion of the U.S. equity market.
SPECIALTY PROFUND VP BASIC MATERIALS: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the Dow LLC
Jones U.S. Basic Materials Sector Index. The Dow Jones U.S. Basic
Materials Sector Index measures the performance of the basic materials
economic sector of the U.S. equity market.
SPECIALTY PROFUND VP BIOTECHNOLOGY: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the Dow LLC
Jones U.S. Biotechnology Index. The Dow Jones U.S. Biotechnology
Index measures the performance of the biotechnology industry portion of
the U.S. equity market.
SPECIALTY PROFUND VP CONSUMER SERVICES (formerly ProFund VP Consumer Cyclical): ProFund Advisors
seeks daily investment results, before fees and expenses, that correspond LLC
to the daily performance of the Dow Jones U.S. Consumer Services
Index. The Dow Jones U.S. Consumer Services Index measures the
performance of consumer spending in the services industry of the U.S.
equity market.
21
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP CONSUMER GOODS (formerly ProFund VP Consumer Non- ProFund Advisors
Cyclical): seeks daily investment results, before fees and expenses, that LLC
correspond to the daily performance of the Dow Jones U.S. Consumer
Goods Index. The Dow Jones U.S. Consumer Goods Index measures the
performance of consumer spending in the goods industry of the U.S.
equity market.
SPECIALTY PROFUND VP OIL & GAS (formerly ProFund VP Energy): seeks daily ProFund Advisors
investment results, before fees and expenses, that correspond to the LLC
daily performance of the Dow Jones U.S. Oil & Gas Index. The Dow
Jones U.S. Oil & Gas Sector Index measures the performance of the
energy sector of the U.S. equity market.
SPECIALTY PROFUND VP FINANCIALS (formerly ProFund VP Financial): seeks daily ProFund Advisors
investment results, before fees and expenses, that correspond to the LLC
daily performance of the Dow Jones U.S. Financials Sector Index. The
Dow Jones U.S. Financials Sector Index measures the performance of
the financial services economic sector of the U.S. equity market.
SPECIALTY PROFUND VP HEALTH CARE (formerly ProFund VP Healthcare): seeks daily ProFund Advisors
investment results, before fees and expenses, that correspond to the LLC
daily performance of the Dow Jones U.S. Health Care Index. The Dow
Jones U.S. Health Care Index measures the performance of the
healthcare economic sector of the U.S. equity market.
SPECIALTY PROFUND VP INDUSTRIALS (formerly ProFund VP Industrial): seeks daily ProFund Advisors
investment results, before fees and expenses, that correspond to the daily LLC
performance of the Dow Jones U.S. Industrials Index. The Dow Jones U.S.
Industrials Index measures the performance of the industrial economic
sector of the U.S. equity market.
SPECIALTY PROFUND VP INTERNET: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones LLC
Composite Internet Index. The Dow Jones Composite Internet Index
measures the performance of stocks in the U.S. equity markets that
generate the majority of their revenues from the Internet.
SPECIALTY PROFUND VP PHARMACEUTICALS: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the Dow LLC
Jones U.S. Pharmaceuticals Index. The Dow Jones U.S. Pharmaceuticals
Index measures the performance of the pharmaceuticals industry portion
of the U.S. equity market.
SPECIALTY PROFUND VP PRECIOUS METALS: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the Dow LLC
Jones Precious Metals Index. The Dow Jones Precious Metals Index
measures the performance of the precious metals mining industry.
22
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP REAL ESTATE: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the Dow LLC
Jones U.S. Real Estate Index. The Dow Jones U.S. Real Estate Index
measures the performance of the real estate industry portion of the U.S.
equity market.
SPECIALTY PROFUND VP SEMICONDUCTOR: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the Dow LLC
Jones U.S. Semiconductor Index. The Dow Jones U.S. Semiconductor
Index measures the performance of the semiconductor industry portion
of the U.S. equity market.
SPECIALTY PROFUND VP TECHNOLOGY: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones LLC
U.S. Technology Sector Index. The Dow Jones U.S. Technology Sector
Index measures the performance of the technology sector of the U.S.
equity market.
SPECIALTY PROFUND VP TELECOMMUNICATIONS: seeks daily investment results, before ProFund Advisors
fees and expenses, that correspond to the daily performance of the Dow LLC
Jones U.S. Telecommunications Sector Index. The Dow Jones U.S.
Telecommunications Sector Index measures the performance of the
telecommunications economic sector of the U.S. equity market.
SPECIALTY PROFUND VP UTILITIES: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones LLC
U.S. Utilities Sector Index. The Dow Jones U.S. Utilities Sector Index
measures the performance of the utilities economic sector of the U.S.
equity market.
SPECIALTY PROFUND VP BULL: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the S&P 500(R) Index. LLC
SPECIALTY PROFUND VP BEAR: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the inverse (opposite) of the daily LLC
performance of the S&P 500(R) Index. If ProFund VP Bear is successful in
meeting its objective, its net asset value should gain approximately the
same, on a percentage basis, as any decrease in the S&P 500(R) Index
when the Index declines on a given day. Conversely, its net asset value
should lose approximately the same, on a percentage basis, as any
increase in the Index when the Index rises on a given day.
23
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP ULTRABULL: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to twice (200%) the daily performance of the LLC
S&P 500(R) Index. Prior to May 1, 2003, ProFund VP UltraBull was named
"ProFund VP Bull Plus" and sought daily investment results that
corresponded to one and one-half times (150%) the daily performance of
the S&P 500(R) Index. If ProFund VP UltraBull is successful in meeting its
objective, its net asset value should gain approximately twice as much,
on a percentage basis, as the S&P 500(R) Index when the Index rises on a
given day. Conversely, its net asset value should lose approximately twice
as much, on a percentage basis, as the Index when the Index declines
on a given day.
SPECIALTY PROFUND VP OTC: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the NASDAQ-100 LLC
Index(R). "OTC" in the name of ProFund VP OTC refers to securities that do
not trade on a U.S. securities exchange registered under the Securities
Exchange Act of 1934.
SPECIALTY PROFUND VP SHORT OTC: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the inverse (opposite) of the daily LLC
performance of the NASDAQ-100 Index(R). If ProFund VP Short OTC is
successful in meeting its objective, its net asset value should gain
approximately the same, on a percentage basis, as any decrease in the
NASDAQ-100 Index(R) when the Index declines on a given day. Conversely,
its net asset value should lose approximately the same, on a percentage
basis, as any increase in the Index when the Index rises on a given day.
"OTC" in the name of ProFund VP Short OTC refers to securities that do
not trade on a U.S. securities exchange registered under the Securities
Exchange Act of 1934.
SPECIALTY PROFUND VP ULTRAOTC: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to twice (200%) the daily performance of the LLC
NASDAQ-100 Index(R). If ProFund VP UltraOTC is successful in meeting its
objective, its net asset value should gain approximately twice as much,
on a percentage basis, as the NASDAQ-100 Index(R) when the Index rises
on a given day. Conversely, its net asset value should lose approximately
twice as much, on a percentage basis, as the Index when the Index
declines on a given day. "OTC" in the name of ProFund VP UltraOTC
refers to securities that do not trade on a U.S. securities exchange
registered under the Securities Exchange Act of 1934.
MID CAP VALUE PROFUND VP MID-CAP VALUE: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the S&P LLC
MidCap 400/Barra Value Index(R). The S&P MidCap400/Barra Value Index(R)
is a float adjusted market capitalization weighted index comprised of the
stocks in the S&P MidCap 400 Index that have comparatively low price-
to-book ratios as determined before each semiannual rebalance date.
24
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ------------------------------------------------------------------------------------------------------------------
MID CAP PROFUND VP MID-CAP GROWTH: seeks daily investment results, before fees ProFund Advisors
GROWTH and expenses, that correspond to the daily performance of the S&P LLC
MidCap 400/Barra Growth Index(R). The S&P MidCap 400/Barra Growth
Index(R) is a float adjusted market capitalization weighted index comprised
of the stocks in the S&P MidCap 400 Index(R) that have comparatively
high price-to-book ratios as determined before each semiannual
rebalance date.
SPECIALTY PROFUND VP ULTRAMID-CAP: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to twice (200%) the daily performance of the LLC
S&P MidCap 400 Index(R). If ProFund VP UltraMid-Cap is successful in
meeting its objective, its net asset value should gain approximately twice
as much, on a percentage basis, as the S&P MidCap 400 Index(R) when
the Index rises on a given day. Conversely, its net asset value should lose
approximately twice as much, on a percentage basis, as the Index when
the Index declines on a given day.
SMALL CAP PROFUND VP SMALL-CAP VALUE: seeks daily investment results, before fees ProFund Advisors
VALUE and expenses, that correspond to the daily performance of the S&P LLC
SmallCap 600/Barra Value Index(R). The S&P SmallCap 600/Barra Value
Index(R) is a float adjusted market capitalization weighted index comprised
of the stocks in the S&P SmallCap 600/Barra Value Index(R) that have
comparatively low price-to-book ratios as determined before each
semiannual rebalance date.
SMALL CAP PROFUND VP SMALL-CAP GROWTH: seeks daily investment results, before ProFund Advisors
GROWTH fees and expenses, that correspond to the daily performance of the S&P LLC
SmallCap 600/Barra Growth Index(R). The S&P SmallCap 600/Barra Growth
Index(R) is a float adjusted market capitalization weighted index comprised
of the stocks in the S&P SmallCap 600/Barra Growth Index(R) that have
comparatively high price-to-book ratios as determined before each
semiannual rebalance date.
SPECIALTY PROFUND VP ULTRASMALL-CAP: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to twice (200%) the daily performance of LLC
the Russell 2000(R) Index. If ProFund VP UltraSmall-Cap is successful in
meeting its objective, its net asset value should gain approximately twice
as much, on a percentage basis, as the Russell 2000 Index(R) when the
Index rises on a given day. Conversely, its net asset value should lose
approximately twice as much, on a percentage basis, as the Index when
the Index declines on a given day.
25
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- --------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP U.S. GOVERNMENT PLUS: seeks daily investment results, before ProFund Advisors
fees and expenses, that correspond to one and one-quarter times (125%) LLC
the daily price movement of the most recently issued 30-year U.S.
Treasury bond ("Long Bond"). In accordance with its stated objective,
the net asset value of ProFund VP U.S. Government Plus generally should
decrease as interest rates rise. If ProFund VP U.S. Government Plus is
successful in meeting its objective, its net asset value should gain
approximately one and one-quarter times (125%) as much, on a
percentage basis, as any daily increase in the price of the Long Bond on
a given day. Conversely, its net asset value should lose approximately
one and one-quarter as much, on a percentage basis, as any daily
decrease in the price of the Long Bond on a given day.
SPECIALTY PROFUND VP RISING RATES OPPORTUNITY: seeks daily investment results, ProFund Advisors
before fees and expenses, that correspond to one and one-quarter times LLC
(125%) the inverse (opposite) of the daily price movement of the most
recently issued 30-year U.S. Treasury bond ("Long Bond"). In accordance
with its stated objective, the net asset value of ProFund VP Rising Rates
Opportunity generally should decrease as interest rates fall. If ProFund
VP Rising Rates Opportunity is successful in meeting its objective, its net
asset value should gain approximately one and one-quarter times as
much, on a percentage basis, as any daily decrease in the Long Bond on
a given day. Conversely, its net asset value should lose approximately
one and one-quarter times as much, on a percentage basis, as any daily
increase in the Long Bond on a given day.
LARGE CAP PROFUND VP LARGE-CAP GROWTH: seeks daily investment results, before ProFund Advisors
GROWTH fees and expenses, that correspond to the daily performance of the S&P LLC
500/Barra Growth Index(R). The S&P 500/Barra Growth Index is a float
adjusted market capitalization weighted index comprised of the stocks in
the S&P 500 Index that have comparatively high price-to-book ratios as
determined before each semiannual rebalance date.
LARGE CAP PROFUND VP LARGE-CAP VALUE: seeks daily investment results, before fees ProFund Advisors
VALUE and expenses, that correspond to the daily performance of the S&P LLC
500/Barra Value Index(R). The S&P 500/Barra Value Index is a float
adjusted market capitalization weighted index comprised of the stocks in
the S&P 500 Index that have comparatively low price-to-book ratios as
determined before each semiannual rebalance date.
SPECIALTY PROFUND VP SHORT SMALL-CAP: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the inverse (opposite) of the daily LLC
performance of the Russell 2000(R) Index. If ProFund VP Short Small-Cap
is successful in meeting its objective, its net asset value should gain
approximately the same amount, on a percentage basis, as any decrease
in the Russell 2000 Index when the Index declines on a given day.
Conversely, its net asset value should lose approximately the same
amount, on a percentage basis, as any increase in the Index when the
Index rises on a given day.
26
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ------------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP SHORT MID-CAP: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the inverse (opposite) of the daily LLC
performance of the S&P MidCap 400 Index(R). If ProFund VP Short Mid-Cap
is successful in meeting its objective, its net asset value should gain
approximately the same amount, on a percentage basis, as any decrease
in the S&P MidCap 400 Index when the Index declines on a given day.
Conversely, its net asset value should lose approximately the same
amount, on a percentage basis, as any increase in the Index when the
Index rises on a given day.
SPECIALTY ACCESS VP HIGH YIELD: seeks to provide investment results that ProFund Advisors
correspond generally to the total return of the high yield market LLC
consistent with maintaining reasonable liquidity. The Access VP High
Yield, created by ProFund Advisors, will achieve its high yield exposure
primarily through CDSs but may invest in high yield debt instruments
("junk bonds"), Interest rate swap agreements and futures contracts, and
other debt and money market instruments without limitation, consistent
with applicable regulations. Under normal market conditions, the fund will
invest at least 80% of its net assets in credit default swaps and other
financial instruments that in combination have economic characteristics
similar to the high yield debt market and/or in high yield debt securities.
The fund seeks to maintain exposure to the high yield bond markets
regardless of market conditions and without taking defensive positions.
SPECIALTY FIRST TRUST(R) 10 UNCOMMON VALUES: seeks to provide above-average capital First Trust Advisors
appreciation. The Portfolio seeks to achieve its objective by investing L.P.
primarily in the ten common stocks selected by the Investment Policy
Committee of Lehman Brothers Inc. ("Lehman Brothers") with the
assistance of the Research Department of Lehman Brothers which, in
their opinion have the greatest potential for capital appreciation during
the next year. The stocks included in the Portfolio are adjusted annually
on or about July 1st in accordance with the selections of Lehman
Brothers.
SPECIALTY TARGET MANAGED VIP: seeks to provide above-average total return. The First Trust Advisors
Portfolio seeks to achieve its objective by investing in common stocks of L.P.
the most attractive companies that are identified by a model based on six
uniquely specialized strategies -- The Dowsm DART 5, the European
Target 20, the Nasdaq(R) Target 15, the S&P Target 24, the Target Small
Cap and the Value Line(R) Target 25.
SPECIALTY THE DOWSM DART 10: seeks to provide above-average total return. The First Trust Advisors
Portfolio seeks to achieve its objective by investing in common stocks L.P.
issued by companies that are expected to provide income and to have
the potential for capital appreciation. The Portfolio invests primarily in the
common stocks of the ten companies in the DJIA that have the highest
combined dividend yields and buyback ratios on or about the applicable
stock selection date.
27
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- -------------------------------------------------------------------------------------------------------------------
SPECIALTY GLOBAL DIVIDEND TARGET 15 (formerly Global Target 15): seeks to provide First Trust Advisors
above-average total return. The Portfolio seeks to achieve its objective by L.P.
investing in common stocks issued by companies that are expected to
provide income and to have the potential for capital appreciation. The
Portfolio invests primarily in the common stocks of the companies which
are components of the DJIA, the Financial Times Industrial Ordinary
Share Index ("FT Index") and the Hang Seng Index. The Portfolio
primarily consists of common stocks of the five companies with the
lowest per share stock prices of the ten companies in each of the DJIA,
FT Index and Hang Seng Index, respectively, that have the highest
dividend yield in the respective index on or about the applicable stock
selection date.
SPECIALTY S&P(R) TARGET 24: seeks to provide above-average total return. The First Trust Advisors
Portfolio seeks to achieve its objective by investing in common stocks L.P.
issued by companies that have the potential for capital appreciation. The
Portfolio invests primarily in the common stocks of twenty-four companies
selected from a subset of the stocks included in the Standard & Poor's
500 Composite Stock Price Index(R). The subset of stocks will be taken
from each of the eight largest economic sectors of the S&P 500 Index(R)
based on the sector's market capitalization.
SPECIALTY THE DOW SM TARGET DIVIDEND seeks to provide above-average total return. First Trust Advisors
The Portfolio seeks to achieve its objective by investing in common L.P.
stocks issued by companies that are expected to provide income and to
have the potential for capital appreciation. The Portfolio invests primarily
in the 20 common stocks from the Dow Jones Select Dividend Index SM
with the best overall ranking on both the change in return on assets over
the last 12 months and price-to-book ratio as of the close of business on
or about the applicable stock selection date.
SPECIALTY VALUE LINE(R) TARGET 25: seeks to provide above-average capital First Trust Advisors
appreciation. The Portfolio seeks to achieve its objective by investing in L.P.
25 of the 100 common stocks that Value Line(R) gives a #1 ranking for
Timeliness[TM] which have recently exhibited certain positive financial
attributes as of the close of business on the applicable stock selection
date through a multi-step process.
SPECIALTY NASDAQ(R) TARGET 15: seeks to provide above-average total return. The First Trust Advisors
Portfolio seeks to achieve its objective by investing in common stocks L.P.
issued by companies that are expected to have the potential for capital
appreciation. The Portfolio invests primarily in the common stocks of
fifteen companies selected from a pre-screened subset of the stocks
included in the Nasdaq-100 Index(R) on or about the applicable stock
selection date through a multi-step process.
28
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- -------------------------------------------------------------------------------------------------------------------
INTERNATIONAL THE PRUDENTIAL SERIES FUND, INC. -- SP WILLIAM BLAIR INTERNATIONAL Prudential
EQUITY GROWTH: Seeks long-term capital appreciation. The Portfolio invests Investments LLC/
primarily in stocks of large and medium-sized companies located in William Blair &
countries included in the Morgan Stanley Capital International All Country Company, LLC
World Ex-U.S. Index. Under normal market conditions, the portfolio invests
at least 80% of its net assets in equity securities. The Portfolio's assets
normally will be allocated among not fewer than six different countries
and will not concentrate investments in any particular industry.
"Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard & Poor's 500," and
"500" are trademarks of the McGraw-Hill Companies, Inc. and have been licensed
for use by American Skandia Investment Services, Incorporated. The Portfolio is
not sponsored, endorsed, sold or promoted by Standard & Poor's and Standard &
Poor's makes no representation regarding the advisability of investing in the
Portfolio.
"Dow Jones Industrial Averagesm", "DJIAsm", "Dow Industrialssm", "Dow Jones
Select Dividend Indexsm", and "The Dow 10sm", are service marks of Dow Jones &
Company, Inc. ("Dow Jones") and have been licensed for use for certain purposes
by First Trust Advisors L.P. ("First Trust"). The portfolios, including, and in
particular the Target Managed VIP portfolio The DowSM DART 10 portfolio, and The
Dow SM Target Dividend Portfolio are not endorsed, sold or promoted by Dow
Jones, and Dow Jones makes no representation regarding the advisability of
investing in such products.
"Standard & Poor's," "S&P," "S&P 500," "Standard & Poor's 500," and "500" are
trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by
First Trust on behalf of the S&P Target 24 Portfolio and the Target Managed VIP
Portfolio. The Portfolios are not sponsored, endorsed, managed, sold or promoted
by Standard & Poor's and Standard & Poor's makes no representation regarding the
advisability of investing in the Portfolio.
"The Nasdaq 100(R)", "Nasdaq-100 Index(R)", "Nasdaq Stock Market(R)", and
"Nasdaq(R)" are trade or service marks of The Nasdaq Stock Market, Inc. (which
with its affiliates are the "Corporations") and have been licensed for use by
First Trust. The Nasdaq Target 15 Portfolio and Target Managed VIP Portfolio
have not been passed on by the Corporations as to its legality or suitability.
The Nasdaq Target 15 Portfolio and Target Managed VIP Portfolio are not issued,
endorsed, sponsored, managed, sold or promoted by the Corporations. THE
CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE NASDAQ
TARGET 15 PORTFOLIO OR THE TARGET MANAGED VIP PORTFOLIO.
"Value Line(R)," "The Value Line Investment Survey," and "Value Line
TimelinessTM Ranking System" are registered trademarks of Value Line Securities,
Inc. or Value Line Publishing, Inc. The Target Managed VIP(R) Portfolio is not
sponsored, recommended, sold or promoted by Value Line Publishing, Inc., Value
Line, Inc. or Value Line Securities, Inc. ("Value Line"). Value Line makes no
representation regarding the advisability of investing in the Portfolio.
The First Trust(R) 10 Uncommon Values portfolio is not sponsored or created by
Lehman Brothers, Inc. ("Lehman Brothers"). Lehman Brothers' only relationship to
First Trust is the licensing of certain trademarks and trade names of Lehman
Brothers and of the "10 Uncommon Values" which is determined, composed and
calculated by Lehman Brothers without regard to First Trust or the First
Trust(R) 10 Uncommon Values portfolio.
Dow Jones has no relationship to the ProFunds VP, other than the licensing of
the Dow Jones sector indices and its service marks for use in connection with
the ProFunds VP. The ProFunds VP are not sponsored, endorsed, sold, or promoted
by Standard & Poor's or NASDAQ, and neither Standard & Poor's nor NASDAQ makes
any representations regarding the advisability of investing in the ProFunds VP.
WHAT ARE THE FIXED ALLOCATIONS?
We offer Fixed Allocations of different durations during the accumulation
period. These "Fixed Allocations" earn a guaranteed fixed rate of interest for a
specified period of time, called the "Guarantee Period." In most states, we
offer Fixed Allocations with Guarantee Periods from 1 to 10 years. We may also
offer special purpose Fixed Allocations for use with certain optional investment
programs. We guarantee the fixed rate for the entire Guarantee Period. However,
if you withdraw or transfer Account Value before the end of the Guarantee
Period, we will adjust the value of your withdrawal or transfer based on a
formula, called a "Market Value Adjustment." The Market Value Adjustment can
either be positive or negative, depending on the movement of applicable interest
rates payable on Strips of the appropriate duration. Please refer to the section
entitled "How does the Market Value Adjustment Work?" for a description of the
formula along with examples of how it is calculated. You may allocate Account
Value to more than one Fixed Allocation at a time.
Fixed Allocations may not be available in all states. Availability of
Fixed Allocations is subject to change and may differ by state and by the
annuity product you purchase. Please call American Skandia at 1-800-752-6342 to
determine availability of Fixed Allocations in your state and for your annuity
product.
29
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Fees and Charges
The charges under the contracts are designed to cover, in the aggregate, our
direct and indirect costs of selling, administering and providing benefits under
the contracts. They are also designed, in the aggregate, to compensate us for
the risks of loss we assume pursuant to the contracts. If, as we expect, the
charges that we collect from the contracts exceed our total costs in connection
with the contracts, we will earn a profit. Otherwise we will incur a loss. For
example, American Skandia may make a profit on the Insurance Charge if, over
time, the actual costs of providing the guaranteed insurance obligations under
the Annuity are less than the amount we deduct for the Insurance Charge. To the
extent we make a profit on the Insurance Charge, such profit may be used for any
other corporate purpose, including payment of other expenses that American
Skandia incurs in promoting, distributing, issuing and administering the
Annuity.
The rates of certain of our charges have been set with reference to
estimates of the amount of specific types of expenses or risks that we will
incur. In most cases, this prospectus identifies such expenses or risks in the
name of the charge; however, the fact that any charge bears the name of, or is
designed primarily to defray a particular expense or risk does not mean that the
amount we collect from that charge will never be more than the amount of such
expense or risk nor does it mean that we may not also be compensated for such
expense or risk out of any other charges we are permitted to deduct by the terms
of the contract. A portion of the proceeds that American Skandia receives from
charges that apply solely to the variable investment options may include amounts
based on market appreciation of the variable investment option values.
WHAT ARE THE CONTRACT FEES AND CHARGES?
CONTINGENT DEFERRED SALES CHARGE: We do not deduct a sales charge from Purchase
Payments you make to your Annuity. However, we may deduct a CDSC if you
surrender your Annuity or when you make a partial withdrawal. The CDSC
reimburses us for expenses related to sales and distribution of the Annuity,
including commissions, marketing materials and other promotional expenses. The
CDSC is calculated as a percentage of your Purchase Payment being surrendered or
withdrawn during the applicable Annuity Year. For purposes of calculating the
CDSC, we consider the year following the Issue Date of your Annuity as Year 1.
The amount of the CDSC decreases over time, measured from the Issue Date of the
Annuity. The CDSC percentages are shown below.
YEARS 1 2 3 4 5+
- -------------------------------------------------------------------
CHARGE (%) 8.5% 8.0% 7.0% 6.0% 0.0%
THE CDSC PERIOD IS BASED ON THE ISSUE DATE OF THE ANNUITY, NOT ON THE DATE
EACH PURCHASE PAYMENT IS APPLIED TO THE ANNUITY. Purchase Payments applied to
the Annuity after the Issue Date do not have their own CDSC period. During the
first four (4) Annuity Years, under certain circumstances you can withdraw a
limited amount of Account Value without paying a CDSC. This is referred to as a
"Free Withdrawal." After four (4) complete Annuity Years, you can surrender your
Annuity or make a partial withdrawal without a CDSC being deducted from the
amount being withdrawn. Free Withdrawals are not treated as a withdrawal of
Purchase Payments for purposes of calculating the CDSC on a subsequent
withdrawal or surrender. Withdrawals of amounts greater than the maximum Free
Withdrawal amount are treated as a withdrawal of Purchase Payments and will be
assessed a CDSC during Annuity Years 1 through 4. For purposes of calculating
the CDSC on a surrender, the Purchase Payments being withdrawn may be greater
than your remaining Account Value or the amount of your withdrawal request. This
is most likely to occur if you have made prior withdrawals under the Free
Withdrawal provision or if your Account Value has declined in value due to
negative market performance.
We may waive the CDSC under certain medically-related circumstances or
when taking a Minimum Distribution from an Annuity purchased as a "qualified"
investment. Free Withdrawals, Medically-Related Surrenders and Minimum
Distributions are each explained more fully in the section entitled "Access to
Your Account Value".
TRANSFER FEE: Currently, you may make twenty (20) free transfers between
investment options each Annuity Year. We will charge $10.00 for each transfer
after the twentieth in each Annuity Year. We do not consider transfers made as
part of a dollar cost averaging, automatic rebalancing or asset allocation
program when we count the twenty free transfers. All transfers made on the same
day will be treated as one (1) transfer. Renewals or transfers of Account Value
from a Fixed Allocation at the end of its Guarantee Period are not subject to
the Transfer Fee and are not counted toward the twenty free transfers. We may
reduce the number of free transfers allowable each Annuity Year (subject to a
minimum of eight) without charging a Transfer Fee unless you make use of
electronic means to transmit your transfer requests. We may eliminate the
Transfer Fee for transfer requests transmitted electronically or through other
30
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
means that reduce our processing costs. If enrolled in any program that does not
permit transfer requests to be transmitted electronically, the Transfer Fee will
not be waived.
ANNUAL MAINTENANCE FEE: During the accumulation period we deduct an Annual
Maintenance Fee. The Annual Maintenance Fee is $35.00 or 2% of your Account
Value invested in the variable investment options, whichever is less. This fee
will be deducted annually on the anniversary of the Issue Date of your Annuity
or, if you surrender your Annuity during the Annuity Year, the fee is deducted
at the time of surrender. Currently, the Annual Maintenance Fee is only deducted
if your Account Value is less than $100,000 on the anniversary of the Issue Date
or at the time of surrender. We may increase the Annual Maintenance Fee.
However, any increase will only apply to Annuities issued after the date of the
increase.
TAX CHARGE: Several states and some municipalities charge premium taxes or
similar taxes on annuities that we are required to pay. The amount of tax will
vary from jurisdiction to jurisdiction and is subject to change. The tax charge
currently ranges up to 3 1/2% of your premium and is designed to approximate the
taxes that we are required to pay. We generally will deduct the charge at the
time the tax is imposed, but may also decide to deduct the charge from each
Purchase Payment at the time of a withdrawal or surrender of your Annuity or at
the time you elect to begin receiving annuity payments. We may assess a charge
against the Sub-accounts and the Fixed Allocations equal to any taxes which may
be imposed upon the separate accounts.
We will pay company income taxes on the taxable corporate earnings created
by this separate account product. While we may consider company income taxes
when pricing our products, we do not currently include such income taxes in the
tax charges you pay under the contract. We will periodically review the issue of
charging for these taxes and may impose a charge in the future.
In calculating our corporate income tax liability, we derive certain
corporate income tax benefits associated with the investment of company assets,
including separate account assets, which are treated as company assets under
applicable income tax law. These benefits reduce our overall corporate income
tax liability. Under current law, such benefits may include foreign tax credits
and corporate dividends received deductions. We do not pass these tax benefits
through to holders of the separate account annuity contracts because (i) the
contract owners are not the owners of the assets generating these benefits under
applicable income tax law and (ii) we do not currently include company income
taxes in the tax charges you pay under the contract.
WHAT CHARGES APPLY SOLELY TO THE VARIABLE INVESTMENT OPTIONS?
INSURANCE CHARGE: We deduct an Insurance Charge daily. The charge is assessed
against the average daily assets allocated to the Sub-accounts and is equal to
1.65% on an annual basis. The Insurance Charge is a combination of the Mortality
and Expense Risk Charge (1.50%) and the Administration Charge (0.15%). The
Insurance Charge is intended to compensate American Skandia for providing the
insurance benefits under the Annuity, including the Annuity's basic death
benefit that provides guaranteed benefits to your beneficiaries even if the
market declines and the risk that persons we guarantee annuity payments to will
live longer than our assumptions. The charge also covers administrative costs
associated with providing the Annuity benefits, including preparation of the
contract, confirmation statements, annual account statements and annual reports,
legal and accounting fees as well as various related expenses. Finally, the
charge covers the risk that our assumptions about the mortality risks and
expenses under this Annuity are incorrect and that we have agreed not to
increase these charges over time despite our actual costs. We may increase the
portion of the total Insurance Charge that is deducted for administrative costs;
however, any increase will only apply to Annuities issued after the date of the
increase.
The Insurance Charge is not deducted against assets allocated to a Fixed
Allocation. However, the amount we credit to Fixed Allocations may also reflect
similar assumptions about the insurance guarantees provided under the Annuity.
OPTIONAL BENEFITS FOR WHICH WE ASSESS A CHARGE SOLELY AGAINST THE VARIABLE
INVESTMENT OPTIONS: If you elect to purchase certain optional benefits, we will
deduct an additional charge on a daily basis solely from your Account Value
allocated to the Sub-accounts. The additional charge is included in the daily
calculation of the Unit Price for each Sub-account. We may assess charges for
other optional benefits on a different basis as described elsewhere in the
prospectus. Please refer to the sections entitled "Living Benefit Programs" and
"Death Benefit" for a description of the charge for each Optional Benefit.
31
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Fees and Charges continued
WHAT FEES AND EXPENSES ARE INCURRED BY THE PORTFOLIOS?
Each Portfolio incurs total annual operating expenses comprised of an investment
management fee, other expenses and any distribution and service (12b-1) fees
that may apply. These fees and expenses are reflected daily by each Portfolio
before it provides American Skandia with the net asset value as of the close of
business each day. More detailed information about fees and expenses can be
found in the prospectuses for the Portfolios.
WHAT CHARGES APPLY TO THE FIXED ALLOCATIONS?
No specific fee or expenses are deducted when determining the rate we credit to
a Fixed Allocation. However, for some of the same reasons that we deduct the
Insurance Charge against Account Value allocated to the Sub-accounts, we also
take into consideration mortality, expense, administration, profit and other
factors in determining the interest rates we credit to Fixed Allocations. Any
CDSC or Tax Charge applies to amounts that are taken from the variable
investment options or the Fixed Allocations. A Market Value Adjustment may also
apply to transfers, certain withdrawals, surrender or annuitization from a Fixed
Allocation.
WHAT CHARGES APPLY IF I CHOOSE AN ANNUITY PAYMENT OPTION?
If you select a fixed payment option, the amount of each fixed payment will
depend on the Account Value of your Annuity when you elected to annuitize. There
is no specific charge deducted from these payments; however, the amount of each
annuity payment reflects assumptions about our insurance expenses. If you select
a variable payment option that we may offer, then the amount of your benefits
will reflect changes in the value of your Annuity and will be subject to charges
that apply under the variable immediate annuity option. Also, a tax charge may
apply (see "Tax Charge" above).
EXCEPTIONS/REDUCTIONS TO FEES AND CHARGES
We may reduce or eliminate certain fees and charges or alter the manner in which
the particular fee or charge is deducted. For example, we may reduce the amount
of the CDSC or the length of time it applies, reduce or eliminate the amount of
the Annual Maintenance Fee or reduce the portion of the total Insurance Charge
that is deducted as an Administration Charge. Generally, these types of changes
will be based on a reduction to our sales, maintenance or administrative
expenses due to the nature of the individual or group purchasing the Annuity.
Some of the factors we might consider in making such a decision are: (a) the
size and type of group; (b) the number of Annuities purchased by an Owner; (c)
the amount of Purchase Payments or likelihood of additional Purchase Payments;
and/or (d) other transactions where sales, maintenance or administrative
expenses are likely to be reduced. We will not discriminate unfairly between
Annuity purchasers if and when we reduce any fees and charges.
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Purchasing Your Annuity
WHAT ARE OUR REQUIREMENTS FOR PURCHASING THE ANNUITY?
INITIAL PURCHASE PAYMENT: You must make a minimum initial Purchase Payment of
$10,000. However, if you decide to make payments under a systematic investment
or "bank drafting" program, we will accept a lower initial Purchase Payment
provided that, within the first Annuity Year, you make at least $10,000 in total
Purchase Payments.
Where allowed by law, we must approve any initial and additional Purchase
Payments of $1,000,000 or more. We may apply certain limitations and/or
restrictions on the Annuity as a condition of our acceptance, including limiting
the liquidity features or the Death Benefit protection provided under the
Annuity, limiting the right to make additional Purchase Payments, changing the
number of transfers allowable under the Annuity or restricting the Sub-accounts
or Fixed Allocations that are available. Other limitations and/or restrictions
may apply.
Except as noted below, Purchase Payments must be submitted by check drawn
on a U.S. bank, in U.S. dollars, and made payable to American Skandia. Purchase
Payments may also be submitted via 1035 exchange or direct transfer of funds.
Under certain circumstances, Purchase Payments may be transmitted to American
Skandia via wiring funds through your investment professional's broker-dealer
firm. Additional Purchase Payments may also be applied to your Annuity under an
arrangement called "bank drafting" where you authorize us to deduct money
directly from your bank account. We call our bank drafting program "Auto Saver".
We may reject any payment if it is received in an unacceptable form. Our
acceptance of a check is subject to our ability to collect funds.
AGE RESTRICTIONS: The Owner must be age 85 or under as of the Issue Date of the
Annuity. If the Annuity is owned jointly, the oldest of the Owners must be age
85 or under on the Issue Date. If the Annuity is owned by an entity, the
Annuitant must be age 85 or under as of the Issue Date. You should consider your
need to access your Account Value and whether the Annuity's liquidity features
will satisfy that need. If you take a distribution prior to age 59 1/2, you may
be subject to a 10% penalty in addition to ordinary income taxes on any gain.
The availability and level of protection of certain optional benefits may vary
based on the age of the Owner on the Issue Date of the Annuity or the date of
the Owner's death.
OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS: We will ask you to name the
Owner(s), Annuitant and one or more Beneficiaries for your Annuity.
- - Owner: The Owner(s) holds all rights under the Annuity. You may name up to
two Owners in which case all ownership rights are held jointly. Generally
joint owners are required to act jointly; however, if each owner provides
us with an instruction that we find acceptable, we will permit each owner
to act separately. All information and documents that we are required to
send you will be sent to the first named owner. This Annuity does not
provide a right of survivorship. Refer to the Glossary of Terms for a
complete description of the term "Owner."
- - Annuitant: The Annuitant is the person we agree to make annuity payments
to and upon whose life we continue to make such payments. You must name an
Annuitant who is a natural person. We do not accept a designation of joint
Annuitants during the accumulation period. Where allowed by law, you may
name one or more Contingent Annuitants. A Contingent Annuitant will become
the Annuitant if the Annuitant dies before the Annuity Date. Please refer
to the discussion of "Considerations for Contingent Annuitants" in the Tax
Considerations section of the Prospectus.
- - Beneficiary: The Beneficiary is the person(s) or entity you name to
receive the death benefit. Your beneficiary designation must be the exact
name of your beneficiary, not only a reference to the beneficiary's
relationship to you. For example, a designation of "surviving spouse"
would not be acceptable. If no beneficiary is named the death benefit will
be paid to you or your estate.
Your right to make certain designations may be limited if your Annuity is
to be used as an IRA or other "qualified" investment that is given beneficial
tax treatment under the Code. You should seek competent tax advice on the
income, estate and gift tax implications of your designations.
33
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Managing Your Annuity
MAY I CHANGE THE OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS?
You may change the Owner, Annuitant and Beneficiary designations by sending us a
request in writing. Upon an ownership change, any automated investment or
withdrawal programs will be canceled. The new owner must submit the applicable
program enrollment if they wish to participate in such a program. Where allowed
by law, such changes will be subject to our acceptance. Some of the changes we
will not accept include, but are not limited to:
- - a new Owner subsequent to the death of the Owner or the first of any joint
Owners to die, except where a spouse-Beneficiary has become the Owner as a
result of an Owner's death;
- - a new Annuitant subsequent to the Annuity Date;
- - for "non-qualified" investments, a new Annuitant prior to the Annuity Date
if the Annuity is owned by an entity; and
- - a change in Beneficiary if the Owner had previously made the designation
irrevocable.
SPOUSAL OWNERS/SPOUSAL BENEFICIARIES
If an Annuity is co-owned by spouses, we will assume that the sole primary
Beneficiary is the surviving spouse that was named as the co-owner unless you
elect an alternative Beneficiary designation. Unless you elect an alternative
Beneficiary designation, upon the death of either spousal Owner, the surviving
spouse may elect to assume ownership of the Annuity instead of taking the Death
Benefit payment. The Death Benefit that would have been payable will be the new
Account Value of the Annuity as of the date of due proof of death and any
required proof of a spousal relationship. As of the date the assumption is
effective, the surviving spouse will have all the rights and benefits that would
be available under the Annuity to a new purchaser of the same attained age. For
purposes of determining any future Death Benefit for the beneficiary of the
surviving spouse, the new Account Value will be considered as the initial
Purchase Payment. No CDSC will apply to the new Account Value. However, any
additional Purchase Payments applied after the date the assumption is effective
will be subject to all provisions of the Annuity, including the CDSC when
applicable.
SPOUSAL CONTINGENT ANNUITANT
If the Annuity is owned by an entity and the surviving spouse is named as a
Contingent Annuitant, upon the death of the Annuitant, the surviving spouse that
was named as the Contingent Annuitant will become the Annuitant. NO DEATH
BENEFIT IS PAYABLE UPON THE DEATH OF THE ANNUITANT. However, the Account Value
of the Annuity as of the date of due proof of death of the Annuitant (and any
required proof of the spousal relationship) will reflect the amount that would
have been payable had a Death Benefit been paid.
MAY I RETURN THE ANNUITY IF I CHANGE MY MIND?
If after purchasing your Annuity you change your mind and decide that you do not
want it, you may return it to us within a certain period of time known as a
right to cancel period. This is often referred to as a "free-look." Depending on
the state in which you purchased your Annuity and, in some states, if you
purchased the Annuity as a replacement for a prior contract, the right to cancel
period may be ten (10) days, twenty-one (21) days or longer, measured from the
time that you received your Annuity. If you return your Annuity during the
applicable period, we will refund your current Account Value plus any tax charge
deducted, and depending on your state's requirements, any applicable insurance
charges deducted. The amount may be higher or lower than the Purchase Payment(s)
applied during the right to cancel period. Where required by law, we will return
your Purchase Payment(s), or the greater of your current Account Value and the
amount of your initial Purchase Payment(s) applied during the right to cancel
period.
MAY I MAKE ADDITIONAL PURCHASE PAYMENTS?
The minimum amount that we accept as an additional Purchase Payment is $100
unless you participate in American Skandia's Systematic Investment Plan or a
periodic purchase payment program. Unless you participate in an asset allocation
program, or unless you have provided us with other specific allocation
instructions for one, more than one, or all subsequent purchase payments, we
will allocate any additional Purchase Payments you make according to your
initial purchase payment allocation instructions. If you so instruct us, we will
allocate subsequent purchase payments according to any new allocation
instructions. Purchase Payments made while you participate in an asset
allocation program will be allocated in accordance with such program. Additional
Purchase Payments may be paid at any time before the Annuity Date.
MAY I MAKE SCHEDULED PAYMENTS DIRECTLY FROM MY BANK ACCOUNT?
You can make additional Purchase Payments to your Annuity by authorizing us to
deduct money directly from your bank account and applying it to your Annuity.
This type of program is often called "bank drafting". We call our bank drafting
program "Auto
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Saver". Purchase Payments made through bank drafting may only be allocated to
the variable investment options when applied. Auto Saver allows you to invest in
your Annuity with a lower initial Purchase Payment, as long as you authorize
payments that will equal at least $10,000 during the first 12 months of your
Annuity. We may suspend or cancel bank drafting privileges if sufficient funds
are not available from the applicable financial institution on any date that a
transaction is scheduled to occur.
MAY I MAKE PURCHASE PAYMENTS THROUGH A SALARY REDUCTION PROGRAM?
These types of programs are only available with certain types of qualified
investments. If your employer sponsors such a program, we may agree to accept
periodic Purchase Payments through a salary reduction program as long as the
allocations are made only to variable investment options and the periodic
Purchase Payments received in the first year total at least $10,000.
35
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Managing Your Account Value
HOW AND WHEN ARE PURCHASE PAYMENTS INVESTED?
(See "Valuing Your Investment" for a description of our procedure for pricing
initial and subsequent Purchase Payments.)
INITIAL PURCHASE PAYMENT: Once we accept your application, we invest your
net Purchase Payment in the Annuity. The net Purchase Payment is your initial
Purchase Payment minus any tax charges that may apply. On your application we
ask you to provide us with instructions for allocating your Account Value. You
can allocate Account Value to one or more variable investment options or Fixed
Allocations.
SUBSEQUENT PURCHASE PAYMENTS: Unless you participate in an asset
allocation program, or unless you have provided us with other specific
allocation instructions for one, more than one, or all subsequent Purchase
Payments, we will allocate any additional Purchase Payments you make according
to your initial Purchase Payment allocation instructions. If you so instruct us,
we will allocate subsequent Purchase Payments according to any new allocation
instructions. Unless you tell us otherwise, Purchase Payments made while you
participate in an asset allocation program will be allocated in accordance with
such program.
HOW DO I RECEIVE A LOYALTY CREDIT?
For annuities issued on or after June 20, 2005 (subject to state availability)
we apply a Loyalty Credit to your Annuity's Account Value at the end of your
fifth Annuity year ("fifth Annuity Anniversary"). The Loyalty Credit is equal to
2.25% of total Purchase Payments made during the first four Annuity years less
the cumulative amount of withdrawals made (including the deduction of any CDSC
amounts) through the fifth Annuity Anniversary. If the total Purchase Payments
made during the first four Annuity years is less than the cumulative amount of
withdrawals made on or before the fifth Annuity Anniversary, no Loyalty Credit
will be applied to your Annuity. Also, no Loyalty Credit will be applied to your
Annuity if your Account Value is zero on the fifth Annuity Anniversary. This
would include any situation where the Annuity is still in force due to the fact
that payments are being made under an optional benefit such as Lifetime Five or
the Guaranteed Minimum Withdrawal Benefit. In addition, no Loyalty Credit will
be applied to your Annuity if before the fifth Annuity Anniversary: (i) you have
surrendered your Annuity; (ii) you have annuitized your Annuity; (iii) your
beneficiary has elected our Beneficiary Continuation Option; or (iv) we have
received due proof of your death (and there has been no spousal continuation
election made). If your spouse continues the contract under our spousal
continuance option, we will apply the Loyalty Credit to your Annuity only on the
fifth Annuity Anniversary measured from the date that we originally issued you
the Annuity. Since the Loyalty Credit is applied to the Account Value only, any
guarantees that are not based on Account Value will not reflect the Loyalty
Credit. Similarly, guarantees that are made against a loss in Account Value will
not be triggered in certain very limited circumstances where they otherwise
would have been, had no Loyalty Credit been applied to the Account Value.
HOW ARE LOYALTY CREDITS APPLIED TO MY ACCOUNT VALUE?
Any Loyalty Credit that is allocated to your Account Value on the fifth Annuity
Anniversary will be allocated to the Fixed Allocations and Variable Investment
Options in the same percentages as Purchase Payments are then being allocated to
your Annuity.
EXAMPLE OF APPLYING THE LOYALTY CREDIT
Assume you make an initial Purchase Payment of $10,000. During Contract Year
four (i.e., prior to the fourth Annuity Anniversary) you make an additional
$10,000 Purchase Payment. During the early part of Annuity Year five (i.e. prior
to the fifth Annuity Anniversary) you make a $10,000 Purchase Payment and later
in the year make a withdrawal of $5,000. The Loyalty Credit that we will apply
to your Annuity on the fifth Annuity Anniversary is equal to 2.25% of $15,000.
(This represents the $20,000 of Purchase Payments made during the first four
Annuity years minus the $5,000 withdrawal made in the fifth Annuity year. The
computation disregards the additional $10,000 Purchase Payment made in the fifth
Annuity year.) Therefore, the Loyalty Credit amount would be equal to $337.50.
ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?
During the accumulation period you may transfer Account Value between investment
options. Transfers are not subject to taxation on any gain. We currently limit
the number of Sub-accounts you can invest in at any one time to twenty (20).
However, you can invest in an unlimited number of Fixed Allocations. We may
require a minimum of $500 in each Sub-account you allocate Account Value to at
the time of any allocation or transfer. If you request a transfer and, as a
result of the transfer, there would be less than $500 in the Sub-account, we may
transfer the remaining Account Value in the Sub-account pro rata to the other
investment options to which you transferred.
We may impose specific restrictions on financial transactions (including
transfer requests) for certain Portfolios based
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
on the Portfolio's investment and/or transfer restrictions. We may do so to
conform to any present or future restriction that is imposed by any portfolio
available under this Annuity. Currently, any purchase, redemption or transfer
involving the ProFunds VP Sub-accounts must be received by us no later than one
hour prior to any announced closing of the applicable securities exchange
(generally, 3:00 p.m. Eastern time) to be processed on the current Valuation
Day. The "cut-off" time for such financial transactions involving a ProFunds VP
Sub-account will be extended to 1/2 hour prior to any announced closing
(generally, 3:30 p.m. Eastern time) for transactions submitted electronically
through American Skandia's Internet website
(www.americanskandia.prudential.com).
Currently, we charge $10.00 for each transfer after the twentieth (20th) in each
Annuity Year. Transfers made as part of a dollar cost averaging, automatic
rebalancing or asset allocation program do not count toward the twenty free
transfer limit. Renewals or transfers of Account Value from a Fixed Allocation
at the end of its Guarantee Period are not subject to the transfer charge. We
may reduce the number of free transfers allowable each Annuity Year (subject to
a minimum of eight) without charging a Transfer Fee unless you make use of
electronic means to transmit your transfer requests. We may also increase the
Transfer Fee that we charge to $15.00 for each transfer after the number of free
transfers has been used up. We may eliminate the Transfer Fee for transfer
requests transmitted electronically or through other means that reduce our
processing costs. If enrolled in any program that does not permit transfer
requests to be transmitted electronically, the Transfer Fee will not be waived.
Once you have made 20 transfers among the Sub-accounts during an Annuity Year,
we will accept any additional transfer request during that year only if the
request is submitted to us in writing with an original signature and otherwise
is in good order. For purposes of this 20 transfer limit, we (i) do not view a
facsimile transmission as a "writing", (ii) will treat multiple transfer
requests submitted on the same business day as a single transfer, and (iii) do
not count any transfer that solely involves Sub-accounts corresponding to any
ProFund Portfolio and/or the AST Money Market Portfolio, or any transfer that
involves one of our systematic programs, such as asset allocation and automated
withdrawals.
Frequent transfers among Sub-accounts in response to short-term fluctuations in
markets, sometimes called "market timing," can make it very difficult for a
Portfolio manager to manage a Portfolio's investments. Frequent transfers may
cause the Portfolio to hold more cash than otherwise necessary, disrupt
management strategies, increase transaction costs, or affect performance. The
Annuity offers Sub-accounts designed for Owners who wish to engage in frequent
transfers (i.e., one or more of the Sub-accounts corresponding to the ProFund
Portfolios and the AST Money Market Portfolio), and we encourage Owners seeking
frequent transfers to utilize those Sub-accounts.
In light of the risks posed to Owners and other investors by frequent transfers,
we reserve the right to limit the number of transfers in any Annuity Year for
all existing or new Owners and to take the other actions discussed below. We
also reserve the right to limit the number of transfers in any Annuity Year or
to refuse any transfer request for an Owner or certain Owners if: (a) we believe
that excessive transfer activity (as we define it) or a specific transfer
request or group of transfer requests may have a detrimental effect on Unit
Values or the share prices of the Portfolios; or (b) we are informed by a
Portfolio (e.g., by the Portfolio's portfolio manager) that the purchase or
redemption of shares in the Portfolio must be restricted because the Portfolio
believes the transfer activity to which such purchase and redemption relates
would have a detrimental effect on the share prices of the affected Portfolio.
Without limiting the above, the most likely scenario where either of the above
could occur would be if the aggregate amount of a trade or trades represented a
relatively large proportion of the total assets of a particular Portfolio. In
furtherance of our general authority to restrict transfers as described above,
and without limiting other actions we may take in the future, we have adopted
the following specific restrictions:
- - With respect to each Sub-account (other than the AST Money Market
Sub-account, or a Sub-account corresponding to a ProFund Portfolio), we
track amounts exceeding a certain dollar threshold that were transferred
into the Sub-account. If you transfer such amount into a particular
Sub-account, and within 30 calendar days thereafter transfer (the
"Transfer Out") all or a portion of that amount into another Sub-account,
then upon the Transfer Out, the former Sub-account becomes restricted (the
"Restricted Sub-account"). Specifically, we will not permit subsequent
transfers into the Restricted Sub-account for 90 calendar days after the
Transfer Out if the Restricted Sub-account invests in a non-international
Portfolio, or 180 calendar days after the Transfer Out if the Restricted
Sub-account invests in an international Portfolio. For purposes of this
rule, we (i) do not count transfers made in connection with one of
37
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Managing Your Account Value continued
our systematic programs, such as asset allocation and auto- mated
withdrawals; (ii) do not count any transfer that solely involves
Sub-accounts corresponding to any ProFund Portfolio and/or the AST Money
Market Portfolio; and (iii) do not categorize as a transfer the first
transfer that you make after the Issue Date, if you make that transfer
within 30 calendar days after the Issue Date. Even if an amount becomes
restricted under the foregoing rules, you are still free to redeem the
amount from your Annuity at any time.
- We reserve the right to effect exchanges on a delayed basis for all
contracts. That is, we may price an exchange involving the
Sub-accounts on the Valuation Day subsequent to the Valuation Day on
which the exchange request was received. Before implementing such a
practice, we would issue a separate written notice to Owners that
explains the practice in detail.
- If we deny one or more transfer requests under the foregoing rules,
we will inform you or your investment professional promptly of the
circumstances concerning the denial.
- Contract owners in New York who purchased their contracts prior to
March 15, 2004 are not subject to the specific restrictions outlined
in bulleted paragraphs immediately above. In addition, there are
contract owners of different variable annuity contracts that are
funded through the same Separate Account that are not subject to the
above-referenced transfer restrictions and, therefore, might make
more numerous and frequent transfers than contract owners who are
subject to such limitations. Finally there are contract owners of
other variable annuity contracts or variable life contracts that are
issued by American Skandia as well as other insurance companies that
have the same underlying mutual fund portfolios available to them.
Since some contract owners are not subject to the same transfer
restrictions, unfavorable consequences associated with such frequent
trading within the underlying mutual fund (e.g., greater portfolio
turnover, higher transaction costs, or performance or tax issues)
may affect all contract owners. Similarly, while contracts managed
by an investment professional or third party investment advisor are
subject to the restrictions on transfers between investment options
that are discussed above, if the advisor manages a number of
contracts in the same fashion unfavorable consequences may be
associated with management activity since it may involve the
movement of a substantial portion of an underlying mutual fund
asset's which may affect all contract owners invested in the
affected options. Apart from jurisdiction-specific and contract
difference in transfer restrictions, we will apply these rules
uniformly (including contracts managed by an investment professional
or third party investment advisor), and will not waive a transfer
restriction for any contract owner.
ALTHOUGH OUR TRANSFER RESTRICTIONS ARE DESIGNED TO PREVENT EXCESSIVE
TRANSFERS, THEY ARE NOT CAPABLE OF PREVENTING EVERY POTENTIAL OCCURRENCE OF
EXCESSIVE TRANSFER ACTIVITY.
DO YOU OFFER DOLLAR COST AVERAGING?
Yes. We offer Dollar Cost Averaging during the accumulation period. Dollar Cost
Averaging allows you to systematically transfer an amount periodically from one
investment option to one or more other investment options. You can choose to
transfer earnings only, principal plus earnings or a flat dollar amount. You may
elect a Dollar Cost Averaging program that transfers amounts monthly, quarterly,
semi-annually, or annually from variable investment options, or a program that
transfers amounts monthly from Fixed Allocations. By investing amounts on a
regular basis instead of investing the total amount at one time, Dollar Cost
Averaging may decrease the effect of market fluctuation on the investment of
your purchase payment. This may result in a lower average cost of units over
time. However, there is no guarantee that Dollar Cost Averaging will result in a
profit or protect against a loss in a declining market. There is no minimum
Account Value required to enroll in a Dollar Cost Averaging program and we do
not deduct a charge for participating in a Dollar Cost Averaging program.
You can Dollar Cost Average from variable investment options or Fixed
Allocations. Dollar Cost Averaging from Fixed Allocations is subject to a number
of rules that include, but are not limited to the following:
- - You may only use Fixed Allocations with Guarantee Periods of 1, 2 or 3
years.
- - You may only Dollar Cost Average earnings or principal plus earnings. If
transferring principal plus earnings, the program must be designed to last
the entire Guarantee Period for the Fixed Allocation.
- - Dollar Cost Averaging transfers from Fixed Allocations are not subject to
a Market Value Adjustment.
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
NOTE: When a Dollar Cost Averaging program is established from a Fixed
Allocation, the fixed rate of interest we credit to your Account Value is
applied to a declining balance due to the transfers of Account Value to the
Sub-accounts during the Guarantee Period. This will reduce the effective rate of
return on the Fixed Allocation over the Guarantee Period.
The Dollar Cost Averaging program is not available if you elect the
Guaranteed Return Option Plus(SM), the Guaranteed Return Option or the automatic
rebalancing programs when it involves transfers out of the Fixed Allocations and
is also not available when you have elected an asset allocation program.
DO YOU OFFER ANY AUTOMATIC REBALANCING PROGRAMS?
Yes. During the accumulation period, we offer automatic rebalancing among the
variable investment options you choose. You can choose to have your Account
Value rebalanced monthly, quarterly, semi-annually, or annually. On the
appropriate date, the variable investment options you chose are rebalanced to
the allocation percentages you requested. With automatic rebalancing, we
transfer the appropriate amount from the "overweighted" Sub-accounts to the
"underweighted" Sub-accounts to return your allocations to the percentages you
request. For example, over time the performance of the variable investment
options will differ, causing your percentage allocations to shift. Any transfer
to or from any variable investment option that is not part of your automatic
rebalancing program, will be made, however that variable investment option will
not become part of your rebalancing program unless we receive instructions from
you indicating that you would like such option to become part of the program.
There is no minimum Account Value required to enroll in automatic
rebalancing. All rebalancing transfers as part of an automatic rebalancing
program are not included when counting the number of transfers each year toward
the maximum number of free transfers. We do not deduct a charge for
participating in an automatic rebalancing program. Participation in the
Automatic Rebalancing program may be resticted if you are enrolled in certain
other optional programs.
ARE ANY ASSET ALLOCATION PROGRAMS AVAILABLE?
Yes. Certain "static asset allocation programs" are available for use with the
Annuity. These programs are considered static because once you have selected a
model portfolio, the Sub-accounts and the percentage of contract value allocated
to each Sub-account cannot be changed without your consent. The programs are
available at no additional charge. Under these programs, the Sub-account for
each asset class in each model portfolio is designated for you. Under the
programs, the values in the Sub-accounts will be rebalanced periodically back to
the indicated percentages for the applicable asset class within the model
portfolio that you have selected. For more information on the asset allocation
programs, see the Appendix entitled "Additional Information on the Asset
Allocation Programs."
Asset allocation is a sophisticated method of diversification, which
allocates assets among asset classes in order to manage investment risk and
enhance returns over the long term. However, asset allocation does not guarantee
a profit or protect against a loss. No personalized investment advice is
provided in connection with the asset allocation programs and you should not
rely on these programs as providing individualized investment recommendations to
you. The asset allocation programs do not guarantee better investment results.
We reserve the right to terminate or change the asset allocation programs at any
time. You should consult with your Investment Professional before electing any
asset allocation program.
DO YOU OFFER PROGRAMS DESIGNED TO GUARANTEE A "RETURN OF PREMIUM" AT A FUTURE
DATE?
Yes. We offer two different programs for investors who wish to invest in the
variable investment options but also wish to protect their principal, as of a
specific date in the future. They are the Balanced Investment Program and the
Guaranteed Return Option Plus(SM). (The Guaranteed Return Option Plus (GRO
Plus(SM)) is not available in all states. In some states where GRO Plus is not
available we offer the Guaranteed Return Option (GRO).) Both the Balanced
Investment Program and GRO Plus allow you to allocate a portion of your Account
Value to the available variable investment options while ensuring that your
Account Value will at least equal your contributions adjusted for withdrawals
and transfers on a specified date. Under GRO Plus, Account Value is allocated to
and maintained in Fixed Allocations to the extent we, in our sole discretion,
deem it is necessary to support our guarantee under
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Managing Your Account Value continued
the program. This differs from the Balanced Investment Program where a set
amount is allocated to a Fixed Allocation regardless of the performance of the
underlying Sub-accounts or the interest rate environment after the amount is
allocated to a Fixed Allocation. Generally, more of your Account Value will be
allocated to the variable investment options under the GRO Plus program than
under the Balanced Investment Program (although in periods of poor market
performance, low interest rates and/or as the option progresses to its maturity
date, this may not be the case). You may not want to use either of these
programs if you expect to begin taking annuity payments before the program would
be completed. In addition, as with most return of premium programs, amounts that
are available to allocate to the variable investment options may be
substantially less than they would be if you did not elect a return of premium
program. This means that, if investment experience in the variable investment
options were positive, your Account Value would grow at a slower rate than if
you did not elect a return of premium program and allocated all of your Account
Value to the variable investment options.
BALANCED INVESTMENT PROGRAM
We offer a balanced investment program where a portion of your Account Value is
allocated to a Fixed Allocation and the remaining Account Value is allocated to
the variable investment options that you select. When you enroll in the Balanced
Investment Program, you choose the duration that you wish the program to last.
This determines the duration of the Guarantee Period for the Fixed Allocation.
Based on the fixed rate for the Guarantee Period chosen, we calculate the
portion of your Account Value that must be allocated to the Fixed Allocation to
grow to a specific "principal amount" (such as your initial Purchase Payment).
We determine the amount based on the rates then in effect for the Guarantee
Period you choose. If you continue the program until the end of the Guarantee
Period and make no withdrawals or transfers, at the end of the Guarantee Period,
the Fixed Allocation will have grown to equal the "principal amount".
Withdrawals or transfers from the Fixed Allocation before the end of the
Guarantee Period will terminate the program and may be subject to a Market Value
Adjustment. You can transfer the Account Value that is not allocated to the
Fixed Allocation between any of the Sub-accounts available under the Annuity.
Account Value you allocate to the variable investment options is subject to
market fluctuations and may increase or decrease in value. We do not deduct a
charge for participating in the Balanced Investment Program.
EXAMPLE
Assume you invest $100,000. You choose a 10-year program and allocate a
portion of your Account Value to a Fixed Allocation with a 10-year
Guarantee Period. The rate for the 10-year Guarantee Period is 2.50%*.
Based on the fixed interest rate for the Guarantee Period chosen, the
factor is 0.781198 for determining how much of your Account Value will be
allocated to the Fixed Allocation. That means that $78,120 will be
allocated to the Fixed Allocation and the remaining Account Value
($21,880) will be allocated to the variable investment options. Assuming
that you do not make any withdrawals or transfers from the Fixed
Allocation, it will grow to $100,000 at the end of the Guarantee Period.
Of course we cannot predict the value of the remaining Account Value that
was allocated to the variable investment options.
The GUARANTEED RETURN OPTION PLUS (GRO PLUS) guarantees that, after a
seven-year period following commencement of the program ("maturity date") and on
each anniversary of the maturity date thereafter, your Account Value will not be
less than the Account Value on the effective date of the program. The program
also offers you the option to elect a second, enhanced guarantee amount at a
higher Account Value subject to a separate maturity period (and its
anniversaries). The GRO Plus program may be appropriate if you wish to protect a
principal amount (called the "Protected Principal Value") against market
downturns as of a specific date in the future, but also wish to exercise control
of your available Account Value among the variable investment options to
participate in market experience. Under the GRO Plus program, you give us the
right to allocate amounts to Fixed Allocations as needed to support the
guarantees provided. The available Account Value is the amount not allocated to
the Fixed Allocations to support the guarantees provided. There is a fee
associated with this program. See "Living Benefit Programs," later in this
Prospectus, for more information about this program.
MAY I GIVE MY INVESTMENT PROFESSIONAL PERMISSION TO MANAGE MY ACCOUNT VALUE?
Yes. Your Investment Professional may direct the allocation of your Account
Value and request financial transactions between investment options while you
are living, subject to our rules and unless you tell us otherwise. IF YOUR
INVESTMENT PROFESSIONAL HAS THIS AUTHORITY, WE DEEM THAT ALL TRANSACTIONS THAT
ARE DIRECTED BY YOUR INVESTMENT PROFESSIONAL WITH RESPECT TO YOUR ANNUITY HAVE
BEEN AUTHORIZED BY YOU. You must contact us
* The rate in this example is hypothetical and may not reflect the current rate
for Guarantee Periods of this duration.
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
immediately if and when you revoke such authority. We will not be responsible
for acting on instructions from your Investment Professional until we receive
notification of the revocation of such person's authority. We may also suspend,
cancel or limit these privileges at any time. We will notify you if we do.
MAY I AUTHORIZE MY THIRD PARTY INVESTMENT ADVISOR TO MANAGE MY ACCOUNT?
Yes. You may engage your own investment advisor to manage your account. These
investment advisors may be firms or persons who also are appointed by us, or
whose affiliated broker-dealers are appointed by us, as authorized sellers of
the Annuity. EVEN IF THIS IS THE CASE, HOWEVER, PLEASE NOTE THAT THE INVESTMENT
ADVISOR YOU ENGAGE TO PROVIDE ADVICE AND/OR MAKE TRANSFERS FOR YOU, IS NOT
ACTING ON OUR BEHALF, BUT RATHER IS ACTING ON YOUR BEHALF. We do not offer
advice about how to allocate your Account Value under any circumstance. As such,
we are not responsible for any recommendations such investment advisors make,
any investment models or asset allocation programs they choose to follow or any
specific transfers they make on your behalf.
Any fee that is charged by your investment advisor is in addition to the
fees and expenses that apply under your Annuity. If you authorize your
investment advisor to withdraw amounts from your Annuity (to the extent
permitted) to pay for the investment advisor's fee, as with any other withdrawal
from your Annuity, you may incur adverse tax consequences, a CDSC and/or a
Market Value Adjustment. Withdrawals to pay your investment advisor generally
will also reduce the level of various living and death benefit guarantees
provided (e.g. the withdrawals will reduce proportionately the Annuity's
guaranteed minimum death benefit.) WE ARE NOT A PARTY TO THE AGREEMENT YOU HAVE
WITH YOUR INVESTMENT ADVISOR AND DO NOT VERIFY THAT AMOUNTS WITHDRAWN FROM YOUR
ANNUITY, INCLUDING AMOUNTS WITHDRAWN TO PAY FOR THE INVESTMENT ADVISOR'S FEE,
ARE WITHIN THE TERMS OF YOUR AGREEMENT WITH YOUR INVESTMENT ADVISOR. You will,
however, receive confirmations of transactions that affect your Annuity. If your
investment advisor has also acted as your Investment Professional with respect
to the sale of your Annuity, he or she may be receiving compensation for
services provided both as an Investment Professional and investment advisor.
Alternatively, the investment advisor may compensate the Investment Professional
from whom you purchased your annuity for the referral that led you to enter into
your investment advisory relationship with the investment advisor. If you are
interested in the details about the compensation that your investment advisor
and/or your Investment Professional receive in connection with your Annuity, you
should ask them for more details.
We or an affiliate of ours may provide administrative support to licensed,
registered Investment Professionals or investment advisors who you authorize to
make financial transactions on your behalf. We may require Investment
Professionals or investment advisors, who are authorized by multiple contract
owners to make financial transactions, to enter into an administrative agreement
with American Skandia as a condition of our accepting transactions on your
behalf. The administrative agreement may impose limitations on the Investment
Professional's or investment advisor's ability to request financial transactions
on your behalf. These limitations are intended to minimize the detrimental
impact of an Investment Professional who is in a position to transfer large
amounts of money for multiple clients in a particular Portfolio or type of
portfolio or to comply with specific restrictions or limitations imposed by a
Portfolio(s) of American Skandia. Contracts managed by your Investment
Professional also are subject to the restrictions on transfers between
investment options that are discussed in the section entitled "ARE THERE
RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?". Since
transfer activity under contracts managed by an Investment Professional or third
party investment adviser may result in unfavorable consequences to all contract
owners invested in the affected options we reserve the right to limit the
investment options available to a particular Owner whose contract is managed by
the advisor or impose other transfer restrictions we deem necessary. The
administrative agreement may limit the available investment options, require
advance notice of large transactions, or impose other trading limitations on
your Investment Professional. Your Investment Professional will be informed of
all such restrictions on an ongoing basis. We may also require that your
Investment Professional transmit all financial transactions using the electronic
trading functionality available through our Internet website
(www.americanskandia.prudential.com). LIMITATIONS THAT WE MAY IMPOSE ON YOUR
INVESTMENT PROFESSIONAL OR INVESTMENT ADVISOR UNDER THE TERMS OF THE
ADMINISTRATIVE AGREEMENT DO NOT APPLY TO FINANCIAL TRANSACTIONS REQUESTED BY AN
OWNER ON THEIR OWN BEHALF, EXCEPT AS OTHERWISE DESCRIBED IN THIS PROSPECTUS.
HOW DO THE FIXED ALLOCATIONS WORK?
We credit the fixed interest rate to the Fixed Allocation throughout a set
period of time called a "Guarantee Period." Fixed Allocations currently are
offered with Guarantee Periods
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Managing Your Account Value continued
from 1 to 10 years. We may make Fixed Allocations of different durations
available in the future, including Fixed Allocations offered exclusively for use
with certain optional investment programs. Fixed Allocations may not be
available in all states and may not always be available for all Guarantee
Periods depending on market factors and other considerations.
The interest rate credited to a Fixed Allocation is the rate in effect when the
Guarantee Period begins and does not change during the Guarantee Period. The
rates are an effective annual rate of interest. We determine the interest rates
for the various Guarantee Periods. At the time that we confirm your Fixed
Allocation, we will advise you of the interest rate in effect and the date your
Fixed Allocation matures. We may change the rates we credit new Fixed
Allocations at any time. Any change in interest rate does not affect Fixed
Allocations that were in effect before the date of the change. To inquire as to
the current rates for Fixed Allocations, please call 1-800-752-6342.
A Guarantee Period for a Fixed Allocation begins:
- - when all or part of a net Purchase Payment is allocated to that particular
Guarantee Period;
- - upon transfer of any of your Account Value to a Fixed Allocation for that
particular Guarantee Period; or
- - when you "renew" a Fixed Allocation by electing a new Guarantee Period.
To the extent permitted by law, we may establish different interest rates
for Fixed Allocations offered to a class of Owners who choose to participate in
various optional investment programs we make available. This may include, but is
not limited to, Owners who elect to use Fixed Allocations under a dollar cost
averaging program (see "Do You Offer Dollar Cost Averaging?") or a balanced
investment program (see "Do you offer programs designed to guarantee a "Return
of Premium" at a future date?"). The interest rate credited to Fixed Allocations
offered to this class of purchasers may be different than those offered to other
purchasers who choose the same Guarantee Period but who do not participate in an
optional investment program. Any such program is at our sole discretion.
AMERICAN SKANDIA MAY OFFER FIXED ALLOCATIONS WITH GUARANTEE PERIODS OF 3
MONTHS OR 6 MONTHS EXCLUSIVELY FOR USE AS A SHORT-TERM FIXED ALLOCATION
("SHORT-TERM FIXED ALLOCATIONS"). SHORT-TERM FIXED ALLOCATIONS MAY ONLY BE
ESTABLISHED WITH YOUR INITIAL PURCHASE PAYMENT OR ADDITIONAL PURCHASE PAYMENTS.
YOU MAY NOT TRANSFER EXISTING ACCOUNT VALUE TO A SHORT-TERM FIXED ALLOCATION. WE
RESERVE THE RIGHT TO TERMINATE OFFERING THESE SPECIAL PURPOSE FIXED ALLOCATIONS
AT ANY TIME.
On the Maturity Date of the Short-term Fixed Allocation, the Account Value
will be transfered to the Sub-account(s) you choose at the inception of the
program. If no instructions are provided, such Account Value will be transferred
to the AST Money Market Sub-account. Short-term Fixed Allocations may not be
renewed on the Maturity Date. If you surrender the Annuity or transfer any
Account Value from the Short-term Fixed Allocation to any other investment
option before the end of the Guarantee Period, a Market Value Adjustment will
apply.
HOW DO YOU DETERMINE RATES FOR FIXED ALLOCATIONS?
We do not have a specific formula for determining the fixed interest rates for
Fixed Allocations. Generally the interest rates we offer for Fixed Allocations
will reflect the investment returns available on the types of investments we
make to support our fixed rate guarantees. These investment types may include
cash, debt securities guaranteed by the United States government and its
agencies and instrumentalities, money market instruments, corporate debt
obligations of different durations, private placements, asset-backed obligations
and municipal bonds. In determining rates we also consider factors such as the
length of the Guarantee Period for the Fixed Allocation, regulatory and tax
requirements, liquidity of the markets for the type of investments we make,
commissions, administrative and investment expenses, our insurance risks in
relation to the Fixed Allocations, general economic trends and competition. Some
of these considerations are similar to those we consider in determining the
Insurance Charge that we deduct from Account Value allocated to the
Sub-accounts.
We will credit interest on a new Fixed Allocation in an existing Annuity
at a rate not less than the rate we are then crediting to Fixed Allocations for
the same Guarantee Period selected by new Annuity purchasers in the same class.
The interest rate we credit for a Fixed Allocation is subject to a
minimum. Please refer to the Statement of Additional
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Information. In certain states the interest rate may be subject to a minimum
under state law or regulation.
HOW DOES THE MARKET VALUE ADJUSTMENT WORK?
If you transfer or withdraw Account Value from a Fixed Allocation more than 30
days before the end of its Guarantee Period, we will adjust the value of your
investment based on a formula, called a "Market Value Adjustment" or "MVA". The
amount of any Market Value Adjustment can be either positive or negative,
depending on the movement of a combination of Strip Yields on Strips and an
Option-adjusted Spread (each as defined below) between the time that you
purchase the Fixed Allocation and the time you make a transfer or withdrawal.
The Market Value Adjustment formula compares the combination of Strip Yields for
Strips and the Option-adjusted Spreads as of the date the Guarantee Period began
with the combination of Strip Yields for Strips and the Option-adjusted Spreads
as of the date the MVA is being calculated. In certain states the amount of any
Market Value Adjustment may be limited under state law or regulation. If your
Annuity is governed by the laws of that state, any Market Value Adjustment that
applies will be subject to our rules for complying with such law or regulation.
- - "Strips" are a form of security where ownership of the interest portion of
United States Treasury securities are separated from ownership of the
underlying principal amount or corpus.
- - "Strip Yields" are the yields payable on coupon Strips of United States
Treasury securities.
- - "Option-adjusted Spread" is the difference between the yields on corporate
debt securities (adjusted to disregard options on such securities) and
government debt securities of comparable duration. We currently use the
Merrill Lynch 1 to 10 year Investment Grade Corporate Bond Index of
Option-adjusted Spreads.
MVA FORMULA
The MVA formula is applied separately to each Fixed Allocation to determine the
Account Value of the Fixed Allocation on a particular date. The formula is as
follows:
[(1+I) / (1+J+0.0010)](N/365)
where:
I is the Strip Yield as of the start date of the Guarantee Period for
coupon Strips maturing at the end of the applicable Guarantee Period plus
the Option-adjusted Spread. If there are no Strips maturing at that time,
we will 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 being applied for
coupon Strips maturing at the end of the applicable Guarantee Period plus
the Option-adjusted Spread. If there are no Strips maturing at that time,
we will 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 the original Guarantee Period.
If you surrender your Annuity under the right to cancel provision, the MVA
formula is
[(1 + I)/(1 + J)](N/365)
MVA EXAMPLES
The following hypothetical examples show the effect of the MVA in determining
Account Value. Assume the following:
- - You allocate $50,000 into a Fixed Allocation (we refer to this as the
"Allocation Date" in these examples) with a Guarantee Period of 5 years
(we refer to this as the "Maturity Date" in these examples).
- - The Strip Yields for coupon Strips beginning on the Allocation Date and
maturing on the Maturity Date plus the Option-adjusted Spread is 5.50% (I
= 5.50%).
- - You make no withdrawals or transfers until you decide to withdraw the
entire Fixed Allocation after exactly three (3) years, at which point 730
days remain before the Maturity Date (N = 730).
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Managing Your Account Value continued
EXAMPLE OF POSITIVE MVA
Assume that at the time you request the withdrawal, the Strip Yields for Strips
maturing on the Maturity Date plus the Option-adjusted Spread is 4.00% (J =
4.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0010)](N/365) =
[1.055/1.041](2) = 1.027078
Interim Value = $57,881.25
Account Value after MVA = Interim Value x MVA
Factor = $59,448.56
EXAMPLE OF NEGATIVE MVA
Assume that at the time you request the withdrawal, the Strip Yields for Strips
maturing on the Maturity Date plus the Option-adjusted Spread is 7.00% (J =
7.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0010)](N/365) =
[1.055/1.071)](2) = 0.970345
Interim Value = $57,881.25
Account Value after MVA = Interim Value x MVA
Factor = $56,164.78.
WHAT HAPPENS WHEN MY GUARANTEE PERIOD MATURES?
The "Maturity Date" for a Fixed Allocation is the last day of the Guarantee
Period. Before the Maturity Date, you may choose to renew the Fixed Allocation
for a new Guarantee Period of the same or different length or you may transfer
all or part of that Fixed Allocation's Account Value to another Fixed Allocation
or to one or more Sub-accounts. We will not charge a MVA if you choose to renew
a Fixed Allocation on its Maturity Date or transfer the Account Value to one or
more variable investment options. We will notify you before the end of the
Guarantee Period about the fixed interest rates that we are currently crediting
to all Fixed Allocations that are being offered. The rates being credited to
Fixed Allocations may change before the Maturity Date.
IF YOU DO NOT SPECIFY HOW YOU WANT A FIXED ALLOCATION TO BE ALLOCATED ON
ITS MATURITY DATE, WE WILL THEN TRANSFER THE ACCOUNT VALUE OF THE FIXED
ALLOCATION TO THE AST MONEY MARKET SUB-ACCOUNT. You can then elect to allocate
the Account Value to any of the Sub-accounts or to a new Fixed Allocation.
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Access To Account Value
WHAT TYPES OF DISTRIBUTIONS ARE AVAILABLE TO ME?
During the accumulation period you can access your Account Value through
partial withdrawals, Systematic Withdrawals, and where required for tax
purposes, Minimum Distributions. You can also surrender your Annuity at any
time. We may deduct a portion of the Account Value being withdrawn or
surrendered as a CDSC. The CDSC will be assessed on the amount of Purchase
Payments, not on the Account Value at the time of the withdrawal or surrender.
If you surrender your Annuity, in addition to any CDSC, we may deduct the
Annual Maintenance Fee, any Tax Charge that applies and the charge for any
optional benefits. We may also apply a Market Value Adjustment to any Fixed
Allocations being withdrawn or surrendered. Certain amounts may be available to
you each Annuity Year that are not subject to a CDSC. These are called "Free
Withdrawals." In addition, under certain circumstances, we may waive the CDSC
for surrenders made for qualified medical reasons or for withdrawals made to
satisfy Minimum Distribution requirements. Unless you notify us differently,
withdrawals are taken pro-rata based on the Account Value in the investment
options at the time we receive your withdrawal request. Each of these types of
distributions is described more fully below.
ARE THERE TAX IMPLICATIONS FOR DISTRIBUTIONS?
(For more information, see "Tax Considerations".)
DURING THE ACCUMULATION PERIOD
A distribution during the accumulation period is deemed to come first from any
"gain" in your Annuity and second as a return of your "tax basis", if any.
Distributions from your Annuity are generally subject to ordinary income
taxation on the amount of any investment gain unless the distribution qualifies
as a non-taxable exchange or transfer. If you take a distribution prior to the
taxpayer's age 59 1/2, you may be subject to a 10% penalty in addition to
ordinary income taxes on any gain. You may wish to consult a professional tax
advisor for advice before requesting a distribution.
DURING THE ANNUITIZATION PERIOD
During the annuitization period, a portion of each annuity payment is taxed as
ordinary income at the tax rate you are subject to at the time of the payment.
The Code and regulations have "exclusionary rules" that we use to determine
what portion of each annuity payment should be treated as a return of any tax
basis you have in the Annuity. Once the tax basis in the Annuity has been
distributed, the remaining annuity payments are taxable as ordinary income. The
tax basis in the Annuity may be based on the tax-basis from a prior contract in
the case of a 1035 exchange or other qualifying transfer.
CAN I WITHDRAW A PORTION OF MY ANNUITY?
Yes, you can make a withdrawal during the accumulation period.
- - To meet liquidity needs, you can withdraw a limited amount from your
Annuity during each of Annuity Years 1-4 without a CDSC being applied. We
call this the "Free Withdrawal" amount. The Free Withdrawal amount is not
available if you choose to surrender your Annuity. Amounts withdrawn as a
Free Withdrawal do not reduce the amount of CDSC that may apply upon a
subsequent withdrawal or surrender of the Annuity. The minimum Free
Withdrawal you may request is $100.
- - You can also make withdrawals in excess of the Free Withdrawal amount. The
maximum amount that you may withdraw will depend on the Annuity's
Surrender Value as of the date we process the withdrawal request. After
any partial withdrawal, your Annuity must have a Surrender Value of at
least $1,000, or we may treat the partial withdrawal request as a request
to fully surrender your Annuity. The minimum partial withdrawal you may
request is $100.
When we determine if a CDSC applies to partial withdrawals and Systematic
Withdrawals, we will first determine what, if any, amounts qualify as a Free
Withdrawal. Those amounts are not subject to the CDSC. Partial withdrawals or
Systematic Withdrawals of amounts greater than the maximum Free Withdrawal
amount will be subject to a CDSC.
You may request a withdrawal for an exact dollar amount after deduction of
any CDSC that applies (called a "net withdrawal") or request a gross withdrawal
from which we will deduct any CDSC that applies, resulting in less money being
payable to you than the amount you requested. If you request a net withdrawal,
the amount deducted from your Account Value to pay the CDSC may also be subject
to a CDSC.
Partial withdrawals may also be available following annuitization but only
if you choose certain annuity payment options.
To request the forms necessary to make a withdrawal from your Annuity,
contact our Customer Service Team at 1-800-752-6342 or visit our Internet
Website at www.americanskandia.prudential.com.
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Access To Account Value continued
HOW MUCH CAN I WITHDRAW AS A FREE WITHDRAWAL?
ANNUITY YEAR 1-4
The maximum Free Withdrawal amount during each of Annuity Year 1 through
Annuity Year 4 (when a CDSC would otherwise apply to a partial withdrawal or
surrender of your initial Purchase Payments) is 10% of all Purchase Payments.
We may apply a Market Value Adjustment to any Fixed Allocations. Withdrawals of
amounts greater than the maximum Free Withdrawal amount are treated as a
withdrawal of Purchase Payments and will be assessed a CDSC during Annuity
Years 1 through 4. If, during Annuity Years 1 through 4, all Purchase Payments
withdrawn are subject to a CDSC, then any subsequent withdrawals will be
withdrawn from any gain in the Annuity. If you do not make a Free Withdrawal
during an Annuity Year, you are not allowed to carry over the Free Withdrawal
amount to the next Annuity Year.
ANNUITY YEAR 5+
After Annuity Year 4, you can surrender your Annuity or make a partial
withdrawal without a CDSC being deducted from the amount being withdrawn.
NOTE: Amounts that you have withdrawn as a Free Withdrawal will not reduce
the amount of any CDSC that we deduct if, during the first four (4) Annuity
Years, you make a partial withdrawal or choose to surrender the Annuity.
EXAMPLES
1. Assume you make an initial Purchase Payment of $10,000 and make no
additional Purchase Payments. The maximum Free Withdrawal amount during
each of the first four Annuity Years would be 10% of $10,000, or $1,000.
2. Assume you make an initial Purchase Payment of $10,000 and make an
additional Purchase Payment of $5,000 in Annuity Year 2. The maximum Free
Withdrawal amount during Annuity Year 3 and 4 would be 10% of $15,000, or
$1,500. From Annuity Year 5 and thereafter, you can surrender your Annuity
or make a partial withdrawal without a CDSC being deducted from the amount
being withdrawn.
3. Assume you make an initial Purchase Payment of $10,000 and take a Free
Withdrawal of $500 in Annuity Year 2 and $1,000 in Annuity Year 3. If you
surrender your Annuity in Annuity Year 4, the CDSC will be assessed
against the initial Purchase Payment amount ($10,000), not the amount of
Purchase Payments reduced by the amounts that were withdrawn under the
Free Withdrawal provision.
IS THERE A CHARGE FOR A PARTIAL WITHDRAWAL?
A CDSC may be assessed against a partial withdrawal during the first four (4)
Annuity Years. Whether a CDSC applies and the amount to be charged depends on
whether the Partial Withdrawal exceeds any Free Withdrawal amount and, if so,
the number of years that have elapsed since the Issue Date of the Annuity.
1. If you request a partial withdrawal, we determine if the amount you
requested is available as a Free Withdrawal (in which case it would not be
subject to a CDSC);
2. If the amount requested exceeds the available Free Withdrawal amount, we
determine if a CDSC will apply to the partial withdrawal based on the
number of years that have elapsed since the Annuity was issued. The
maximum Free Withdrawal amount during each of Annuity Years 1 through 4 is
10% of all Purchase Payments. Withdrawals of amounts greater than the
maximum Free Withdrawal amount are treated as a withdrawal of Purchase
Payments and will be assessed a CDSC. If, during Annuity Years 1 through
4, all Purchase Payments are withdrawn subject to a CDSC, then any
subsequent withdrawals will be withdrawn from any gain in the Annuity.
CAN I MAKE PERIODIC WITHDRAWALS FROM THE ANNUITY DURING THE ACCUMULATION PERIOD?
Yes. We call these "Systematic Withdrawals." You can receive Systematic
Withdrawals of earnings only, principal plus earnings or a flat dollar amount.
Systematic Withdrawals during the first four (4) Annuity Years may be subject to
a CDSC. We will determine whether a CDSC applies and the amount in the same way
as we would for a Partial Withdrawal.
Systematic Withdrawals can be made from Account Value allocated to the
variable investment options or Fixed Allocations. Generally, Systematic
Withdrawals from Fixed Allocations are limited to earnings accrued after the
program of Systematic Withdrawals begins, or payments of fixed dollar amounts
that do not exceed such earnings. Systematic Withdrawals are available on a
monthly, quarterly, semi-annual or annual basis. The Surrender Value of your
Annuity must be at least $20,000 before we will allow you to begin a program of
Systematic Withdrawals.
The minimum amount for each Systematic Withdrawal is $100. If any
scheduled Systematic Withdrawal is for less than $100 (which may occur under a
program that provides payment of an amount equal to the earnings in the annuity
for the
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
period requested), we may postpone the withdrawal and add the expected amount to
the amount that is to be withdrawn on the next scheduled Systematic Withdrawal.
DO YOU OFFER A PROGRAM FOR WITHDRAWALS UNDER SECTION 72(t) OF THE INTERNAL
REVENUE CODE?
Yes. If your Annuity is used as a funding vehicle for certain retirement plans
that receive special tax treatment under Sections 401, 403(b) or 408 of the
Code, Section 72(t) of the Code may provide an exception to the 10% penalty tax
on distributions made prior to age 59 1/2 if you elect to receive distributions
as a series of "substantially equal periodic payments". Distributions received
under this provision in any Annuity Year that exceed the maximum amount
available as a free withdrawal will be subject to a CDSC. We may apply a Market
Value Adjustment to any Fixed Allocations. To request a program that complies
with Section 72(t), you must provide us with certain required information in
writing on a form acceptable to us. We may require advance notice to allow us
to calculate the amount of 72(t) withdrawals. The Surrender Value of your
Annuity must be at least $20,000 before we will allow you to begin a program
for withdrawals under Section 72(t). The minimum amount for any such withdrawal
is $100.
You may also annuitize your contract and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments before age 59 1/2 that are not subject to the 10% penalty.
WHAT ARE MINIMUM DISTRIBUTIONS AND WHEN WOULD I NEED TO MAKE THEM?
(See "Tax Considerations" for a further discussion of Minimum Distributions.)
Minimum Distributions are a type of Systematic Withdrawal we allow to meet
distribution requirements under Sections 401, 403(b) or 408 of the Code. Under
the Code, you may be required to begin receiving periodic amounts from your
Annuity. In such case, we will allow you to make Systematic Withdrawals in
amounts that satisfy the minimum distribution rules under the Code. We do not
assess a CDSC on Minimum Distributions from your Annuity if you are required by
law to take such Minimum Distributions from your Annuity at the time it is
taken. However, a CDSC may be assessed on that portion of a Systematic
Withdrawal that is taken to satisfy the minimum distribution requirements in
relation to other savings or investment plans under other qualified retirement
plans not maintained with American Skandia.
The amount of the required Minimum Distribution for your particular
situation may depend on other annuities, savings or investments. We will only
calculate the amount of your required Minimum Distribution based on the value of
your Annuity. We require three (3) days advance written notice to calculate and
process the amount of your payments. You may elect to have Minimum Distributions
paid out monthly, quarterly, semi-annually or annually. The $100 minimum amount
that applies to Systematic Withdrawals applies to monthly Minimum Distributions
but does not apply to Minimum Distributions taken out on a quarterly,
semi-annual or annual basis.
You may also annuitize your contract and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments and satisfying the Minimum Distribution requirements under the Code.
CAN I SURRENDER MY ANNUITY FOR ITS VALUE?
Yes. During the accumulation period you can surrender your Annuity at any time.
Upon surrender, you will receive the Surrender Value. Upon surrender of your
Annuity, you will no longer have any rights under the Annuity.
For purposes of calculating the CDSC on surrender, the Purchase Payments
being withdrawn may be greater than your remaining Account Value or the amount
of your withdrawal request. This is most likely to occur if you have made prior
withdrawals under the Free Withdrawal provision or if your Account Value has
declined in value due to negative market performance. We may apply a Market
Value Adjustment to any Fixed Allocations.
Under certain annuity payment options, you may be allowed to surrender
your Annuity for its then current value.
To request the forms necessary to surrender your Annuity, contact our
Customer Service Team at 1-800-752-6342 or visit our Internet Website at
www.americanskandia.prudential.com.
WHAT IS A MEDICALLY-RELATED SURRENDER AND HOW DO I QUALIFY?
Where permitted by law, you may request to surrender your Annuity prior to the
Annuity Date without application of any CDSC upon occurrence of a
medically-related "Contingency Event". We may apply a Market Value Adjustment to
any Fixed Allocations. The amount payable will be your Account Value.
This waiver of any applicable CDSC is subject to our rules, including but
not limited to the following:
- - the Annuitant must have been named or any change of Annuitant must have
been accepted by us, prior to the
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Access To Account Value continued
"Contingency Event" described below in order to qualify for a
medically-related surrender.
- - the Annuitant must be alive as of the date we pay the proceeds of such
surrender request;
- if the Owner is one or more natural persons, all such Owners must
also be alive at such time;
- we must receive satisfactory proof of the Annuitant's confinement in
a Medical Care Facility or Fatal Illness in writing on a form
satisfactory to us; and
- this benefit is not available if the total Purchase Payments
received exceed $500,000 for all annuities issued by us with this
benefit where the same person is named as Annuitant.
A "Contingency Event" occurs if the Annuitant is:
- - first confined in a "Medical Care Facility" while your Annuity is in force
and remains confined for at least 90 days in a row; or
- - first diagnosed as having a "Fatal Illness" while your Annuity is in
force.
The definitions of "Medical Care Facility" and "Fatal Illness," as well as
additional terms and conditions, are provided in your Annuity. Specific details
and definitions in relation to this benefit may differ in certain jurisdictions.
WHAT TYPES OF ANNUITY OPTIONS ARE AVAILABLE?
We currently make annuity options available that provide fixed annuity
payments, variable payments or adjustable payments. Fixed options provide the
same amount with each payment. Variable options generally provide a payment
which may increase or decrease depending on the investment performance of the
Sub-accounts. However, currently, we also make a variable payment option that
has a guarantee feature. Adjustable options provide a fixed payment that is
periodically adjusted based on current interest rates. WE DO NOT GUARANTEE TO
MAKE ANY ANNUITY PAYMENT OPTIONS AVAILABLE IN THE FUTURE OTHER THAN THOSE FIXED
ANNUITIZATION OPTIONS GUARANTEED IN YOUR ANNUITY. Please refer to the
"Guaranteed Minimum Income Benefit" and the "Lifetime Five Income Benefit"
under "Living Benefits" below for a description of annuity options that are
available when you elect these benefits. For additional information on annuity
payment options you may request a Statement of Additional Information.
When you purchase an Annuity, or at a later date, you may choose an
Annuity Date, an annuity option and the frequency of annuity payments. You may
change your choices before the Annuity Date under the terms of your contract. A
maximum Annuity Date may be required by law. The Annuity Date may depend on the
annuity option you choose. Certain annuity options may not be available
depending on the age of the Annuitant.
Certain of these annuity options may be available to Beneficiaries who
choose to receive the Death Benefit proceeds as a series of payments instead of
a lump sum payment.
OPTION 1
PAYMENTS FOR LIFE: Under this option, income is payable periodically until the
death of the "key life". The "key life" (as used in this section) is the person
or persons upon whose life annuity payments are based. No additional annuity
payments are made after the death of the key life. Since no minimum number of
payments is guaranteed, this option offers the largest amount of periodic
payments of the life contingent annuity options. It is possible that only one
payment will be payable if the death of the key life occurs before the date the
second payment was due, and no other payments nor death benefits would be
payable. This Option is currently available on a fixed or variable basis. Under
this option, you cannot make a partial or full surrender of the annuity.
OPTION 2
PAYMENTS BASED ON JOINT LIVES: Under this option, income is payable periodically
during the joint lifetime of two key lives, and thereafter during the remaining
lifetime of the survivor, ceasing with the last payment prior to the survivor's
death. No minimum number of payments is guaranteed under this option. It is
possible that only one payment will be payable if the death of all the key lives
occurs before the date the second payment was due, and no other payments or
death benefits would be payable. This Option is currently available on a fixed
or variable basis. Under this option, you cannot make a partial or full
surrender of the annuity.
OPTION 3
PAYMENTS FOR LIFE WITH A CERTAIN PERIOD: Under this option, income is payable
until the death of the key life. However, if the key life dies before the end
of the period selected (5, 10 or 15 years), the remaining payments are paid to
the Beneficiary until the end of such period. This Option is currently
available on a fixed or variable basis. If you elect to receive payments on a
variable basis under this option, you can request partial or full surrender of
the annuity and receive its then current cash value (if any) subject to our
rules.
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
OPTION 4
FIXED PAYMENTS FOR A CERTAIN PERIOD: Under this option, income is payable
periodically for a specified number of years. If the payee dies before the end
of the specified number of years, the remaining payments are paid to the
Beneficiary until the end of such period. Note that under this option, payments
are not based on any assumptions of life expectancy. Therefore, that portion of
the Insurance Charge assessed to cover the risk that key lives outlive our
expectations provides no benefit to an Owner selecting this option. Under this
option, you cannot make a partial or full surrender of the annuity.
OPTION 5
VARIABLE PAYMENTS FOR LIFE WITH A CASH VALUE: Under this option, benefits are
payable periodically until the death of the key life. Benefits may increase or
decrease depending on the investment performance of the Sub-accounts. This
option has a cash value that also varies with the investment performance of the
Sub-account. The cash value provides a "cushion" from volatile investment
performance so that negative investment performance does not automatically
result in a decrease in the annuity payment each month, and positive investment
performance does not automatically result in an increase in the annuity payment
each month. The cushion generally "stabilizes" monthly annuity payments. Any
cash value remaining on the death of the key life is paid to the Beneficiary in
a lump sum or as periodic payments. Under this option, you can request partial
or full surrender of the Annuity and receive its then current cash value (if
any) subject to our rules.
OPTION 6
VARIABLE PAYMENTS FOR LIFE WITH A CASH VALUE AND GUARANTEE: Under this option,
benefits are payable as described in Option 5; except that, while the key life
is alive, the annuity payment will not be less than a guaranteed amount, which
generally is equal to the first annuity payment. WE CHARGE AN ADDITIONAL AMOUNT
FOR THIS GUARANTEE. Under this option, any cash value remaining on the death of
the key life is paid to the Beneficiary in a lump sum or as periodic payments.
Under this option, you can request partial or full surrender of the Annuity and
receive its then current cash value (if any) subject to our rules.
We may make additional annuity payment options available in the future.
HOW AND WHEN DO I CHOOSE THE ANNUITY PAYMENT OPTION?
Unless prohibited by law, we require that you elect either a life annuity or an
annuity with a certain period of at least 5 years if any CDSC would apply were
you to surrender your Annuity on the Annuity Date. Therefore, choosing an
Annuity Date within four (4) years of the Issue Date of the Annuity may limit
the available annuity payment options. Certain annuity payment options may not
be available if your Annuity Date occurs during the period that a CDSC would
apply.
You have a right to choose your annuity start date. If you have not
provided us with your Annuity Date or annuity payment option in writing, then:
- - a default date for the Annuity Date will be the first day of the calendar
month following the later of the Annuitant's 85th birthday or the fifth
anniversary of our receipt of your request to purchase an Annuity; and
- - the annuity payments, where allowed by law, will be calculated on a fixed
basis under Option 3, Payments for Life with 10 years certain.
If you choose to defer the Annuity Date beyond the default date, the IRS
may not consider your Annuity to be an annuity under the tax law. If that should
occur, all gain in your Annuity at that time will become immediately taxable to
you. Further, each subsequent year's increase in Account Value would be taxable
in that year. By choosing to continue to defer after the default date, you will
assume the risk that your Annuity will not be considered an annuity for federal
income tax purposes.
HOW ARE ANNUITY PAYMENTS CALCULATED?
Fixed Annuity Payments (Options 1-4)
If you choose to receive fixed annuity payments, you will receive equal
fixed-dollar payments throughout the period you select. The amount of the fixed
payment will vary depending on the annuity payment option and payment frequency
you select. Generally, the first annuity payment is determined by multiplying
the Account Value, minus any state premium taxes that may apply, by the factor
determined from our table of annuity rates. The table of annuity rates differs
based on the type of annuity chosen and the frequency of payment selected. Our
rates will not be less than our guaranteed minimum rates. These guaranteed
minimum rates are derived from the a2000 Individual Annuity Mortality Table 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.
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Access To Account Value continued
VARIABLE ANNUITY PAYMENTS
Generally, we offer three different types of variable annuity payment options.
The first annuity payment will be calculated based upon the assumed investment
return ("AIR"). You select the AIR before we start to make annuity payments.
You will not receive annuity payments until you choose an AIR. The remaining
annuity payments will fluctuate based on the performance of the Sub-accounts
relative to the AIR, as well as other factors described below. The greater the
AIR, the greater the first annuity payment. A higher AIR may result in smaller
potential growth in the annuity payments. A lower AIR results in a lower
initial annuity payment. Within payment options 1-3, if the Sub-accounts you
choose perform exactly the same as the AIR, then subsequent annuity payments
will be the same as the first annuity payment. If the Sub-accounts you choose
perform better than the AIR, then subsequent annuity payments will be higher
than the first annuity payment. If the Sub-accounts you choose perform worse
than the AIR, then subsequent annuity payments will be lower than the first.
Within payment options 5 and 6, the cash value for the Annuitant (while alive)
and a variable period of time during which annuity payments will be made
whether or not the Annuitant is still alive are adjusted based on the
performance of the Sub-accounts relative to the AIR; however, subsequent
annuity payments do not always increase or decrease based on the performance of
the Sub-accounts relative to the AIR.
- Variable Payments (Options 1-3)
We calculate each annuity payment amount by multiplying the number
of units scheduled to be redeemed under a schedule of units for each
Sub-account by the Unit Value of each Sub-account on the annuity
payment date. We determine the schedule of units based on your
Account Value (minus any premium tax that applies) at the time you
elect to begin receiving annuity payments. The schedule of units
will vary based on the annuity payment option selected, the length
of any certain period (if applicable), the Annuitant's age and
gender (if annuity payments are due for the life of the Annuitant)
and the Unit Value of the Sub-accounts you initially selected on the
Issue Date. The calculation is performed for each Sub-account, and
the sum of the Sub-account calculations equals the amount of your
annuity payment. Other than to fund annuity payments, the number of
units allocated to each Sub-account will not change unless you
transfer among the Sub-accounts or make a withdrawal (if allowed).
You can select one of three AIRs for these options: 3%, 5% or 7%.
- Stabilized Variable Payments (Option 5)
This option provides guaranteed payments for life, a cash value for
the Annuitant (while alive) and a variable period of time during
which annuity payments will be made whether or not the Annuitant is
still alive. We calculate the initial annuity payment amount by
multiplying the number of units scheduled to be redeemed under a
schedule of units by the Unit Values determined on the annuitization
date. The schedule of units is established for each Sub-account you
choose on the annuitization date based on the applicable benchmark
rate, meaning the AIR, and the annuity factors. The annuity factors
reflect our assumptions regarding the costs we expect to bear in
guaranteeing payments for the lives of the Annuitant and will depend
on the benchmark rate, the annuitant's attained age and gender
(where permitted). Unlike variable payments (described above) where
each payment can vary based on Sub-account performance, this payment
option cushions the immediate impact of Sub-account performance by
adjusting the length of the time during which annuity payments will
be made whether or not the Annuitant is alive while generally
maintaining a level annuity payment amount. Sub-account performance
that exceeds a benchmark rate will generally extend this time
period, while Sub-account performance that is less than a benchmark
rate will generally shorten the period. If the period reaches zero
and the Annuitant is still alive, Annuity Payments continue,
however, the annuity payment amount will vary depending on
Sub-account performance, similar to conventional variable payments.
The AIR for this option is 4%.
- Stabilized Variable Payments with a Guaranteed Minimum (Option 6)
This option provides guaranteed payments for life in the same manner
as Stabilized Variable Payments (described above). In addition to
the stabilization feature, this option also guarantees that variable
annuity payments will not be less than the initial annuity payment
amount regardless of Sub-account performance. The AIR for this
option is 3%.
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
The variable annuity payment options are described in greater detail in a
separate prospectus which will be provided to you at the time you elect one of
the variable annuity payment options.
Adjustable Annuity Payments
We may make an adjustable annuity payment option available. Adjustable annuity
payments are calculated similarly to fixed annuity payments except that on every
fifth (5th) anniversary of receiving annuity payments, the annuity payment
amount is adjusted upward or downward depending on the rate we are currently
crediting to annuity payments. The adjustment in the annuity payment amount does
not affect the duration of remaining annuity payments, only the amount of each
payment.
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Living Benefit Programs
DO YOU OFFER PROGRAMS DESIGNED TO PROVIDE INVESTMENT PROTECTION FOR OWNERS WHILE
THEY ARE ALIVE?
American Skandia offers different optional benefits, for an additional charge,
that can provide investment protection for Owners while they are alive.
Notwithstanding the additional protection provided under the optional Living
Benefit Programs, the additional cost has the impact of reducing net performance
of the investment options. Each optional benefit offers a distinct type of
guarantee, regardless of the performance of variable investment options, that
may be appropriate for you depending on the manner in which you intend to make
use of your annuity while you are alive. Depending on which optional benefit you
choose, you can have substantial flexibility to invest in variable investment
options while:
- - protecting a principal amount from decreases in value as of specified
future dates due to investment performance;
- - taking withdrawals with a guarantee that you will be able to withdraw not
less than a principal amount over time; or
- - guaranteeing a minimum amount of growth will be applied to your principal,
if it is to be used as the basis for lifetime income payments beginning
after a waiting period.
Below is a brief summary of the "living benefits" that American Skandia
offers. Please refer to the benefit description for a complete description of
the terms, conditions and limitations of each optional benefit. You should
consult with your investment professional to determine if any of these optional
benefits may be appropriate for you based on your financial needs. There are
many factors to consider, but we note that among them you may want to evaluate
the tax implications of these different approaches to meeting your needs, both
between these benefits and in comparison to other potential solutions to your
needs (e.g. comparing the tax implications of the withdrawal benefit and annuity
payments).
I. The GUARANTEED RETURN OPTION PLUS(SM) (GRO PLUS(SM)) guarantees that,
after a seven-year period following commencement of the program ("maturity
date") and on each anniversary of the maturity date thereafter, your
Account Value will not be less than the Account Value on the effective
date of the program. The program also offers you the option to elect a
second, enhanced guarantee amount at a higher Account Value subject to a
separate maturity period (and its anniversaries). The GRO Plus(SM) program
may be appropriate if you wish to protect a principal amount (called the
"Protected Principal Value") against market downturns as of a specific
date in the future, but also wish to exercise control by allocating and
transferring your available Account Value among the variable investment
options to participate in market experience. Under the GRO Plus(SM)
program, you give us the right to allocate amounts to Fixed Allocations as
needed to support the guarantees provided. The available Account Value
that may be allocated among your variable investment options are those
amounts not allocated to the Fixed Allocations to support the guarantees
provided. The
II. The GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) guarantees your ability
to make cumulative withdrawals over time equal to an initial principal
value (called the "Protected Value"), regardless of decreases in your
Account Value due to market losses. The GMWB program may be appropriate if
you intend to make periodic withdrawals from your Annuity and wish to
ensure that market performance will not affect your ability to receive
guaranteed minimum withdrawals. Taking income as withdrawals, rather than
annuity payments, may be less tax efficient for non-qualified uses of the
Annuity, but provides greater control over the timing and amount of
withdrawals during the accumulation period, as well as continuing the
Annuity's other benefits, such as the death benefit.
III. The GUARANTEED MINIMUM INCOME BENEFIT (GMIB) guarantees your ability,
after a minimum seven-year waiting period, to begin receiving income from
the Annuity in the form of annuity payments based on your total purchase
payments under the Annuity and an annual increase of 5% on such Purchase
Payments, adjusted for withdrawals, regardless of the impact of market
performance on your Account Value. The GMIB program may be appropriate if
you anticipate using your Annuity as a future source of periodic fixed
income payments for the remainder of your life and wish to ensure that the
basis upon which your income payments will be calculated will achieve at
least a minimum amount despite fluctuations in market performance.
IV. The LIFETIME FIVE INCOME BENEFIT guarantees your ability to withdraw
amounts equal to a percentage of a "Protected Withdrawal Value" regardless
of decreases in your Account Value due to market losses. The Lifetime Five
Benefit may be appropriate if you intend to make periodic withdrawals from
your Annuity and wish to ensure that the market performance will not
affect your ability to receive guaranteed minimum withdrawals. Taking
income as withdrawals, rather than annuity payments, may be less tax
efficient for
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
non-qualified uses of the Annuity, but provides greater control over the
timing and amount of withdrawals during the accumulation period, as well
as continuing the Annuity's other benefits, such as the death benefit.
GUARANTEED RETURN OPTION Plus(SM) (GRO Plus(SM))
- --------------------------------------------------------------------------------
THE GUARANTEED RETURN OPTION PLUS DESCRIBED BELOW IS ONLY BEING OFFERED IN THOSE
JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL, AND WILL BE OFFERED
SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY APPROVAL IN THOSE
JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS
ONCE APPROVED. THE PROGRAM CAN BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF
THEIR ANNUITY, AND CAN BE ELECTED BY EXISTING ANNUITY OWNERS ON EITHER THE
ANNIVERSARY OF THE ISSUE DATE OF THEIR ANNUITY OR ON A DATE OTHER THAN THAT
ANNIVERSARY, AS DESCRIBED BELOW UNDER "ELECTION OF THE PROGRAM". THE GUARANTEED
RETURN OPTION PLUS IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION
PROGRAM (AND IT IS CURRENTLY ACTIVE), THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT
RIDER, THE GUARANTEED MINIMUM INCOME BENEFIT RIDER, THE LIFETIME FIVE INCOME
BENEFIT RIDER, THE HIGHEST DAILY VALUE DEATH BENEFIT OR THE DOLLAR COST
AVERAGING PROGRAM IF IT INVOLVES TRANSFERS OUT OF THE FIXED ALLOCATIONS.
- --------------------------------------------------------------------------------
We offer a program that, after a seven-year period following commencement
of the program (we refer to the end of that period and any applicable subsequent
period as the "maturity date") and on each anniversary of the maturity date
thereafter while the program remains in effect, guarantees your Account Value
will not be less than your Account Value on the effective date of your program
(called the "Protected Principal Value"). The program also offers you the
opportunity to elect a second, enhanced guaranteed amount at a later date if
your Account Value has increased, while preserving the guaranteed amount
established on the effective date of your program. The enhanced guaranteed
amount (called the "Enhanced Protected Principal Value") guarantees that, after
a separate period following election of the enhanced guarantee and on each
anniversary thereafter while this enhanced guarantee amount remains in effect,
your Account Value will not be less than your Account Value on the effective
date of your election of the enhanced guarantee.
The program monitors your Account Value daily and, if necessary,
systematically transfers amounts between variable investment options you choose
and Fixed Allocations used to support the Protected Principal Value(s). The
program may be appropriate if you wish to protect a principal amount against
market downturns as of a specific date in the future, but also wish to invest in
the variable investment options to participate in market performance. There is
an additional charge if you elect the Guaranteed Return Option Plus program.
The guarantees provided by the program exist only on the applicable
maturity date(s) and on each anniversary of the maturity date(s) thereafter.
However, due to the ongoing monitoring of your Account Value and the transfer of
Account Value between the variable investment options and the Fixed Allocations
to support our future guarantees, the program may provide some protection from
significant market losses if you choose to surrender the Annuity or begin
receiving annuity payments prior to a maturity date. For this same reason, the
program may limit your ability to benefit from market increases while it is in
effect.
KEY FEATURE -- PROTECTED PRINCIPAL VALUE/ ENHANCED PROTECTED PRINCIPAL VALUE
The Guaranteed Return Option Plus offers a base guarantee as well as the option
of electing an enhanced guarantee at a later date.
- - BASE GUARANTEE: Under the base guarantee, American Skandia guarantees that
on the maturity date and on each anniversary of the maturity date
thereafter that the program remains in effect, your Account Value will be
no less than the Protected Principal Value. On the maturity date and on
each anniversary after the maturity date that the program remains in
effect, if your Account Value is below the Protected Principal Value,
American Skandia will apply additional amounts to your Annuity from its
general account to increase your Account Value to be equal to the
Protected Principal Value.
- - ENHANCED GUARANTEE: On any anniversary following commencement of the
program, you can establish an enhanced guaranteed amount based on your
current Account Value. Under the enhanced guarantee, American Skandia
guarantees that at the end of a specified period following the election of
the enhanced guarantee (also referred to as its "maturity date"), and on
each anniversary of the maturity date thereafter that the enhanced
guaranteed amount remains in effect, your Account Value will be no less
than the Enhanced Protected
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Living Benefit Programs continued
Principal Value. YOU CAN ELECT AN ENHANCED GUARANTEE MORE THAN ONCE;
HOWEVER, A SUBSEQUENT ELECTION SUPERSEDES THE PRIOR ELECTION OF AN
ENHANCED GUARANTEE. ELECTION OF AN ENHANCED GUARANTEE DOES NOT IMPACT THE
BASE GUARANTEE. IN ADDITION, YOU MAY ELECT AN "AUTO STEP-UP" FEATURE THAT
WILL AUTOMATICALLY CREATE AN ENHANCED GUARANTEE (OR INCREASE YOUR ENHANCED
GUARANTEE, IF PREVIOUSLY ELECTED) ON EACH ANNIVERSARY OF THE PROGRAM (AND
CREATE A NEW MATURITY PERIOD FOR THE NEW ENHANCED GUARANTEE) IF THE
ACCOUNT VALUE AS OF THAT ANNIVERSARY EXCEEDS THE PROTECTED PRINCIPAL VALUE
OR ENHANCED PROTECTED PRINCIPAL VALUE BY 7% OR MORE. YOU MAY ALSO ELECT TO
TERMINATE AN ENHANCED GUARANTEE. IF YOU ELECT TO TERMINATE THE ENHANCED
GUARANTEE, THE BASE GUARANTEE WILL REMAIN IN EFFECT. If you have elected
the enhanced guarantee, on the guarantee's maturity date and on each
anniversary of the maturity date thereafter that the enhanced guarantee
amount remains in effect, if your Account Value is below the Enhanced
Protected Principal Value, American Skandia will apply additional amounts
to your Annuity from its general account to increase your Account Value to
be equal to the Enhanced Protected Principal Value.
Any amounts added to your Annuity to support our guarantees under the
program will be applied to any Fixed Allocations first and then to the
sub-accounts pro rata, based on your most recent allocation instructions in
accordance with the allocation mechanism we use under the program. We will
notify you of any amounts added to your Annuity under the program. If our
assumptions are correct and the operations relating to the administration of the
program work properly, we do not expect that we will need to add additional
amounts to the Annuity. The Protected Principal Value is referred to as the
"Base Guarantee" and the Enhanced Protected Principal Value is referred to as
the "Step-up Guarantee" in the rider we issue for this benefit.
WITHDRAWALS UNDER YOUR ANNUITY
Withdrawals from your Annuity, while the program is in effect, will reduce the
base guarantee under the program as well as any enhanced guarantee. Cumulative
annual withdrawals up to 5% of the Protected Principal Value as of the
effective date of the program (adjusted for any subsequent Purchase Payments)
will reduce the applicable guaranteed amount by the actual amount of the
withdrawal (referred to as the "dollar-for-dollar limit"). If the amount
withdrawn is greater than the dollar-for-dollar limit, the portion of the
withdrawal equal to the dollar-for-dollar limit will be treated as described
above, and the portion of the withdrawal in excess of the dollar-for-dollar
limit will reduce the base guarantee and the enhanced guarantee proportionally,
according to the formula as described in the rider for this benefit (see the
examples of this calculation below). Withdrawals other than Systematic
Withdrawals will be taken pro-rata from the variable investment options and any
Fixed Allocations. Systematic Withdrawals will be taken pro-rata from the
variable investment options and any Fixed Allocations up to growth attributable
to the Fixed Allocations and thereafter pro-rata solely from the variable
investment options. Withdrawals will be subject to all other provisions of the
Annuity, including any Contingent Deferred Sales Charge and Market Value
Adjustment that would apply.
Charges for other optional benefits under the Annuity that are deducted as
an annual charge in arrears will not reduce the applicable guaranteed amount
under the Guaranteed Return Option Plus program, however, any partial
withdrawals in payment of charges for any third party investment advisory
service will be treated as withdrawals and will reduce the applicable guaranteed
amount.
The following examples of dollar-for-dollar and proportional reductions
assume that: 1.) the Issue Date and the effective date of the GRO Plus(SM)
program are October 13, 2004; 2.) an initial Purchase Payment of $250,000; 3.) a
base guarantee amount of $250,000; and 4.) a dollar-for-dollar limit of $12,500
(5% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 29, 2004 (in the first Annuity Year).
No prior withdrawals have been taken. As the amount withdrawn is less than the
Dollar-for-dollar Limit:
- - The base guarantee amount is reduced by the amount withdrawn (i.e., by
$10,000, from $250,000 to $240,000).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance
of the first Annuity Year is also reduced by the amount withdrawn (from
$12,500 to $2,500).
54
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on December 18, 2004 (still within the
first Annuity Year). The Account Value immediately before the withdrawal is
$180,000. As the amount withdrawn exceeds the Remaining Limit of $2,500 from
Example 1:
- - The base guarantee amount is first reduced by the Remaining Limit (from
$240,000 to $237,500);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the Remaining Limit ($10,000 -
$2,500, or $7,500).
- B is the Account Value less the Remaining Limit ($180,000 - $2,500,
or $177,500).
The resulting base guarantee amount is: $237,500 x (1 - $7,500 /
$177,500), or $227,464.79.
- - The Remaining Limit is set to zero (0) for the balance of the first
Annuity Year.
EXAMPLE 3. RESET OF THE DOLLAR-FOR-DOLLAR LIMIT
A $10,000 withdrawal is made on December 19, 2005 (second Annuity Year). The
Remaining Limit has been reset to the dollar-for-dollar limit of $12,500. As
the amount withdrawn is less than the dollar-for-dollar limit:
- - The base guarantee amount is reduced by the amount withdrawn (i.e.,
reduced by $10,000, from $227,464.79 to $217,464.79).
- - The Remaining Limit for the balance of the second Annuity Year is also
reduced by the amount withdrawn (from $12,500 to $2,500).
KEY FEATURE -- ALLOCATION OF ACCOUNT VALUE
Account Value is transferred to and maintained in Fixed Allocations to the
extent we, in our sole discretion, deem it is necessary to support our
guarantee(s) under the program. We monitor fluctuations in your Account Value
each Valuation Day, as well as the prevailing interest rates on Fixed
Allocations, the remaining duration(s) until the applicable maturity date(s) and
the amount of Account Value allocated to Fixed Allocation(s) relative to a
"reallocation trigger", which determines whether Account Value must be
transferred to or from Fixed Allocation(s). While you are not notified when your
Account Value reaches a reallocation trigger, you will receive a confirmation
statement indicating the transfer of a portion of your Account Value either to
or from Fixed Allocation(s).
- - IF YOUR ACCOUNT VALUE IS GREATER THAN OR EQUAL TO THE REALLOCATION
TRIGGER, your Account Value in the variable investment options will remain
allocated according to your most recent instructions. If a portion of
Account Value was previously allocated to a Fixed Allocation to support
the applicable guaranteed amount, all or a portion of those amounts may be
transferred from the Fixed Allocation and re-allocated to the variable
investment options pro-rata according to your most recent allocation
instructions (including the model allocations under any asset allocation
program you may have elected). A Market Value Adjustment will apply when
we reallocate Account Value from a Fixed Allocation to the variable
investment options, which may result in a decrease or increase in your
Account Value.
- - IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER, a portion of
your Account Value in the variable investment options will be transferred
from your variable investment options pro rata according to your
allocations to a new Fixed Allocation(s) to support the applicable
guaranteed amount. The new Fixed Allocation(s) will have a Guarantee
Period equal to the time remaining until the applicable maturity date(s).
The Account Value allocated to the new Fixed Allocation(s) will be
credited with the fixed interest rate(s) then being credited to a new
Fixed Allocation(s) maturing on the applicable maturity date(s) (rounded
to the next highest yearly duration). The Account Value will remain
invested in each applicable Fixed Allocation until the applicable maturity
date unless, at an earlier date, your Account Value is greater than or
equal to the reallocation trigger and, therefore, amounts can be
transferred to the variable investment options while maintaining the
guaranteed protection under the program (as described above).
55
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Living Benefit Programs continued
IF A SIGNIFICANT AMOUNT OF YOUR ACCOUNT VALUE IS SYSTEMATICALLY TRANSFERRED TO
FIXED ALLOCATIONS TO SUPPORT THE PROTECTED PRINCIPAL VALUE AND/OR THE ENHANCED
PROTECTED PRINCIPAL VALUE DURING PERIODS OF MARKET DECLINES, LOW INTEREST RATES,
AND/OR AS THE PROGRAM NEARS ITS MATURITY DATE, LESS OF YOUR ACCOUNT VALUE MAY BE
AVAILABLE TO PARTICIPATE IN THE INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT
OPTIONS IF THERE IS A SUBSEQUENT MARKET RECOVERY. DURING PERIODS CLOSER TO THE
MATURITY DATE OF THE BASE GUARANTEE OR ANY ENHANCED GUARANTEE, OR ANY
ANNIVERSARY OF SUCH MATURITY DATE(S), A SIGNIFICANT PORTION OF YOUR ACCOUNT
VALUE MAY BE ALLOCATED TO FIXED ALLOCATIONS TO SUPPORT ANY APPLICABLE GUARANTEED
AMOUNT(S). IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER AND NEW
FIXED ALLOCATIONS MUST BE ESTABLISHED DURING PERIODS WHERE THE INTEREST RATE(S)
BEING CREDITED TO SUCH FIXED ALLOCATIONS IS LOW, A LARGER PORTION OF YOUR
ACCOUNT VALUE MAY NEED TO BE TRANSFERRED TO FIXED ALLOCATIONS TO SUPPORT THE
APPLICABLE GUARANTEED AMOUNT(S), CAUSING LESS OF YOUR ACCOUNT VALUE TO BE
AVAILABLE TO PARTICIPATE IN THE INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT
OPTIONS.
Separate Fixed Allocations may be established in support of the Protected
Principal Value and the Enhanced Protected Principal Value (if elected). There
may also be circumstances when a Fixed Allocation will be established only in
support of the Protected Principal Value or the Enhanced Protected Principal
Value. If you elect an enhanced guarantee, it is more likely that a portion of
your Account Value may be allocated to Fixed Allocations and will remain
allocated for a longer period of time to support the Enhanced Protected
Principal Value, even during a period of positive market performance and/or
under circumstances where Fixed Allocations would not be necessary to support
the Protected Principal Value. Further, there may be circumstances where Fixed
Allocations in support of the Protected Principal Value or Enhanced Protected
Principal Value are transferred to the variable investment options differently
than each other because of the different guarantees they support.
American Skandia uses an allocation mechanism based on assumptions of
expected and maximum market volatility, interest rates and time left to the
maturity of the program to determine the reallocation trigger. The allocation
mechanism is used to determine the allocation of Account Value between Fixed
Allocations and the Sub-accounts you choose. American Skandia reserves the right
to change the allocation mechanism and the reallocation trigger at its
discretion, subject to regulatory approval where required. Changes to the
allocation mechanism and/or the reallocation trigger may be applied to existing
programs where allowed by law.
ELECTION OF THE PROGRAM
The Guaranteed Return Option Plus program can be elected at the time that you
purchase your Annuity, or on any Valuation Day thereafter (prior to
annuitization). If you elect the program after the Issue Date of your Annuity,
the program will be effective as of the Valuation Day that we receive the
required documentation in good order at our home office, and the guaranteed
amount will be based on your Account Value as of that date. If you previously
elected the Guaranteed Return Option program and wish to elect the Guaranteed
Return Option Plus program, your prior Guaranteed Return Option program will be
terminated. Termination of the Guaranteed Return Option for the purpose of
electing the Guaranteed Return Option Plus, will be treated as any other
termination of the Guaranteed Return Option (see below), including the
termination of any guaranteed amount, and application of any applicable Market
Value Adjustment when amounts are transferred to the variable investment
options as a result of the termination. The Guaranteed Return Option Plus
program will then be added to your Annuity BASED ON THE CURRENT ACCOUNT VALUE.
TERMINATION OF THE PROGRAM
You can elect to terminate the enhanced guarantee but maintain the protection
provided by the base guarantee. You also can terminate the Guaranteed Return
Option Plus program entirely. If you terminate the program entirely, you can
subsequently elect to participate in the program again (based on the Account
Value on that date) by furnishing the documentation we require. In a rising
market, you could, for example, terminate the program on a given Valuation Day
and two weeks later reinstate the program with a higher base guarantee (and a
new maturity date). However, your ability to reinstate the program is limited
by the following: (A) in any Annuity Year, we do not permit more than two
program elections (including any election made effective on the Annuity issue
date and any election made by a surviving spouse) and (B) a program
reinstatement cannot be effected on the same business day on which a program
termination was effected. Upon termination, any Account Value in the Fixed
Allocations will be transferred to the variable investment options pro-rata
based on the Account
56
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Values in such variable investment options, or in accordance with any effective
asset allocation program. A Market Value Adjustment will apply.
The program will terminate automatically upon: (a) the death of the Owner or the
Annuitant (in an entity owned contract); (b) as of the date Account Value is
applied to begin annuity payments; or (c) upon full surrender of the Annuity. If
you elect to terminate the program, the Guaranteed Return Option Plus will no
longer provide any guarantees. The surviving spouse may elect the benefit at any
time, subject to the limitations described above, after the death of the Annuity
Owner. The surviving spouse's election will be effective on the Valuation Day
that we receive the required documentation in good order at our home office, and
the Account Value on that Valuation Day will be the Protected Principal Value.
The charge for the Guaranteed Return Option Plus program will no longer be
deducted from your Account Value upon termination of the program.
SPECIAL CONSIDERATIONS UNDER THE GUARANTEED RETURN OPTION PLUS
This program is subject to certain rules and restrictions, including, but not
limited to the following:
- - Upon inception of the program, 100% of your Account Value must be
allocated to the variable investment options. No Fixed Allocations may be
in effect as of the date that you elect to participate in the program.
However, the reallocation trigger may transfer Account Value to Fixed
Allocations as of the effective date of the program under some
circumstances.
- - You cannot allocate any portion of Purchase Payments or transfer Account
Value to or from a Fixed Allocation while participating in the program;
however, all or a portion of any Purchase Payments may be allocated by us
to Fixed Allocations to support the amount guaranteed. You cannot
participate in any dollar cost averaging program that transfers Account
Value from a Fixed Allocation to a variable investment option.
- - Transfers from Fixed Allocations made as a result of the allocation
mechanism under the program will be subject to the Market Value Adjustment
formula under the Annuity; however, the 0.10% liquidity factor in the
formula will not apply. A Market Value Adjustment may be either positive
or negative. Transfer amounts will be taken from the most recently
established Fixed Allocation.
- - Transfers from the Sub-accounts to Fixed Allocations or from Fixed
Allocations to the Sub-accounts under the program will not count toward
the maximum number of free transfers allowable under the Annuity.
- - Any amounts applied to your Account Value by American Skandia on the
maturity date or any anniversary of the maturity date will not be treated
as "investment in the contract" for income tax purposes.
- - Low interest rates may require allocation to Fixed Allocations even when
the current Account Value exceeds the guarantee.
- - As the time remaining until the applicable maturity date gradually
decreases the program will become increasingly sensitive to moves to Fixed
Allocations.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
CHARGES UNDER THE PROGRAM
We deduct a charge equal to 0.25% of the average daily net assets of the
sub-accounts for participation in the Guaranteed Return Option Plus program. The
annual charge is deducted daily. Account Value allocated to Fixed Allocations
under the program is not subject to the charge. The charge is deducted to
compensate American Skandia for: (a) the risk that your Account Value on the
maturity date is less than the amount guaranteed; and (b) administration of the
program.
57
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Living Benefit Programs continued
GUARANTEED RETURN OPTION (GRO)
THE GUARANTEED RETURN OPTION DESCRIBED BELOW IS OFFERED ONLY IN THOSE
JURISDICTIONS WHERE WE HAVE NOT YET RECEIVED REGULATORY APPROVAL FOR THE
GUARANTEED RETURN OPTION PLUS AS OF THE DATE THE ELECTION OF THE OPTION IS
MADE. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS. THE
PROGRAM CAN BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF THEIR
ANNUITY, AND CAN BE ELECTED BY EXISTING ANNUITY OWNERS ON EITHER THE
ANNIVERSARY OF THE ISSUE DATE OF THEIR ANNUITY OR ON A DATE OTHER THAN
THAT ANNIVERSARY, AS DESCRIBED BELOW UNDER "ELECTION OF THE PROGRAM". THE
GUARANTEED RETURN OPTION IS NOT AVAILABLE IF YOU ELECT THE GRO PLUS RIDER,
THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT RIDER, THE GUARANTEED MINIMUM
INCOME BENEFIT RIDER, THE LIFETIME FIVE INCOME BENEFIT RIDER, THE HIGHEST
DAILY VALUE DEATH BENEFIT OR THE DOLLAR COST AVERAGING PROGRAM IF IT
INVOLVES TRANSFERS OUT OF THE FIXED ALLOCATIONS.
We offer a program that, after a seven-year period following commencement
of the program (we refer to the end of that period as the "maturity date")
guarantees your Account Value will not be less than your Account Value on the
effective date of your program (called the "Protected Principal Value").
The program monitors your Account Value daily and, if necessary,
systematically transfers amounts between variable investment options you choose
and the Fixed Allocation used to support the Protected Principal Value. The
program may be appropriate if you wish to protect a principal amount against
market downturns as of a specific date in the future, but also wish to invest in
the variable investment options to participate in market performance. There is
an additional charge if you elect the Guaranteed Return Option program.
The guarantees provided by the program exist only on the applicable
maturity date. However, due to the ongoing monitoring of your Account Value and
the transfer of Account Value between the variable investment options and the
Fixed Allocation to support our future guarantee, the program may provide some
protection from significant market losses if you choose to surrender the
Annuity or begin receiving annuity payments prior to a maturity date. For this
same reason, the program may limit your ability to benefit from market
increases while it is in effect.
KEY FEATURE -- PROTECTED PRINCIPAL VALUE
- - Under the GRO option, American Skandia guarantees that on the maturity
date, your Account Value will be no less than the Protected Principal
Value. On the maturity date if your Account Value is below the Protected
Principal Value, American Skandia will apply additional amounts to your
Annuity from its general account to increase your Account Value to be
equal to the Protected Principal Value.
Any amounts added to your Annuity to support our guarantees under the
program will be applied to the Fixed Allocation first and then to the
Sub-accounts pro rata, based on your most recent allocation instructions in
accordance with the allocation mechanism we use under the program. We will
notify you of any amounts added to your Annuity under the program. If our
assumptions are correct and the operations relating to the administration of the
program work properly, we do not expect that we will need to add additional
amounts to the Annuity. The Protected Principal Value is generally referred to
as the "Guaranteed Amount" in the rider we issue for this benefit.
KEY FEATURE -- ALLOCATION OF ACCOUNT VALUE
Account Value is transferred to and maintained in a Fixed Allocation to the
extent we, in our sole discretion, deem it is necessary to support our guarantee
under the program. We monitor fluctuations in your Account Value each Valuation
Day, as well as the prevailing interest rates on the Fixed Allocation, the
remaining duration until the applicable maturity date and the amount of Account
Value allocated to the Fixed Allocation relative to a "reallocation trigger",
which determines whether Account Value must be transferred to or from the Fixed
Allocation. While you are not notified when your Account Value reaches a
reallocation trigger, you will receive a confirmation statement indicating the
transfer of a portion of your Account Value either to or from the Fixed
Allocation.
- - IF YOUR ACCOUNT VALUE IS GREATER THAN OR EQUAL TO THE REALLOCATION
TRIGGER, your Account Value in the variable investment options will remain
allocated according to your most recent instructions. If a portion of
Account Value was previously allocated to the Fixed Allocation to support
the guaranteed amount, all or a portion of those amounts may be
transferred from the Fixed Allocation and re-allocated to the variable
investment options pro-rata according to your most recent allocation
instructions (including the model allocations under any asset allocation
program you may have elected). A Market Value Adjustment will apply when
we reallocate Account Value from the Fixed Allocation to
58
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
the variable investment options, which may result in a decrease or increase in
your Account Value.
- - If your Account Value is less than the reallocation trigger, a portion of
your Account Value in the variable investment options will be transferred
from your variable investment options pro rata according to your
allocations to a new Fixed Allocation to support the guaranteed amount.
The new Fixed Allocation will have a Guarantee Period equal to the time
remaining until the applicable maturity date. The Account Value allocated
to the new Fixed Allocation will be credited with the fixed interest rate
then being credited to a new Fixed Allocation maturing on the applicable
maturity date (rounded to the next highest yearly duration). The Account
Value will remain invested in the Fixed Allocation until the maturity date
unless, at an earlier date, your Account Value is greater than or equal to
the reallocation trigger and, therefore, amounts can be transferred to the
variable investment options while maintaining the guaranteed protection
under the program (as described above).
IF A SIGNIFICANT AMOUNT OF YOUR ACCOUNT VALUE IS SYSTEMATICALLY TRANSFERRED TO
THE FIXED ALLOCATION TO SUPPORT THE PROTECTED PRINCIPAL VALUE DURING PERIODS OF
MARKET DECLINES, LOW INTEREST RATES, AND/OR AS THE PROGRAM NEARS ITS MATURITY
DATE, LESS OF YOUR ACCOUNT VALUE MAY BE AVAILABLE TO PARTICIPATE IN THE
INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS IF THERE IS A
SUBSEQUENT MARKET RECOVERY. DURING PERIODS CLOSER TO THE MATURITY DATE OF THE
GUARANTEE A SIGNIFICANT PORTION OF YOUR ACCOUNT VALUE MAY BE ALLOCATED TO THE
FIXED ALLOCATION TO SUPPORT ANY APPLICABLE GUARANTEED AMOUNT. IF YOUR ACCOUNT
VALUE IS LESS THAN THE REALLOCATION TRIGGER AND A NEW FIXED ALLOCATION MUST BE
ESTABLISHED DURING PERIODS WHERE THE INTEREST RATE BEING CREDITED TO SUCH FIXED
ALLOCATIONS IS LOW, A LARGER PORTION OF YOUR ACCOUNT VALUE MAY NEED TO BE
TRANSFERRED TO THE FIXED ALLOCATION TO SUPPORT THE GUARANTEED AMOUNT, CAUSING
LESS OF YOUR ACCOUNT VALUE TO BE AVAILABLE TO PARTICIPATE IN THE INVESTMENT
EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS.
American Skandia uses an allocation mechanism based on assumptions of
expected and maximum market volatility, interest rates and time left to the
maturity of the program to determine the reallocation trigger. The allocation
mechanism is used to determine the allocation of Account Value between Fixed
Allocation and the Sub-accounts you choose. American Skandia reserves the right
to change the allocation mechanism and the reallocation trigger at its
discretion, subject to regulatory approval where required. Changes to the
allocation mechanism and/or the reallocation trigger may be applied to existing
programs where allowed by law.
ELECTION OF THE PROGRAM
The Guaranteed Return Option can be elected at the time that you purchase your
Annuity, or on any Valuation Day thereafter (prior to annuitization). If you
elect the program after the Issue Date of your Annuity, the program will be
effective as of the business day that we receive the required documentation in
good order at our home office, and the guaranteed amount will be based on your
Account Value as of that date.
TERMINATION OF THE PROGRAM
The Annuity Owner also can terminate the Guaranteed Return Option program. Upon
termination, any Account Value in the Fixed Allocations will be transferred to
the variable investment options pro rata based on the Account Values in such
variable investment options, or in accordance with any effective asset
allocation program. A Market Value Adjustment will apply.
The program will terminate automatically upon: (a) the death of the Owner
or the Annuitant (in an entity owned contract); (b) as of the date Account Value
is applied to begin annuity payments; or (c) upon full surrender of the Annuity.
If you elect to terminate the program, the Guaranteed Return Option will no
longer provide any guarantees. If the surviving spouse assumes the Annuity,
he/she may re-elect the benefit on any anniversary of the Issue Date of the
Annuity or, if the deceased Owner had not previously elected the benefit, may
elect the benefit at any time. The surviving spouse's election will be effective
on the Valuation Day that we receive the required documentation in good order at
our home office, and the Account Value on that Valuation Day will be the
Protected Principal Value.
The charge for the Guaranteed Return Option program will no longer be
deducted from your Account Value upon termination of the program.
59
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Living Benefit Programs continued
SPECIAL CONSIDERATIONS UNDER THE GUARANTEED RETURN OPTION
This program is subject to certain rules and restrictions, including, but not
limited to the following:
- - Upon inception of the program, 100% of your Account Value must be
allocated to the variable investment options. The Fixed Allocations may
not be in effect as of the date that you elect to participate in the
program. However, the reallocation trigger may transfer Account Value to
the Fixed Allocation as of the effective date of the program under some
circumstances.
- - Annuity Owners cannot allocate any portion of Purchase Payments or
transfer Account Value to or from the Fixed Allocation while participating
in the program; however, all or a portion of any Purchase Payments may be
allocated by us to the Fixed Allocation to support the amount guaranteed.
You cannot participate in any dollar cost averaging program that transfers
Account Value from the Fixed Allocation to a variable investment option.
- - Transfers from the Fixed Allocation made as a result of the allocation
mechanism under the program will be subject to the Market Value Adjustment
formula under the Annuity; however, the 0.10% liquidity factor in the
formula will not apply. A Market Value Adjustment may be either positive
or negative. Transfer amounts will be taken from the most recently
established Fixed Allocation.
- - Transfers from the Sub-accounts to the Fixed Allocation or from the Fixed
Allocation to the Sub-accounts under the program will not count toward the
maximum number of free transfers allowable under the Annuity.
- - Any amounts applied to your Account Value by American Skandia on the
maturity date or any anniversary of the maturity date will not be treated
as "investment in the contract" for income tax purposes.
- - Low interest rates may require allocation to the Fixed Allocation even
when the current Account Value exceeds the guarantee.
- - As the time remaining until the applicable maturity date gradually
decreases the program will become increasingly sensitive to moves to the
Fixed Allocation.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
CHARGES UNDER THE PROGRAM
We deduct a charge equal to 0.25% of the average daily net assets of the
Sub-accounts for participation in the Guaranteed Return Option program. The
annual charge is deducted daily. In those states where the daily deduction of
the charge has not yet been approved, the annual charge is deducted annually, in
arrears. Account Value allocated to the Fixed Allocation under the program is
not subject to the charge. The charge is deducted to compensate American Skandia
for: (a) the risk that your Account Value on the maturity date is less than the
amount guaranteed; and (b) administration of the program.
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT PROGRAM DESCRIBED BELOW IS ONLY
BEING OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY
APPROVAL AND WILL BE OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE
RECEIVE REGULATORY APPROVAL IN THOSE JURISDICTIONS. CERTAIN TERMS AND
CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. CURRENTLY, THE
PROGRAM CAN ONLY BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF THEIR
ANNUITY. WE MAY OFFER THE PROGRAM TO EXISTING ANNUITY OWNERS IN THE FUTURE,
SUBJECT TO OUR ELIGIBILITY RULES AND RESTRICTIONS. THE GUARANTEED MINIMUM
WITHDRAWAL BENEFIT PROGRAM IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED
RETURN OPTION, GUARANTEED RETURN OPTION PLUS, THE GUARANTEED MINIMUM INCOME
BENEFIT RIDER OR THE LIFETIME FIVE INCOME BENEFIT RIDER.
We offer a program that guarantees your ability to withdraw amounts equal
to an initial principal value (called the "Protected Value"), regardless of the
impact of market performance on your Account Value, subject to our program rules
regarding the timing and amount of withdrawals. The program may be appropriate
if you intend to make periodic withdrawals from your Annuity and wish to ensure
that market performance will not affect your ability to protect your principal.
You are not required to make withdrawals as part of the program -- the
60
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
guarantee is not lost if you withdraw less than the maximum allowable amount of
principal each year under the rules of the program. There is an additional
charge if you elect the GMWB program; however, the charge may be waived under
certain circumstances described below.
KEY FEATURE -- PROTECTED VALUE
The Protected Value is the total amount that we guarantee will be available to
you through withdrawals from your Annuity and/or benefit payments, regardless of
the impact of market performance on your Account Value. The Protected Value is
reduced with each withdrawal you make until the Protected Value is reduced to
zero. When the Protected Value is reduced to zero due to your withdrawals, the
GMWB program terminates. Additionally, the Protected Value is used to determine
the maximum annual amount that you can withdraw from your Annuity, called the
Protected Annual Withdrawal Amount, without triggering an adjustment in the
Protected Value on a proportional basis. The Protected Value is referred to as
the "Benefit Base" in the rider we issue for this benefit.
The Protected Value is determined as of the date you make your first
withdrawal under the Annuity following your election of the GMWB program. The
initial Protected Value is equal to the greater of (A) the Account Value on the
date you elect the GMWB program, plus any additional Purchase Payments before
the date of your first withdrawal; or (B) the Account Value as of the date of
the first withdrawal from your Annuity. The Protected Value may be enhanced by
increases in your Account Value due to market performance during the period
between your election of the GMWB program and the date of your first
withdrawal.
- - If you elect the GMWB program at the time you purchase your Annuity, the
Account Value will be your initial Purchase Payment.
- - IF WE OFFER THE GMWB PROGRAM TO EXISTING ANNUITY OWNERS, the Account Value
on the anniversary of the Issue Date of your Annuity following your
election of the GMWB program will be used to determine the initial
Protected Value.
- - If you make additional Purchase Payments after your first withdrawal, the
Protected Value will be increased by the amount of the additional Purchase
Payment.
You may elect to step-up your Protected Value if, due to positive market
performance, your Account Value is greater than the Protected Value. You are
eligible to step-up the Protected Value on or after the 5th Annuity anniversary
following the first withdrawal under the GMWB program. The Protected Value can
be stepped up again on or after the 5th Annuity anniversary following the
preceding step-up. If you elect to step-up the Protected Value, you must do so
during the 30-day period prior to your eligibility date. If you elect to step-up
the Protected Value under the program, and on the date you elect to step-up, the
charges under the GMWB program have changed for new purchasers, your program may
be subject to the new charge going forward.
Upon election of the step-up, we reset the Protected Value to be equal to
the then current Account Value. For example, assume your initial Protected Value
was $100,000 and you have made cumulative withdrawals of $40,000, reducing the
Protected Value to $60,000. On the date you are eligible to step-up the
Protected Value, your Account Value is equal to $75,000. You could elect to
step-up the Protected Value to $75,000 on the date you are eligible. Upon
election of the step-up, we also reset the Protected Annual Withdrawal Amount
(discussed immediately below) to be equal to the greater of (A) the Protected
Annual Withdrawal Amount immediately prior to the reset; and (B) 7% of the
Protected Value immediately after the reset.
KEY FEATURE -- PROTECTED ANNUAL WITHDRAWAL AMOUNT
The initial Protected Annual Withdrawal Amount is equal to 7% of the Protected
Value. Under the GMWB program, if your cumulative withdrawals each Annuity Year
are less than or equal to the Protected Annual Withdrawal Amount, your Protected
Value will be reduced on a "dollar-for-dollar" basis (the Protected Value is
reduced by the actual amount of the withdrawal, including any CDSC or MVA that
may apply). Cumulative withdrawals in any Annuity Year that exceed the Protected
Annual Withdrawal Amount trigger a proportional adjustment to both the Protected
Value and the Protected Annual Withdrawal Amount, as described in the rider for
this benefit (see the examples of this calculation below). The Protected Annual
Withdrawal Amount is referred to as the "Maximum Annual Benefit" in the rider we
issue for this benefit.
THE GMWB PROGRAM DOES NOT AFFECT YOUR ABILITY TO MAKE WITHDRAWALS UNDER
YOUR ANNUITY OR LIMIT YOUR ABILITY TO REQUEST WITHDRAWALS THAT EXCEED THE
PROTECTED
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Living Benefit Programs continued
ANNUAL WITHDRAWAL AMOUNT. You are not required to withdraw all or any portion of
the Protected Annual Withdrawal Amount each Annuity Year.
- - If, cumulatively, you withdraw an amount less than the Protected Annual
Withdrawal Amount in any Annuity Year, you cannot carry-over the unused
portion of the Protected Annual Withdrawal Amount to subsequent Annuity
Years. However, because the Protected Value is only reduced by the actual
amount of withdrawals you make under these circumstances, any unused
Protected Annual Withdrawal Amount may extend the period of time until the
remaining Protected Value is reduced to zero.
- - Additional Purchase Payments will increase the Protected Annual Withdrawal
Amount by 7% of the applicable Purchase Payment.
- - If the Protected Annual Withdrawal Amount after an adjustment exceeds the
Protected Value, the Protected Annual Withdrawal Amount will be set equal
to the Protected Value.
The following examples of dollar-for-dollar and proportional reductions
and the reset of the Maximum Annual Benefit assume that: 1.) the Issue Date and
the effective date of the GMWB program are October 13, 2004; 2.) an initial
Purchase Payment of $250,000; 3.) a Protected Value of $250,000; and 4.) a
Protected Annual Withdrawal Amount of $17,500 (7% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 13, 2004 (in the first Annuity Year).
No prior withdrawals have been taken. As the amount withdrawn is less than the
Protected Annual Withdrawal Amount:
- - The Protected Value is reduced by the amount withdrawn (i.e., by $10,000,
from $250,000 to $240,000).
- - The remaining Protected Annual Withdrawal Amount for the balance of the
first Annuity Year is also reduced by the amount withdrawn (from $17,500
to $7,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on December 13, 2004 (still within the
first Annuity Year). The Account Value immediately before the withdrawal is
$220,000. As the amount withdrawn exceeds the remaining Protected Annual
Withdrawal Amount of $7,500 from Example 1:
- - the Protected Value is first reduced by the remaining Protected Annual
Withdrawal Amount (from $240,000 to $232,500);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the remaining Protected Annual
Withdrawal Amount ($10,000 - $7,500, or $2,500).
- B is the Account Value less the remaining Protected Annual
Withdrawal Amount ($220,000 - $7,500, or $212,500).
The resulting Protected Value is: $232,500 x (1 - $2,500 / $212,500), or
$229,764.71.
- - the Protected Annual Withdrawal Amount is also reduced by the ratio of A
to B: The resulting Protected Annual Withdrawal Amount is: $17,500 x (1 -
$2,500 / $212,500), or $17,294.12.
- - The remaining Protected Annual Withdrawal Amount is set to zero (0) for
the balance of the first Annuity Year.
EXAMPLE 3. RESET OF THE MAXIMUM ANNUAL BENEFIT
A $10,000 withdrawal is made on October 13, 2005 (second Annuity Year). The
remaining Protected Annual Withdrawal Amount has been reset to the Protected
Annual Withdrawal Amount of $17,294.12 from Example 2. As the amount withdrawn
is less than the remaining Protected Annual Withdrawal Amount:
- - the Protected Value is reduced by the amount withdrawn (i.e., reduced by
$10,000, from $229,764.71 to $219,764.71).
- - The remaining Protected Annual Withdrawal Amount for the balance of the
second Annuity Year is also reduced by the amount withdrawn (from
$17,294.12 to $7,294.12).
BENEFITS UNDER THE GMWB PROGRAM
- - In addition to any withdrawals you make under the GMWB program, market
performance may reduce your Account Value. If your Account Value is equal
to zero, and you have not received all of your Protected Value in the form
of withdrawals from your Annuity, we will continue to make payments equal
to the remaining Protected Value in the form of fixed, periodic payments
until the remainder of the Protected Value is paid, at which time the
rider terminates. The fixed, periodic payments will each be equal to the
Protected Annual Withdrawal Amount, except for the last
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
payment which may be equal to the remaining Protected Value. We will
determine the duration for which periodic payments will continue by
dividing the Protected Value by the Protected Annual Withdrawal Amount.
You will not have the right to make additional Purchase Payments or
receive the remaining Protected Value in a lump sum. You can elect the
frequency of payments, subject to our rules then in effect.
- - If the death benefit under the Annuity becomes payable before you have
received all of your Protected Value in the form of withdrawals from your
Annuity, your Beneficiary has the option to elect to receive the remaining
Protected Value as an alternate death benefit payout in lieu of the amount
payable under any other death benefit provided under the Annuity. The
remaining Protected Value will be payable in the form of fixed, periodic
payments. Your beneficiary can elect the frequency of payments, subject to
our rules then in effect. We will determine the duration for which
periodic payments will continue by dividing the Protected Value by the
Protected Annual Withdrawal Amount. THE PROTECTED VALUE IS NOT EQUAL TO
THE ACCOUNT VALUE FOR PURPOSES OF THE ANNUITY'S OTHER DEATH BENEFIT
OPTIONS. THE GMWB PROGRAM DOES NOT INCREASE OR DECREASE THE AMOUNT
OTHERWISE PAYABLE UNDER THE ANNUITY'S OTHER DEATH BENEFIT OPTIONS.
GENERALLY, THE GMWB PROGRAM WOULD BE OF VALUE TO YOUR BENEFICIARY ONLY
WHEN THE PROTECTED VALUE AT DEATH EXCEEDS ANY OTHER AMOUNT AVAILABLE AS A
DEATH BENEFIT.
- If you elect to begin receiving annuity payments before you have
received all of your Protected Value in the form of withdrawals from
your Annuity, an additional annuity payment option will be available
that makes fixed annuity payments for a certain period, determined
by dividing the Protected Value by the Protected Annual Withdrawal
Amount. If you elect to receive annuity payments calculated in this
manner, the assumed interest rate used to calculate such payments
will be 0%, which is less than the assumed interest rate on other
annuity payment options we offer. This 0% assumed interest rate
results in lower annuity payments than what would have been paid if
the assumed interest rate was higher than 0%. YOU CAN ALSO ELECT TO
TERMINATE THE GMWB PROGRAM AND BEGIN RECEIVING ANNUITY PAYMENTS
BASED ON YOUR THEN CURRENT ACCOUNT VALUE (NOT THE REMAINING
PROTECTED VALUE) UNDER ANY OF THE AVAILABLE ANNUITY PAYMENT OPTIONS.
OTHER IMPORTANT CONSIDERATIONS
- - Withdrawals under the GMWB program are subject to all of the terms and
conditions of the Annuity, including any CDSC and MVA that may apply.
- - Withdrawals made while the GMWB program is in effect will be treated, for
tax purposes, in the same way as any other withdrawals under the Annuity.
- - The GMWB program does not directly affect the Annuity's Account Value or
Surrender Value, but any withdrawal will decrease the Account Value by the
amount of the withdrawal. If you surrender your Annuity, you will receive
the current Surrender Value, not the Protected Value.
- - You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the GMWB program. The GMWB program
provides a guarantee that if your Account Value declines due to market
performance, you will be able to receive your Protected Value in the form
of periodic benefit payments.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
ELECTION OF THE PROGRAM
Currently, the GMWB program can only be elected at the time that you purchase
your Annuity. In the future, we may offer existing Annuity Owners the option to
elect the GMWB program after the Issue Date of their Annuity, subject to our
eligibility rules and restrictions. If you elect the GMWB program after the
Issue Date of your Annuity, the program will be effective as of the next
anniversary date. Your Account Value as of such anniversary date will be used to
calculate the initial Protected Value and the initial Protected Annual
Withdrawal Amount.
We reserve the right to restrict the maximum amount of Protected Value
that may be covered under the GMWB program under this Annuity or any other
annuities that you own that are issued by American Skandia or its affiliated
companies.
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TERMINATION OF THE PROGRAM
The program terminates automatically when your Protected Value reaches zero
based on your withdrawals. You may terminate the program at any time by
notifying us. If you terminate the program, any guarantee provided by the
benefit will terminate as of the date the termination is effective. The program
terminates upon your surrender of the Annuity, upon due proof of death (unless
your surviving spouse elects to continue the Annuity and the GMWB program or
your Beneficiary elects to receive the amounts payable under the GMWB program
in lieu of the death benefit) or upon your election to begin receiving annuity
payments.
The charge for the GMWB program will no longer be deducted from your
Account Value upon termination of the program.
CHARGES UNDER THE PROGRAM
Currently, we deduct a charge equal to 0.35% of the average daily net assets of
the Sub-accounts per year to purchase the GMWB program. The annual charge is
deducted daily. Account Value allocated to Fixed Allocations under the program
is not subject to the charge.
- - If, during the seven years following the effective date of the program,
you do not make any withdrawals, and do not make any additional Purchase
Payments after a five-year period following the effective date of the
program, the program will remain in effect; however, we will waive the
annual charge going forward. If you make an additional Purchase Payment
following the waiver of the annual charge, we will begin charging for the
program. After year seven (7) following the effective date of the program,
withdrawals will not cause a charge to be re-imposed.
- - If you elect to step-up the Protected Value under the program, and on the
date you elect to step-up, the charges under the program have changed for
new purchasers, your program may be subject to the new charge level for
the benefit.
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS
If you purchase an Annuity as an investment vehicle for "qualified" investments,
including an IRA, SEP-IRA, Roth IRA or Tax Sheltered Annuity (or 403(b)), the
minimum distribution rules under the Code require that you begin receiving
periodic amounts from your Annuity beginning after age 70 1/2. The amount
required under the Code may exceed the Protected Annual Withdrawal Amount, which
will cause us to recalculate the Protected Value and the Protected Annual
Withdrawal Amount, resulting in a lower amount payable in future Annuity Years.
In addition, the amount and duration of payments under the annuity payment and
death benefit provisions may be adjusted so that the payments do not trigger any
penalty or excise taxes due to tax considerations such as minimum distribution
requirements.
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
THE GUARANTEED MINIMUM INCOME BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL,
AND WILL BE OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE
REGULATORY APPROVAL IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY
DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. CURRENTLY, THE PROGRAM CAN ONLY
BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY. WE MAY
OFFER THE PROGRAM TO EXISTING ANNUITY OWNERS IN THE FUTURE, SUBJECT TO OUR
ELIGIBILITY RULES AND RESTRICTIONS. THE GUARANTEED MINIMUM INCOME BENEFIT
PROGRAM IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION PROGRAM,
GUARANTEED RETURN OPTION PLUS PROGRAM, THE GUARANTEED MINIMUM WITHDRAWAL
BENEFIT RIDER OR THE LIFETIME FIVE INCOME BENEFIT RIDER.
We offer a program that, after a seven-year waiting period, guarantees
your ability to begin receiving income from your Annuity in the form of annuity
payments based on a guaranteed minimum value (called the "Protected Income
Value") that increases after the waiting period begins, regardless of the impact
of market performance on your Account Value. The program may be appropriate for
you if you anticipate using your Annuity as a future source of periodic fixed
income payments for the remainder of your life and wish to ensure that the basis
upon which your income payments will be calculated will achieve at least a
minimum amount despite fluctuations in market performance. There is an
additional charge if you elect the GMIB program.
KEY FEATURE -- PROTECTED INCOME VALUE
The Protected Income Value is the minimum amount that we guarantee will be
available (net of any applicable tax charge), after a waiting period of at least
seven years, as a basis to begin receiving fixed annuity payments. The Protected
Income
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Value is initially established on the effective date of the GMIB program and is
equal to your Account Value on such date. Currently, since the GMIB program may
only be elected at issue, the effective date is the Issue Date of the Annuity.
The Protected Income Value is increased daily based on an annual growth rate of
5%, subject to the limitations described below. The Protected Income Value is
referred to as the "Protected Value" in the rider we issue for this benefit. The
5% annual growth rate is referred to as the "Roll-Up Percentage" in the rider we
issue for this benefit.
The Protected Income Value is subject to a limit of 200% (2X) of the sum
of the Protected Income Value established on the effective date of the GMIB
program, or the effective date of any step-up value, plus any additional
Purchase Payments made after the waiting period begins ("Maximum Protected
Income Value"), minus the sum of any reductions in the Protected Income Value
due to withdrawals you make from the Annuity after the waiting period begins.
- - Subject to the maximum age/durational limits described immediately below,
we will no longer increase the Protected Income Value by the 5% annual
growth rate once you reach the Maximum Protected Income Value. However, we
will increase the Protected Income Value by the amount of any additional
Purchase Payments after you reach the Maximum Protected Income Value.
Further, if you make withdrawals after you reach the Maximum Protected
Income Value, we will reduce the Protected Income Value and the Maximum
Protected Income Value by the proportional impact of the withdrawal on
your Account Value.
- - Subject to the Maximum Protected Income Value, we will no longer increase
the Protected Income Value by the 5% annual growth rate after the later of
the anniversary date on or immediately following the Annuitant's 80th
birthday or the 7th anniversary of the later of the effective date of the
GMIB program or the effective date of the most recent step-up. However, we
will increase the Protected Income Value by the amount of any additional
Purchase Payments. Further, if you make withdrawals after the Annuitant
reaches the maximum age/duration limits, we will reduce the Protected
Income Value and the Maximum Protected Income Value by the proportional
impact of the withdrawal on your Account Value.
- - Subject to the Maximum Protected Income Value, if you make an additional
Purchase Payment, we will increase the Protected Income Value by the
amount of the Purchase Payment and will apply the 5% annual growth rate on
the new amount from the date the Purchase Payment is applied.
- - As described below, after the waiting period begins, cumulative
withdrawals each Annuity Year that are up to 5% of the Protected Income
Value on the prior anniversary of the Annuity will reduce the Protected
Income Value by the amount of the withdrawal. Cumulative withdrawals each
Annuity Year in excess of 5% of the Protected Income Value on the prior
anniversary of the Annuity, will reduce the Protected Income Value
proportionately. All withdrawals after the Maximum Protected Income Value
is reached will reduce the Protected Income Value proportionately. The 5%
annual growth rate will be applied to the reduced Protected Income Value
from the date of the withdrawal.
Stepping-Up the Protected Income Value -- You may elect to "step-up" or
"reset" your Protected Income Value if your Account Value is greater than the
current Protected Income Value. Upon exercise of the step-up provision, your
initial Protected Income Value will be reset equal to your current Account
Value. From the date that you elect to step-up the Protected Income Value, we
will apply the 5% annual growth rate to the stepped-up Protected Income Value,
as described above. You can exercise the step-up provision twice while the GMIB
program is in effect, and only while the Annuitant is less than age 76.
- - A new seven-year waiting period will be established upon the effective
date of your election to step-up the Protected Income Value. You cannot
exercise your right to begin receiving annuity payments under the GMIB
program until the end of the new waiting period.
- - The Maximum Protected Income Value will be reset as of the effective date
of any step-up. The new Maximum Protected Income Value will be equal to
200% of the sum of the Protected Income Value as of the effective date of
the step-up plus any subsequent Purchase Payments, minus the impact of any
withdrawals after the date of the step-up.
- - When determining the guaranteed annuity purchase rates for annuity
payments under the GMIB program, we will apply such rates based on the
number of years since the most recent step-up.
- - If you elect to step-up the Protected Income Value under the program, and
on the date you elect to step-up, the
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Living Benefit Programs continued
charges under the GMIB program have changed for new purchasers, your
program may be subject to the new charge going forward.
- - A step-up will increase the dollar for dollar limit on the anniversary of
the Issue Date of the Annuity following such step-up.
Impact of Withdrawals on the Protected Income Value -- Cumulative
withdrawals each Annuity Year up to 5% of the Protected Income Value will reduce
the Protected Income Value on a "dollar-for-dollar" basis (the Protected Income
Value is reduced by the actual amount of the withdrawal). Cumulative withdrawals
in any Annuity Year in excess of 5% of the Protected Income Value will reduce
the Protected Income Value proportionately (see the examples of this calculation
below). The 5% annual withdrawal amount is determined on each anniversary of the
Issue Date (or on the Issue Date for the first Annuity Year) and applies to any
withdrawals during the Annuity Year. This means that the amount available for
withdrawals each Annuity Year on a "dollar-for-dollar" basis is adjusted on each
Annuity anniversary to reflect changes in the Protected Income Value during the
prior Annuity Year.
The following examples of dollar-for-dollar and proportional reductions
assume that: 1.) the Issue Date and the effective date of the GMIB program are
October 13, 2005; 2.) an initial Purchase Payment of $250,000; 3.) an initial
Protected Income Value of $250,000; and 4.) a dollar-for-dollar limit of
$12,500 (5% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 13, 2005 (in the first Annuity Year).
No prior withdrawals have been taken. Immediately prior to the withdrawal, the
Protected Income Value is $251,038.10 (the initial value accumulated for 31 days
at an annual effective rate of 5%). As the amount withdrawn is less than the
dollar-for-dollar limit:
- - the Protected Income Value is reduced by the amount withdrawn (i.e., by
$10,000, from $251,038.10 to $241,038.10).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance
of the first Annuity Year is also reduced by the amount withdrawn (from
$12,500 to $2,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on December 13, 2005 (still within the
first Annuity Year). Immediately before the withdrawal, the Account Value is
$220,000 and the Protected Income Value is $242,006.64. As the amount withdrawn
exceeds the Remaining Limit of $2,500 from Example 1:
- - the Protected Income Value is first reduced by the Remaining Limit (from
$242,006.64 to $239,506.64);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the Remaining Limit ($10,000 -
$2,500, or $7,500).
- B is the Account Value less the Remaining Limit ($220,000 - $2,500,
or $217,500).
The resulting Protected Income Value is: $239,506.64 x (1 - $7,500 /
$217,500), or $231,247.79.
- - The Remaining Limit is set to zero (0) for the balance of the first
Annuity Year.
EXAMPLE 3. RESET OF THE DOLLAR-FOR-DOLLAR LIMIT
A $10,000 withdrawal is made on the first anniversary of the Issue Date,
October 13, 2006 (second Annuity Year). Prior to the withdrawal, the Protected
Income Value is $240,838.37. The Remaining Limit is reset to 5% of this amount,
or $12,041.92. As the amount withdrawn is less than the dollar-for-dollar
limit:
- - the Protected Income Value is reduced by the amount withdrawn (i.e.,
reduced by $10,000, from $240,838.37 to $230,838.37).
- - The Remaining Limit for the balance of the second Annuity Year is also
reduced by the amount withdrawn (from $12,041.92 to $2,041.92).
KEY FEATURE -- GMIB ANNUITY PAYMENTS
You can elect to apply the Protected Income Value to one of the available GMIB
Annuity Payment Options on any anniversary date following the initial waiting
period, or any subsequent waiting period established upon your election to
step-up the Protected Income Value. Once you have completed the waiting period,
you will have a 30-day period each year, prior to the Annuity anniversary,
during which you may elect to begin receiving annuity payments under one of the
available GMIB Annuity Payment Options. You must elect one of the GMIB Annuity
Payment Options by the anniversary of the Annuity's Issue Date on or immediately
following the Annuitant's 95th birthday, except for Annuities used as a funding
vehicle for an IRA, SEP IRA or 403(b), in which case you must elect one of the
GMIB Annuity Payment Options by the anniversary of the Annuity's Issue Date on
or immediately following the Annuitant's 92nd birthday.
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
The amount of each GMIB Annuity Payment will be determined based on the age and,
where permitted by law, sex of the Annuitant by applying the Protected Income
Value (net of any applicable tax charge that may be due) to the GMIB Annuity
Payment Option you choose. We use special annuity purchase rates to calculate
the amount of each payment due under the GMIB Annuity Payment Options. These
special rates for the GMIB Annuity Payment Options are calculated using an
assumed interest rate factor that provides for lower growth in the value applied
to produce annuity payments than if you elected an annuity payment option that
is not part of the GMIB program. These special rates also are calculated using
other factors such as "age setbacks" (use of an age lower than the Annuitant's
actual age) that result in lower payments than would result if you elected an
annuity payment option that is not part of the GMIB program. Use of an age
setback entails a longer assumed life for the Annuitant which in turn results in
lower annuity payments.
ON THE DATE THAT YOU ELECT TO BEGIN RECEIVING GMIB ANNUITY PAYMENTS, WE
GUARANTEE THAT YOUR PAYMENTS WILL BE CALCULATED BASED ON YOUR ACCOUNT VALUE AND
OUR THEN CURRENT ANNUITY PURCHASE RATES IF THE PAYMENT AMOUNT CALCULATED ON THIS
BASIS WOULD BE HIGHER THAN IT WOULD BE BASED ON THE PROTECTED INCOME VALUE AND
THE SPECIAL GMIB ANNUITY PURCHASE RATES.
GMIB ANNUITY PAYMENT OPTION 1 -- PAYMENTS FOR LIFE WITH A CERTAIN PERIOD
Under this option, monthly annuity payments will be made until the death of the
Annuitant. If the Annuitant dies before having received 120 monthly annuity
payments, the remainder of the 120 monthly annuity payments will be made to the
Beneficiary.
GMIB ANNUITY PAYMENT OPTION 2 -- PAYMENTS FOR JOINT LIVES WITH A CERTAIN PERIOD
Under this option, monthly annuity payments will be made until the death of both
the Annuitant and the Joint Annuitant. If the Annuitant and the Joint Annuitant
die before having received 120 monthly annuity payments, the remainder of the
120 monthly annuity payments will be made to the Beneficiary.
- - If the Annuitant dies first, we will continue to make payments until the
later of the death of the Joint Annuitant and the end of the period
certain. However, if the Joint Annuitant is still receiving annuity
payments following the end of the certain period, we will reduce the
amount of each subsequent payment to 50% of the original payment amount.
- - If the Joint Annuitant dies first, we will continue to make payments until
the later of the death of the Annuitant and the end of the period certain.
You cannot withdraw your Account Value or the Protected Income Value under
either GMIB Annuity Payment Option once annuity payments have begun. We may make
other payout frequencies available, such as quarterly, semi-annually or
annually.
OTHER IMPORTANT CONSIDERATIONS
- - You should note that GMIB is designed to provide a type of insurance that
serves as a safety net only in the event your Account Value declines
significantly due to negative investment performance. If your contract
value is not significantly affected by negative investment performance, it
is unlikely that the purchase of the GMIB will result in your receiving
larger annuity payments than if you had not purchased GMIB. This is
because the assumptions that we use in computing the GMIB, such as the
annuity purchase rates, (which include assumptions as to age-setbacks and
assumed interest rates), are more conservative than the assumptions that
we use in computing annuity payout options outside of GMIB. Therefore, you
may generate higher income payments if you were to annuitize a lower
Account Value at the current annuity purchase rates, than if you were to
annuitize under the GMIB with a higher Protected Value than your Account
Value but, at the annuity purchase rates guaranteed under the GMIB. The
GMIB program does not directly affect the Annuity's Account Value,
Surrender Value or the amount payable under either the basic death benefit
provision of the Annuity or any optional death benefit provision. If you
surrender your Annuity, you will receive the current Surrender Value, not
the Protected Income Value. The Protected Income Value is only applicable
if you elect to begin receiving annuity payments under one of the GMIB
annuity options after the waiting period.
- - The Annuity offers other annuity payment options that you can elect which
do not impose an additional charge, but which do not offer to guarantee a
minimum value on which to make annuity payments.
- - Where allowed by law, we reserve the right to limit subsequent purchase
payments if we determine, at our sole discretion, that based on the timing
of your Purchase Payments and withdrawals, your Protected Income Value is
increasing in ways we did not intend. In determining
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Living Benefit Programs continued
whether to limit Purchase Payments, we will look at Pur- chase Payments
which are disproportionately larger than your initial Purchase Payment and
other actions that may artificially increase the Protected Income Value.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
- If you change the Annuitant after the effective date of the GMIB
program, the period of time during which we will apply the 5% annual
growth rate may be changed based on the age of the new Annuitant. If
the new Annuitant would not be eligible to elect the GMIB program
based on his or her age at the time of the change, then the GMIB
program will terminate.
- Annuity payments made under the GMIB program are subject to the same
tax treatment as any other annuity payment.
- At the time you elect to begin receiving annuity payments under the
GMIB program or under any other annuity payment option we make
available, the protection provided by the Annuity's basic death
benefit or any optional death benefit provision you elected will no
longer apply.
ELECTION OF THE PROGRAM
Currently, the GMIB program can only be elected at the time that you purchase
your Annuity. The Annuitant must be age 75 or less as of the effective date of
the GMIB program. In the future, we may offer existing Annuity Owners the option
to elect the GMIB program after the Issue Date of their Annuity, subject to our
eligibility rules and restrictions. If you elect the GMIB program after the
Issue Date of your Annuity, the program will be effective as of the date of
election. Your Account Value as of that date will be used to calculate the
Protected Income Value as of the effective date of the program.
TERMINATION OF THE PROGRAM
The GMIB program cannot be terminated by the Owner once elected. The GMIB
program automatically terminates as of the date the Annuity is fully
surrendered, on the date the death benefit is payable to your Beneficiary
(unless your surviving spouse elects to continue the Annuity), or on the date
that your Account Value is transferred to begin making annuity payments. The
GMIB program may also be terminated if you designate a new Annuitant who would
not be eligible to elect the GMIB program based on his or her age at the time of
the change.
Upon termination of the GMIB program we will deduct the charge from your
Account Value for the portion of the Annuity Year since the prior anniversary of
the Annuity's Issue Date (or the Issue Date if in the first Annuity Year).
CHARGES UNDER THE PROGRAM
Currently, we deduct a charge equal to 0.50% per year of the average Protected
Income Value for the period the charge applies. Because the charge is calculated
based on the average Protected Income Value, it does not increase or decrease
based on changes to the Annuity's Account Value due to market performance. The
dollar amount you pay each year will increase in any year the Protected Income
Value increases, and it will decrease in any year the Protected Income Value
decreases due to withdrawal, irrespective of whether your Account Value
increases or decreases.
The charge is deducted annually in arrears each Annuity Year on the
anniversary of the Issue Date of the Annuity. We deduct the amount of the charge
pro-rata from the Account Value allocated to the variable investment options and
the Fixed Allocations. No MVA will apply to Account Value deducted from a Fixed
Allocation. If you surrender your Annuity, begin receiving annuity payments
under the GMIB program or any other annuity payment option we make available
during an Annuity Year, or the GMIB program terminates, we will deduct the
charge for the portion of the Annuity Year since the prior anniversary of the
Annuity's Issue Date (or the Issue Date if in the first Annuity Year).
No charge applies after the Annuity Date.
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
LIFETIME FIVE INCOME BENEFIT (LIFETIME FIVE)
THE LIFETIME FIVE INCOME BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL
AND WILL BE OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE
REGULATORY APPROVAL IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY
DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. CURRENTLY, LIFETIME FIVE CAN BE
ELECTED ONLY ONCE EACH ANNUITY YEAR, AND ONLY WHERE THE ANNUITANT AND THE
OWNER ARE THE SAME PERSON OR, IF THE ANNUITY OWNER IS AN ENTITY, WHERE THERE
IS ONLY ONE ANNUITANT. WE RESERVE THE RIGHT TO LIMIT THE ELECTION FREQUENCY
IN THE FUTURE. BEFORE MAKING ANY SUCH CHANGE TO THE ELECTION FREQUENCY, WE
WILL PROVIDE PRIOR NOTICE TO OWNERS WHO HAVE AN EFFECTIVE LIFETIME FIVE
INCOME BENEFIT. THE ANNUITANT MUST BE AT LEAST 45 YEARS OLD WHEN THE PROGRAM
IS ELECTED. THE LIFETIME FIVE INCOME BENEFIT PROGRAM IS NOT AVAILABLE IF YOU
ELECT THE GUARANTEED RETURN OPTION, GUARANTEED RETURN OPTION PLUS,
GUARANTEED MINIMUM WITHDRAWAL BENEFIT OR THE GUARANTEED MINIMUM INCOME
BENEFIT RIDER. AS LONG AS YOUR LIFETIME FIVE INCOME BENEFIT IS IN EFFECT,
YOU MUST ALLOCATE YOUR ACCOUNT VALUE IN ACCORDANCE WITH AN ELIGIBLE MODEL
UNDER OUR ASSET ALLOCATION PROGRAMS, WHICH ARE GENERALLY DESCRIBED IN THE
"ARE ANY ASSET ALLOCATION PROGRAMS AVAILABLE?" SECTION ABOVE. FOR FURTHER
INFORMATION ON ASSET ALLOCATION PROGRAMS, PLEASE CONSULT WITH YOUR
INVESTMENT PROFESSIONAL OR CALL 1-800-752-6342.
We offer a program that guarantees your ability to withdraw amounts equal
to a percentage of an initial principal value (called the "Protected Withdrawal
Value"), regardless of the impact of market performance on your Account Value,
subject to our program rules regarding the timing and amount of withdrawals.
There are two options -- one is designed to provide an annual withdrawal amount
for life (the "Life Income Benefit") and the other is designed to provide a
greater annual withdrawal amount as long as there is Protected Withdrawal Value
(adjusted as described below) (the "Withdrawal Benefit"). If there is no
Protected Withdrawal Value, the withdrawal benefit will be zero. You do not
choose between these two options; each option will continue to be available as
long as the Annuity has an Account Value and the Lifetime Five is in effect.
Certain benefits under Lifetime Five may remain in effect even if the Account
Value of the Annuity is zero. The program may be appropriate if you intend to
make periodic withdrawals from your Annuity and wish to ensure that market
performance will not affect your ability to receive annual payments. You are not
required to make withdrawals as part of the program -- the guarantees are not
lost if you withdraw less than the maximum allowable amount each year under the
rules of the program.
KEY FEATURE -- PROTECTED WITHDRAWAL VALUE
The Protected Withdrawal Value is initially used to determine the amount of each
initial annual payment under the Life Income Benefit and the Withdrawal Benefit.
The initial Protected Withdrawal Value is determined as of the date you make
your first withdrawal under the Annuity following your election of Lifetime
Five. The initial Protected Withdrawal Value is equal to the greater of (A) the
Account Value on the date you elect Lifetime Five, plus any additional Purchase
Payments each growing at 5% per year from the date of your election of the
program, or application of the Purchase Payment to your Annuity, as applicable,
until the date of your first withdrawal or the 10th anniversary of the benefit
effective date, if earlier (B) the Account Value as of the date of the first
withdrawal from your Annuity, prior to the withdrawal, and (C) the highest
Account Value on each Annuity anniversary prior to the first withdrawal or on
the first 10 Annuity anniversaries if earlier than the date of your first
withdrawal after the benefit effective date. Each value is increased by the
amount of any subsequent Purchase Payments.
- - If you elect the Lifetime Five program at the time you purchase your
Annuity, the Account Value will be your initial Purchase Payment.
- - For existing Owners who are electing the Lifetime Five benefit, the
Account Value on the date of your election of the Lifetime Five program
will be used to determine the initial Protected Withdrawal Value.
- - If you make additional Purchase Payments after your first withdrawal, the
Protected Withdrawal Value will be increased by the amount of each
additional Purchase Payment.
You may elect to step-up your Protected Withdrawal Value if, due to
positive market performance, your Account Value is greater than the Protected
Withdrawal Value. You are eligible
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Living Benefit Programs continued
to step-up the Protected Withdrawal Value on or after the 5th anniversary of the
first withdrawal under the Lifetime Five program. The Protected Withdrawal Value
can be stepped up again on or after the 5th anniversary following the preceding
step-up. If you elect to step-up the Protected Withdrawal Value under the
program, and on the date you elect to step-up, the charges under the Lifetime
Five program have changed for new purchasers, your program may be subject to the
new charge going forward.
Upon election of the step-up, we increase the Protected Withdrawal Value to be
equal to the then current Account Value. For example, assume your initial
Protected Withdrawal Value was $100,000 and you have made cumulative withdrawals
of $40,000, reducing the Protected Withdrawal Value to $60,000. On the date you
are eligible to step-up the Protected Withdrawal Value, your Account Value is
equal to $75,000. You could elect to step-up the Protected Withdrawal Value to
$75,000 on the date you are eligible. If your current Annual Income Amount and
Annual Withdrawal Amount are less than they would be if we did not reflect the
step-up in Protected Withdrawal Value, then we will increase these amounts to
reflect the step-up as described below.
The Protected Withdrawal Value is reduced each time a withdrawal is made on a
dollar-for-dollar basis up to 7% per Annuity Year of the Protected Withdrawal
Value and on the greater of a dollar-for-dollar basis or a pro-rata basis for
withdrawals in an Annuity Year in excess of that amount until the Protected
Withdrawal Value is reduced to zero. At that point the Annual Withdrawal Amount
will be zero until such time (if any) as the Annuity reflects a Protected
Withdrawal Value (for example, due to a step-up or additional Purchase Payments
being made into the Annuity).
KEY FEATURE -- ANNUAL INCOME AMOUNT UNDER THE LIFE INCOME BENEFIT
The initial Annual Income Amount is equal to 5% of the initial Protected
Withdrawal Value. Under the Lifetime Five program, if your cumulative
withdrawals in an Annuity Year are less than or equal to the Annual Income
Amount, they will not reduce your Annual Income Amount in subsequent Annuity
Years. If your cumulative withdrawals are in excess of the Annual Income Amount
("Excess Income"), your Annual Income Amount in subsequent years will be reduced
(except with regard to required minimum distributions) by the result of the
ratio of the Excess Income to the Account Value immediately prior to such
withdrawal (see examples of this calculation below). Reductions include the
actual amount of the withdrawal, including any CDSC that may apply. A withdrawal
can be considered Excess Income under the Life Income Benefit even though it
does not exceed the Annual Withdrawal Amount under the Withdrawal Benefit. When
you elect a step-up, your Annual Income Amount increases to equal 5% of your
Account Value after the step-up if such amount is greater than your Annual
Income Amount. Your Annual Income Amount also increases if you make additional
Purchase Payments. The amount of the increase is equal to 5% of any additional
Purchase Payments. Any increase will be added to your Annual Income Amount
beginning on the day that the step-up is effective or the Purchase Payment is
made. A determination of whether you have exceeded your Annual Income Amount is
made at the time of each withdrawal; therefore a subsequent increase in the
Annual Income Amount will not offset the effect of a withdrawal that exceeded
the Annual Income Amount at the time the withdrawal was made.
KEY FEATURE -- ANNUAL WITHDRAWAL AMOUNT UNDER THE WITHDRAWAL BENEFIT
The initial Annual Withdrawal Amount is equal to 7% of the initial Protected
Withdrawal Value. Under the Lifetime Five program, if your cumulative
withdrawals each Annuity Year are less than or equal to the Annual Withdrawal
Amount, your Protected Withdrawal Value will be reduced on a dollar-for-dollar
basis. If your cumulative withdrawals are in excess of the Annual Withdrawal
Amount ("Excess Withdrawal"), your Annual Withdrawal Amount will be reduced
(except with regard to required minimum distributions) by the result of the
ratio of the Excess Withdrawal to the Account Value immediately prior to such
withdrawal (see the examples of this calculation below). Reductions include the
actual amount of the withdrawal, including any CDSC that may apply. When you
elect a step-up, your Annual Withdrawal Amount increases to equal 7% of your
Account Value after the step-up if such amount is greater than your Annual
Withdrawal Amount. Your Annual Withdrawal Amount also increases if you make
additional Purchase Payments. The amount of the increase is equal to 7% of any
additional Purchase Payments. A determination of whether you have exceeded your
Annual Withdrawal Amount is made at the time of each withdrawal; therefore, a
subsequent increase
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
in the Annual Withdrawal Amount will not offset the effect of a withdrawal that
exceeded the Annual Withdrawal Amount at the time the withdrawal was made.
The Lifetime Five program does not affect your ability to make withdrawals under
your Annuity or limit your ability to request withdrawals that exceed the Annual
Income Amount and the Annual Withdrawal Amount. You are not required to withdraw
all or any portion of the Annual Withdrawal Amount or Annual Income Amount in
each Annuity Year.
- - If, cumulatively, you withdraw an amount less than the Annual Withdrawal
Amount under the Withdrawal Benefit in any Annuity Year, you cannot
carry-over the unused portion of the Annual Withdrawal Amount to
subsequent Annuity Years. However, because the Protected Withdrawal Value
is only reduced by the actual amount of withdrawals you make under these
circumstances, any unused Annual Withdrawal Amount may extend the period
of time until the remaining Protected Withdrawal Value is reduced to zero.
- - If, cumulatively, you withdraw an amount less than the Annual Income
Amount under the Life Income Benefit in any Annuity Year, you cannot
carry-over the unused portion of the Annual Income Amount to subsequent
Annuity Years. However, because the Protected Withdrawal Value is only
reduced by the actual amount of withdrawals you make under these
circumstances, any unused Annual Income Amount may extend the period of
time until the remaining Protected Withdrawal Value is reduced to zero.
The following examples of dollar-for-dollar and proportional reductions
and the step-up of the Protected Withdrawal Value, Annual Withdrawal Amount and
Annual Income Amount assume: 1.) the Issue Date and the Effective Date of the
Lifetime Five program are February 1, 2005; 2.) an initial Purchase Payment of
$250,000; 3.) the Account Value on February 1, 2006 is equal to $265,000; 4.)
the first withdrawal occurs on March 1, 2006 when the Account Value is equal to
$263,000; and 5.) the Account Value on March 1, 2011 is equal to $240,000.
The initial Protected Withdrawal Value is calculated as the greatest of
(a), (b) and (c):
(a) Purchase payment accumulated at 5% per year from February 1, 2005
until March 1, 2006 (393 days) = $250,000 x 1.05(393/365) =
$263,484.33
(b) Account Value on March 1, 2006 (the date of the first withdrawal) =
$263,000
(c) Account Value on February 1, 2006 (the first Annuity Anniversary) =
$265,000
Therefore, the initial Protected Withdrawal Value is equal to $265,000.
The Annual Withdrawal Amount is equal to $18,550 under the Withdrawal Benefit
(7% of $265,000). The Annual Income Amount is equal to $13,250 under the Life
Income Benefit (5% of $265,000).
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
If $10,000 was withdrawn (less than both the Annual Income Amount and the
Annual Withdrawal Amount) on March 1, 2006, then the following values would
result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 -
$10,000 = $8,550 Annual Withdrawal Amount for future Annuity Years remains
at $18,550
- - Remaining Annual Income Amount for current Annuity Year = $13,250 -
$10,000 = $3,250 Annual Income Amount for future Annuity Years remains at
$13,250
- - Protected Withdrawal Value is reduced by $10,000 from $265,000 to $255,000
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
(a) If $15,000 was withdrawn (more than the Annual Income Amount but
less than the Annual Withdrawal Amount) on March 1, 2006, then the
following values would result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 -
$15,000 = $3,550 Annual Withdrawal Amount for future Annuity Years remains
at $18,550
- - Remaining Annual Income Amount for current Annuity Year = $0 Excess of
withdrawal over the Annual Income Amount ($15,000 - $13,250 = $1,750)
reduces Annual Income Amount for future Annuity Years.
- - Reduction to Annual Income Amount = Excess Income/ Account Value before
Excess Income - Annual Income Amount = $1,750 / ($263,000 - $13,250) -
$13,250 = $93 Annual Income Amount for future Annuity Years = $13,250 -
$93 = $13,157
- - Protected Withdrawal Value is reduced by $15,000 from $265,000 to $250,000
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Living Benefit Programs continued
(b) If $25,000 was withdrawn (more than both the Annual Income Amount
and the Annual Withdrawal Amount) on March 1, 2006, then the
following values would result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Withdrawal Amount ($25,000 - $18,550
= $6,450) reduces Annual Withdrawal Amount for future Annuity Years.
- - Reduction to Annual Withdrawal Amount = Excess Withdrawal/Account Value
before Excess Withdrawal x Annual Withdrawal Amount = $6,450 / ($263,000 -
$18,550) x $18,550 = $489
Annual Withdrawal Amount for future Annuity Years = $18,550 - $489 =
$18,061
- - Remaining Annual Income Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Income Amount ($25,000 - $13,250 =
$11,750) reduces Annual Income Amount for future Annuity Years.
- - Reduction to Annual Income Amount = Excess Income/ Account Value before
Excess Income x Annual Income Amount = $11,750 / ($263,000 - $13,250) x
$13,250 = $623 Annual Income Amount for future Annuity Years = $13,250 -
$623 = $12,627
- - Protected Withdrawal Value is first reduced by the Annual Withdrawal
Amount ($18,550) from $265,000 to $246,450. It is further reduced by the
greater of a dollar-for-dollar reduction or a proportional reduction.
Dollar-for-dollar reduction = $25,000 - $18,550 = $6,450
- - Proportional reduction = Excess Withdrawal / Account Value before Excess
Withdrawal x Protected Withdrawal Value = $6,450 / ($263,000 - $18,550) x
$246,450 = $6,503 Protected Withdrawal Value = $246,450 - max {$6,450,
6,503} = $239,947
EXAMPLE 3. STEP-UP OF THE PROTECTED WITHDRAWAL VALUE
If the Annual Income Amount ($13,250) is withdrawn each year starting on March
1, 2006 for a period of 5 years, the Protected Withdrawal Value on March 1, 2011
would be reduced to $198,750 {$265,000 - ($13,250 - 5)}. If a step-up is elected
on March 1, 2011, then the following values would result:
- - Protected Withdrawal Value = Account Value on March 1, 2011 = $240,000
- - Annual Income Amount is equal to the greater of the current Annual Income
Amount or 5% of the stepped up Protected Withdrawal Value. Current Annual
Income Amount is $13,250. 5% of the stepped-up Protected Withdrawal Value
is 5% of $240,000, which is $12,000. Therefore, the Annual Income Amount
remains $13,250.
- - Annual Withdrawal Amount is equal to the greater of the current Annual
Withdrawal Amount or 7% of the stepped up Protected Withdrawal Value.
Current Annual Withdrawal Amount is $18,550. 7% of the stepped-up
Protected Withdrawal Value is 7% of $240,000, which is $16,800. Therefore
the Annual Withdrawal Amount remains $18,550.
BENEFITS UNDER THE LIFETIME FIVE PROGRAM
- - If your Account Value is equal to zero, and the cumulative withdrawals in
the current Annuity Year are greater than the Annual Withdrawal Amount,
the Lifetime Five program will terminate. To the extent that your Account
Value was reduced to zero as a result of cumulative withdrawals that are
equal to or less than the Annual Income Amount and amounts are still
payable under both the Life Income Benefit and the Withdrawal Benefit, you
will be given the choice of receiving the payments under the Life Income
Benefit or under the Withdrawal Benefit. Once you make this election we
will make an additional payment for that Annuity Year equal to either the
remaining Annual Income Amount or Annual Withdrawal Amount for the Annuity
Year, if any, depending on the option you choose. In subsequent Annuity
Years we make payments that equal either the Annual Income Amount or the
Annual Withdrawal Amount as described in this Prospectus. You will not be
able to change the option after your election and no further Purchase
Payments will be accepted under your Annuity. If you do not make an
election, we will pay you annually under the Life Income Benefit. To the
extent that cumulative withdrawals in the current Annuity Year that
reduced your Account Value to zero are more than the Annual Income Amount
but less than or equal to the Annual Withdrawal Amount and amounts are
still payable under the Withdrawal Benefit, you will receive the payments
under the Withdrawal Benefit. In the year of a withdrawal that reduced
your Account Value to zero, we will make an additional payment to equal
any remaining Annual Withdrawal Amount and make payments equal to the
Annual Withdrawal Amount in each subsequent year (until the Protected
Withdrawal Value is depleted). Once your Account Value equals zero no
further Purchase Payments will be accepted under your Annuity.
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
- - If annuity payments are to begin under the terms of your Annuity or if you
decide to begin receiving annuity payments and there is any Annual Income
Amount due in subsequent Annuity Years or any remaining Protected
Withdrawal Value, you can elect one of the following three options:
(1) apply your Account Value to any annuity option available; or
(2) request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We
make such annuity payments until the Annuitant's death; or
(3) request that, as of the date annuity payments are to begin, we pay
out any remaining Protected Withdrawal Value as annuity payments.
Each year such annuity payments will equal the Annual Withdrawal
Amount or the remaining Protected Withdrawal Value if less. We make
such annuity payments until the earlier of the Annuitant's death or
the date the Protected Withdrawal Value is depleted.
We must receive your request in a form acceptable to us at our office.
- - In the absence of an election when mandatory annuity payments are to
begin, we will make annual annuity payments as a single life fixed annuity
with five payments certain using the greater of the annuity rates then
currently available or the annuity rates guaranteed in your Annuity. The
amount that will be applied to provide such annuity payments will be the
greater of:
(1) the present value of future Annual Income Amount payments. Such
present value will be calculated using the greater of the single
life fixed annuity rates then currently available or the single life
fixed annuity rates guaranteed in your Annuity; and
(2) the Account Value.
- - If no withdrawal was ever taken, we will determine a Protected Withdrawal
Value and calculate an Annual Income Amount and an Annual Withdrawal
Amount as if you made your first withdrawal on the date the annuity
payments are to begin.
OTHER IMPORTANT CONSIDERATIONS
- - Withdrawals under the Lifetime Five program are subject to all of the
terms and conditions of the Annuity, including any CDSC.
- - Withdrawals made while the Lifetime Five program is in effect will be
treated, for tax purposes, in the same way as any other withdrawals under
the Annuity. The Lifetime Five program does not directly affect the
Annuity's Account Value or Surrender Value, but any withdrawal will
decrease the Account Value by the amount of the withdrawal (plus any
applicable CDSC). If you surrender your Annuity, you will receive the
current Surrender Value, not the Protected Withdrawal Value.
- - You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the Lifetime Five program. The
Lifetime Five program provides a guarantee that if your Account Value
declines due to market performance, you will be able to receive your
Protected Withdrawal Value or Annual Income Amount in the form of periodic
benefit payments.
- - You must allocate your Account Value in accordance with an eligible model
under an available asset allocation program or in accordance with other
options that we may permit in order to elect and maintain the Lifetime
Five program. Asset allocation programs are described generally in the
"Are Any Asset Allocation Programs Available?" section above. For further
information on asset allocation programs, please consult with your
Investment Professional or call 1-800-752-6342.
ELECTION OF THE PROGRAM
The Lifetime Five program can be elected at the time that you purchase your
Annuity. We also offer existing Owners the option to elect the Lifetime Five
program after the Issue Date of their Annuity, subject to our eligibility rules
and restrictions. Your Account Value as the date of election will be used as a
basis to calculate the initial Protected Withdrawal Value, the initial Protected
Annual Withdrawal Amount, and the Annual Income Amount.
TERMINATION OF THE PROGRAM
The program terminates automatically when your Protected Withdrawal Value and
Annual Income Amount equals zero. You may terminate the program at any time by
notifying us. If you terminate the program, any guarantee provided by the
benefit will terminate as of the date the termination is effective. The program
terminates upon your surrender of the Annuity, upon the death of the Annuitant
(but your surviving spouse may elect a new Lifetime Five if your spouse elects
the spousal continuance option and your spouse would then be eligible to elect
the benefit if he or she was a new purchaser), upon a change in ownership of the
Annuity that changes the tax identification number of the Owner, upon change in
the Annuitant or upon your election to begin receiving annuity payments.
The charge for the Lifetime Five program will no longer be deducted from
your Account Value upon termination of the program.
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Living Benefit Programs continued
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS If you purchase an Annuity
as an investment vehicle for "qualified" investments, including an IRA, SEP-IRA,
or Tax Sheltered Annuity (or 403(b)), the minimum distribution rules under the
Code require that you begin receiving periodic amounts from your Annuity
beginning after age 70 1/2. The amount required under the Code may exceed the
Annual Withdrawal Amount and the Annual Income Amount, which will cause us to
increase the Annual Income Amount and the Annual Withdrawal Amount in any
Annuity Year that required minimum distributions due from your Annuity are
greater than such amounts. Any such payments will reduce your Protected
Withdrawal Value. In addition, the amount and duration of payments under the
annuity payment and death benefit provisions may be adjusted so that the
payments do not trigger any penalty or excise taxes due to tax considerations
such as minimum distribution requirements.
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Death Benefit
WHAT TRIGGERS THE PAYMENT OF A DEATH BENEFIT?
The Annuity provides a Death Benefit during its accumulation period. If the
Annuity is owned by one or more natural persons, the Death Benefit is payable
upon the first death of an Owner. IF THE ANNUITY IS OWNED BY AN ENTITY, THE
DEATH BENEFIT IS PAYABLE UPON THE ANNUITANT'S DEATH, IF THERE IS NO CONTINGENT
ANNUITANT. If a Contingent Annuitant was designated before the Annuitant's death
and the Annuitant dies, then the Contingent Annuitant becomes the Annuitant and
a Death Benefit will not be paid at that time. The person upon whose death the
Death Benefit is paid is referred to below as the "decedent."
BASIC DEATH BENEFIT
The Annuity provides a basic Death Benefit at no additional charge. The
Insurance Charge we deduct daily from your Account Value allocated to the
Sub-accounts is used, in part, to pay us for the risk we assume in providing
the basic Death Benefit guarantee under the Annuity. The Annuity also offers
three different optional Death Benefits that can be purchased for an additional
charge. The additional charge is deducted to compensate American Skandia for
providing increased insurance protection under the optional Death Benefits.
NOTWITHSTANDING THE ADDITIONAL PROTECTION PROVIDED UNDER THE OPTIONAL DEATH
BENEFITS, THE ADDITIONAL COST HAS THE IMPACT OF REDUCING THE NET PERFORMANCE OF
THE INVESTMENT OPTIONS.
The BASIC DEATH BENEFIT is the greater of:
- - The sum of all Purchase Payments less the sum of all proportional
withdrawals.
- - The sum of your Account Value in the variable investment options and your
Interim Value in the Fixed Allocations.
"PROPORTIONAL WITHDRAWALS" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn. For
example, a withdrawal of 50% of Account Value would be considered as a 50%
reduction in Purchase Payments for purposes of calculating the basic Death
Benefit.
OPTIONAL DEATH BENEFITS
Three optional Death Benefits are offered for purchase with your Annuity to
provide an enhanced level of protection for your beneficiaries.
CURRENTLY, THESE BENEFITS ARE ONLY OFFERED IN THOSE JURISDICTIONS WHERE WE
HAVE RECEIVED REGULATORY APPROVAL AND MUST BE ELECTED AT THE TIME THAT YOU
PURCHASE YOUR ANNUITY. WE MAY, AT A LATER DATE, ALLOW EXISTING ANNUITY
OWNERS TO PURCHASE AN OPTIONAL DEATH BENEFIT SUBJECT TO OUR RULES AND ANY
CHANGES OR RESTRICTIONS IN THE BENEFITS. CERTAIN TERMS AND CONDITIONS MAY
DIFFER BETWEEN JURISDICTIONS ONCE APPROVED AND IF YOU PURCHASE YOUR ANNUITY
AS PART OF AN EXCHANGE, REPLACEMENT OR TRANSFER, IN WHOLE OR IN PART, FROM
ANY OTHER ANNUITY WE ISSUE. THE "COMBINATION 5% ROLL-UP AND HIGHEST
ANNIVERSARY VALUE" DEATH BENEFIT MAY ONLY BE ELECTED INDIVIDUALLY, AND
CANNOT BE ELECTED IN COMBINATION WITH ANY OTHER OPTIONAL DEATH BENEFIT.
ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT
The Enhanced Beneficiary Protection Optional Death Benefit can provide
additional amounts to your Beneficiary that may be used to offset federal and
state taxes payable on any taxable gains in your Annuity at the time of your
death. Whether this benefit is appropriate for you may depend on your particular
circumstances, including other financial resources that may be available to your
Beneficiary to pay taxes on your Annuity should you die during the accumulation
period. No benefit is payable if death occurs on or after the Annuity Date.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT PROVIDES A
BENEFIT THAT IS PAYABLE IN ADDITION TO THE BASIC DEATH BENEFIT. If the Annuity
has one Owner, the Owner must be age 75 or less at the time the benefit is
purchased. If the Annuity has joint Owners, the oldest Owner must be age 75 or
less. If the Annuity is owned by an entity, the Annuitant must be age 75 or
less.
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Death Benefit continued
CALCULATION OF ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT
If you purchase the Enhanced Beneficiary Protection Optional Death Benefit, the
Death Benefit is calculated as follows:
1. the BASIC DEATH BENEFIT described above; PLUS
2. 40% of your "GROWTH" under the Annuity, as defined below.
"GROWTH" means the sum of your Account Value in the variable investment
options and your Interim Value in the Fixed Allocations, minus the total of all
Purchase Payments reduced by the sum of all proportional withdrawals.
"PROPORTIONAL WITHDRAWALS" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT IS SUBJECT TO A
MAXIMUM OF 100% OF ALL PURCHASE PAYMENTS APPLIED TO THE ANNUITY AT LEAST 12
MONTHS PRIOR TO THE DEATH OF THE DECEDENT THAT TRIGGERS THE PAYMENT OF THE
DEATH BENEFIT.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT DESCRIBED ABOVE
IS CURRENTLY BEING OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED
REGULATORY APPROVAL. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. PLEASE REFER TO THE SECTION ENTITLED "TAX
CONSIDERATIONS" FOR A DISCUSSION OF SPECIAL TAX CONSIDERATIONS FOR
PURCHASERS OF THIS BENEFIT. THE ENHANCED BENEFICIARY PROTECTION DEATH
BENEFIT IS NOT AVAILABLE IF YOU ELECT THE "COMBINATION 5% ROLL-UP AND
HIGHEST ANNIVERSARY VALUE" DEATH BENEFIT.
See Appendix B for examples of how the Enhanced Beneficiary Protection
Optional Death Benefit is calculated.
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT ("HAV")
If the Annuity has one Owner, the Owner must be age 79 or less at the time
Highest Anniversary Value Optional Death Benefit is purchased. If the Annuity
has joint Owners, the oldest Owner must be age 79 or less. If the Annuity is
owned by an entity, the Annuitant must be age 79 or less.
CERTAIN OF THE PORTFOLIOS OFFERED AS SUB-ACCOUNTS UNDER THE ANNUITY ARE
NOT AVAILABLE IF YOU ELECT THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT. IN
ADDITION, WE RESERVE THE RIGHT TO REQUIRE YOU TO USE CERTAIN ASSET ALLOCATION
MODEL(S) IF YOU ELECT THIS DEATH BENEFIT.
CALCULATION OF HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
The HAV Death Benefit depends on whether death occurs before or after the Death
Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value as of the Owner's date of death.
If the Owner dies on or after the Death Benefit Target Date, the Death
Benefit equals the greater of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value on the Death Benefit Target Date plus
the sum of all Purchase Payments less the sum of all proportional
withdrawals since the Death Benefit Target Date.
THE AMOUNT DETERMINED BY THIS CALCULATION IS INCREASED BY ANY PURCHASE
PAYMENTS RECEIVED AFTER THE OWNER'S DATE OF DEATH AND DECREASED BY ANY
PROPORTIONAL WITHDRAWALS SINCE SUCH DATE.
THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT DESCRIBED ABOVE IS CURRENTLY
BEING OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY
APPROVAL. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE
APPROVED. THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT IS NOT AVAILABLE IF
YOU ELECT THE "COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE" OR THE
"HIGHEST DAILY VALUE" DEATH BENEFIT.
Please refer to the definition of Death Benefit Target Date below. This
death benefit may not be an appropriate feature where the Owner's age is near
the age specified in the Death Benefit Target Date. This is because the benefit
may not have the same potential for growth as it otherwise would, since there
will be fewer contract anniversaries before the death benefit target date is
reached. The death benefit target date under this death benefit is earlier than
the death benefit target date under the Combination 5% Roll-up and Highest
Anniversary Value Death Benefit for Owners who are age 76 or older when the
contract is issued, which may result in a lower value
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
on the death benefit, since there will be fewer contract anniversaries before
the death benefit target date is reached. See Appendix B for examples of how the
Highest Anniversary Value Death Benefit is calculated.
COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
If the Annuity has one Owner, the Owner must be age 79 or less at the time the
Combination 5% Roll-up and HAV Optional Death Benefit is purchased. If the
Annuity has joint Owners, the oldest Owner must be age 79 or less. If the
Annuity is owned by an entity, the Annuitant must be age 79 or less.
CERTAIN OF THE PORTFOLIOS OFFERED AS SUB-ACCOUNTS UNDER THE ANNUITY ARE
NOT AVAILABLE IF YOU ELECT THE COMBINATION 5% ROLL-UP AND HAV DEATH BENEFIT. IN
ADDITION, WE RESERVE THE RIGHT TO REQUIRE YOU TO USE CERTAIN ASSET ALLOCATION
MODEL(S) IF YOU ELECT THIS DEATH BENEFIT.
CALCULATION OF THE COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH
BENEFIT
The Combination 5% Roll-up and HAV Death Benefit equals the greatest of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value death benefit described above, and
3. 5% Roll-up described below.
The calculation of the 5% Roll-up depends on whether death occurs before
or after the Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date the 5% Roll up is
equal to:
- - all Purchase Payments increasing at an annual effective interest rate of
5% starting on the date that each Purchase Payment is made and ending on
the Owner's date of death;
MINUS
- - the sum of all withdrawals, dollar for dollar up to 5% of the death
benefit's value as of the prior contract anniversary (or issue date if the
withdrawal is in the first contract year). Any withdrawals in excess of
the 5% dollar for dollar limit are proportional.
If the Owner dies on or after the Death Benefit Target Date the 5% Roll-up
is equal to:
- - the 5% Roll-up value as of the Death Benefit Target Date increased by
total Purchase Payments made after the Death Benefit Target Date;
MINUS
- - the sum of all withdrawals which reduce the 5% Roll-up proportionally.
PLEASE REFER TO THE DEFINITIONS OF DEATH BENEFIT TARGET DATE BELOW. THIS
DEATH BENEFIT MAY NOT BE AN APPROPRIATE FEATURE WHERE THE OWNER'S AGE IS NEAR
THE AGE SPECIFIED IN THE DEATH BENEFIT TARGET DATE. THIS IS BECAUSE THE BENEFIT
MAY NOT HAVE THE SAME POTENTIAL FOR GROWTH AS IT OTHERWISE WOULD, SINCE THERE
WILL BE FEWER ANNUITY ANNIVERSARIES BEFORE THE DEATH BENEFIT TARGET DATE IS
REACHED.
THE COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
DESCRIBED ABOVE IS CURRENTLY BEING OFFERED IN THOSE JURISDICTIONS WHERE WE
HAVE RECEIVED REGULATORY APPROVAL. CERTAIN TERMS AND CONDITIONS MAY DIFFER
BETWEEN JURISDICTIONS ONCE APPROVED. THE "COMBINATION 5% ROLL-UP AND HIGHEST
ANNIVERSARY VALUE" DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT ANY OTHER
OPTIONAL DEATH BENEFIT.
See Appendix B for examples of how the Combination 5% Roll-up and Highest
Anniversary Value Death Benefit is calculated.
KEY TERMS USED WITH THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT AND THE
COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT:
- - The Death Benefit Target Date for the Highest Anniversary Value Death
Benefit is the contract anniversary on or after the 80th birthday of the
current Owner, the oldest of either joint Owner or the Annuitant, if
entity owned.
- - The Death Benefit Target Date for the Combination 5% Roll-up and HAV Death
Benefit is the later of the contract anniversary on or after the 80th
birthday of the current Owner, the oldest of either joint Owner or the
Annuitant, if entity owned, or five years after the Issue Date of the
Annuity.
- - The Highest Anniversary Value equals the highest of all previous
"Anniversary Values" less proportional withdrawals since such anniversary
and plus any Purchase Payments since such anniversary.
- - The Anniversary Value is the Account Value as of each anniversary of the
Issue Date of the Annuity. The Anniversary Value on the Issue Date is
equal to your Purchase Payment.
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Death Benefit continued
- - Proportional withdrawals are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
Proportional withdrawals result in a reduction to the Highest Anniversary
Value or 5% Roll-up value by reducing such value in the same proportion as
the Account Value was reduced by the withdrawal as of the date the
withdrawal occurred. For example, if your Highest Anniversary Value or 5%
Roll-up value is $125,000 and you subsequently withdraw $10,000 at a time
when your Account Value is equal to $100,000 (a 10% reduction), when
calculating the optional Death Benefit we will reduce your Highest
Anniversary Value ($125,000) by 10% or $12,500.
HIGHEST DAILY VALUE DEATH BENEFIT ("HDV")
If the Annuity has one Owner, the Owner must be age 79 or less at the time the
Highest Daily Value Death Benefit is elected. If the Annuity has joint Owners,
the older Owner must be age 79 or less. If there are Joint Owners, death of the
Owner refers to the first to die of the Joint Owners. If the Annuity is owned by
an entity, the Annuitant must be age 79 or less and death of the Owner refers to
the death of the Annuitant.
IF YOU ELECT THIS BENEFIT, YOU MUST ALLOCATE YOUR ACCOUNT VALUE IN
ACCORDANCE WITH AN ELIGIBLE MODEL UNDER AN AVAILABLE ASSET ALLOCATION PROGRAM OR
IN ACCORDANCE WITH OTHER OPTIONS THAT WE MAY PERMIT. Because this benefit, once
elected, may not be terminated, you must keep your Account Value allocated to an
eligible model throughout the life of the Annuity. You may, however, switch from
one eligible model to another eligible model. Our asset allocation programs are
generally described in the "Are Any Asset Allocation Programs Available?"
section above. For further information on asset allocation programs, please
consult with your Investment Professional or call 1-800-752-6342.
The HDV Death Benefit depends on whether death occurs before or after the
Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the basic Death Benefit described above; and
2. the HDV as of the Owner's date of death.
If the Owner dies on or after the Death Benefit Target Date, the Death
Benefit equals the greater of:
1. the basic Death Benefit described above; and
2. the HDV on the Death Benefit Target Date plus the sum of all
Purchase Payments less the sum of all proportional withdrawals since
the Death Benefit Target Date.
The amount determined by this calculation is increased by any Purchase
Payments received after the Owner's date of death and decreased by any
proportional withdrawals since such date.
THE HIGHEST DAILY VALUE DEATH BENEFIT DESCRIBED ABOVE IS CURRENTLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL.
CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE APPROVED.
THE HIGHEST DAILY VALUE DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT THE
GUARANTEED RETURN OPTION, GUARANTEED RETURN OPTION PLUS, THE "COMBINATION 5%
ROLL-UP AND HIGHEST ANNIVERSARY VALUE" DEATH BENEFIT, OR THE HIGHEST
ANNIVERSARY VALUE DEATH BENEFIT.
KEY TERMS USED WITH THE HIGHEST DAILY VALUE DEATH BENEFIT:
- - The Death Benefit Target Date for the Highest Daily Value Death Benefit is
the later of the Annuity anniversary on or after the 80th birthday of the
current Owner, or the older of either the joint Owner or the Annuitant, if
entity owned, or five years after the Issue Date of the Annuity.
- - The Highest Daily Value equals the highest of all previous "Daily Values"
less proportional withdrawals since such date and plus any Purchase
Payments since such date.
- - The Daily Value is the Account Value as of the end of each Valuation Day.
The Daily Value on the Issue Date is equal to your Purchase Payment.
- - Proportional withdrawals are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
Proportional withdrawals result in a reduction to the Highest Daily Value
by reducing such value in the same proportion as the Account Value was
reduced by the withdrawal as of the date the withdrawal occurred. For
example, if your Highest Daily Value is $125,000 and you subsequently
withdraw $10,000 at a time when your Account Value is equal to $100,000 (a
10% reduction), when calculating the optional Death Benefit we will reduce
your Highest Daily Value ($125,000) by 10% or $12,500.
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Please see Appendix B to this prospectus for a hypothetical example of how the
HDV Death Benefit is calculated.
ANNUITIES WITH JOINT OWNERS
For Annuities with Joint Owners, the Death Benefits are calculated as shown
above except that the age of the oldest of the Joint Owners is used to determine
the Death Benefit Target Date. NOTE: If you and your spouse own the Annuity
jointly, we will pay the Death Benefit to the Beneficiary. If the sole primary
Beneficiary is the surviving spouse, then the surviving spouse can elect to
assume ownership of the Annuity and continue the Annuity instead of receiving
the Death Benefit.
ANNUITIES OWNED BY ENTITIES
For Annuities owned by an entity, the Death Benefits are calculated as shown
above except that the age of the Annuitant is used to determine the Death
Benefit Target Date. Payment of the Death Benefit is based on the death of the
Annuitant (or Contingent Annuitant, if applicable).
CAN I TERMINATE THE OPTIONAL DEATH BENEFITS? DO THE OPTIONAL DEATH BENEFITS
TERMINATE UNDER OTHER CIRCUMSTANCES?
You can terminate the Enhanced Beneficiary Protection Death Benefit and Highest
Anniversary Value Death Benefit at any time. The "Combination 5% Roll-up and HAV
Death Benefit" and the HDV Death Benefit may not be terminated once elected. The
optional Death Benefits will terminate automatically on the Annuity Date. We may
also terminate any optional Death Benefit if necessary to comply with our
interpretation of the Code and applicable regulations.
WHAT ARE THE CHARGES FOR THE OPTIONAL DEATH BENEFITS?
We deduct a charge equal to 0.25% per year of the average daily net assets of
the Sub-accounts for each of the Highest Anniversary Value Death Benefit and
the Enhanced Beneficiary Protection Death Benefit and 0.50% per year of the
average daily net assets of the Sub-accounts for the "Combination 5% Roll-up
and HAV Death Benefit" and the HDV Death Benefit. We deduct the charge for each
of these benefits to compensate American Skandia for providing increased
insurance protection under the optional Death Benefits.
Please refer to the section entitled "Tax Considerations" for additional
considerations in relation to the optional Death Benefit.
AMERICAN SKANDIA'S ANNUITY REWARDS
WHAT IS THE ANNUITY REWARDS BENEFIT?
The Annuity Rewards Benefit offers Owners the ability to capture any market
gains since the Issue Date of their Annuity as an enhancement to their current
Death Benefit so their Beneficiaries will not receive less than the Annuity's
value as of the effective date of the benefit. Under the Annuity Rewards
benefit, American Skandia guarantees that the Death Benefit will not be less
than:
- - your Account Value in the variable investment options plus the Interim
Value in any Fixed Allocations as of the effective date of the benefit
- - MINUS any proportional withdrawals* following the effective date of the
benefit
- - PLUS any additional Purchase Payments applied to the Annuity following the
effective date of the benefit.
The Annuity Rewards Death Benefit enhancement does not affect the basic
Death Benefit calculation and any Optional Death Benefits available under the
Annuity. If the Death Benefit amount payable under your Annuity's basic Death
Benefit or any Optional Death Benefits you purchase is greater than the enhanced
Death Benefit under the Annuity Rewards Benefit on the date the Death Benefit is
calculated, your Beneficiary will receive the higher amount.
WHO IS ELIGIBLE FOR THE ANNUITY REWARDS BENEFIT?
Owners can elect the Annuity Rewards Death Benefit enhancement following the
fourth (4th) anniversary of the Annuity's Issue Date. However, the Account Value
on the date that the Annuity Rewards Benefit is effective must be greater than
the amount that would be payable to the Beneficiary under the Death Benefit
(including any amounts payable under any optional death benefit then in effect).
The effective date must occur before annuity payments begin. There can only be
one effective date for the Annuity Rewards Death Benefit enhancement. There is
no additional charge for electing the Annuity Rewards Death Benefit enhancement.
PAYMENT OF DEATH BENEFITS
PAYMENT OF DEATH BENEFIT TO BENEFICIARY
Except in the case of a spousal assumption as described below, in the event of
your death, the death benefit must be distributed:
* "Proportional withdrawals" are determined by calculating the percentage of the
Account Value that each withdrawal represented when withdrawn. For example, a
withdrawal of 50% of your Account Value would be treated as a 50% reduction in
the amount payable under the Death Benefit.
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Death Benefit continued
- - as a lump sum amount at any time within five (5) years of the date of
death; or
- - as a series of annuity payments not extending beyond the life expectancy
of the Beneficiary or over the life of the Beneficiary. Payments under
this option must begin within one year of the date of death.
Unless you have made an election prior to death benefit proceeds becoming
due, a Beneficiary can elect to receive the Death Benefit proceeds as a series
of fixed annuity payments (annuity payment options 1-4) or as a series of
variable annuity payments (annuity payment options 1-3 or 5 and 6). See the
section entitled "What Types of Annuity Options are Available."
SPOUSAL BENEFICIARY -- ASSUMPTION OF ANNUITY
You may name your spouse as your Beneficiary. If you and your spouse own the
Annuity jointly, we assume that the sole primary Beneficiary will be the
surviving spouse unless you elect an alternative Beneficiary designation. Unless
you elect an alternative Beneficiary designation, the spouse Beneficiary may
elect to assume ownership of the Annuity instead of taking the Death Benefit
payment. Any Death Benefit (including any optional Death Benefits) that would
have been payable to the Beneficiary will become the new Account Value as of the
date we receive due proof of death and any required proof of a spousal
relationship. As of the date the assumption is effective, the surviving spouse
will have all the rights and benefits that would be available under the Annuity
to a new purchaser of the same attained age. For purposes of determining any
future Death Benefit for the surviving spouse, the new Account Value will be
considered as the initial Purchase Payment. No CDSC will apply to the new
Account Value. However, any additional Purchase Payments applied after the date
the assumption is effective will be subject to all provisions of the Annuity,
including any CDSC that may apply to the additional Purchase Payments.
See the section entitled "Managing Your Annuity -- Spousal Contingent
Annuitant" for a discussion of the treatment of a spousal Contingent Annuitant
in the case of the death of the Annuitant in an entity owned Annuity.
QUALIFIED BENEFICIARY CONTINUATION OPTION
The Code provides for alternative death benefit payment options when an Annuity
is used as an IRA, 403(b) or other "qualified investment" that requires Minimum
Distributions. Upon the Owner's death under an IRA, 403(b) or other "qualified
investment", a Beneficiary may generally elect to continue the Annuity and
receive Minimum Distributions under the Annuity instead of receiving the death
benefit in a single payment. The available payment options will depend on
whether the Owner died on or before the date he or she was required to begin
receiving Minimum Distributions under the Code and whether the Beneficiary is
the surviving spouse.
- - If death occurs BEFORE the date Minimum Distributions must begin under the
Code, the Death Benefit can be paid out in either a lump sum, within five
years from the date of death, or over the life or life expectancy of the
designated Beneficiary (as long as payments begin by December 31st of the
year following the year of death). However, if the spouse is the
Beneficiary, the Death Benefit can be paid out over the life or life
expectancy of the spouse with such payments beginning no earlier than
December 31st of the year following the year of death or December 31st of
the year in which the deceased would have reached age 70 1/2, which ever
is later.
- - If death occurs AFTER the date Minimum Distributions must begin under the
Code, the Death Benefit must be paid out at least as rapidly as under the
method then in effect.
A Beneficiary has the flexibility to take out more each year than required
under the Minimum Distribution rules. Until withdrawn, amounts in an IRA, 403(b)
or other "qualified investment" continue to be tax deferred. Amounts withdrawn
each year, including amounts that are required to be withdrawn under the Minimum
Distribution rules, are subject to tax. You may wish to consult a professional
tax advisor for tax advice as to your particular situation.
Upon election of this Qualified Beneficiary Continuation option:
- - the Annuity contract will be continued in the Owner's name, for the
benefit of the Beneficiary.
- - the Beneficiary will be charged at an amount equal to 1.40% daily against
the average daily assets allocated to the Sub-accounts.
- - the Account Value will be equal to any Death Benefit (including any
optional Death Benefit) that would have been payable to the Beneficiary if
they had taken a lump sum distribution.
- - the Beneficiary may request transfers among Sub-accounts, subject to the
same limitations and restrictions that applied
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
to the Owner, except that the Sub-accounts offered will be those offered
under the Qualified Beneficiary Continuation option at the time the option
is elected.
- - the Fixed Allocations will be those offered under the Qualified
Beneficiary Continuation option at the time the option is elected.
- no additional Purchase Payments can be applied to the Annuity.
- other optional Benefits will be those offered under the Qualified
Beneficiary Continuation option at the time of election.
- the basic Death Benefit and any optional Death Benefits elected by
the Owner will no longer apply to the Beneficiary.
- the Beneficiary can request a withdrawal of all or a portion of the
Account Value at any time without application of a CDSC.
- upon the death of the Beneficiary, any remaining Account Value will
be paid in a lump sum to the person(s) named by the Beneficiary.
- all amounts in the Annuity must be paid out to the Beneficiary
according to the Minimum Distribution rules described above.
Your Beneficiary will be provided with a prospectus and settlement option
that will describe this option at the time he or she elects this option. Please
contact American Skandia for additional information on the availability,
restrictions and limitations that will apply to a Beneficiary under the
Qualified Beneficiary Continuation option.
ARE THERE ANY EXCEPTIONS TO THESE RULES FOR PAYING THE DEATH BENEFIT?
Yes, there are exceptions that apply no matter how your Death Benefit is
calculated. There are exceptions to the Death Benefit if the decedent was not
the Owner or Annuitant as of the Issue Date and did not become the Owner or
Annuitant due to the prior Owner's or Annuitant's death. Any Death Benefit
(including any optional Death Benefit) that applies will be suspended for a
two-year period from the date he or she first became Owner or Annuitant. After
the two-year suspension period is completed, the Death Benefit is the same as if
this person had been an Owner or Annuitant on the Issue Date.
WHEN DO YOU DETERMINE THE DEATH BENEFIT?
We determine the amount of the Death Benefit as of the date we receive "due
proof of death", any instructions we require to determine the method of payment
and any other written representations we require to determine the proper payment
of the Death Benefit to all Beneficiaries. "Due proof of death" may include a
certified copy of a death certificate, a certified copy of a decree of a court
of competent jurisdiction as to the finding of death or other satisfactory proof
of death. Upon our receipt of "due proof of death" we automatically transfer the
Death Benefit to the AST Money Market Sub-account until we further determine the
universe of eligible Beneficiaries. Once the universe of eligible Beneficiaries
has been determined each eligible Beneficiary may allocate his or her eligible
share of the Death Benefit to the Sub-accounts according to our rules.
Each Beneficiary must make an election as to the method they wish to
receive their portion of the Death Benefit. Absent an election of a Death
Benefit payment method, no Death Benefit can be paid to the Beneficiary. We may
require written acknowledgment of all named Beneficiaries before we can pay the
Death Benefit. DURING THE PERIOD FROM THE DATE OF DEATH UNTIL WE RECEIVE ALL
REQUIRED PAPER WORK, THE AMOUNT OF THE DEATH BENEFIT MAY BE SUBJECT TO MARKET
FLUCTUATIONS.
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Valuing Your Investment
HOW IS MY ACCOUNT VALUE DETERMINED?
During the accumulation period, the Annuity has an Account Value. The Account
Value is determined separately for each Sub-account allocation and for each
Fixed Allocation. The Account Value is the sum of the values of each Sub-account
allocation and the value of each Fixed Allocation. The Account Value does not
reflect any CDSC that may apply to a withdrawal or surrender. The Account Value
includes any loyalty credit we apply. When determining the Account Value on a
day more than 30 days prior to a Fixed Allocation's Maturity Date, the Account
Value may include any Market Value Adjustment that would apply to a Fixed
Allocation (if withdrawn or transferred) on that day.
WHAT IS THE SURRENDER VALUE OF MY ANNUITY?
The Surrender Value of your Annuity is the value available to you on any day
during the accumulation period. The Surrender Value is defined under "Glossary
of Terms" above.
HOW AND WHEN DO YOU VALUE THE SUB-ACCOUNTS?
When you allocate Account Value to a Sub-account, you are purchasing units of
the Sub-account. Each Sub-account invests exclusively in shares of an underlying
Portfolio. The value of the Units fluctuates with the market fluctuations of the
Portfolios. The value of the Units also reflects the daily accrual for the
Insurance Charge and if you elected one or more optional benefits whose annual
charge is deducted daily, the additional charge made for such benefits. There
may be several different Unit Prices for each Sub-account to reflect the
Insurance Charge and the charges for any optional benefits. The Unit Price for
the Units you purchase will be based on the total charges for the benefits that
apply to your Annuity. See the section entitled "What Happens to My Units When
There is a Change in Daily Asset-Based Charges?" for a detailed discussion of
how Units are purchased and redeemed to reflect changes in the daily charges
that apply to your Annuity.
Each Valuation Day, we determine the price for a Unit of each Sub-account,
called the "Unit Price." The Unit Price is used for determining the value of
transactions involving Units of the Sub-accounts. We determine the number of
Units involved in any transaction by dividing the dollar value of the
transaction by the Unit Price of the Sub-account as of the Valuation Day.
EXAMPLE
Assume you allocate $5,000 to a Sub-account. On the Valuation Day you make the
allocation, the Unit Price is $14.83. Your $5,000 buys 337.154 Units of the
Sub-account. Assume that later, you wish to transfer $3,000 of your Account
Value out of that Sub-account and into another Sub-account. On the Valuation Day
you request the transfer, the Unit Price of the original Sub-account has
increased to $16.79. To transfer $3,000, we sell 178.677 Units at the current
Unit Price, leaving you 158.477 Units. We then buy $3,000 of Units of the new
Sub-account at the Unit Price of $17.83. You would then have 168.255 Units of
the new Sub-account.
HOW DO YOU VALUE FIXED ALLOCATIONS?
During the Guarantee Period, we use the concept of an Interim Value. The Interim
Value can be calculated on any day and is equal to the initial value allocated
to a Fixed Allocation plus all interest credited to a Fixed Allocation as of the
date calculated. The Interim Value does not include the impact of any Market
Value Adjustment. If you made any transfers or withdrawals from a Fixed
Allocation, the Interim Value will reflect the withdrawal of those amounts and
any interest credited to those amounts before they were withdrawn. To determine
the Account Value of a Fixed Allocation on any day more than 30 days prior to
its Maturity Date, we multiply the Account Value of the Fixed Allocation times
the Market Value Adjustment factor.
WHEN DO YOU PROCESS AND VALUE TRANSACTIONS?
American Skandia is generally open to process financial transactions on those
days that the New York Stock Exchange (NYSE) is open for trading. There may be
circumstances where the NYSE does not open on a regularly scheduled date or time
or closes at an earlier time than scheduled (normally 4:00 p.m. EST). Financial
transactions requested before the close of the NYSE which meet our requirements
will be processed according to the value next determined following the close of
business. Financial transactions requested on a non-business day or after the
close of the NYSE will be processed based on the value next computed on the next
Valuation Day. There may be circumstances when the opening or closing time of
the NYSE is different than other major stock exchanges, such as NASDAQ or the
American Stock Exchange. Under such circumstances, the closing time of the NYSE
will be used when valuing and processing transactions.
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There may be circumstances where the NYSE is open, however, due to inclement
weather, natural disaster or other circumstances beyond our control, our offices
may be closed or our business processing capabilities may be restricted. Under
those circumstances, your Account Value may fluctuate based on changes in the
Unit Values, but you may not be able to transfer Account Value, or make a
purchase or redemption request.
The NYSE is closed on the following nationally recognized holidays: New Year's
Day, Martin Luther King, Jr. Day, Washington's Birthday, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving, and Christmas. On those dates,
we will not process any financial transactions involving purchase or redemption
orders.
American Skandia will also not process financial transactions involving purchase
or redemption orders or transfers on any day that:
- - trading on the NYSE is restricted;
- - an emergency exists making redemption or valuation of securities held in
the separate account impractical; or
- - the SEC, by order, permits the suspension or postponement for the
protection of security holders.
INITIAL PURCHASE PAYMENTS: We are required to allocate your initial
Purchase Payment to the Sub-accounts within two (2) business days after we
receive all of our requirements at our office to issue the Annuity. If we do not
have all the required information to allow us to issue your Annuity, we may
retain the Purchase Payment while we try to reach you or your representative to
obtain all of our requirements. If we are unable to obtain all of our required
information within five (5) business days, we are required to return the
Purchase Payment to you at that time, unless you specifically consent to our
retaining the Purchase Payment while we gather the required information. Once we
obtain the required information, we will invest the Purchase Payment and issue
the Annuity within two (2) business days. During any period that we are trying
to obtain the required information, your money is not invested.
ADDITIONAL PURCHASE PAYMENTS: We will apply any additional Purchase
Payments on the Valuation Day that we receive the Purchase Payment at our office
with satisfactory allocation instructions. We will allocate any additional
Purchase Payments you make according to your most recent allocation instructions
if none are provided.
SCHEDULED TRANSACTIONS: "Scheduled" transactions include transfers under a
Dollar Cost Averaging, rebalancing, or asset allocation program, Systematic
Withdrawals, Minimum Distributions or annuity payments. Scheduled transactions
are processed and valued as of the date they are scheduled, unless the scheduled
day is not a Valuation Day. In that case, the transaction will be processed and
valued on the next Valuation Day, unless the next Valuation Day falls in the
subsequent calendar year, in which case the transaction will be processed and
valued on the prior Valuation Day.
UNSCHEDULED TRANSACTIONS: "Unscheduled" transactions include any other
non-scheduled transfers and requests for Partial Withdrawals or Free Withdrawals
or Surrenders. Unscheduled transactions are processed and valued as of the
Valuation Day we receive the request at our Office and have all of the required
information.
MEDICALLY-RELATED SURRENDERS & DEATH BENEFITS: Medically-related surrender
requests and Death Benefit claims require our review and evaluation before
processing. We price such transactions as of the date we receive at our Office
all supporting documentation we require for such transactions and that are
satisfactory to us.
TRANSACTIONS IN PROFUNDS VP SUB-ACCOUNTS: Generally, purchase or
redemption orders or transfer requests must be received by us by no later than
the close of the NYSE to be processed on the current Valuation Day. However, any
purchase or redemption order or transfer request involving the ProFunds VP
Sub-accounts must be received by us no later than one hour prior to any
announced closing of the applicable securities exchange (generally, 3:00 p.m.
Eastern time) to be processed on the current Valuation Day. The "cut-off" time
for such financial transactions involving a ProFunds VP Sub-account will be
extended to 1/2 hour prior to any announced closing (generally, 3:30 p.m.
Eastern time) for transactions submitted electronically through American
Skandia's Internet website (www.americanskandia.prudential.com). You cannot
request a transaction involving the purchase, redemption or transfer of units in
one of the ProFunds VP Sub-account between the applicable "cut-off" time and
4:00 p.m. Transactions received after 4:00 p.m. will be treated as received by
us on the next Valuation Day.
WHAT HAPPENS TO MY UNITS WHEN THERE IS A CHANGE IN DAILY ASSET-BASED CHARGES?
TERMINATION OF OPTIONAL BENEFITS: Except for the Guaranteed Minimum Income
Benefit, the Combination 5% Roll-up and Highest Anniversary Value Death Benefit
and the Highest Daily Value Death Benefit, which cannot be terminated by the
owner once elected, if any optional benefit terminates, we will no longer
deduct the charge we apply to purchase the optional
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Valuing Your Investment continued
benefit. Certain optional benefits may be added after you have purchased your
Annuity. On the date a charge no longer applies or a charge for an optional
benefit begins to be deducted, your Annuity will become subject to a different
daily asset-based charge. This change may result in the number of Units
attributed to your Annuity and the value of those Units being different than it
was before the change, however, the adjustment in the number of Units and Unit
Price will not affect your Account Value (although the change in charges that
are deducted will affect your Account Value).
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Tax Considerations
The tax considerations associated with the Annuity vary depending on whether the
contract is (i) owned by an individual and not associated with a tax-favored
retirement plan (including contracts held by a non-natural person, such as a
trust acting as an agent for a natural person), or (ii) held under a tax-favored
retirement plan. We discuss the tax considerations for these categories of
contracts below. The discussion is general in nature and describes only federal
income tax law (not state or other tax laws). It is based on current law and
interpretations, which may change. The discussion includes a description of
certain spousal rights under the contract and under tax-qualified plans. Our
administration of such spousal rights and related tax reporting accords with our
understanding of the Defense of Marriage Act (which defines a "marriage" as a
legal union between a man and a woman and a "spouse" as a person of the opposite
sex). The information provided is not intended as tax advice. You should consult
with a qualified tax advisor for complete information and advice. References to
purchase payments below relates to your cost basis in your contract. Generally,
your cost basis in a contract not associated with a tax-favored retirement plan
is the amount you pay into your contract, or into annuities exchanged for your
contract, on an after-tax basis less any withdrawals of such payments.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA or 403(b) account, which can hold other permissible assets other than the
annuity. The terms and administration of the trust or custodial account in
accordance with the laws and regulations for IRAs or 403(b)s, as applicable, are
the responsibility of the applicable trustee or custodian.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
TAXES PAYABLE BY YOU
We believe the contract is an annuity contract for tax purposes. Accordingly,
as a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates)
to you during the same calendar year must be treated as one annuity contract for
purposes of determining the amount subject to tax under the rules described
below.
It is possible that the Internal Revenue Service (IRS) would assert that
some or all of the charges for the optional benefits under the contract should
be treated for federal income tax purposes as a partial withdrawal from the
contract. If this were the case, the charge for this benefit could be deemed a
withdrawal and treated as taxable to the extent there are earnings in the
contract. Additionally, for owners under age 59 1/2, the taxable income
attributable to the charge for the benefit could be subject to a tax penalty.
If the IRS determines that the charges for one or more benefits under the
contract are taxable withdrawals, then the sole or surviving owner will be
provided with a notice from us describing available alternatives regarding these
benefits.
If you choose to defer the Annuity Date beyond the default date for your
Annuity, the IRS may not consider your contract to be an annuity under the tax
law. For more information, see "How and When Do I Choose the Annuity Payment
Option?".
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn. You
will generally be taxed on any withdrawals from the contract while you are
alive even if the withdrawal is paid to someone else.
If you assign or pledge all or part of your contract as collateral for a
loan, the part assigned generally will be treated as a withdrawal.
If you transfer your contract for less than full consideration, such as by
gift, you will trigger tax on any gain in the contract. This rule does not
apply if you transfer the contract to your spouse or under most circumstances
if you transfer the contract incident to divorce.
TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment you receive by a fraction, the
numerator of which is your purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the contract.
After the full amount of your purchase payments have been recovered
tax-free, the full amount of the annuity payments will be taxable. If annuity
payments stop due to the death of the annuitant before the full amount of your
purchase payments have been recovered, a tax deduction may be allowed for the
unrecovered amount.
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Tax Considerations continued
TAX PENALTY ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount you receive under your contract may be subject to a 10% tax
penalty. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled;
- - generally the amount paid or received is in the form of substantially
equal payments not less frequently than annually (Please note that
substantially equal payments must continue until the later of reaching age
59 1/2 or 5 years. Modification of payments during that time period will
result in retroactive application of the 10% tax penalty.); or
- - the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
SPECIAL RULES IN RELATION TO TAX-FREE EXCHANGES UNDER SECTION 1035
Section 1035 of the Internal Revenue Code of 1986, as amended (Code) permits
certain tax-free exchanges of a life insurance, annuity or endowment contract
for an annuity. If the annuity is purchased through a tax-free exchange of a
life insurance, annuity or endowment contract that was purchased prior to August
14, 1982, then any purchase payments made to the original contract prior to
August 14, 1982 will be treated as made to the new contract prior to that date.
(See Federal Tax Status section in the Statement of Additional Information.)
Partial surrenders may be treated in the same way as tax-free 1035
exchanges of entire contracts, therefore avoiding current taxation of any gains
in the contract as well as the 10% tax penalty on pre-age 59 1/2 withdrawals.
The IRS has reserved the right to treat transactions it considers abusive as
ineligible for this favorable partial 1035 exchange treatment. We do not know
what transactions may be considered abusive. For example we do not know how the
IRS may view early withdrawals or annuitizations after a partial exchange. In
addition, it is unclear how the IRS will treat a partial exchange from a life
insurance, endowment, or annuity contract into an immediate annuity. As of the
date of this prospectus, we will accept a partial 1035 exchange from a
non-qualified annuity into an immediate annuity as a "tax-free" exchange for
future tax reporting purposes, except to the extent that we, as a reporting and
withholding agent, believe that we would be expected to deem the transaction to
be abusive. However, some insurance companies may not recognize these partial
surrenders as tax-free exchanges and may report them as taxable distributions to
the extent of any gain distributed as well as subjecting the taxable portion of
the distribution to the 10% tax penalty. We strongly urge you to discuss any
transaction of this type with your tax advisor before proceeding with the
transaction.
TAXES PAYABLE BY BENEFICIARIES
The death benefit options are subject to income tax to the extent the
distribution exceeds the cost basis in the contract. The value of the death
benefit, as determined under federal law, is also included in the owner's
estate.
Generally, the same tax rules described above would also apply to amounts
received by your beneficiary. Choosing any option other than a lump sum death
benefit may defer taxes. Certain minimum distribution requirements apply upon
your death, as discussed further below.
Tax consequences to the beneficiary vary among the death benefit payment
options.
- - Choice 1: the beneficiary is taxed on earnings in the contract.
- - Choice 2: the beneficiary is taxed as amounts are withdrawn (in this case
earnings are treated as being distributed first).
- - Choice 3: the beneficiary is taxed on each payment (part will be treated
as earnings and part as return of premiums).
CONSIDERATIONS FOR CONTINGENT ANNUITANTS: There may be adverse tax consequences
if a Contingent Annuitant succeeds an Annuitant when the Annuity is owned by a
trust that is neither tax exempt nor qualifies for preferred treatment under
certain sections of the Code. In general, the Code is designed to prevent
indefinite deferral of tax. Continuing the benefit of tax deferral by naming one
or more Contingent Annuitants when the Annuity is owned by a non-qualified trust
might be deemed an attempt to extend the tax deferral for an indefinite period.
Therefore, adverse tax treatment may depend on the terms of the trust, who is
named as Contingent Annuitant, as well as the particular facts and
circumstances. You should consult your tax advisor before naming a Contingent
Annuitant if you expect to use an Annuity in such a fashion.
REPORTING AND WITHHOLDING ON DISTRIBUTIONS
Taxable amounts distributed from your annuity contracts are subject to federal
and state income tax reporting and withholding. In general, we will withhold
federal income tax from the taxable portion of such distribution based on the
type of distribution. In the case of an annuity or similar periodic payment, we
will withhold as if you are a married individual with 3 exemptions unless you
designate a different withholding status. In the case of all other
distributions, we will withhold at a
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10% rate. You may generally elect not to have tax withheld from your payments.
An election out of withholding must be made on forms that we provide.
State income tax withholding rules vary and we will withhold based on the rules
of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident aliens
at a 30% rate. A different withholding rate may be applicable to a nonresident
alien based on the terms of an existing income tax treaty between the United
States and the nonresident alien's country. Please refer to the discussion below
regarding withholding rules for tax favored plans (for example, an IRA).
Regardless of the amount withheld by us, you are liable for payment of federal
and state income tax on the taxable portion of annuity distributions. You should
consult with your tax advisor regarding the payment of the correct amount of
these income taxes and potential liability if you fail to pay such taxes.
ANNUITY QUALIFICATION
Diversification And Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the assets underlying the
variable investment options of the annuity contract must be diversified,
according to certain rules. We believe these diversification rules will be met.
An additional requirement for qualification for the tax treatment
described above is that we, and not you as the contract owner, must have
sufficient control over the underlying assets to be treated as the owner of the
underlying assets for tax purposes. While we also believe these investor control
rules will be met, 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. It is unclear whether such guidelines, if in fact
promulgated, would have retroactive effect. It is also unclear what effect, if
any, such guidelines may have on transfers between the investment options
offered pursuant to this Prospectus. We will take any action, including
modifications to your Annuity or the investment options, required to comply with
such guidelines if promulgated.
Please refer to the Statement of Additional information for further
information on these Diversification and Investor Control issues.
Required Distributions Upon Your Death. Upon your death, certain
distributions must be made under the contract. The required distributions depend
on whether you die before you start taking annuity payments under the contract
or after you start taking annuity payments under the contract.
If you die on or after the annuity date, the remaining portion of the
interest in the contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract
must be distributed within 5 years after the date of death. However, if a
periodic payment option is selected by your designated beneficiary and if such
payments begin within 1 year of your death, the value of the contract may be
distributed over the beneficiary's life or a period not exceeding the
beneficiary's life expectancy. Your designated beneficiary is the person to whom
benefit rights under the contract pass by reason of death, and must be a natural
person in order to elect a periodic payment option based on life expectancy or a
period exceeding five years.
If the contract is payable to (or for the benefit of) your surviving
spouse, that portion of the contract may be continued with your spouse as the
owner.
Changes In The Contract. We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract owners and you will be
given notice to the extent feasible under the circumstances.
ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
- - The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
- - Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
- - You transfer your contract to, or designate, a beneficiary who is either
37 1/2 years younger than you or a grandchild.
- - You purchased more than one annuity contract from the same insurer within
the same calendar year (other than contracts held by tax favored plans).
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
Currently, the contract may be purchased for use in connection with
individual retirement accounts and annuities (IRAs) which are subject to
Sections 408(a), 408(b) and 408A of the Code. In addition, this contract may be
purchased for use in
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Tax Considerations continued
connection with a corporate Pension and Profit-sharing plan (subject to 401(a)
of the Code), H.R. 10 plans (also known as Keogh Plans, subject to 401(a) of the
Code), Tax Sheltered Annuities (subject to 403(b) of the Code, also known as Tax
Deferred Annuities or TDAs), and Section 457 plans (subject to 457 of the Code).
This description assumes that you have satisfied the requirements for
eligibility for these products.
This contract may also be purchased as a non-qualified annuity (i.e., a contract
not held under a tax-favored retirement plan) by a trust or custodial IRA or
403(b) account, which can hold other permissible assets other than the annuity.
The terms and administration of the trust or custodial account in accordance
with the laws and regulations for IRAs or 403(b)s, as applicable, are the
responsibility of the applicable trustee or custodian.
You should be aware that tax favored plans such as IRAs generally provide income
tax deferral regardless of whether they invest in annuity contracts. This means
that when a tax favored plan invests in an annuity contract, it generally does
not result in any additional tax benefits (such as income tax deferral and
income tax free transfers).
TYPES OF TAX FAVORED PLANS
IRAs. If you buy a contract for use as an IRA, we will provide you a copy of the
prospectus and contract. The "IRA Disclosure Statement" contains information
about eligibility, contribution limits, tax particulars, and other IRA
information. In addition to this information (some of which is summarized
below), the IRS requires that you have a "free look" after making an initial
contribution to the contract. During this time, you can cancel the contract by
notifying us in writing, and we will refund all of the purchase payments under
the contract (or, if provided by applicable state law, the amount credited under
the contract, if greater), less any applicable federal and state income tax
withholding.
Contributions Limits/Rollovers. Because of the way the contract is
designed, you may purchase a contract for an IRA in connection with a "rollover"
of amounts from a qualified retirement plan or transfer from another IRA. In
2005 the limit is $4,000; increasing to $5,000 in 2008. After 2008 the
contribution amount will be indexed for inflation. The tax law also provides for
a catch-up provision for individuals who are age 50 and above. These taxpayers
will be permitted to contribute an additional $500, increasing to $1,000 in 2006
and years thereafter.
The "rollover" rules under the Code are fairly technical; however, an
individual (or his or her surviving spouse) may generally "roll over" certain
distributions from tax favored retirement plans (either directly or within 60
days from the date of these distributions) if he or she meets the requirements
for distribution. Once you buy the contract, you can make regular IRA
contributions under the contract (to the extent permitted by law). However, if
you make such regular IRA contributions, you should note that you will not be
able to treat the contract as a "conduit IRA," which means that you will not
retain possible favorable tax treatment if you subsequently "roll over" the
contract funds originally derived from a qualified retirement plan or TDA into
another Section 401(a) plan or TDA.
Required Provisions. Contracts that are IRAs (or endorsements that are
part of the contract) must contain certain provisions:
- - You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree
of divorce);
- - Your rights as owner are non-forfeitable;
- - You cannot sell, assign or pledge the contract;
- - The annual contribution you pay cannot be greater than the maximum amount
allowed by law, including catch-up contributions if applicable (which does
not include any rollover amounts);
- - The date on which annuity payments must begin cannot be later than April
1st of the calendar year after the calendar year you turn age 70 1/2; and
- - Death and annuity payments must meet "minimum distribution requirements"
described below.
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
- - A 10% "early distribution penalty" described below;
- - Liability for "prohibited transactions" if you, for example, borrow
against the value of an IRA; or
- - Failure to take a minimum distribution also described below.
SEPs. SEPs are a variation on a standard IRA, and contracts issued to a
SEP must satisfy the same general requirements described under IRAs (above).
There are, however, some differences:
- - If you participate in a SEP, you generally do not include in income any
employer contributions made to the SEP on your behalf up to the lesser of
(a) $42,000 in 2005 or (b)
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25% of the employee's earned income (not including contribution as "earned
income" for these purposes). However, for these purposes, compensation in
excess of certain limits established by the IRS will not be considered. In
2005, this limit is $210,000;
- - SEPs must satisfy certain participation and nondiscrimination requirements
not generally applicable to IRAs; and
- SEPs for small employers permit salary deferrals up to $14,000 in
2005 with the employer making these contributions to the SEP.
However, no new "salary reduction" or "SARSEPs" can be established
after 1996. Individuals participating in a SARSEP who are age 50 or
above by the end of the year will be permitted to contribute an
additional $4,000 in 2005, increasing to $5,000 in 2006. Thereafter,
the amount is indexed for inflation.
You will also be provided the same information, and have the same "free
look" period, as you would have if you purchased the contract for a standard
IRA.
ROTH IRAs. Like standard IRAs, income within a Roth IRA accumulates
tax-free, and contributions are subject to specific limits. Roth IRAs have,
however, the following differences:
- - Contributions to a Roth IRA cannot be deducted from your gross income;
- - "Qualified distributions" from a Roth IRA are excludable from gross
income. A "qualified distribution" is a distribution that satisfies two
requirements: (1) the distribution must be made (a) after the owner of the
IRA attains age 59 1/2; (b) after the owner's death; (c) due to the
owner's disability; or (d) for a qualified first time homebuyer
distribution within the meaning of Section 72(t)(2)(F) of the Code; and
(2) the distribution must be made in the year that is at least five tax
years after the first year for which a contribution was made to any Roth
IRA established for the owner or five years after a rollover, transfer, or
conversion was made from a traditional IRA to a Roth IRA. Distributions
from a Roth IRA that are not qualified distributions will be treated as
made first from contributions and then from earnings, and taxed generally
in the same manner as distributions from a traditional IRA.
- - If eligible (including meeting income limitations and earnings
requirements), you may make contributions to a Roth IRA after attaining
age 70 1/2, and distributions are not required to begin upon attaining
such age or at any time thereafter.
Because of the way the contract is designed, you may purchase a contract
for a Roth IRA in connection with a "rollover" of amounts of another traditional
IRA, conduit IRA, SEP, SIMPLE-IRA or Roth IRA. The Code permits persons who meet
certain income limitations (generally, adjusted gross income under $100,000),
and who receive certain qualifying distributions from such non-Roth IRAs, to
directly rollover or make, within 60 days, a "rollover" of all or any part of
the amount of such distribution to a Roth IRA which they establish. This
conversion triggers current taxation (but is not subject to a 10% early
distribution penalty). Once the contract has been purchased, regular Roth IRA
contributions will be accepted to the extent permitted by law.
TDAs. You may own a TDA generally if you are either an employer or
employee of a tax-exempt organization (as defined under Code Section 501 (c)(3))
or a public educational organization, and you may make contributions to a TDA so
long as the employee's rights to the annuity are nonforfeitable. Contributions
to a TDA, and any earnings, are not taxable until distribution. You may also
make contributions to a TDA under a salary reduction agreement, generally up to
a maximum of $14,000 in 2005. Individuals participating in a TDA who are age 50
or above by the end of the year will be permitted to contribute an additional
$4,000 in 2005, increasing to $5,000 in 2006. Thereafter, the amount is indexed
for inflation. Further, you may roll over TDA amounts to another TDA or an IRA.
You may also roll over TDA amounts to a qualified retirement plan, a SEP and a
457 government plan. A contract may only qualify as a TDA if distributions
(other than "grandfathered" amounts held as of December 31, 1988) may be made
only on account of:
- - Your attainment of age 59 1/2;
- - Your severance of employment;
- - Your death;
- - Your total and permanent disability; or
- - Hardship (under limited circumstances, and only related to salary
deferrals and any earnings attributable to these amounts).
In any event, you must begin receiving distributions from your TDA by
April 1st of the calendar year after the calendar year you turn age 70 1/2 or
retire, whichever is later.
These distribution limits do not apply either to transfers or exchanges of
investments under the contract, or to any "direct transfer" of your interest in
the contract to another TDA or to a
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Tax Considerations continued
mutual fund "custodial account" described under Code Section 403(b)(7).
Employer contributions to TDAs are subject to the same general contribution,
nondiscrimination, and minimum participation rules applicable to "qualified"
retirement plans.
MINIMUM DISTRIBUTION REQUIREMENTS AND PAYMENT OPTION
If you hold the contract under an IRA (or other tax-favored plan), IRS minimum
distribution requirements must be satisfied. This means that generally payments
must start by April 1 of the year after the year you reach age 70 1/2 and must
be made for each year thereafter. The amount of the payment must at least equal
the minimum required under the IRS rules. Several choices are available for
calculating the minimum amount. More information on the mechanics of this
calculation is available on request. Please contact us at a reasonable time
before the IRS deadline so that a timely distribution is made. Please note that
there is a 50% tax penalty on the amount of any minimum distribution not made
in a timely manner.
Effective in 2006, in accordance with recent changes in laws and
regulations, required minimum distributions will be calculated based on the sum
of the contract value and the acturial value of any additional death benefits
and benefits from optional riders that you have purchased under the contract. As
a result, the required minimum distributions may be larger than if the
calculation were based on the contract value only, which may in turn result in
an earlier (but not before the required beginning date) distribution under the
Contract and an increased amount of taxable income distributed to the contract
owner, and a reduction of death benefits and the benefits of any optional
riders.
You can use the Minimum Distribution option to satisfy the IRS minimum
distribution requirements for this contract without either beginning annuity
payments or surrendering the contract. We will distribute to you this minimum
distribution amount, less any other partial withdrawals that you made during the
year.
Although the IRS rules determine the required amount to be distributed
from your IRA each year, certain payment alternatives are still available to
you. If you own more than one IRA, you can choose to satisfy your minimum
distribution requirement for each of your IRAs by withdrawing that amount from
any of your IRAs.
PENALTY FOR EARLY WITHDRAWALS
You may owe a 10% tax penalty on the taxable part of distributions received
from an IRA, SEP, Roth IRA, TDA or qualified retirement plan before you attain
age 59 1/2. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled; or
- - generally the amount paid or received is in the form of substantially
equal payments not less frequently than annually (Please note that
substantially equal payments must continue until the later of reaching age
59 1/2 or 5 years. Modification of payments during that time period will
result in retroactive application of the 10% tax penalty.).
Other exceptions to this tax may apply. You should consult your tax
advisor for further details.
WITHHOLDING
Unless a distribution is an eligible rollover distribution that is "directly"
rolled over into another qualified plan, IRA (including the IRA variations
described above), SEP, 457 government plan or TDA, we will withhold federal
income tax at the rate of 20%. This 20% withholding does not apply to
distributions from IRAs and Roth IRAs. For all other distributions, unless you
elect otherwise, we will withhold federal income tax from the taxable portion of
such distribution at an appropriate percentage. The rate of withholding on
annuity payments where no mandatory withholding is required is determined on the
basis of the withholding certificate that you file with us. If you do not file a
certificate, we will automatically withhold federal taxes on the following
basis:
- - For any annuity payments not subject to mandatory withholding, you will
have taxes withheld by us as if you are a married individual, with 3
exemptions; and
- - For all other distributions, we will withhold at a 10% rate.
We will provide you with forms and instructions concerning the right to
elect that no amount be withheld from payments in the ordinary course. However,
you should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should consult with
your tax advisor to find out more information on your potential liability if you
fail to pay such taxes. There may be additional state income tax withholding
requirements.
ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevents a fiduciary and other "parties in interest" with respect to a plan
(and, for these purposes, an IRA would also constitute a "plan") from receiving
any benefit
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
from any party dealing with the plan, as a result of the sale of the contract.
Administrative exemptions under ERISA generally permit the sale of
insurance/annuity products to plans, provided that certain information is
disclosed to the person purchasing the contract. This information has to do
primarily with the fees, charges, discounts and other costs related to the
contract, as well as any commissions paid to any agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found in the applicable sections of this Prospectus.
Information about sales representatives and commissions may be found in the
sections of this Prospectus addressing distribution of the Annuity.
Please consult your tax advisor if you have any additional questions.
SPOUSAL CONSENT RULES FOR RETIREMENT PLANS -- QUALIFIED CONTRACTS
If you are married at the time your payments commence, you may be required by
federal law to choose an income option that provides survivor annuity income to
your spouse, unless your spouse waives that right. Similarly, if you are
married at the time of your death, federal law may require all or a portion of
the death benefit to be paid to your spouse, even if you designated someone
else as your beneficiary. A brief explanation of the applicable rules follows.
For more information, consult the terms of your retirement arrangement.
Defined Benefit Plans and Money Purchase Pension Plans. If you are married
at the time your payments commence, federal law requires that benefits be paid
to you in the form of a "qualified joint and survivor annuity" (QJSA), unless
you and your spouse waive that right, in writing. Generally, this means that you
will receive a reduced payment during your life and, upon your death, your
spouse will receive at least one-half of what you were receiving for life. You
may elect to receive another income option if your spouse consents to the
election and waives his or her right to receive the QJSA. If your spouse
consents to the alternative form of payment, your spouse may not receive any
benefits from the plan upon your death. Federal law also requires that the plan
pay a death benefit to your spouse if you are married and die before you begin
receiving your benefit. This benefit must be available in the form of an annuity
for your spouse's lifetime and is called a "qualified pre-retirement survivor
annuity" (QPSA). If the plan pays death benefits to other beneficiaries, you may
elect to have a beneficiary other than your spouse receive the death benefit,
but only if your spouse consents to the election and waives his or her right to
receive the QPSA. If your spouse consents to the alternate beneficiary, your
spouse will receive no benefits from the plan upon your death. Any QPSA waiver
prior to your attaining age 35 will become null and void on the first day of the
calendar year in which you attain age 35, if still employed.
Defined Contribution Plans (including 401(k) Plans and ERISA 403(b)
Annuities). Spousal consent to a distribution is generally not required. Upon
your death, your spouse will receive the entire death benefit, even if you
designated someone else as your beneficiary, unless your spouse consents in
writing to waive this right. Also, if you are married and elect an annuity as a
periodic income option, federal law requires that you receive a QJSA (as
described above), unless you and your spouse consent to waive this right.
IRAs, non-ERISA 403(b) Annuities, and 457 Plans. Spousal consent to a
distribution is not required. Upon your death, any death benefit will be paid to
your designated beneficiary.
ADDITIONAL INFORMATION
For additional information about federal tax law requirements applicable to tax
favored plans, see the IRA Disclosure Statement.
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
GENERAL INFORMATION
HOW WILL I RECEIVE STATEMENTS AND REPORTS?
We send any statements and reports required by applicable law or regulation to
you at your last known address of record. You should therefore give us prompt
notice of any address change. We reserve the right, to the extent permitted by
law and subject to your prior consent, to provide any prospectus, prospectus
supplements, confirmations, statements and reports required by applicable law or
regulation to you through our Internet Website at
http://www.americanskandia.prudential.com or any other electronic means,
including diskettes or CD ROMs. We send a confirmation statement to you each
time a transaction is made affecting Account Value, such as making additional
Purchase Payments, transfers, exchanges or withdrawals. We also send quarterly
statements detailing the activity affecting your Annuity during the calendar
quarter. We may confirm regularly scheduled transactions, such as the Annual
Maintenance Fee, systematic withdrawals (including 72(t) payments and required
minimum distributions), bank drafting, dollar cost averaging, and static
rebalancing, in quarterly statements instead of confirming them immediately. You
should review the information in these statements carefully. You may request
additional reports. We reserve the right to charge up to $50 for each such
additional report. We may also send an annual report and a semi-annual report
containing applicable financial statements for the Separate Account and the
Portfolios, as of December 31 and June 30, respectively, to Owners or, with your
prior consent, make such documents available electronically through our Internet
Website or other electronic means.
WHO IS AMERICAN SKANDIA?
American Skandia Life Assurance Corporation, a Prudential Financial Company
("American Skandia") is a stock life insurance company domiciled in Connecticut
with licenses in all 50 states, the District of Columbia and Puerto Rico.
American Skandia is a wholly-owned subsidiary of American Skandia, Inc. ("ASI"),
whose ultimate parent is Prudential Financial, Inc. American Skandia markets its
products to broker-dealers and financial planners through an internal field
marketing staff. In addition, American Skandia markets through and in
conjunction with financial institutions such as banks that are permitted
directly, or through affiliates, to sell annuities.
American Skandia is in the business of issuing annuity and life insurance
products. American Skandia currently offers the following products: (a) flexible
premium deferred annuities and single premium fixed deferred annuities that are
registered with the SEC; (b) certain other fixed deferred annuities that are not
registered with the SEC; and (c) both fixed and variable immediate adjustable
annuities.
Effective May 1, 2003, Skandia U.S. Inc., the sole shareholder of ASI,
which is the parent of American Skandia, was purchased by Prudential Financial,
Inc. Prudential Financial, Inc. is a New Jersey insurance holding company whose
subsidiary companies serve individual and institutional customers worldwide and
include The Prudential Insurance Company of America, one of the largest life
insurance companies in the U.S. These companies offer a variety of products and
services, including life insurance, property and casualty insurance, mutual
funds, annuities, pension and retirement related services and administration,
asset management, securities brokerage, banking and trust services, real estate
brokerage franchises, and relocation services.
No company other than American Skandia has any legal responsibility to pay
amounts that it owes under its annuity and variable life insurance contracts.
However, Prudential Financial exercises significant influence over the
operations and capital structure of American Skandia.
WHAT ARE SEPARATE ACCOUNTS?
The separate accounts are where American Skandia sets aside and invests the
assets of some of our annuities. In the accumulation period, assets supporting
Account Values of the Annuities are held in a separate account established
under the laws of the State of Connecticut. We are the legal owner of assets in
the separate accounts. In the payout period, assets supporting fixed annuity
payments and any adjustable annuity payments we make available are held in our
general account. Assets supporting variable annuity payment options may be
invested in our separate accounts. Income, gains and losses from assets
allocated to these separate accounts are credited to or charged against each
such separate account without regard to other income, gains or losses of
American Skandia or of any other of our separate accounts. These assets may
only be charged with liabilities which arise from the Annuities issued by
American Skandia. The amount of our obligation in relation to allocations to
the Sub-accounts is based on the investment performance of such Sub-accounts.
However, the obligations themselves are our general corporate obligations.
SEPARATE ACCOUNT B
During the accumulation period, the assets supporting obligations based on
allocations to the variable investment options
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
are held in Sub-accounts of American Skandia Life Assurance Corporation Variable
Account B, also referred to as "Separate Account B". Separate Account B was
established by us pursuant to Connecticut law on November 25, 1987. 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.
Separate Account B consists of multiple Sub-accounts. Each Sub-account invests
only in a single mutual fund or mutual fund portfolio. The name of each
Sub-account generally corresponds to the name of the underlying Portfolio. Each
Sub-account in Separate Account B may have several different Unit Prices to
reflect the Insurance Charge and the charges for any optional benefits that are
offered under this Annuity and other annuities issued by us through Separate
Account B. Separate Account B is registered with the SEC under the Investment
Company Act of 1940 ("Investment Company Act") as a unit investment trust, which
is a type of investment company. The SEC does not supervise investment policies,
management or practices of Separate Account B.
Prior to November 18, 2002, Separate Account B was organized as a single
separate account with six different Sub-account classes, each of which was
registered as a distinct unit investment trust under the Investment Company Act.
Effective November 18, 2002 each Sub-account class of Separate Account B was
consolidated into the unit investment trust formerly named American Skandia Life
Assurance Corporation Variable Account B (Class 1 Sub-accounts), which was
subsequently renamed American Skandia Life Assurance Corporation Variable
Account B. Each Sub-account of Separate Account B has multiple Unit Prices to
reflect the daily charge deducted for each combination of the applicable
Insurance Charge, Distribution Charge (when applicable) and the charge for each
optional benefit offered under Annuity contracts funded through Separate Account
B. The consolidation of Separate Account B had no impact on Annuity Owners.
We reserve the right to make changes to the Sub-accounts available under the
Annuity as we determine appropriate. We may offer new Sub-accounts, eliminate
Sub-accounts, or combine Sub-accounts at our sole discretion. We may also close
Sub-accounts to additional Purchase Payments on existing Annuity contracts or
close Sub-accounts for Annuities purchased on or after specified dates. We may
also substitute an underlying mutual fund or portfolio of an underlying mutual
fund for another underlying mutual fund or portfolio of an underlying mutual
fund, subject to our receipt of any exemptive relief that we are required to
obtain under the Investment Company Act. We will notify Owners of changes we
make to the Sub-accounts available under the Annuity.
VALUES AND BENEFITS BASED ON ALLOCATIONS TO THE SUB-ACCOUNTS WILL VARY WITH THE
INVESTMENT PERFORMANCE OF THE UNDERLYING MUTUAL FUNDS OR FUND PORTFOLIOS, AS
APPLICABLE. WE DO NOT GUARANTEE THE INVESTMENT RESULTS OF ANY SUB-ACCOUNT. YOUR
ACCOUNT VALUE ALLOCATED TO THE SUB-ACCOUNTS MAY INCREASE OR DECREASE. YOU BEAR
THE ENTIRE INVESTMENT RISK. THERE IS NO ASSURANCE THAT THE ACCOUNT VALUE OF YOUR
ANNUITY WILL EQUAL OR BE GREATER THAN THE TOTAL OF THE PURCHASE PAYMENTS YOU
MAKE TO US.
SEPARATE ACCOUNT D
During the accumulation period, assets supporting our obligations based on Fixed
Allocations are held in American Skandia Life Assurance Corporation Separate
Account D, also referred to as "Separate Account D". Such obligations are based
on the fixed interest rates we credit to Fixed Allocations and the terms of the
Annuities. These obligations do not depend on the investment performance of the
assets in Separate Account D. Separate Account D was established by us pursuant
to Connecticut law.
There are no units in Separate Account D. The Fixed Allocations are
guaranteed by our general account. An Annuity Owner who allocates a portion of
their Account Value to Separate Account D does not participate in the investment
gain or loss on assets maintained in Separate Account D. Such gain or loss
accrues solely to us. We retain the risk that the value of the assets in
Separate Account D may drop below the reserves and other liabilities we must
maintain. Should the value of the assets in Separate Account D drop below the
reserve and other liabilities we must maintain in relation to the annuities
supported by such assets, we will transfer assets from our general account to
Separate Account D to make up the difference. We have the right to transfer to
our general account any assets of Separate Account D in excess of such reserves
and other liabilities. We maintain assets in Separate Account D supporting a
number of annuities we offer.
We currently employ investment managers to manage the assets maintained in
Separate Account D. Each manager we employ is responsible for investment
management of a different portion of Separate Account D. From time to time
additional investment managers may be employed or investment
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
General Information continued
managers may cease being employed. We are under no obligation to employ or
continue to employ any investment manager(s) and have sole discretion over the
investment managers we retain.
We are not obligated to invest according to specific guidelines or strategies
except as may be required by Connecticut and other state insurance laws.
WHAT IS THE LEGAL STRUCTURE OF THE UNDERLYING FUNDS?
Each underlying mutual fund is registered as an open-end management investment
company under the Investment Company Act. Shares of the underlying mutual fund
portfolios are sold to separate accounts of life insurance companies offering
variable annuity and variable life insurance products. The shares may also be
sold directly to qualified pension and retirement plans.
VOTING RIGHTS
We are the legal owner of the shares of the underlying mutual funds in which
the Sub-accounts invest. However, under SEC rules, you have voting rights in
relation to Account Value maintained in the Sub-accounts. If an underlying
mutual fund portfolio requests a vote of shareholders, we will vote our shares
based on instructions received from Owners with Account Value allocated to that
Sub-account. Owners have the right to vote an amount equal to the number of
shares attributable to their contracts. If we do not receive voting
instructions in relation to certain shares, we will vote those shares in the
same manner and proportion as the shares for which we have received
instructions. We will furnish those Owners who have Account Value allocated to
a Sub-account whose underlying mutual fund portfolio has requested a "proxy"
vote with proxy materials and the necessary forms to provide us with their
voting instructions. Generally, you will be asked to provide instructions for
us to vote on matters such as changes in a fundamental investment strategy,
adoption of a new investment advisory agreement, or matters relating to the
structure of the underlying mutual fund that require a vote of shareholders.
American Skandia Trust (the "Trust") has obtained an exemption from the
Securities and Exchange Commission that permits its co-investment advisers,
American Skandia Investment Services, Incorporated ("ASISI") and Prudential
Investments LLC, subject to approval by the Board of Trustees of the Trust, to
change sub-advisors for a Portfolio and to enter into new sub-advisory
agreements, without obtaining shareholder approval of the changes. This
exemption (which is similar to exemptions granted to other investment companies
that are organized in a similar manner as the Trust) is intended to facilitate
the efficient supervision and management of the sub-advisors by ASISI,
Prudential Investments LLC and the Trustees. The Trust is required, under the
terms of the exemption, to provide certain information to shareholders following
these types of changes. We may add new Sub-accounts that invest in a series of
underlying funds other than the Trust that is managed by an affiliate. Such
series of funds may have a similar order from the SEC. You also should review
the prospectuses for the other underlying funds in which various Sub-accounts
invest as to whether they have obtained similar orders from the SEC.
MATERIAL CONFLICTS
It is possible that differences may occur between companies that offer shares of
an underlying mutual fund portfolio to their respective separate accounts
issuing variable annuities and/or variable life insurance products. Differences
may also occur surrounding the offering of an underlying mutual fund portfolio
to variable life insurance policies and variable annuity contracts that we
offer. Under certain circumstances, these differences could be considered
"material conflicts," in which case we would take necessary action to protect
persons with voting rights under our variable annuity contracts and variable
life insurance policies against persons with voting rights under other insurance
companies' variable insurance products. If a "material conflict" were to arise
between owners of variable annuity contracts and variable life insurance
policies issued by us we would take necessary action to treat such persons
equitably in resolving the conflict. "Material conflicts" could arise due to
differences in voting instructions between owners of variable life insurance and
variable annuity contracts of the same or different companies. We monitor any
potential conflicts that may exist.
SERVICE FEES PAYABLE TO AMERICAN SKANDIA
American Skandia or our affiliates have entered into agreements with the
investment adviser or distributor of the underlying Portfolios. Under the terms
of these agreements, American Skandia may provide administrative and support
services to the Portfolios for which it receives a fee of up to 0.75%
(currently) of the average assets allocated to the Portfolios under the Annuity
from the investment adviser, distributor and/or the fund. These agreements may
be different for each underlying mutual fund whose portfolios are offered as
Sub-accounts. In addition, the investment advisor, sub-advisor or distributor of
the underlying Portfolios may also compensate us by providing reimbursement or
paying directly for, among other things, marketing and/or administrative
services and/or other services they provide in connection with the Annuity.
These services may include, but are not limited to: co-sponsoring various
meetings and seminars attended by broker-dealer firms' registered
representatives and creating marketing material discussing the Annuity and the
available options.
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
WHO DISTRIBUTES ANNUITIES OFFERED BY AMERICAN SKANDIA?
American Skandia Marketing, Incorporated ("ASM"), a wholly-owned subsidiary of
American Skandia, Inc., is the distributor and principal underwriter of the
securities offered through this prospectus. ASM acts as the distributor of a
number of annuity and life insurance products we offer and co-distributor of
American Skandia Trust and American Skandia Advisor Funds, Inc., a family of
retail mutual funds. ASM also acts as an introducing broker-dealer through which
it receives a portion of brokerage commissions in connection with purchases and
sales of securities held by portfolios of American Skandia Trust which are
offered as underlying investment options under the Annuity.
ASM's principal business address is One Corporate Drive, Shelton,
Connecticut 06484. ASM is registered as broker-dealer under the Securities
Exchange Act of 1934 ("Exchange Act") and is a member of the National
Association of Securities Dealers, Inc. ("NASD").
The Annuity is offered on a continuous basis. ASM enters into distribution
agreements with broker-dealers who are registered under the Exchange Act and
with entities that may offer the Annuity but are exempt from registration
("firms"). Applications for the Annuity are solicited by registered
representatives of those firms. Such representatives will also be our appointed
insurance agents under state insurance law. In addition, ASM may offer the
Annuity directly to potential purchasers.
Commissions are paid to firms on sales of the Annuity according to one or
more schedules. The individual representative will receive a portion of the
compensation, depending on the practice of his or her firm. Commissions are
generally based on a percentage of Purchase Payments made, up to a maximum of
4.0%. Alternative compensation schedules are available that provide a lower
initial commission plus ongoing annual compensation based on all or a portion of
Account Value. We may also provide compensation to the distributing firm for
providing ongoing service to you in relation to the Annuity. Commissions and
other compensation paid in relation to the Annuity do not result in any
additional charge to you or to the Separate Account.
In addition, in an effort to promote the sale of our products (which may
include the placement of American Skandia and/or the Annuity on a preferred or
recommended company or product list and/or access to the firm's registered
representatives), we or ASM may enter into compensation arrangements with
certain broker-dealer firms with respect to certain or all registered
representatives of such firms under which such firms may receive separate
compensation or reimbursement for, among other things, training of sales
personnel and/or marketing and/or administrative services and/or other services
they provide to us. These services may include, but are not limited to:
educating customers of the firm on the Annuity's features; conducting due
diligence and analysis, providing office access, operations and systems support;
holding seminars intended to educate the firm's registered representatives and
make them more knowledgeable about the Annuity; providing a dedicated marketing
coordinator; providing priority sales desk support; and providing expedited
marketing compliance approval. To the extent permitted by NASD rules and other
applicable laws and regulations, ASM may pay or allow other promotional
incentives or payments in the form of cash or non-cash compensation. These
arrangements may not be offered to all firms and the terms of such arrangements
may differ between firms. A list of the firms to whom American Skandia pays an
amount of greater than $10,000.00 for these arrangements is provided in the
Statement of Additional Information, which is available upon request. You should
note that firms and individual registered representatives and branch managers
within some firms participating in one of these compensation arrangements might
receive greater compensation for selling the Annuity than for selling a
different annuity that is not eligible for these compensation arrangements.
While compensation is generally taken into account as an expense in considering
the charges applicable to an annuity product, any such compensation will be paid
by us or ASM and will not result in any additional charge to you. Overall
compensation paid to the distributing firm does not exceed, based on actuarial
assumptions, 8.5% of the total Purchase Payments made. Your registered
representative can provide you with more information about the compensation
arrangements that apply upon the sale of the Annuity.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
American Skandia publishes annual and quarterly reports that are filed with the
SEC. These reports contain financial information about American Skandia that is
annually audited by an independent registered public accounting firm. American
Skandia's annual report for the year ended December 31, 2004, together with
subsequent periodic reports that American Skandia files with the SEC, are
incorporated by reference into this prospectus. You can obtain copies, at no
cost, of any and all of this information, including the American Skandia annual
report
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
General Information continued
that is not ordinarily mailed to contract owners, the more current reports and
any subsequently filed documents at no cost by contacting us at American Skandia
- -- Variable Annuities; P.O. Box 7960, Philadelphia, PA 19176 (Telephone:
203-926-1888). The SEC file number for American Skandia is 33-44202. You may
read and copy any filings made by American Skandia with the SEC at the SEC's
Public Reference Room at 450 Fifth Street, Washington, D.C. 20549-0102. You can
obtain information on the operation of the Public Reference Room by calling
(202) 942-8090. The SEC maintains an Internet site that contains reports, proxy
and information statements, and other information regarding issuers that file
electronically with the SEC at http://www.sec.gov.
FINANCIAL STATEMENTS
The financial statements of the separate account and American Skandia Life
Assurance Corporation are included in the Statement of Additional Information.
HOW TO CONTACT US
You can contact us by:
- - calling our Customer Service Team at 1-800-752-6342 during our normal
business hours, 8:30 a.m. EST to 8:00 p.m. EST, Monday through Friday, or
Skandia's telephone automated response system at 1-800-766-4530.
- - writing to us via regular mail at American Skandia -- Variable Annuities,
Attention: STAGECOACH ANNUITY, P.O. Box 7960, Philadelphia, PA 19176 OR
for express mail American Skandia -- Variable Annuities, Attention:
STAGECOACH ANNUITY, 2101 Welsh Road, Dresher, PA 19025. NOTE: Failure to
send mail to the proper address may result in a delay in our receiving and
processing your request.
- - sending an email to service@prudential.com or visiting our Internet
Website at www.americanskandia.prudential.com.
- - accessing information about your Annuity through our Internet Website at
www.americanskandia.prudential.com.
You can obtain account information by calling our automated response
system and at www.americanskandia. prudential.com, our Internet Website. Our
Customer Service representatives are also available during business hours to
provide you with information about your account. You can request certain
transactions through our telephone voice response system, our Internet Website
or through a customer service representative. You can provide authorization for
a third party, including your attorney-in-fact acting pursuant to a power of
attorney, to access your account information and perform certain transactions on
your account. You will need to complete a form provided by us which identifies
those transactions that you wish to authorize via telephonic and electronic
means and whether you wish to authorize a third party to perform any such
transactions. Please note that unless you tell us otherwise, we deem that all
transactions that are directed by your investment professional with respect to
your Annuity have been authorized by you. We require that you or your
representative provide proper identification before performing transactions over
the telephone or through our Internet Website. This may include a Personal
Identification Number (PIN) that will be provided to you upon issue of your
Annuity or you may establish or change your PIN by calling our automated
response system and at www.americanskandia.prudential.com, our Internet Website.
Any third party that you authorize to perform financial transactions on your
account will be assigned a PIN for your account.
Transactions requested via telephone are recorded. To the extent permitted
by law, we will not be responsible for any claims, loss, liability or expense in
connection with a transaction requested by telephone or other electronic means
if we acted on such transaction instructions after following reasonable
procedures to identify those persons authorized to perform transactions on your
Annuity using verification methods which may include a request for your Social
Security number, PIN or other form of electronic identification. We may be
liable for losses due to unauthorized or fraudulent instructions if we did not
follow such procedures.
American Skandia does not guarantee access to telephonic, facsimile,
Internet or any other electronic information or that we will be able to accept
transaction instructions via such means at all times. Regular and/or express
mail will be the only means by which we will accept transaction instructions
when telephonic, facsimile, Internet or any other electronic means are
unavailable or delayed. American Skandia reserves the right to limit, restrict
or terminate telephonic, facsimile, Internet or any other electronic transaction
privileges at any time.
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Securities Act") may be permitted to directors, officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed
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AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
that in the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
LEGAL PROCEEDINGS
As of the date of this Prospectus, American Skandia and its affiliates are not
involved in any legal proceedings outside of the ordinary course of business.
American Skandia and its affiliates are involved in pending and threatened legal
proceedings in the normal course of its business, however, we do not anticipate
that the outcome of any such legal proceedings will have a material adverse
affect on the Separate Account, or American Skandia's ability to meet its
obligations under the Annuity, or on the distribution of the Annuity.
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The following are the contents of the Statement of Additional Information:
General Information about American Skandia
- - American Skandia Life Assurance Corporation
- - American Skandia Life Assurance Corporation Variable Account B
- - American Skandia Life Assurance Corporation Separate Account D
Principal Underwriter/Distributor -- American Skandia Marketing, Incorporated
Payments Made to Promote Sale of Our Products
How the Unit Price is Determined
Additional Information on Fixed Allocations
- - How We Calculate the Market Value Adjustment
General Information
- - Voting Rights
- - Modification
- - Deferral of Transactions
- - Misstatement of Age or Sex
- - Ending the Offer
Annuitization
Experts
Legal Experts
Financial Statements
97
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APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B
Separate Account B consists of multiple Sub-accounts. Each Sub-account invests
only in a single mutual fund or mutual fund portfolio. All or some of these
Sub-accounts are available as investment options for other variable annuities
we offer pursuant to different prospectuses.
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 Sub-accounts of Separate
Account B that are being offered pursuant to this Prospectus; and (b) the
number of Units outstanding for each such Sub-account as of the dates shown.
Since November 18, 2002, we have been determining, on a daily basis, multiple
Unit Prices for each Sub-account of Separate Account B. We compute multiple
Unit Prices because several of our variable annuities invest in the same
Sub-accounts, and these annuities deduct varying charges that correspond to
each combination of the applicable Insurance Charge, Distribution Charge (when
applicable) and the charges for each optional benefit. Where an asset-based
charge corresponding to a particular Sub-account within a new annuity product
is identical to that in the same Sub-account within an existing annuity, the
Unit Price for the new annuity will be identical to that of the existing
annuity. In such cases, we will for reference purposes depict, in the condensed
financial information for the new annuity, Unit Prices of the existing annuity.
The year in which operations commenced in each such Sub-account is noted in
parentheses. To the extent a Sub-account commenced operations during a
particular calendar year, the Unit Price as of the end of the period reflects
only the partial year results from the commencement of operations until
December 31st of the applicable year. When a Unit Price was first calculated
for a particular Sub-account, we set the price of that Unit at $10.00 per Unit.
Thereafter, Unit Prices vary based on market performance. Unit Prices and Units
are provided for Sub-accounts that commenced operations prior to January 1,
2005.
A-1
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
--------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------------------------------ ------------ ----------- ------------
Wells Fargo Variable Trust -- INTERNATIONAL EQUITY (1) (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.70 $ 12.71 --
Number of Units 36,282 30,093 --
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.63 -- --
Number of Units 3,086 -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.55 -- --
Number of Units 1,400 -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Price -- -- --
Number of Units -- -- --
Wells Fargo Variable Trust -- SMALL-CAP GROWTH (2) (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 15.25 $ 13.63 $ 9.74
Number of Units 31,804 27,988 2,121
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.17 -- --
Number of Units 4,467 -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Price -- -- --
Number of Units -- -- --
A-2
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
--------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------------------------------ ------------- ------------- ------------
Wells Fargo Variable Trust -- GROWTH (3) (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.42 $ 11.65 $ 9.59
Number of Units 9,541 8,938 1,090
With any one of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With GMWB
Unit Value $ 11.01 -- --
Number of Units 714 -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
Wells Fargo Variable Trust -- LARGE COMPANY GROWTH (4) (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.81 $ 11.63 $ 9.36
Number of Units 145,943 94,737 8,608
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.74 $ 11.59 --
Number of Units 12,589 1,333 --
With GMWB
Unit Value $ 10.50 -- --
Number of Units 6,708 -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-3
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
--------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ----------------------------------------------------- ------------- ------------- ------------
Wells Fargo Variable Trust -- EQUITY VALUE (5) (1998)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.47 $ 12.32 $ 9.97
Number of Units 43,291 30,911 900
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.40 -- --
Number of Units 6,651 -- --
With GMWB
Unit Value $ 13.37 -- --
Number of Units 931 -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value $ 9.53 $ 8.77 --
Number of Units 2,185 2,290 --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Price -- -- --
Number of Units -- -- --
Wells Fargo Variable Trust -- EQUITY INCOME (6) (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.18 $ 10.23 $ 8.25
Number of Units 590,808 314,757 196,720
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.36 $ 12.26 $ 9.9
Number of Units 285,526 251,071 10,707
With GMWB
Unit Value $ 13.33 $ 12.25 --
Number of Units 39,530 5,900 --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.29 $ 12.23 $ 9.9
Number of Units 63,454 15,983 91
With any one of EBP or HAV and GMWB
Unit Value $ 16.60 $ 15.29 --
Number of Units 14,303 15,958 --
With HAV, EBP and GRO Plus
Unit Price $ 13.22 -- --
Number of Units 480 -- --
With HAV, EBP and GMWB
Unit Price $ 11.61 -- --
Number of Units 13 -- --
A-4
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
--------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------------------------- ------------- ------------- ------------
Wells Fargo Variable Trust -- ASSET ALLOCATION (7) (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.67 $ 11.79 $ 9.82
Number of Units 88,663 62,075 2,641
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.61 $ 11.75 --
Number of Units 903 701 --
With GMWB
Unit Value $ 11.07 -- --
Number of Units 5,863 -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.54 -- --
Number of Units 961 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 11.24 -- --
Number of Units 1,339 -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Price -- -- --
Number of Units -- -- --
Wells Fargo Variable Trust -- TOTAL RETURN BOND (8) (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.19 $ 10.89 $ 10.21
Number of Units 38,158 29,473 74
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.13 $ 10.86 --
Number of Units 0 89 --
With GMWB
Unit Value $ 10.26 -- --
Number of Units 1,190 -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.29 -- --
Number of Units 354 -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Price -- -- --
Number of Units -- -- --
A-5
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
--------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ---------------------------------------------- -------------- --------------- ---------------
AST JP MORGAN INTERNATIONAL EQUITY PORTFOLIO
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.67 $ 11.00 $ 8.56
Number of Units 3,227,381 2,415,394 2,569,506
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.65 $ 12.75 $ 9.95
Number of Units 2,064,681 936,678 90,759
With GMWB
Unit Value $ 14.62 $ 12.74 --
Number of Units 217,166 17,098 --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.57 $ 12.72 $ 9.95
Number of Units 284,319 141,470 6,047
With any one of EBP or HAV and GMWB
Unit Value $ 7.86 $ 6.87 --
Number of Units 428,765 400,112 --
With HAV, EBP and GRO Plus
Unit Price $ 14.49 $ 12.68 --
Number of Units 38,292 13,590 --
With HAV, EBP and GMWB
Unit Price $ 12.32 -- --
Number of Units 20,718 -- --
AST WILLIAM BLAIR INTERNATIONAL GROWTH (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 15.30 $ 13.39 $ 9.72
Number of Units 11,265,469 5,547,558 835,523
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.21 $ 13.35 $ 9.72
Number of Units 15,481,627 6,498,151 78,368
With GMWB
Unit Value $ 15.18 $ 13.34 --
Number of Units 1,821,923 103,740 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.13 $ 13.32 $ 9.71
Number of Units 2,722,552 1,009,679 5,178
With any one of EBP or HAV and GMWB
Unit Value $ 15.74 $ 13.86 --
Number of Units 545,075 29,434 --
With HAV, EBP and GRO Plus
Unit Price $ 15.05 $ 13.28 --
Number of Units 325,809 32,626 --
With HAV, EBP and GMWB
Unit Price $ 11.94 -- --
Number of Units 135,829 -- --
A-6
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- --------------- --------------- ------------
AST LSV INTERNATIONAL VALUE (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.84 $ 10.79 $ 8.19
Number of Units 1,897,469 1,201,268 269,995
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.27 $ 12.86 $ 9.79
Number of Units 810,108 368,945 22,770
With GMWB
Unit Value $ 15.24 $ 12.85 --
Number of Units 69,494 5,504 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.19 $ 12.82 --
Number of Units 119,845 24,374 --
With any one of EBP or HAV and GMWB
Unit Value $ 6.69 $ 5.65 --
Number of Units 122,795 72,406 --
With HAV, EBP and GRO Plus
Unit Price $ 15.11 $ 12.79 --
Number of Units 16,366 1,767 --
With HAV, EBP and GMWB
Unit Value $ 12.70 -- --
Number of Units 5,736 -- --
AST MFS GLOBAL EQUITY (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.16 $ 11.30 $ 9.04
Number of Units 2,276,801 1,393,001 969,509
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.29 $ 12.31 $ 9.87
Number of Units 1,897,254 916,888 32,306
With GMWB
Unit Value $ 14.26 $ 12.29 --
Number of Units 98,046 4,306 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.22 $ 12.27 --
Number of Units 219,580 62,490 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.48 $ 9.06 --
Number of Units 273,401 308,725 --
With HAV, EBP and GRO Plus
Unit Price $ 14.14 $ 12.24 --
Number of Units 26,943 6,069 --
With HAV, EBP and GMWB
Unit Value $ 12.40 -- --
Number of Units 5,188 -- --
A-7
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------------- --------------- --------------- ---------------
AST STATE STREET RESEARCH SMALL-CAP GROWTH (9)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.05 $ 9.89 $ 6.92
Number of Units 2,242,129 3,292,593 1,970,250
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.33 $ 13.50 $ 9.48
Number of Units 1,200,247 1,059,046 47,261
With GMWB
Unit Value $ 12.30 $ 13.49 --
Number of Units 113,913 9,676 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.26 $ 13.46 $ 9.47
Number of Units 136,313 138,936 6,595
With any one of EBP or HAV and GMWB
Unit Value $ 15.30 $ 16.82 --
Number of Units 67,370 64,850 --
With HAV, EBP and GRO Plus
Unit Price $ 12.19 $ 13.43 --
Number of Units 23,253 4,691 --
With HAV, EBP and GMWB
Unit Value $ 9.32 -- --
Number of Units 1,043 -- --
AST DEAM SMALL-CAP GROWTH (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.98 $ 11.13 $ 7.67
Number of Units 1,618,719 1,682,193 639,695
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.10 $ 14.06 $ 9.71
Number of Units 779,045 480,221 12,122
With GMWB
Unit Value $ 15.07 $ 14.05 --
Number of Units 56,414 1,850 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.02 $ 14.02 $ 9.71
Number of Units 192,105 89,708 1,728
With any one of EBP or HAV and GMWB
Unit Value $ 7.07 $ 6.61 --
Number of Units 129,475 131,605 --
With HAV, EBP and GRO Plus
Unit Price $ 14.94 $ 13.98 --
Number of Units 18,825 3,753 --
With HAV, EBP and GMWB
Unit Value $ 11.03 -- --
Number of Units 3,398 -- --
A-8
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
-------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- -------------- -------------- ---------------
AST FEDERATED AGGRESSIVE GROWTH (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 15.42 $ 12.74 $ 7.64
Number of Units 4,808,453 3,085,373 1,255,415
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.79 $ 16.40 $ 9.86
Number of Units 5,192,694 2,615,505 63,097
With GMWB
Unit Value $ 19.75 $ 16.38 --
Number of Units 562,771 37,078 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 19.69 $ 16.35 $ 9.86
Number of Units 808,007 362,906 4,107
With any one of EBP or HAV and GMWB
Unit Value $ 9.70 $ 8.06 --
Number of Units 324,340 79,226 --
With HAV, EBP and GRO Plus
Unit Price $ 19.58 $ 16.30 --
Number of Units 95,514 20,181 --
With HAV, EBP and GMWB
Unit Value $ 12.64 -- --
Number of Units 53,866 -- --
AST SMALL-CAP VALUE (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 14.22 $ 12.42 $ 9.3
Number of Units 10,785,030 10,183,346 6,141,523
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.34 $ 13.43 $ 10.08
Number of Units 10,169,483 5,824,200 209,790
With GMWB
Unit Value $ 15.31 $ 13.41 --
Number of Units 1,007,926 100,155 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.26 $ 13.39 $ 10.08
Number of Units 1,690,870 767,455 17,411
With any one of EBP or HAV and GMWB
Unit Value $ 15.87 $ 13.95 --
Number of Units 465,784 275,971 --
With HAV, EBP and GRO Plus
Unit Price $ 15.17 $ 13.35 --
Number of Units 166,852 34,978 --
With HAV, EBP and GMWB
Unit Value $ 12.11 -- --
Number of Units 91,011 -- --
A-9
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ---------------------------------------- --------------- --------------- ---------------
AST DEAM SMALL-CAP VALUE (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.99 $ 10.81 $ 7.66
Number of Units 2,143,020 1,134,865 423,387
With any one of GRO Plus, EBP or HAV
Unit Price $ 17.00 $ 14.19 $ 10.08
Number of Units 1,054,696 434,509 11,686
With GMWB
Unit Value $ 16.96 $ 14.17 --
Number of Units 236,402 10,756 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 16.90 $ 14.15 $ 10.08
Number of Units 213,632 70,597 5,211
With any one of EBP or HAV and GMWB
Unit Value $ 12.78 $ 10.70 --
Number of Units 63,057 22,847 --
With HAV, EBP and GRO Plus
Unit Price $ 16.81 $ 14.11 --
Number of Units 14,277 879 --
With HAV, EBP and GMWB
Unit Value $ 12.71 -- --
Number of Units 634 -- --
AST GOLDMAN SACHS MID-CAP GROWTH (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.80 $ 10.31 $ 7.97
Number of Units 4,375,813 3,027,057 1,273,118
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.55 $ 12.75 $ 9.87
Number of Units 5,139,643 2,379,820 66,279
With GMWB
Unit Value $ 14.52 $ 12.73 --
Number of Units 516,261 37,400 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.47 $ 12.71 $ 9.87
Number of Units 994,493 365,115 2,488
With any one of EBP or HAV and GMWB
Unit Value $ 4.24 $ 3.73 --
Number of Units 457,010 175,708 --
With HAV, EBP and GRO Plus
Unit Price $ 14.39 $ 12.68 --
Number of Units 124,672 12,201 --
With HAV, EBP and GMWB
Unit Value $ 11.91 -- --
Number of Units 33,665 -- --
A-10
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
--------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------------- -------------- --------------- ---------------
AST NEUBERGER BERMAN MID-CAP GROWTH (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.86 $ 9.51 $ 7.41
Number of Units 4,715,301 3,415,318 2,175,250
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.87 $ 12.18 $ 9.51
Number of Units 2,211,800 1,089,649 44,760
With GMWB
Unit Value $ 13.84 $ 12.17 --
Number of Units 153,923 16,702 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.80 $ 12.15 $ 9.51
Number of Units 377,548 96,879 1,311
With any one of EBP or HAV and GMWB
Unit Value $ 6.81 $ 6.01 --
Number of Units 369,234 294,816 --
With HAV, EBP and GRO Plus
Unit Price $ 13.72 $ 12.11 --
Number of Units 38,051 5,407 --
With HAV, EBP and GMWB
Unit Value $ 11.70 -- --
Number of Units 18,225 -- --
AST NEUBERGER BERMAN MID-CAP VALUE (1993)
WITH NO OPTIONAL BENEFITS
Unit Price $ 14.51 $ 12.01 $ 8.96
Number of Units 11,461,684 8,530,129 5,118,558
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.08 $ 13.34 $ 9.98
Number of Units 9,335,291 4,786,623 163,415
With GMWB
Unit Value $ 16.04 $ 13.33 --
Number of Units 937,314 87,253 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.99 $ 13.31 $ 9.97
Number of Units 1,457,788 610,598 10,745
With any one of EBP or HAV and GMWB
Unit Value $ 15.99 $ 13.32 --
Number of Units 537,445 370,965 --
With HAV, EBP and GRO Plus
Unit Price $ 15.91 $ 13.27 --
Number of Units 154,749 21,843 --
With HAV, EBP and GMWB
Unit Value $ 12.97 -- --
Number of Units 95,076 -- --
A-11
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- --------------- --------------- ---------------
AST ALGER ALL-CAP GROWTH (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.67 $ 9.07 $ 6.8
Number of Units 1,798,457 2,002,166 658,419
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.25 $ 12.45 $ 9.36
Number of Units 715,598 636,548 6,409
With GMWB
Unit Value $ 13.22 $ 12.43 --
Number of Units 119,566 10,356 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.17 $ 12.41 $ 9.36
Number of Units 141,575 106,376 3,466
With any one of EBP or HAV and GMWB
Unit Value $ 6.19 $ 5.84 --
Number of Units 107,188 87,326 --
With HAV, EBP and GRO Plus
Unit Price $ 13.10 $ 12.38 --
Number of Units 22,732 4,810 --
With HAV, EBP and GMWB
Unit Value $ 10.73 -- --
Number of Units 6,346 -- --
AST GABELLI ALL-CAP VALUE (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.38 $ 10.91 $ 8.17
Number of Units 2,587,064 2,513,413 1,200,225
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.14 $ 13.38 $ 10.04
Number of Units 1,071,978 727,500 28,449
With GMWB
Unit Value $ 15.11 $ 13.37 --
Number of Units 116,474 12,627 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.06 $ 13.35 $ 10.04
Number of Units 256,671 127,279 88
With any one of EBP or HAV and GMWB
Unit Value $ 11.15 $ 9.89 --
Number of Units 194,765 166,080 --
With HAV, EBP and GRO Plus
Unit Price $ 14.98 $ 13.31 --
Number of Units 8,849 1,455 --
With HAV, EBP and GMWB
Unit Value $ 12.11 -- --
Number of Units 7,555 -- --
A-12
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------------- --------------- --------------- ---------------
AST T. ROWE PRICE NATURAL RESOURCES (1995)
WITH NO OPTIONAL BENEFITS
Unit Price $ 16.25 $ 12.59 $ 9.59
Number of Units 2,040,188 2,011,627 724,670
With any one of GRO Plus, EBP or HAV
Unit Price $ 17.60 $ 13.67 $ 10.44
Number of Units 1,025,462 433,891 7,378
With GMWB
Unit Value $ 17.56 $ 13.66 --
Number of Units 172,186 24,634 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 17.50 $ 13.63 $ 10.44
Number of Units 158,672 77,245 5,472
With any one of EBP or HAV and GMWB
Unit Value $ 14.40 $ 11.23 --
Number of Units 41,428 6,747 --
With HAV, EBP and GRO Plus
Unit Price $ 17.41 $ 13.60 --
Number of Units 37,779 1,035 --
With HAV, EBP and GMWB
Unit Value $ 14.36 -- --
Number of Units 13,775 -- --
AST ALLIANCE GROWTH (10) (1996)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.44 $ 9.08 $ 7.46
Number of Units 2,378,881 2,098,873 1,869,353
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.76 $ 11.34 $ 9.34
Number of Units 1,189,655 717,430 31,105
With GMWB
Unit Value $ 11.73 $ 11.32 --
Number of Units 84,417 2,206 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.70 $ 11.30 $ 9.34
Number of Units 297,369 114,477 3,975
With any one of EBP or HAV and GMWB
Unit Value $ 5.91 $ 5.72 --
Number of Units 307,367 267,109 --
With HAV, EBP and GRO Plus
Unit Price $ 11.63 $ 11.27 --
Number of Units 15,562 8,067 --
With HAV, EBP and GMWB
Unit Value $ 10.57 -- --
Number of Units 4,945 -- --
A-13
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- -------------- -------------- --------------
AST MFS GROWTH (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.97 $ 9.16 $ 7.58
Number of Units 4,529,834 4,784,269 2,930,432
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.39 $ 11.41 $ 9.47
Number of Units 2,897,175 2,222,614 134,574
With GMWB
Unit Value $ 12.37 $ 11.40 --
Number of Units 304,760 18,900 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.33 $ 11.38 $ 9.46
Number of Units 442,758 207,063 2,437
With any one of EBP or HAV and GMWB
Unit Value $ 6.72 $ 6.21 --
Number of Units 387,463 262,995 --
With HAV, EBP and GRO Plus
Unit Price $ 12.26 $ 11.35 --
Number of Units 52,718 10,550 --
With HAV, EBP and GMWB
Unit Value $ 11.00 -- --
Number of Units 33,939 -- --
AST MARSICO CAPITAL GROWTH (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.26 $ 10.78 $ 8.32
Number of Units 28,117,310 20,138,164 10,144,317
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.95 $ 12.30 $ 9.51
Number of Units 30,793,077 14,975,841 457,013
With GMWB
Unit Value $ 13.92 $ 12.28 --
Number of Units 3,136,818 215,988 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.88 $ 12.26 $ 9.51
Number of Units 4,692,895 2,031,583 30,465
With any one of EBP or HAV and GMWB
Unit Value $ 9.22 $ 8.16 --
Number of Units 2,016,277 925,591 --
With HAV, EBP and GRO Plus
Unit Price $ 13.80 $ 12.23 --
Number of Units 578,919 70,776 --
With HAV, EBP and GMWB
Unit Value $ 11.61 -- --
Number of Units 263,104 -- --
A-14
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------------- --------------- --------------- ---------------
AST GOLDMAN SACHS CONCENTRATED GROWTH (1992)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.64 $ 9.45 $ 7.67
Number of Units 2,785,100 2,053,023 1,349,939
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.83 $ 11.63 $ 9.46
Number of Units 1,641,544 715,845 41,632
With GMWB
Unit Value $ 11.80 $ 11.61 --
Number of Units 122,739 17,452 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.76 $ 11.59 --
Number of Units 277,607 49,620 --
With any one of EBP or HAV and GMWB
Unit Value $ 4.46 $ 4.40 --
Number of Units 541,661 395,905 --
With HAV, EBP and GRO Plus
Unit Price $ 11.70 $ 11.56 --
Number of Units 10,426 242 --
With HAV, EBP and GMWB
Unit Value $ 10.54 -- --
Number of Units 12,303 -- --
AST DEAM LARGE-CAP VALUE (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.53 $ 10.78 $ 8.66
Number of Units 2,351,197 1,072,256 664,649
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.36 $ 12.39 $ 9.98
Number of Units 1,347,344 583,969 18,250
With GMWB
Unit Value $ 14.33 $ 12.38 --
Number of Units 175,087 9,674 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.29 $ 12.36 $ 9.97
Number of Units 234,446 58,333 4,906
With any one of EBP or HAV and GMWB
Unit Value $ 10.72 $ 9.28 --
Number of Units 199,601 137,247 --
With HAV, EBP and GRO Plus
Unit Price $ 14.21 $ 12.32 --
Number of Units 16,355 4,412 --
With HAV, EBP and GMWB
Unit Value $ 12.25 -- --
Number of Units 6,163 -- --
A-15
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------------------ --------------- --------------- ---------------
AST ALLIANCE/BERNSTEIN GROWTH + VALUE (11) (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.72 $ 9.91 $ 7.99
Number of Units 1,620,391 1,387,072 965,912
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.07 $ 12.11 $ 9.79
Number of Units 1,011,796 667,395 11,345
With GMWB
Unit Value $ 13.05 $ 12.09 --
Number of Units 72,365 5,118 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.00 $ 12.07 $ 9.79
Number of Units 256,194 115,455 704
With any one of EBP or HAV and GMWB
Unit Value $ 9.31 $ 8.65 --
Number of Units 215,645 154,955 --
With HAV, EBP and GRO Plus
Unit Price $ 12.93 $ 12.04 --
Number of Units 7,165 1,041 --
With HAV, EBP and GMWB
Unit Value $ 11.15 -- --
Number of Units 1,191 -- --
AST SANFORD BERNSTEIN CORE VALUE (12) (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.39 $ 11.06 $ 8.76
Number of Units 4,643,022 3,621,862 6,005,922
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.18 $ 12.69 $ 10.08
Number of Units 3,959,115 2,277,726 386,259
With GMWB
Unit Value $ 14.15 $ 12.67 --
Number of Units 220,419 11,518 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.10 $ 12.65 $ 10.08
Number of Units 534,389 328,567 30,510
With any one of EBP or HAV and GMWB
Unit Value $ 11.83 $ 10.62 --
Number of Units 303,689 216,416 --
With HAV, EBP and GRO Plus
Unit Price $ 14.03 $ 12.62 --
Number of Units 49,912 10,893 --
With HAV, EBP and GMWB
Unit Value $ 11.86 -- --
Number of Units 57,669 -- --
A-16
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- -------------------------------------------------- --------------- --------------- ---------------
AST COHEN & STEERS REALTY (1998)
WITH NO OPTIONAL BENEFITS
Unit Price $ 18.49 $ 13.63 $ 10.08
Number of Units 4,080,179 3,097,315 1,563,489
With any one of GRO Plus, EBP or HAV
Unit Price $ 18.84 $ 13.92 $ 10.33
Number of Units 2,863,749 1,376,696 41,098
With GMWB
Unit Value $ 18.80 $ 13.91 --
Number of Units 184,027 13,615 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 18.74 $ 13.88 $ 10.32
Number of Units 538,151 270,852 6,429
With any one of EBP or HAV and GMWB
Unit Value $ 14.12 $ 10.47 --
Number of Units 68,406 8,884 --
With HAV, EBP and GRO Plus
Unit Price $ 18.64 $ 13.84 --
Number of Units 17,014 8,189 --
With HAV, EBP and GMWB
Unit Value $ 14.07 -- --
Number of Units 5,246 -- --
AST SANFORD BERNSTEIN MANAGED INDEX 500 (13) (1998)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.07 $ 10.23 $ 8.17
Number of Units 6,845,369 5,442,511 3,662,406
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.22 $ 12.25 $ 9.81
Number of Units 3,486,237 2,209,334 79,915
With GMWB
Unit Value $ 13.19 $ 12.24 --
Number of Units 389,368 16,957 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.15 $ 12.22 $ 9.81
Number of Units 352,176 203,573 383
With any one of EBP or HAV and GMWB
Unit Value $ 8.58 $ 7.98 --
Number of Units 343,296 293,662 --
With HAV, EBP and GRO Plus
Unit Price $ 13.08 $ 12.18 --
Number of Units 9,296 4,899 --
With HAV, EBP and GMWB
Unit Value $ 11.31 -- --
Number of Units 43,627 -- --
A-17
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- -------------------------------------------- -------------- -------------- ---------------
AST AMERICAN CENTURY INCOME & GROWTH (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.57 $ 10.45 $ 8.25
Number of Units 4,670,846 2,115,438 1,751,136
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.80 $ 12.50 $ 9.89
Number of Units 2,219,323 846,118 36,829
With GMWB
Unit Value $ 13.77 $ 12.48 --
Number of Units 198,789 2,386 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.73 $ 12.46 $ 9.89
Number of Units 368,328 124,008 8,874
With any one of EBP or HAV and GMWB
Unit Value $ 9.04 $ 8.22 --
Number of Units 372,540 195,232 --
With HAV, EBP and GRO Plus
Unit Price $ 13.65 $ 12.43 --
Number of Units 25,550 4,612 --
With HAV, EBP and GMWB
Unit Value $ 11.72 -- --
Number of Units 7,406 -- --
AST ALLIANCE GROWTH AND INCOME (14) (1992)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.46 $ 10.50 $ 8.06
Number of Units 25,850,506 21,264,670 6,667,373
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.91 $ 12.77 $ 9.83
Number of Units 27,268,222 13,386,166 165,588
With GMWB
Unit Value $ 13.88 $ 12.76 --
Number of Units 2,899,917 187,011 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.83 $ 12.74 $ 9.83
Number of Units 4,694,207 2,029,598 6,100
With any one of EBP or HAV and GMWB
Unit Value $ 10.72 $ 9.88 --
Number of Units 1,731,512 976,756 --
With HAV, EBP and GRO Plus
Unit Price $ 13.76 $ 12.70 --
Number of Units 564,502 69,435 --
With HAV, EBP and GMWB
Unit Value $ 11.50 -- --
Number of Units 228,955 -- --
A-18
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- --------------- --------------- ---------------
AST HOTCHKIS & WILEY LARGE-CAP VALUE
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.17 $ 9.83 $ 8.34
Number of Units 3,717,848 2,647,064 2,110,071
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.19 $ 11.65 $ 9.9
Number of Units 1,916,775 651,074 30,714
With GMWB
Unit Value $ 13.16 $ 11.63 --
Number of Units 173,888 21,961 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.12 $ 11.61 $ 9.9
Number of Units 198,898 90,092 5,934
With any one of EBP or HAV and GMWB
Unit Value $ 9.78 $ 8.66 --
Number of Units 419,818 347,275 --
With HAV, EBP and GRO Plus
Unit Price $ 13.05 $ 11.58 --
Number of Units 37,159 332 --
With HAV, EBP and GMWB
Unit Value $ 11.75 -- --
Number of Units 23,032 -- --
AST DEAM GLOBAL ALLOCATION (15) (1993)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.19 $ 10.24 $ 8.71
Number of Units 1,061,887 898,161 847,517
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.70 $ 11.65 $ 9.94
Number of Units 278,657 155,865 3,088
With GMWB
Unit Value $ 12.67 $ 11.64 --
Number of Units 35,622 483 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.63 $ 11.62 $ 9.93
Number of Units 52,110 34,914 94
With any one of EBP or HAV and GMWB
Unit Value $ 9.12 $ 8.40 --
Number of Units 290,887 303,295 --
With HAV, EBP and GRO Plus
Unit Price $ 12.56 $ 11.58 --
Number of Units 2,849 1,169 --
With HAV, EBP and GMWB
Unit Value $ 11.23 -- --
Number of Units 2,193 -- --
A-19
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ----------------------------------------------- --------------- --------------- ---------------
AST AMERICAN CENTURY STRATEGIC BALANCED (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.46 $ 10.69 $ 9.14
Number of Units 2,335,598 2,045,205 1,126,058
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.43 $ 11.62 $ 9.97
Number of Units 1,308,462 930,516 15,835
With GMWB
Unit Value $ 12.40 $ 11.61 --
Number of Units 175,763 18,977 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.36 $ 11.59 $ 9.97
Number of Units 186,307 58,741 2,760
With any one of EBP or HAV and GMWB
Unit Value $ 10.08 $ 9.46 --
Number of Units 218,686 196,909 --
With HAV, EBP and GRO Plus
Unit Price $ 12.29 $ 11.56 --
Number of Units 18,231 11,783 --
With HAV, EBP and GMWB
Unit Value $ 10.98 -- --
Number of Units 125 -- --
AST T. ROWE PRICE ASSET ALLOCATION (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.13 $ 11.09 $ 9.09
Number of Units 3,551,315 2,243,566 921,329
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.22 $ 12.12 $ 9.96
Number of Units 2,109,855 955,716 21,928
With GMWB
Unit Value $ 13.19 $ 12.11 --
Number of Units 349,177 27,414 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.15 $ 12.09 $ 9.96
Number of Units 464,055 160,339 150
With any one of EBP or HAV and GMWB
Unit Value $ 11.38 $ 10.48 --
Number of Units 39,231 2,741 --
With HAV, EBP and GRO Plus
Unit Price $ 13.08 $ 12.05 --
Number of Units 46,336 31,706 --
With HAV, EBP and GMWB
Unit Value $ 11.35 -- --
Number of Units 9,372 -- --
A-20
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
-------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- -------------------------------------------- -------------- -------------- ---------------
AST T. ROWE PRICE GLOBAL BOND (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.45 $ 12.59 $ 11.34
Number of Units 4,717,822 2,962,471 1,739,313
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.17 $ 11.42 $ 10.31
Number of Units 6,387,666 1,827,606 36,822
With GMWB
Unit Value $ 12.14 $ 11.40 --
Number of Units 712,411 24,361 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.10 $ 11.38 $ 10.31
Number of Units 1,195,848 279,110 3,700
With any one of EBP or HAV and GMWB
Unit Value $ 14.05 $ 13.23 --
Number of Units 191,816 148,319 --
With HAV, EBP and GRO Plus
Unit Price $ 12.04 $ 11.35 --
Number of Units 137,089 12,591 --
With HAV, EBP and GMWB
Unit Value $ 10.94 -- --
Number of Units 43,652 -- --
AST GOLDMAN SACHS HIGH YIELD BOND PORTFOLIO
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.69 $ 11.61 $ 9.71
Number of Units 13,717,128 12,201,163 5,592,940
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.34 $ 12.24 $ 10.26
Number of Units 4,901,936 3,684,174 74,022
With GMWB
Unit Value $ 13.31 $ 12.23 --
Number of Units 426,333 27,535 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.27 $ 12.21 $ 10.26
Number of Units 707,876 379,114 6,524
With any one of EBP or HAV and GMWB
Unit Value $ 11.51 $ 10.60 --
Number of Units 545,726 346,126 --
With HAV, EBP and GRO Plus
Unit Price $ 13.20 $ 12.17 --
Number of Units 54,058 28,237 --
With HAV, EBP and GMWB
Unit Value $ 11.24 -- --
Number of Units 65,084 -- --
A-21
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- -------------- -------------- --------------
AST LORD ABBETT BOND-DEBENTURE (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.26 $ 11.61 $ 9.94
Number of Units 8,369,008 7,751,236 4,146,530
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.56 $ 11.92 $ 10.23
Number of Units 7,337,467 4,628,945 162,571
With GMWB
Unit Value $ 12.53 $ 11.90 --
Number of Units 904,128 42,593 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.49 $ 11.88 $ 10.23
Number of Units 1,314,641 624,019 7,474
With any one of EBP or HAV and GMWB
Unit Value $ 12.18 $ 11.60 --
Number of Units 732,155 423,485 --
With HAV, EBP and GRO Plus
Unit Price $ 12.42 $ 11.85 --
Number of Units 155,764 28,346 --
With HAV, EBP and GMWB
Unit Value $ 10.88 -- --
Number of Units 85,669 -- --
AST PIMCO TOTAL RETURN BOND (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.31 $ 10.95 $ 10.57
Number of Units 33,208,757 26,287,388 20,544,075
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.82 $ 10.51 $ 10.17
Number of Units 30,067,867 16,012,778 604,147
With GMWB
Unit Value $ 10.79 $ 10.49 --
Number of Units 3,495,678 378,676 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.76 $ 10.48 $ 10.17
Number of Units 4,319,279 2,192,336 36,236
With any one of EBP or HAV and GMWB
Unit Value $ 13.09 $ 12.76 --
Number of Units 2,344,332 1,558,557 --
With HAV, EBP and GRO Plus
Unit Price $ 10.70 $ 10.45 --
Number of Units 476,033 119,982 --
With HAV, EBP and GMWB
Unit Value $ 10.32 -- --
Number of Units 323,335 -- --
A-22
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- --------------- --------------- ---------------
AST PIMCO LIMITED MATURITY BOND (1995)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.55 $ 10.51 $ 10.34
Number of Units 21,299,789 15,242,856 11,274,642
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.23 $ 10.22 $ 10.08
Number of Units 19,103,280 5,152,783 215,314
With GMWB
Unit Value $ 10.21 $ 10.21 --
Number of Units 2,764,809 36,640 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.17 $ 10.19 $ 10.08
Number of Units 2,785,690 636,860 80,547
With any one of EBP or HAV and GMWB
Unit Value $ 11.62 $ 11.65 --
Number of Units 1,143,298 329,629 --
With HAV, EBP and GRO Plus
Unit Price $ 10.12 $ 10.16 --
Number of Units 301,108 35,430 --
With HAV, EBP and GMWB
Unit Value $ 9.96 -- --
Number of Units 240,337 -- --
AST MONEY MARKET (1992)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.78 $ 9.86 $ 9.96
Number of Units 29,870,585 32,730,501 36,255,772
With any one of GRO Plus, EBP or HAV
Unit Price $ 9.75 $ 9.86 $ 9.99
Number of Units 8,152,893 7,176,983 999,737
With GMWB
Unit Value $ 9.73 $ 9.85 --
Number of Units 1,312,018 81,304 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 9.70 $ 9.83 $ 9.99
Number of Units 1,742,703 1,118,618 70,899
With any one of EBP or HAV and GMWB
Unit Value $ 9.98 $ 10.13 --
Number of Units 234,402 35,505 --
With HAV, EBP and GRO Plus
Unit Price $ 9.65 $ 9.80 --
Number of Units 432,144 149,705 --
With HAV, EBP and GMWB
Unit Value $ 9.79 -- --
Number of Units 61,321 -- --
A-23
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------------------------------------- --------------- --------------- ------------
Gartmore Variable Investment Trust -- GVIT DEVELOPING MARKETS (1996)
WITH NO OPTIONAL BENEFITS
Unit Price $ 16.02 $ 13.60 $ 8.66
Number of Units 2,103,950 1,763,660 283,466
With any one of GRO Plus, EBP or HAV
Unit Price $ 18.29 $ 15.56 $ 9.93
Number of Units 934,258 415,864 21,816
With GMWB
Unit Value $ 18.25 $ 15.54 --
Number of Units 161,653 12,503 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 18.19 $ 15.52 $ 9.93
Number of Units 141,365 44,993 442
With any one of EBP or HAV and GMWB
Unit Value $ 12.74 $ 10.88 --
Number of Units 25,630 843 --
With HAV, EBP and GRO Plus
Unit Price $ 18.09 $ 15.47 --
Number of Units 17,121 1,871 --
With HAV, EBP and GMWB
Unit Value $ 12.70 -- --
Number of Units 11,161 -- --
AIM V.I. -- DYNAMICS (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.72 $ 9.61 $ 7.09
Number of Units 668,032 889,464 543,762
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.59 $ 13.12 $ 9.7
Number of Units 590,157 634,308 32,635
With GMWB
Unit Value $ 14.56 $ 13.11 --
Number of Units 61,543 4,848 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.51 $ 13.08 $ 9.7
Number of Units 55,199 38,518 576
With any one of EBP or HAV and GMWB
Unit Value $ 11.67 -- --
Number of Units 1,825 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.43 $ 13.05 --
Number of Units 4,253 3,083 --
With HAV, EBP and GMWB
Unit Value $ 11.63 -- --
Number of Units 13 -- --
A-24
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
-------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- ------------ ------------ -------------
AIM V.I. -- TECHNOLOGY (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 8.09 $ 7.87 $ 5.5
Number of Units 512,424 578,651 293,307
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.71 $ 13.35 --
Number of Units 5,184 3,695 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
AIM V.I. -- HEALTH SCIENCES (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.64 $ 10.05 $ 8
Number of Units 937,586 698,364 475,873
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.58 $ 11.93 $ 9.51
Number of Units 578,826 381,478 5,444
With GMWB
Unit Value $ 12.56 $ 11.91 --
Number of Units 87,037 2,077 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.52 $ 11.89 $ 9.51
Number of Units 181,513 55,867 140
With any one of EBP or HAV and GMWB
Unit Value $ 11.41 $ 10.85 --
Number of Units 5,057 1,330 --
With HAV, EBP and GRO Plus
Unit Price $ 12.45 -- --
Number of Units 5,438 -- --
With HAV, EBP and GMWB
Unit Value $ 11.38 -- --
Number of Units 2,157 -- --
A-25
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
--------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- -------------------------------------------- ------------- ------------- ------------
AIM V.I. -- FINANCIAL SERVICES (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.94 $ 11.17 $ 8.76
Number of Units 585,185 607,265 366,258
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.44 $ 12.61 $ 9.92
Number of Units 387,921 200,360 1,897
With GMWB
Unit Value $ 13.42 $ 12.60 --
Number of Units 67,581 20,268 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.37 $ 12.58 $ 9.92
Number of Units 84,188 50,250 141
With any one of EBP or HAV and GMWB
Unit Value $ 11.11 $ 10.46 --
Number of Units 15,566 1,378 --
With HAV, EBP and GRO Plus
Unit Price $ 13.30 $ 12.54 --
Number of Units 8,806 751 --
With HAV, EBP and GMWB
Unit Value $ 11.08 -- --
Number of Units 468 -- --
Evergreen VA -- INTERNATIONAL EQUITY (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.66 $ 11.65 $ 8.15
Number of Units 414,631 189,143 113,389
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.94 $ 12.78 $ 9.67
Number of Units 195,986 76,749 3,669
With GMWB
Unit Value $ 12.21 $ 10.45 --
Number of Units 32,858 827 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.86 $ 12.74 --
Number of Units 67,201 6,492 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.40 $ 10.64 --
Number of Units 83,727 81,555 --
With HAV, EBP and GRO Plus
Unit Price $ 14.78 $ 12.71 --
Number of Units 7,362 1,395 --
With HAV, EBP and GMWB
Unit Value $ 12.36 -- --
Number of Units 2,878 -- --
A-26
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
--------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ----------------------------------------- ------------- ------------- ------------
Evergreen VA -- SPECIAL EQUITY (16) (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.58 $ 11.12 $ 7.44
Number of Units 702,642 815,621 127,728
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.25 $ 14.69 $ 9.85
Number of Units 509,734 293,794 12,520
With GMWB
Unit Value $ 15.22 $ 14.67 --
Number of Units 46,748 3,620 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.17 $ 14.65 $ 9.85
Number of Units 177,731 58,548 533
With any one of EBP or HAV and GMWB
Unit Value $ 9.13 $ 8.83 --
Number of Units 114,259 23,503 --
With HAV, EBP and GRO Plus
Unit Price $ 15.09 -- --
Number of Units 3,411 -- --
With HAV, EBP and GMWB
Unit Value $ 10.53 -- --
Number of Units 26,034 -- --
Evergreen VA -- OMEGA (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.29 $ 10.71 $ 7.78
Number of Units 570,123 404,789 39,943
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.89 $ 13.21 --
Number of Units 387,492 56,002 --
With GMWB
Unit Value $ 13.86 $ 13.19 --
Number of Units 31,153 283 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.81 $ 13.17 --
Number of Units 108,796 25,003 --
With any one of EBP or HAV and GMWB
Unit Value $ 9.40 $ 8.97 --
Number of Units 84,876 19,658 --
With HAV, EBP and GRO Plus
Unit Price $ 13.74 $ 13.13 --
Number of Units 3,028 1,855 --
With HAV, EBP and GMWB
Unit Value $ 10.92 -- --
Number of Units 30,383 -- --
A-27
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- --------------- --------------- ------------
Profund VP -- EUROPE 30 (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.17 $ 10.83 $ 7.93
Number of Units 1,812,435 2,116,400 292,396
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.80 $ 13.20 $ 9.7
Number of Units 313,111 158,208 2,625
With GMWB
Unit Value $ 14.77 $ 13.18 --
Number of Units 99,557 13,365 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.72 $ 13.16 --
Number of Units 162,300 40,636 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.39 $ 11.09 --
Number of Units 17,205 3,060 --
With HAV, EBP and GRO Plus
Unit Price $ 14.64 -- --
Number of Units 7,739 -- --
With HAV, EBP and GMWB
Unit Value $ 12.35 -- --
Number of Units 7,758 -- --
Profund VP -- ASIA 30 (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.30 $ 12.57 $ 7.75
Number of Units 896,010 942,605 281,993
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.57 $ 15.96 $ 9.86
Number of Units 253,337 131,276 6,995
With GMWB
Unit Value $ 15.54 $ 15.94 --
Number of Units 74,988 10,432 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.49 $ 15.91 --
Number of Units 67,805 33,050 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.14 $ 10.43 --
Number of Units 28,325 1,873 --
With HAV, EBP and GRO Plus
Unit Price $ 15.40 -- --
Number of Units 5,612 -- --
With HAV, EBP and GMWB
Unit Value $ 10.10 -- --
Number of Units 6,082 -- --
A-28
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- ------------ ------------ ------------
ProFund VP -- JAPAN (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.55 $ 9.03 $ 7.24
Number of Units 710,879 426,718 65,845
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.40 $ 12.70 $ 10.21
Number of Units 137,584 76,553 351
With GMWB
Unit Value $ 13.38 $ 12.69 --
Number of Units 35,968 1,883 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.33 $ 12.67 --
Number of Units 62,668 10,769 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.35 -- --
Number of Units 8,278 -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.26 -- --
Number of Units 7,559 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- BANKS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.98 $ 10.90 $ 8.56
Number of Units 229,711 93,067 101,136
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.10 $ 12.86 $ 10.13
Number of Units 171,696 34,962 3,422
With GMWB
Unit Value $ 14.07 -- --
Number of Units 8,847 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.03 $ 12.83 --
Number of Units 29,071 6,833 --
With any one of EBP or HAV and GMWB
Unit Value $ 11.58 -- --
Number of Units 20,936 -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.95 $ 12.79 --
Number of Units 788 1,039 --
With HAV, EBP and GMWB
Unit Value $ 11.54 -- --
Number of Units 582 -- --
A-29
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- ------------- --------------- ------------
ProFund VP -- BASIC MATERIALS (2002)
With No Optional Benefits
Unit Price $ 11.87 $ 10.95 $ 8.46
Number of Units 529,237 1,512,864 76,331
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.43 $ 13.35 $ 10.34
Number of Units 170,212 100,189 12
With GMWB
Unit Value $ 14.40 $ 13.33 --
Number of Units 23,555 8,054 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.35 $ 13.31 --
Number of Units 35,537 15,986 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.43 -- --
Number of Units 15,658 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.28 -- --
Number of Units 3,155 -- --
With HAV, EBP and GMWB
Unit Value $ 12.40 -- --
Number of Units 1,246 -- --
ProFund VP -- BIOTECHNOLOGY (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.52 $ 9.75 $ 7.09
Number of Units 757,678 208,971 130,082
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.56 $ 13.53 --
Number of Units 5,878 847 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-30
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- ------------ ------------ ------------
ProFund VP -- CONSUMER SERVICES (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.56 $ 9.04 $ 7.25
Number of Units 430,620 136,269 128,022
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.31 $ 11.66 $ 9.37
Number of Units 87,433 30,700 2,426
With GMWB
Unit Value $ 12.28 -- --
Number of Units 17,197 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.24 $ 11.62 --
Number of Units 8,198 5,655 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.69 -- --
Number of Units 2,087 -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.17 $ 11.59 --
Number of Units 1,211 3,817 --
With HAV, EBP and GMWB
Unit Value $ 10.66 -- --
Number of Units 14 -- --
ProFund VP -- CONSUMER GOODS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.36 $ 9.64 $ 8.28
Number of Units 369,007 58,425 148,446
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.33 $ 11.51 $ 9.9
Number of Units 102,706 12,720 2,303
With GMWB
Unit Value $ 12.31 $ 11.49 --
Number of Units 8,437 954 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.27 -- --
Number of Units 54,297 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 11.40 $ 10.67 --
Number of Units 9,175 4,737 --
With HAV, EBP and GRO Plus
Unit Price $ 12.20 -- --
Number of Units 1,731 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-31
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- --------------- --------------- ------------
ProFund VP -- OIL & GAS (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.33 $ 10.48 $ 8.71
Number of Units 1,856,882 1,225,844 299,833
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.40 $ 12.14 $ 10.12
Number of Units 888,111 114,553 1,660
With GMWB
Unit Value $ 15.37 $ 12.12 --
Number of Units 58,804 4,007 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.32 $ 12.10 --
Number of Units 174,913 25,623 --
With any one of EBP or HAV and GMWB
Unit Value $ 13.80 -- --
Number of Units 29,672 -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.23 $ 12.07 --
Number of Units 14,353 2,434 --
With HAV, EBP and GMWB
Unit Value $ 13.76 -- --
Number of Units 6,676 -- --
ProFund VP -- FINANCIALS (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.19 $ 11.23 $ 8.85
Number of Units 553,342 398,159 221,377
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.48 $ 12.45 $ 9.84
Number of Units 323,190 134,420 2,066
With GMWB
Unit Value $ 13.45 $ 12.44 --
Number of Units 17,749 1,060 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.41 $ 12.42 --
Number of Units 35,528 27,402 --
With any one of EBP or HAV and GMWB
Unit Value $ 11.26 -- --
Number of Units 15,974 -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.33 -- --
Number of Units 1,103 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-32
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- --------------- ------------ ------------
ProFund VP -- HEALTH CARE (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.23 $ 9.17 $ 7.94
Number of Units 1,318,525 707,449 388,508
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.10 $ 11.05 $ 9.59
Number of Units 518,389 244,228 6,831
With GMWB
Unit Value $ 11.07 $ 11.04 --
Number of Units 8,570 1,969 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.04 $ 11.02 --
Number of Units 139,890 56,392 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.65 -- --
Number of Units 5,322 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.98 $ 10.99 --
Number of Units 4,035 2,123 --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- INDUSTRIALS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.15 $ 10.01 $ 7.93
Number of Units 253,411 318,339 12,642
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.27 $ 12.85 --
Number of Units 88,729 20,601 --
With GMWB
Unit Value $ 14.24 -- --
Number of Units 4,426 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.20 $ 12.81 --
Number of Units 14,026 4,507 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.08 -- --
Number of Units 4,381 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.12 -- --
Number of Units 945 -- --
With HAV, EBP and GMWB
Unit Value $ 12.04 -- --
Number of Units 807 -- --
A-33
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
--------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- ------------- ------------- ------------
ProFund VP -- INTERNET (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 17.89 $ 15.00 $ 8.57
Number of Units 992,879 206,876 306,572
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.83 $ 16.67 --
Number of Units 3,806 1,210 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- PHARMACEUTICALS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.93 $ 8.89 $ 8.56
Number of Units 527,336 266,978 136,559
With any one of GRO Plus, EBP or HAV
Unit Price $ 8.88 $ 9.97 $ 9.63
Number of Units 246,789 77,105 2,545
With GMWB
Unit Value $ 8.86 $ 9.96 --
Number of Units 23,137 2,871 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 8.83 $ 9.94 --
Number of Units 70,946 6,346 --
With any one of EBP or HAV and GMWB
Unit Value $ 9.44 -- --
Number of Units 5,382 -- --
With HAV, EBP and GRO Plus
Unit Price $ 8.78 $ 9.91 --
Number of Units 3,939 1,646 --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-34
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- --------------- --------------- ---------------
ProFund VP -- PRECIOUS METALS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.77 $ 13.29 $ 9.7
Number of Units 1,479,384 1,329,806 1,175,651
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.64 $ 15.44 $ 11.3
Number of Units 457,761 390,896 19,964
With GMWB
Unit Value $ 13.61 -- --
Number of Units 42,627 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.57 $ 15.39 --
Number of Units 111,588 44,664 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.17 -- --
Number of Units 93,541 -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.49 $ 15.35 --
Number of Units 7,072 1,458 --
With HAV, EBP and GMWB
Unit Value $ 10.14 $ 11.55 --
Number of Units 11,671 23,284 --
ProFund VP -- REAL ESTATE (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 16.15 $ 12.91 $ 9.86
Number of Units 1,816,706 462,906 441,318
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.63 $ 13.33 $ 10.2
Number of Units 509,763 136,941 12,789
With GMWB
Unit Value $ 16.60 $ 13.31 --
Number of Units 58,062 3,835 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 16.54 $ 13.29 --
Number of Units 128,625 32,970 --
With any one of EBP or HAV and GMWB
Unit Value $ 13.06 -- --
Number of Units 22,857 -- --
With HAV, EBP and GRO Plus
Unit Price $ 16.45 -- --
Number of Units 629 -- --
With HAV, EBP and GMWB
Unit Value $ 13.02 -- --
Number of Units 1,198 -- --
A-35
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- ------------ ------------ ------------
ProFund VP -- SEMICONDUCTOR (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.15 $ 9.51 $ 5.14
Number of Units 694,352 423,958 93,241
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.95 $ 15.93 --
Number of Units 3,639 3,475 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- TECHNOLOGY (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 8.48 $ 8.66 $ 6.03
Number of Units 727,580 497,972 254,131
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.99 $ 13.30 --
Number of Units 9,239 6,845 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-36
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ---------------------------------------- --------------- ------------ ------------
ProFund VP -- TELECOMMUNICATIONS (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 8.19 $ 7.21 $ 7.15
Number of Units 460,848 398,350 272,408
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.43 $ 10.08 $ 10.03
Number of Units 212,127 47,283 3,642
With GMWB
Unit Value $ 11.40 -- --
Number of Units 6,379 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.37 $ 10.05 --
Number of Units 34,691 13,783 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.54 -- --
Number of Units 4,099 -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.31 -- --
Number of Units 11,741 -- --
With HAV, EBP and GMWB
Unit Value $ 12.50 -- --
Number of Units 2,691 -- --
ProFund VP -- UTILITIES (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.13 $ 9.34 $ 7.83
Number of Units 1,060,939 618,427 521,419
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.00 $ 12.63 $ 10.61
Number of Units 332,768 93,690 8,871
With GMWB
Unit Value $ 14.97 $ 12.62 --
Number of Units 57,208 8,137 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.92 $ 12.60 --
Number of Units 87,691 10,588 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.51 -- --
Number of Units 21,365 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.84 -- --
Number of Units 7,490 -- --
With HAV, EBP and GMWB
Unit Value $ 12.47 -- --
Number of Units 573 -- --
A-37
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- --------------- --------------- ---------------
ProFund VP -- BULL (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.53 $ 9.84 $ 7.97
Number of Units 8,215,357 3,563,562 954,792
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.82 $ 12.01 $ 9.75
Number of Units 2,052,501 708,248 10,297
With GMWB
Unit Value $ 12.79 $ 12.00 --
Number of Units 171,187 1,179 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.75 $ 11.98 $ 9.75
Number of Units 570,114 58,349 400
With any one of EBP or HAV and GMWB
Unit Value $ 11.25 $ 10.58 --
Number of Units 31,600 427 --
With HAV, EBP and GRO Plus
Unit Price $ 12.68 $ 11.94 --
Number of Units 88,697 10,714 --
With HAV, EBP and GMWB
Unit Value $ 11.21 -- --
Number of Units 12,971 -- --
PROFUND VP -- BEAR (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.45 $ 8.44 $ 11.38
Number of Units 1,202,243 1,886,515 1,532,543
With any one of GRO Plus, EBP or HAV
Unit Price $ 6.60 $ 7.49 $ 10.13
Number of Units 289,105 716,467 28,618
With GMWB
Unit Value $ 6.58 -- --
Number of Units 41,480 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 6.56 $ 7.47 $ 10.13
Number of Units 60,475 36,686 1,514
With any one of EBP or HAV and GMWB
Unit Value $ 8.15 $ 9.29 --
Number of Units 10,709 7,927 --
With HAV, EBP and GRO Plus
Unit Price $ 6.52 $ 7.45 --
Number of Units 14,578 13,622 --
With HAV, EBP and GMWB
Unit Value $ 8.12 $ 9.29 --
Number of Units 1,620 7,293 --
A-38
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- --------------- --------------- ---------------
ProFund VP -- ULTRABULL (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.76 $ 10.20 $ 6.78
Number of Units 2,817,803 1,431,345 297,435
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.58 $ 14.42 $ 9.61
Number of Units 9,518 1,432 245
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- OTC (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.94 $ 9.32 $ 6.45
Number of Units 4,885,351 4,445,234 1,346,852
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.34 $ 13.47 $ 9.36
Number of Units 1,807,904 810,005 13,113
With GMWB
Unit Value $ 14.31 $ 13.46 --
Number of Units 128,923 5,378 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.27 $ 13.44 --
Number of Units 225,055 34,480 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.92 -- --
Number of Units 28,507 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.19 -- --
Number of Units 32,376 -- --
With HAV, EBP and GMWB
Unit Value $ 10.88 -- --
Number of Units 14,308 -- --
A-39
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
--------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- --------------- --------------- --------------
ProFund VP -- SHORT OTC (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 5.93 $ 6.78 $ 11
Number of Units 908,064 1,535,439 433,181
With any one of GRO Plus, EBP or HAV
Unit Price $ 5.60 $ 6.42 $ 10.43
Number of Units 181,352 196,526 15,308
With GMWB
Unit Value $ 5.58 -- --
Number of Units 7,191 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 5.57 $ 6.40 --
Number of Units 65,148 20,167 --
With any one of EBP or HAV and GMWB
Unit Value -- $ 9.49 --
Number of Units -- 7,708 --
With HAV, EBP and GRO Plus
Unit Price $ 5.54 $ 6.38 --
Number of Units 16,306 16,907 --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- ULTRAOTC (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.89 $ 7.03 $ 3.53
Number of Units 6,592,447 3,410,589 1,003,123
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.36 $ 17.30 $ 8.7
Number of Units 22,282 5,905 233
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-40
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- --------------- --------------- ------------
ProFund VP -- MID-CAP VALUE (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.67 $ 10.23 $ 7.66
Number of Units 2,632,869 1,455,513 438,387
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.24 $ 13.40 $ 10.06
Number of Units 626,618 462,172 4,777
With GMWB
Unit Value $ 15.21 $ 13.39 --
Number of Units 110,312 4,164 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.16 $ 13.36 $ 10.06
Number of Units 304,648 99,189 4,799
With any one of EBP or HAV and GMWB
Unit Value $ 12.20 $ 10.77 --
Number of Units 39,454 3,516 --
With HAV, EBP and GRO Plus
Unit Price $ 15.08 $ 13.33 --
Number of Units 12,473 916 --
With HAV, EBP and GMWB
Unit Value $ 12.17 -- --
Number of Units 3,507 -- --
ProFund VP -- MID-CAP GROWTH (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.58 $ 9.69 $ 7.7
Number of Units 2,220,901 1,009,867 439,054
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.42 $ 12.32 $ 9.82
Number of Units 579,666 295,528 1,587
With GMWB
Unit Value $ 13.39 $ 12.31 --
Number of Units 53,472 2,028 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.35 $ 12.28 $ 9.81
Number of Units 163,302 47,141 1,583
With any one of EBP or HAV and GMWB
Unit Value $ 11.12 $ 10.24 --
Number of Units 21,341 3,933 --
With HAV, EBP and GRO Plus
Unit Price $ 13.28 $ 12.25 --
Number of Units 6,489 1,274 --
With HAV, EBP and GMWB
Unit Value $ 11.09 -- --
Number of Units 9,859 -- --
A-41
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- --------------- --------------- ------------
ProFund VP -- ULTRAMID-CAP (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.99 $ 9.55 $ 5.71
Number of Units 3,106,849 1,112,311 477,953
With any one of GRO Plus, EBP or HAV
Unit Price $ 20.62 $ 16.46 $ 9.86
Number of Units 338,303 136,523 1,673
With GMWB
Unit Value $ 20.57 $ 16.44 --
Number of Units 101,493 3,746 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 20.51 $ 16.41 --
Number of Units 150,540 88,028 --
With any one of EBP or HAV and GMWB
Unit Value $ 13.86 -- --
Number of Units 27,449 -- --
With HAV, EBP and GRO Plus
Unit Price $ 20.40 $ 16.37 --
Number of Units 2,161 557 --
With HAV, EBP and GMWB
Unit Value $ 13.81 -- --
Number of Units 14,660 -- --
ProFund VP -- SMALL-CAP VALUE (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.10 $ 9.39 $ 7.09
Number of Units 4,088,760 5,144,632 994,778
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.80 $ 13.41 $ 10.15
Number of Units 2,597,154 1,218,990 19,019
With GMWB
Unit Value $ 15.76 $ 13.39 --
Number of Units 163,443 24,769 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.71 $ 13.37 --
Number of Units 596,413 207,523 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.53 $ 10.67 --
Number of Units 31,732 4,223 --
With HAV, EBP and GRO Plus
Unit Price $ 15.63 $ 13.33 --
Number of Units 29,856 28,687 --
With HAV, EBP and GMWB
Unit Value $ 12.49 -- --
Number of Units 6,158 -- --
A-42
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- --------------- --------------- ------------
ProFund VP -- SMALL-CAP GROWTH (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.98 $ 10.16 $ 7.69
Number of Units 4,677,820 3,868,951 772,260
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.34 $ 13.05 $ 9.91
Number of Units 1,611,060 1,289,398 10,572
With GMWB
Unit Value $ 15.31 $ 13.04 --
Number of Units 170,800 21,997 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.26 $ 13.01 --
Number of Units 285,725 210,595 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.23 $ 10.44 --
Number of Units 42,134 2,529 --
With HAV, EBP and GRO Plus
Unit Price $ 15.17 $ 12.98 --
Number of Units 9,388 30,164 --
With HAV, EBP and GMWB
Unit Value $ 12.19 -- --
Number of Units 13,290 -- --
ProFund VP -- ULTRASMALL-CAP (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 15.52 $ 12.04 $ 6.14
Number of Units 5,098,565 1,702,558 212,085
With any one of GRO Plus, EBP or HAV
Unit Price $ 24.98 $ 19.43 --
Number of Units 32,780 13,082 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-43
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ---------------------------------------------- --------------- --------------- ---------------
ProFund VP -- U.S. GOVERNMENT PLUS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.79 $ 11.08 $ 11.56
Number of Units 1,051,158 731,470 2,486,854
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.34 $ 9.75 $ 10.19
Number of Units 372,142 291,892 22,148
With GMWB
Unit Value $ 10.32 $ 9.73 --
Number of Units 120,311 14,956 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.29 $ 9.72 $ 10.19
Number of Units 111,072 32,854 609
With any one of EBP or HAV and GMWB
Unit Value $ 10.80 -- --
Number of Units 4,588 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.23 -- --
Number of Units 13,114 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- RISING RATES OPPORTUNITY (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 6.63 $ 7.56 $ 8.02
Number of Units 5,314,528 1,817,924 165,792
With any one of GRO Plus, EBP or HAV
Unit Price $ 7.97 $ 9.12 $ 9.69
Number of Units 2,060,525 445,486 9,028
With GMWB
Unit Value $ 7.95 $ 9.11 --
Number of Units 333,355 4,991 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 7.93 $ 9.09 --
Number of Units 588,490 82,598 --
With any one of EBP or HAV and GMWB
Unit Value $ 8.31 -- --
Number of Units 219,942 -- --
With HAV, EBP and GRO Plus
Unit Price $ 7.89 $ 9.07 --
Number of Units 52,002 10,876 --
With HAV, EBP and GMWB
Unit Value $ 8.28 -- --
Number of Units 14,108 -- --
A-44
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- ------------- ------- -------
ProFund VP -- LARGE-CAP GROWTH
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.37 -- --
Number of Units 72,725 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.37 -- --
Number of Units 18,860 -- --
With GMWB
Unit Value $ 10.37 -- --
Number of Units 2,860 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.37 -- --
Number of Units 6,286 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.37 -- --
Number of Units 554 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.37 -- --
Number of Units 84 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- LARGE-CAP VALUE
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.37 -- --
Number of Units 159,605 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.36 -- --
Number of Units 36,170 -- --
With GMWB
Unit Value $ 10.36 -- --
Number of Units 3,802 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.36 -- --
Number of Units 1,123 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.36 -- --
Number of Units 554 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.36 -- --
Number of Units 84 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-45
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
--------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- ------------ ------- -------
ProFund VP -- SHORT MID-CAP
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.70 -- --
Number of Units 39,360 -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- SHORT SMALL-CAP
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.54 -- --
Number of Units 136,809 -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-46
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------------- ------------- ------------ -----------
FIRST TRUST(R) 10 UNCOMMON VALUES (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.03 $ 9.16 $ 6.8
Number of Units 91,924 66,435 19,826
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.39 $ 13.17 --
Number of Units 28 467 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
FIRST TRUST GLOBAL TARGET 15 (17)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.85 -- --
Number of Units 311,233 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.83 -- --
Number of Units 303,452 -- --
With GMWB
Unit Value $ 11.82 -- --
Number of Units 108,014 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.81 -- --
Number of Units 65,909 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 11.80 -- --
Number of Units 6,777 -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.79 -- --
Number of Units 4,718 -- --
With HAV, EBP and GMWB
Unit Value $ 11.78 -- --
Number of Units 3,816 -- --
A-47
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-----------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- --------------- ------- -------
FIRST TRUST TARGET MANAGED VIP
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.32 -- --
Number of Units 1,777,316 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.30 -- --
Number of Units 1,562,079 -- --
With GMWB
Unit Value $ 11.30 -- --
Number of Units 1,057,901 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.28 -- --
Number of Units 429,320 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 11.28 -- --
Number of Units 40,194 -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.27 -- --
Number of Units 217,324 -- --
With HAV, EBP and GMWB
Unit Value $ 11.26 -- --
Number of Units 23,730 -- --
FIRST TRUST NASDAQ TARGET 15
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.66 -- --
Number of Units 82,809 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.64 -- --
Number of Units 1,635 -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-48
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- ------------- ------- -------
FIRST TRUST S&P TARGET 24
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.75 -- --
Number of Units 173,851 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.73 -- --
Number of Units 152,355 -- --
With GMWB
Unit Value $ 10.72 -- --
Number of Units 38,677 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.71 -- --
Number of Units 72,575 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.70 -- --
Number of Units 11,933 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.69 -- --
Number of Units 3,409 -- --
With HAV, EBP and GMWB
Unit Value $ 10.68 -- --
Number of Units 2,359 -- --
FIRST TRUST THE DOW(SM) DART 10
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.48 -- --
Number of Units 155,695 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.46 -- --
Number of Units 160,820 -- --
With GMWB
Unit Value $ 10.46 -- --
Number of Units 78,082 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.45 -- --
Number of Units 82,728 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.44 -- --
Number of Units 3,913 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.43 -- --
Number of Units 10,531 -- --
With HAV, EBP and GMWB
Unit Value $ 10.42 -- --
Number of Units 105 -- --
A-49
APPENDIX A
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
--------------------------------
SUB-ACCOUNT 2004 2003 2002
- ---------------------------------------- ------------- ------- ------
FIRST TRUST VALUE LINE(R) TARGET 25
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.59 -- --
Number of Units 389,792 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.57 -- --
Number of Units 4,909 -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
SP WILLIAM BLAIR INTERNATIONAL GROWTH
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.53 -- --
Number of Units 269,671 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.53 -- --
Number of Units 172,859 -- --
With GMWB
Unit Value $ 10.53 -- --
Number of Units 73,031 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.52 -- --
Number of Units 23,863 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.52 -- --
Number of Units 6,604 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.52 -- --
Number of Units 4,127 -- --
With HAV, EBP and GMWB
Unit Value $ 10.52 -- --
Number of Units 806 -- --
A-50
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
APPENDIX A
1: Effective May 2, 2005 the name of the Wells Fargo Variable Trust
International Equity Portfolio has changed to Wells Fargo Variable Trust
Advantage International Core Portfolio.
2: Effective May 2, 2005 the name of the Wells Fargo Variable Trust Small-Cap
Growth Portfolio has changed to Wells Fargo Variable Trust Advantage Small-Cap
Growth Portfolio.
3: Effective May 2, 2005 the name of the Wells Fargo Variable Trust Growth
Portfolio has changed to Wells Fargo Variable Trust Advantage Large Company Core
Portfolio.
4: Effective May 2, 2005 the name of the Wells Fargo Variable Trust Large
Company Growth Portfolio has changed to Wells Fargo Variable Trust Advantage
Large Company Growth Portfolio.
5: Effective May 2, 2005 the name of the Wells Fargo Variable Trust Equity Value
Portfolio has changed to Wells Fargo Variable Trust Advantage C&B Large-Cap
Value Portfolio.
6: Effective May 2, 2005 the name of the Wells Fargo Variable Trust Equity
Income Portfolio has changed to Wells Fargo Variable Trust Advantage Equity
Income Portfolio.
7: Effective May 2, 2005 the name of the Wells Fargo Variable Trust Asset
Allocation Portfolio has changed to Wells Fargo Variable Trust Advantage Asset
Allocation Portfolio.
8: Effective May 2, 2005 the name of the Wells Fargo Variable Trust Total Return
Bond Portfolio has changed to Wells Fargo Variable Trust Advantage Total Return
Bond Portfolio.
9: Effective May 2, 2005 the name of the AST State Street Research Small-Cap
Growth Portfolio has changed to AST Small-Cap Growth Portfolio.
10: Effective May 2, 2005 the name of the AST Alliance Growth Portfolio has
changed to AST AllianceBernstein Large-Cap Growth Portfolio.
11: Effective May 2, 2005 the name of the AST Alliance/Bernstein Growth + Value
Portfolio has changed to AST AllianceBernstein Growth + Value Portfolio.
12: Effective May 2, 2005 the name of the AST Sanford Bernstein Core Value
Portfolio has changed to AST AllianceBernstein Core Value Portfolio.
13: Effective May 2, 2005 the name of the AST Sanford Bernstein Managed Index
500 Portfolio has changed to AST AllianceBernstein Managed Index 500 Portfolio.
14: Effective May 2, 2005 the name of the AST Alliance Growth and Income
Portfolio has changed to AST AllianceBernstein Growth & Income Portfolio.
15: Effective May 2, 2005 the name of the AST DeAM Global Allocation Portfolio
has changed to AST Global Allocation Portfolio.
16: Effective April 15, 2005 the name of the Evergreen VA -- Special Equity
Portfolio has changed to Evergreen VA Growth Portfolio.
17: Effective May 2, 2005 the name of the First Trust Global Target 15 Portfolio
has changed to First Trust Global Dividend Target 15 Portfolio.
A-51
THIS PAGE INTENTIONALLY LEFT BLANK
APPENDIX B
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
APPENDIX B -- CALCULATION OF OPTIONAL DEATH BENEFITS
EXAMPLES OF ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT CALCULATION
The following are examples of how the Enhanced Beneficiary Protection Optional
Death Benefit is calculated. Each example assumes that a $50,000 initial
Purchase Payment is made. Each example assumes that there is one Owner who is
age 50 on the Issue Date and that all Account Value is maintained in the
variable investment options. The formula for determining the Enhanced
Beneficiary Protection Optional Death Benefit is as follows:
Account Value of variable
investment options plus Interim Purchase Payments -
Growth = minus
Value of Fixed Allocations proportional withdrawals
(no MVA applies)
Example with market increase
Assume that the Owner has made no withdrawals and that the Account Value has
been increasing due to positive market performance. On the date we receive due
proof of death, the Account Value is $75,000. The basic Death Benefit is
calculated as Purchase Payments minus proportional withdrawals, or Account
Value, which ever is greater. Therefore, the basic Death Benefit is equal to
$75,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to
the amount payable under the basic Death Benefit ($75,000) PLUS 40% of the
"Growth" under the Annuity.
Growth = $75,000 - [$50,000 - $0]
= $ 25,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit =
40% of Growth
= $25,000 x 0.40
= $ 10,000
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $ 85,000
Examples with market decline
Assume that the Owner has made no withdrawals and that the Account Value has
been decreasing due to declines in market performance. On the date we receive
due proof of death, the Account Value is $45,000. The basic Death Benefit is
calculated as Purchase Payments minus proportional withdrawals, or Account
Value, which ever is greater. Therefore, the basic Death Benefit is equal to
$50,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to
the amount payable under the basic Death Benefit ($50,000) PLUS the "Growth"
under the Annuity.
Growth = $45,000 - [$50,000 - $0]
= $ -5,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit =
40% of Growth
NO BENEFIT IS PAYABLE
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $ 50,000
B-1
APPENDIX B
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits continued
IN THIS EXAMPLE YOU WOULD RECEIVE NO ADDITIONAL BENEFIT FROM PURCHASING THE
ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT.
Example with market increase and withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 5 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $90,000. The basic Death Benefit is calculated as Purchase
Payments minus proportional withdrawals, or Account Value, which ever is
greater. Therefore, the basic Death Benefit is equal to $90,000. The Enhanced
Beneficiary Protection Optional Death Benefit is equal to the amount payable
under the basic Death Benefit ($90,000) PLUS 40% of the "Growth" under the
Annuity.
Growth = $90,000 - [$50,000 - ($50,000 x $15,000/$75,000)]
= $90,000 - [$50,000 - $10,000]
= $90,000 - $40,000
= $50,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit =
40% of Growth
= $50,000 x 0.40
= $20,000
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $110,000
EXAMPLES OF HIGHEST ANNIVERSARY VALUE DEATH BENEFIT CALCULATION
The following are examples of how the Highest Anniversary Value Death Benefit
is calculated. Each example assumes an initial Purchase Payment of $50,000.
Each example assumes that there is one Owner who is age 70 on the Issue Date
and that all Account Value is maintained in the variable investment options.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the date
we receive due proof of death, the Account Value is $75,000; however, the
Anniversary Value on the 5th anniversary of the Issue Date was $90,000. Assume
as well that the Owner has died before the Death Benefit Target Date. The Death
Benefit is equal to the greater of the Highest Anniversary Value or the basic
Death Benefit. The Death Benefit would be the Highest Anniversary Value
($90,000) because it is greater than the amount that would have been payable
under the basic Death Benefit ($75,000).
Example with withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $80,000; however, the Anniversary Value on the 5th anniversary
of the Issue Date was $90,000. Assume as well that the Owner has died before
the Death Benefit Target Date. The Death Benefit is equal to the greater of the
Highest Anniversary Value or the basic Death Benefit.
Highest Anniversary Value = $90,000 - [$90,000 x $15,000/$75,000]
= $90,000 - $18,000
= $ 72,000
Basic Death Benefit = max [$80,000, $50,000 - ($50,000 x
$15,000/$75,000)]
= max [$80,000, $40,000]
= $ 80,000
The Death Benefit therefore is $80,000.
B-2
APPENDIX B
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Example with death after Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals had been made prior to the
Death Benefit Target Date. Further assume that the Owner dies after the Death
Benefit Target Date, when the Account Value is $75,000. The Highest Anniversary
Value on the Death Benefit Target Date was $80,000; however, following the
Death Benefit Target Date, the Owner made a Purchase Payment of $15,000 and
later had taken a withdrawal of $5,000 when the Account Value was $70,000. The
Death Benefit is equal to the greater of the Highest Anniversary Value plus
Purchase Payments minus proportional withdrawals after the Death Benefit Target
Date or the basic Death Benefit.
Highest Anniversary Value = $80,000 + $15,000 - [($80,000 + $15,000) x
$5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $88,214
Basic Death Benefit = max [$75,000, ($50,000 + $15,000) - {($50,000
+ $15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $75,000
The Death Benefit therefore is $88,214.
EXAMPLES OF COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
CALCULATION
The following are examples of how the Combination 5% Roll-Up and Highest
Anniversary Value Death Benefit are calculated. Each example assumes an initial
Purchase Payment of $50,000. Each example assumes that there is one Owner who
is age 70 on the Issue Date and that all Account Value is maintained in the
variable investment options.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the 7th
anniversary of the Issue Date we receive due proof of death, at which time the
Account Value is $75,000; however, the Anniversary Value on the 5th anniversary
of the Issue Date was $90,000. Assume as well that the Owner has died before
the Death Benefit Target Date. The Roll-Up Value is equal to initial Purchase
Payment accumulated at 5% for 6 years, or $67,005. The Death Benefit is equal
to the greatest of the Roll-Up Value, Highest Anniversary Value or the basic
Death Benefit. The Death Benefit would be the Highest Anniversary Value
($90,000) because it is greater than both the Roll-Up Value ($67,005) and the
amount that would have been payable under the basic Death Benefit ($75,000).
Example with withdrawals
Assume that the Owner made a withdrawal of $5,000 on the 6th anniversary of the
Issue Date when the Account Value was $45,000. The Roll-Up Value on the 6th
anniversary of the Issue Date is equal to initial Purchase Payment accumulated
at 5% for 6 years, or $67,005. The 5% Dollar-for-Dollar Withdrawal Limit for
the 7th annuity year is equal to 5% of the Roll-Up Value as of the 6th
anniversary of the Issue Date, or $3,350. Therefore, the remaining $1,650 of
the withdrawal results in a proportional reduction to the Roll-Up Value. On the
7th anniversary of the Issue Date we receive due proof of death, at which time
the Account Value is $43,000; however, the Anniversary Value on the 2nd
anniversary of the Issue Date was $70,000. Assume as well that the Owner has
died before the Death Benefit Target Date. The Death Benefit is equal to the
greatest of the Roll-Up Value, Highest Anniversary Value or the basic Death
Benefit.
B-3
APPENDIX B
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits continued
Roll-Up Value = {($67,005 - $3,350) - [($67,005 - $3,350) x
$1,650/($45,000 -$3,350)]} x 1.05
= ($63,655 - $2,522) x 1.05
= $64,190
Highest Anniversary Value = $70,000 - [$70,000 x $5,000/$45,000]
= $70,000 - $7,778
= $62,222
Basic Death Benefit = max [$43,000, $50,000 - ($50,000 x
$5,000/$45,000)]
= max [$43,000, $44,444]
= $44,444
The Death Benefit therefore is $64,190.
Example with death after Death Benefit Target Date
Assume that the Owner has not made any withdrawals prior to the Death Benefit
Target Date. Further assume that the Owner dies after the Death Benefit Target
Date, when the Account Value is $75,000. The Roll-Up Value on the Death Benefit
Target Date (the contract anniversary on or following the Owner's 80th
birthday) is equal to initial Purchase Payment accumulated at 5% for 10 years,
or $81,445. The Highest Anniversary Value on the Death Benefit Target Date was
$85,000; however, following the Death Benefit Target Date, the Owner made a
Purchase Payment of $15,000 and later had taken a withdrawal of $5,000 when the
Account Value was $70,000. The Death Benefit is equal to the greatest of the
Roll-Up Value, Highest Anniversary Value or the basic Death Benefit as of the
Death Benefit Target Date; each increased by subsequent purchase payments and
reduced proportionally for subsequent withdrawals.
Roll-Up Value = $81,445 + $15,000 - [($81,445 + 15,000) x
$5,000/$70,000]
= $81,445 + $15,000 - $6,889
= $89,556
Highest Anniversary Value = $85,000 + $15,000 - [($85,000 + 15,000) x
$5,000/$70,000]
= $85,000 + $15,000 - $7,143
= $92,857
Basic Death Benefit = max [$75,000, $50,000 + $15,000 - {(50,000 +
$15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $75,000
The Death Benefit therefore is $92,857.
EXAMPLES OF HIGHEST DAILY VALUE DEATH BENEFIT CALCULATION
The following are examples of how the HDV Death Benefit is calculated. Each
example assumes an initial Purchase Payment of $50,000. Each example assumes
that there is one Owner who is age 70 on the Issue Date.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the date
we receive due proof of death, the Account Value is $75,000; however, the
Highest Daily Value was $90,000. Assume as well that the Owner has died before
the Death Benefit Target Date. The Death Benefit is equal to the greater of the
Highest Daily Value or the basic Death Benefit. The Death Benefit would be the
HDV ($90,000) because it is greater than the amount that would have been
payable under the basic Death Benefit ($75,000).
B-4
APPENDIX B
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Example with withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $80,000; however, the Highest Daily Value ($90,000) was
attained during the fifth Annuity Year. Assume as well that the Owner has died
before the Death Benefit Target Date. The Death Benefit is equal to the greater
of the Highest Daily Value (proportionally reduced by the subsequent withdrawal)
or the basic Death Benefit.
Highest Daily Value = $90,000 - [$90,000 x $15,000/$75,000]
= $90,000 - $18,000
= $ 72,000
Basic Death Benefit = max [$80,000, $50,000 - ($50,000 x $15,000/$75,000)]
= max [$80,000, $40,000]
= $ 80,000
The Death Benefit therefore is $80,000.
Example with death after Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals had been made prior to the
Death Benefit Target Date. Further assume that the Owner dies after the Death
Benefit Target Date, when the Account Value is $75,000. The Highest Daily Value
on the Death Benefit Target Date was $80,000; however, following the Death
Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had
taken a withdrawal of $5,000 when the Account Value was $70,000. The Death
Benefit is equal to the greater of the Highest Daily Value on the Death Benefit
Target Date plus Purchase Payments minus proportional withdrawals after the
Death Benefit Target Date or the basic Death Benefit.
Highest Daily Value = $80,000 + $15,000 - [($80,000 + $15,000) x
$5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $ 88,214
Basic Death Benefit = max [$75,000, ($50,000 + $15,000) - {($50,000 +
$15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $ 75,000
The Death Benefit therefore is $88,214.
B-5
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APPENDIX C
AMERICAN SKANDIA STAGECOACH APEX II PROSPECTUS
Appendix C -- Additional Information on Asset Allocation Programs
PROGRAM RULES
- - You can elect an asset allocator program where the Sub-accounts for each
asset class in each model portfolio are designated based on an evaluation
of available Sub-accounts. If you elect the Lifetime Five Benefit ("LT5")
or the Highest Daily Value Death Benefit ("HDV"), you must enroll in one
of the eligible model portfolios. Asset allocation is a sophisticated
method of diversification that allocates assets among asset classes in
order to manage investment risk and potentially enhance returns over the
long term. However, asset allocation does not guarantee a profit or
protect against a loss.
HOW THE ASSET ALLOCATION PROGRAM WORKS
- - Amounts will automatically be allocated in accordance with the percentages
and to Sub-accounts indicated for the model portfolio that you choose. If
you allocate your Account Value or transfer your Account Value among any
Sub-accounts that are outside of your model portfolio, we will allocate
these amounts according to the allocation percentages of the applicable
model portfolio upon the next rebalancing. You may only choose one model
portfolio at a time. When you enroll in the asset allocation program and
upon each rebalance thereafter, 100% of your Account Value allocated to
the variable Sub-accounts will be allocated to the asset allocation
program. Any Account Value not invested in the Sub-accounts will not be
part of the program.
- - ADDITIONAL PURCHASE PAYMENTS: Unless otherwise requested, any additional
Purchase Payments applied to the variable Sub-accounts in the Annuity will
be allocated to the Sub-accounts according to the allocation percentages
for the model portfolio you choose. Allocation of additional Purchase
Payments outside of your model portfolio but into a Sub-account, will be
reallocated according to the allocation percentages of the applicable
model portfolio upon the next rebalancing.
- - REBALANCING YOUR MODEL PORTFOLIO: Changes in the value of the Sub-account
will cause your Account Value allocated to the Sub-accounts to vary from
the percentage allocations of the model portfolio you select. By selecting
the asset allocation program, you have directed us to periodically (e.g.,
quarterly) rebalance your Account Value allocated to the Sub-accounts in
accordance with the percentage allocations assigned to each Sub-account
within your model portfolio at the time you elected the program or as
later modified with your consent. Some asset allocation programs will only
require that a rebalancing occur when the percent of your Account Value
allocated to the Sub-accounts are outside of the acceptable range
permitted under such asset allocation program. Note -- Any Account Value
not invested in the Sub-accounts will not be affected by any rebalance.
- - SUB-ACCOUNT CHANGES WITHIN THE MODEL PORTFOLIOS: From time to time you may
be notified of a suggested change in a Sub-account or percentage allocated
to a Sub-account within your model portfolio. If you consent (in the
manner that is then permitted or required) to the suggested change, then
it will be implemented upon the next rebalance. If you do not consent then
rebalancing will continue in accordance with your unchanged model
portfolio, unless the Sub-account is no longer available under your
Annuity, in which case your lack of consent will be deemed a request to
terminate the asset allocation program and the provisions under
"Termination or Modification of the Asset Allocation Program" will apply.
- - OWNER CHANGES IN CHOICE OF MODEL PORTFOLIO: You may change from the model
portfolio that you have elected to any other currently available model
portfolio at any time. The change will be implemented on the date we
receive all required information in the manner that is then permitted or
required.
TERMINATION OR MODIFICATION OF THE ASSET ALLOCATION PROGRAM:
- - You may request to terminate your asset allocation program at any time.
Any termination will be effective on the date that American Skandia
receives your termination request in good order. If you are enrolled in
HDV or LT5, termination of your asset allocation program must coincide
with enrollment in a then currently available and approved asset
allocation program or other approved option. However, if you are enrolled
in LT5 you may terminate the LT5 benefit in order to then terminate your
asset allocation program. American Skandia reserves the right to terminate
or modify the asset allocation program at any time with respect to any
programs.
RESTRICTIONS ON ELECTING THE ASSET ALLOCATION:
- - You cannot participate in auto-rebalancing or a DCA program while enrolled
in an asset allocation program. Upon election of an asset allocation
program, American Skandia will automatically terminate your enrollment in
any auto-rebalancing or DCA program. Finally, Systematic Withdrawals can
only be made as flat dollar amounts.
C-1
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PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS FURTHER
DETAILS ABOUT THE AMERICAN SKANDIA ANNUITY DESCRIBED IN PROSPECTUS
WFVAPEXII-PROS (05/2005).
--------------------------------------
(print your name)
--------------------------------------
(address)
--------------------------------------
(city/state/zip code)
Variable Annuity Issued by: Variable Annuity Distributed by:
AMERICAN SKANDIA LIFE AMERICAN SKANDIA
ASSURANCE CORPORATION MARKETING, INCORPORATED
A Prudential Financial Company A Prudential Financial Company
One Corporate Drive One Corporate Drive
Shelton, Connecticut 06484 Shelton, Connecticut 06484
Telephone: 1-800-752-6342 Telephone: 203-926-1888
http://www.americanskandia.prudential.com http://www.americanskandia.prudential.com
MAILING ADDRESSES:
AMERICAN SKANDIA -- VARIABLE ANNUITIES
Attention: STAGECOACH ANNUITY
P.O. Box 7960
Philadelphia, PA 19176
EXPRESS MAIL:
AMERICAN SKANDIA -- VARIABLE ANNUITIES
Attention: STAGECOACH ANNUITY
2101 Welsh Road
Dresher, PA 19025
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
A Prudential Financial Company
One Corporate Drive, Shelton, Connecticut 06484
OPTIMUM FOUR(SM)
Flexible Premium Deferred Annuity
PROSPECTUS: MAY 2, 2005
This Prospectus describes Optimum Four(SM), a flexible premium deferred annuity
(the "Annuity") offered by American Skandia Life Assurance Corporation
("American Skandia", "we", "our" or "us") exclusively through Linsco/Private
Ledger, Corp. The Annuity may be offered as an individual annuity contract or as
an interest in a group annuity. This Prospectus describes the important features
of the Annuity and what you should consider before purchasing the Annuity. THE
ANNUITY OR CERTAIN OF ITS INVESTMENT OPTIONS AND/OR FEATURES MAY NOT BE
AVAILABLE IN ALL STATES. VARIOUS RIGHTS AND BENEFITS MAY DIFFER BETWEEN STATES
TO MEET APPLICABLE LAWS AND/OR REGULATIONS. For more information about
variations applicable to your state, please refer to your Annuity contract or
consult your Investment Professional. Certain terms are capitalized in this
Prospectus. Those terms are either defined in the Glossary of Terms or in the
context of the particular section.
American Skandia offers several different annuities which your investment
professional may be authorized to offer to you. Each annuity has different
features and benefits that may be appropriate for you based on your financial
situation, your age and how you intend to use the annuity. The different
features and benefits include variations in death benefit protection and the
ability to access your annuity's account value. The fees and charges you pay and
compensation paid to your Investment Professional may also be different between
each annuity.
The Variable Investment Options
The variable investment options, each a Sub-account of American Skandia Life
Assurance Corporation Variable Account B, invest in an underlying mutual fund
portfolio. Currently, portfolios of the following underlying mutual funds are
being offered: American Skandia Trust and Evergreen Variable Annuity Trust.
Please Read This Prospectus
PLEASE READ THIS PROSPECTUS AND THE CURRENT PROSPECTUS FOR THE UNDERLYING MUTUAL
FUNDS. KEEP THEM FOR FUTURE REFERENCE. If you are purchasing the Annuity as a
replacement for existing variable annuity or variable life coverage, you should
consider any surrender or penalty charges you may incur when replacing your
existing coverage and that this Annuity may be subject to a contingent deferred
sales charge if you elect to surrender the Annuity or take a partial withdrawal.
You should consider your need to access the Annuity's Account Value and whether
the annuity's liquidity features will satisfy that need.
Available Information
We have also filed a Statement of Additional Information that is available from
us, without charge, upon your request. The contents of the Statement of
Additional Information are described on page 79. This Prospectus is part of the
registration statement we filed with the SEC regarding this offering. Additional
information on us and this offering is available in the registration statement
and the exhibits thereto. You may review and 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. These documents, as well as documents
incorporated by reference, may also be obtained through the SEC's Internet
Website (http://www.sec.gov) for this registration statement as well as for
other registrants that file electronically with the SEC.
For Further Information call:
====> 1-800-752-6342
THESE ANNUITIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ISSUED, GUARANTEED OR
ENDORSED BY, ANY BANK, ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC), THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY. AN INVESTMENT IN THIS ANNUITY INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF VALUE, EVEN WITH RESPECT TO AMOUNTS ALLOCATED TO THE AST MONEY
MARKET SUB-ACCOUNT. 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.
OPTIMUM FOURSM IS A SERVICE MARK OF LINSCO/PRIVATE LEDGER, CORP.
Prospectus Dated: May 2, 2005 Statement of Additional Information Dated: May
2, 2005 LPL04
APEX2LPLPROS505
PLEASE SEE OUR PRIVACY POLICY AND IRA DISCLOSURE STATEMENT
ATTACHED TO THE BACK COVER OF THIS PROSPECTUS.
Contents
Introduction ............................................................................. 1
Why Would I Choose to Purchase This Annuity? ........................................... 1
What Are Some of the Key Features of This Annuity? ..................................... 1
How Do I Purchase This Annuity? ........................................................ 1
Glossary of Terms ........................................................................ 2
Summary of Contract Fees and Charges ..................................................... 3
Expense Examples ......................................................................... 9
Investment Options ....................................................................... 10
What Are the Investment Objectives and Policies of the Portfolios? ..................... 10
What Are the Fixed Allocations? ........................................................ 13
Fees and Charges ......................................................................... 14
What Are the Contract Fees and Charges? ................................................ 14
What Charges Apply Solely to the Variable Investment Options? .......................... 15
What Fees and Expenses are Incurred by the Portfolios? ................................. 16
What Charges Apply to the Fixed Allocations? ........................................... 16
What Charges Apply if I Choose an Annuity Payment Option? .............................. 16
Exceptions/Reductions to Fees and Charges .............................................. 16
Purchasing Your Annuity .................................................................. 17
What Are Our Requirements for Purchasing the Annuity? .................................. 17
Managing Your Annuity .................................................................... 18
May I Change the Owner, Annuitant and Beneficiary Designations? ........................ 18
May I Return the Annuity if I Change My Mind? .......................................... 18
May I Make Additional Purchase Payments? ............................................... 18
May I Make Scheduled Payments Directly from My Bank Account? ........................... 18
May I Make Purchase Payments Through a Salary Reduction Program? ....................... 19
Managing Your Account Value .............................................................. 20
How and When Are Purchase Payments Invested? ........................................... 20
How Do I Receive a Loyalty Credit? ..................................................... 20
How Are Loyalty Credits Applied To My Account Value? ................................... 20
Are There Restrictions or Charges on Transfers Between Investment Options? ............. 20
Do You Offer Dollar Cost Averaging? .................................................... 22
Do You Offer Any Automatic Rebalancing Programs? ....................................... 23
Are Any Asset Allocation Programs Available? ........................................... 23
Do You Offer Programs Designed to Guarantee a "Return of Premium" at a Future Date? .... 23
May I Give My Investment Professional Permission to Manage My Account Value? ........... 24
May I Authorize My Third Party Investment Advisor to Manage My Account? ................ 25
How Do the Fixed Allocations Work? ..................................................... 25
How Do You Determine Rates for Fixed Allocations? ...................................... 26
How Does the Market Value Adjustment Work? ............................................. 27
What Happens When My Guarantee Period Matures? ......................................... 28
Access To Account Value .................................................................. 29
What Types of Distributions Are Available to Me? ....................................... 29
Are There Tax Implications for Distributions? .......................................... 29
Can I Withdraw a Portion of My Annuity? ................................................ 29
How Much Can I Withdraw as a Free Withdrawal? .......................................... 30
Is There a Charge for a Partial Withdrawal? ............................................ 30
Can I Make Periodic Withdrawals from the Annuity During the Accumulation Period? ....... 30
Do You Offer a Program for Withdrawals Under Section 72(t) of the Internal Revenue
Code?.................................................................................. 31
What Are Minimum Distributions and When Would I Need to Make Them? ..................... 31
Can I Surrender My Annuity for Its Value? .............................................. 31
What is a Medically-Related Surrender and How Do I Qualify? ............................ 31
What Types of Annuity Options Are Available? ........................................... 32
(i)
Contents
How and When Do I Choose the Annuity Payment Option? ................................... 33
How Are Annuity Payments Calculated? ................................................... 33
Living Benefit Programs .................................................................. 35
Do You Offer Programs Designed to Provide Investment Protection for Owners While They
are Alive? ........................................................................... 35
Guaranteed Return Option Plus(SM)(GRO Plus(SM))......................................... 36
Guaranteed Return Option (GRO) ......................................................... 40
Guaranteed Minimum Withdrawal Benefit (GMWB) ........................................... 43
Guaranteed Minimum Income Benefit (GMIB) ............................................... 47
Lifetime Five Income Benefit (Lifetime Five) ........................................... 51
Death Benefit ............................................................................ 57
What Triggers the Payment of a Death Benefit? .......................................... 57
Basic Death Benefit .................................................................... 57
Optional Death Benefits ................................................................ 57
American Skandia's Annuity Rewards ..................................................... 61
Payment of Death Benefits .............................................................. 61
Valuing Your Investment .................................................................. 64
How is My Account Value Determined? .................................................... 64
What is the Surrender Value of My Annuity? ............................................. 64
How and When Do You Value the Sub-Accounts? ............................................ 64
How Do You Value Fixed Allocations? .................................................... 64
When Do You Process and Value Transactions? ............................................ 64
What Happens to My Units When There is a Change in Daily Asset-Based Charges? .......... 66
Tax Considerations ....................................................................... 67
General Information ...................................................................... 74
How Will I Receive Statements and Reports? ............................................. 74
Who is American Skandia? ............................................................... 74
What Are Separate Accounts? ............................................................ 74
What is the Legal Structure of the Underlying Funds? ................................... 76
Who Distributes Annuities Offered by American Skandia? ................................. 77
Incorporation of Certain Documents by Reference ........................................ 77
Financial Statements ................................................................... 78
How to Contact Us ...................................................................... 78
Indemnification ........................................................................ 78
Legal Proceedings ...................................................................... 79
Contents of the Statement of Additional Information .................................... 79
Appendix A -- Condensed Financial Information About Separate Account B ................... A-1
Appendix B -- Calculation of Optional Death Benefits ..................................... B-1
Appendix C -- Additional Information on Asset Allocation Programs ........................ C-1
(ii)
OPTIMUM FOUR PROSPECTUS
Introduction
Why Would I Choose to Purchase This Annuity?
This Annuity is frequently used for retirement planning because it allows you to
accumulate retirement savings and also offers annuity payment options when you
are ready to begin receiving income. The Annuity also offers a choice of
different optional benefits, for an additional charge, that can provide
principal protection or guaranteed minimum income protection for Owners while
they are alive and one or more death benefits that can protect your retirement
savings if you die during a period of declining markets. It may be used as an
investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Roth
IRA, Section 401(a) plans (defined benefit plans and defined contribution plans
such as 401(k), profit sharing and money purchase plans) or Tax Sheltered
Annuity (or 403(b)). It may also be used as an investment vehicle for
"non-qualified" investments. The Annuity allows you to invest your money in a
number of variable investment options as well as in one or more fixed
allocations.
When an Annuity is purchased as a "NON-QUALIFIED" investment, you generally are
not taxed on any investment gains the Annuity earns until you make a withdrawal
or begin to receive annuity payments. This feature, referred to as
"tax-deferral", can be beneficial to the growth of your Account Value because
money that would otherwise be needed to pay taxes on investment gains each year
remains invested and can earn additional money. However, because the Annuity is
designed for long-term retirement savings, a 10% penalty tax may be applied on
withdrawals you make before you reach age 59 1/2. Annuities purchased as a
non-qualified investment are not subject to the maximum contribution limits that
may apply to a qualified investment, and are not subject to required minimum
distributions after age 70 1/2.
When an Annuity is purchased as a "QUALIFIED" investment, you should consider
that the Annuity does not provide any tax advantages in addition to the
preferential treatment already available through your retirement plan under the
Internal Revenue Code. An Annuity may offer features and benefits in addition to
providing tax deferral that other investment vehicles may not offer, including
death benefit protection for your beneficiaries, lifetime income options, and
the ability to make transfers between numerous variable investment options
offered under the Annuity. You should consult with your investment professional
as to whether the overall benefits and costs of the Annuity are appropriate
considering your overall financial plan.
What Are Some of the Key Features of This Annuity?
- - This Annuity is a "flexible premium deferred annuity." It is called
"flexible premium" because you have considerable flexibility in the timing
and amount of premium payments. Generally, investors "defer" receiving
annuity payments until after an accumulation period.
- - This Annuity offers both variable investment options and Fixed
Allocations. If you allocate your Account Value to variable investment
options, the value of your Annuity will vary daily to reflect the
investment performance of the underlying investment options. Fixed
Allocations of different durations are offered that are guaranteed by us,
but may have a Market Value Adjustment if you withdraw or transfer your
Account Value before the Maturity Date.
- - The Annuity features two distinct periods -- the accumulation period and
the payout period. During the accumulation period your Account Value is
allocated to one or more investment options.
- - During the payout period, commonly called "annuitization," you can elect
to receive annuity payments (1) for life; (2) for life with a guaranteed
minimum number of payments; (3) based on joint lives; or (4) for a
guaranteed number of payments. We currently make annuity payments
available on a fixed or variable basis.
- - For annuities issued on or after June 20, 2005 (subject to state
availability) this Annuity offers a Loyalty Credit which we add to your
Account Value after it has been in effect for five full contract years
(i.e., on your fifth Contract Anniversary), subject to our rules and State
availability.
- - This Annuity offers optional benefits, for an additional charge, that can
provide principal protection or guaranteed minimum income protection for
Owners while they are alive.
- - This Annuity offers a basic Death Benefit. It also offers optional Death
Benefits that provide an enhanced level of protection for your
beneficiary(ies) for an additional charge.
- - You are allowed to withdraw a limited amount of money from your Annuity on
an annual basis without any charges, although any optional guaranteed
benefit you elect may be reduced. Other product features allow you to
access your Account Value as necessary, although a charge may apply. After
Annuity Year 4, you are allowed to make unlimited withdrawals from your
Annuity without any charges.
- - Transfers between investment options are tax-free. Currently, you may make
twenty transfers each year free of charge. We also offer several programs
that enable you to manage your Account Value as your financial needs and
investment performance change.
How Do I Purchase This Annuity?
We sell the Annuity through licensed, registered investment professionals. You
must complete an application and submit a minimum initial purchase payment of
$10,000. We may allow you to make a lower initial purchase payment provided you
establish a bank drafting program under which purchase payments received in the
first Annuity Year total at least $10,000. If the Annuity is owned by an
individual or individuals, the oldest of those Owners must be age 85 or under,
as of the Issue Date of the Annuity. If the Annuity is owned by an entity, the
annuitant must be age 85 or under, as of the Issue Date of the Annuity. The
availability and level of protection of certain optional benefits may vary based
on the age of the Owner, on the Issue Date of the Annuity or the date of the
Owner's death.
1
OPTIMUM FOUR PROSPECTUS
Glossary of Terms
Many terms used within this Prospectus are described within the text where they
appear. The description of those terms are not repeated in this Glossary of
Terms.
ACCOUNT VALUE
The value of each allocation to a Sub-account (also referred to as "variable
investment option") or a Fixed Allocation prior to the Annuity Date, plus any
earnings, and/or less any losses, distributions and charges. The Account Value
is calculated before we assess any applicable Contingent Deferred Sales Charge
("CDSC" or "surrender charge") and/or, other than on a contract anniversary, any
fee that is deducted from the contract annually in arrears. The Account Value
includes any Loyalty Credit we apply. The Account Value is determined separately
for each Sub-account and for each Fixed Allocation, and then totaled to
determine the Account Value for your entire Annuity. The Account Value of each
Fixed Allocation on other than its Maturity Date may be calculated using a
market value adjustment.
ANNUITIZATION
The application of Account Value (or Protected Income Value for the Guaranteed
Minimum Income Benefit, if applicable) to one of the available annuity options
for the Annuitant to begin receiving periodic payments for life, for a
guaranteed minimum number of payments or for life with a guaranteed minimum
number of payments.
ANNUITY DATE
The date you choose for annuity payments to commence. A maximum Annuity Date may
apply.
ANNUITY YEAR
A 12-month period commencing on the Issue Date of the Annuity and each
successive 12-month period thereafter.
CODE
The Internal Revenue Code of 1986, as amended from time to time.
FIXED ALLOCATION
An allocation of Account Value that is to be credited a fixed rate of interest
for a specified Guarantee Period during the accumulation period.
GUARANTEE PERIOD
A period of time during the accumulation period where we credit a fixed rate of
interest on a Fixed Allocation.
INTERIM VALUE
The value of a Fixed Allocation on any date other than the Maturity Date. The
Interim Value is equal to the initial value allocated to the Fixed Allocation
plus all interest credited to the Fixed Allocation as of the date calculated,
less any transfers or withdrawals from the Fixed Allocation.
ISSUE DATE
The effective date of your Annuity.
MVA
A market value adjustment used in the determination of Account Value of each
Fixed Allocation on any day more than 30 days prior to the Maturity Date of such
Fixed Allocation.
OWNER
With an Annuity issued as an individual annuity contract, the Owner is either an
eligible entity or person named as having ownership rights in relation to the
Annuity. With an Annuity issued as a certificate under a group annuity contract,
the "Owner" refers to the person or entity who has the rights and benefits
designated as to the "Participant" in the certificate.
SURRENDER VALUE
The value of your Annuity available upon surrender prior to the Annuity Date. It
equals the Account Value as of the date we price the surrender minus any
applicable CDSC, Annual Maintenance Fee, Tax Charge and the charge for any
optional benefits. The surrender value may be calculated using a Market Value
Adjustment with respect to amounts in any Fixed Allocation.
UNIT
A measure used to calculate your Account Value in a Sub-account during the
accumulation period.
VALUATION DAY
Every day the New York Stock Exchange is open for trading or any other day the
Securities and Exchange Commission requires mutual funds or unit investment
trusts to be valued.
2
OPTIMUM FOUR PROSPECTUS
Summary of Contract Fees and Charges
Below is a summary of the fees and charges for the Annuity. Some fees and
charges are assessed against your Annuity while others are assessed against
assets allocated to the variable investment options. The fees and charges that
are assessed against the Annuity include the Contingent Deferred Sales Charge,
Transfer Fee, Tax Charge and Annual Maintenance Fee. The charges that are
assessed against the variable investment options are the mortality and expense
risk charge, the charge for administration of the Annuity, and the charge for
certain optional benefits you elect, other than the Guaranteed Minimum Income
Benefit, which is assessed against the Protected Income Value. Each underlying
mutual fund portfolio assesses a charge for investment management, other
expenses and with some mutual funds, a 12b-1 charge. The prospectus for each
underlying mutual fund provides more detailed information about the expenses for
the underlying mutual funds.
The following table provides a summary of the fees and charges you will pay if
you surrender the Annuity or transfer Account Value among investment options.
These fees and charges are described in more detail within this Prospectus.
YOUR TRANSACTION FEES AND CHARGES
(ASSESSED AGAINST THE ANNUITY)
FEE/CHARGE AMOUNT DEDUCTED
- ----------------------------------- --------------------------------------------------------------------------
Contingent Deferred Sales Charge* 8.5%
The charge is a percentage of each applicable Purchase Payment
deducted upon surrender or withdrawal. The period during which a
particular percentage applies is measured from the Issue Date of the
Annuity.
Transfer Fee $10.00 (currently, $15 maximum)
(Currently, we deduct the fee after the
20th transfer each Annuity Year. We
guarantee that the number of charge free
transfers per Annuity Year will never be less than 8.)
Tax Charge Up to 3.5% of the value that is annuitized, depending on the
requirements of the applicable jurisdiction. This charge is deducted
generally at the time you annuitize your contract.
* The following are the Contingent Deferred Sales Charges (as a percentage of
each applicable Purchase Payment) upon surrender or withdrawal. For purposes of
calculating this charge we consider the year following the Issue Date of your
Annuity as Year 1.
Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yrs. 5+
8.5% 8.0% 7.0% 6.0% 0.0%
3
OPTIMUM FOUR PROSPECTUS
Summary of Contract Fees and Charges continued
The following table provides a summary of the periodic fees and charges you will
pay while you own the Annuity, excluding the underlying mutual fund Portfolio
annual expenses. These fees and charges are described in more detail within this
Prospectus.
YOUR PERIODIC FEES AND CHARGES
ANNUAL FEES/CHARGES ASSESSED AGAINST THE ANNUITY
FEE/CHARGE AMOUNT DEDUCTED
- ------------------------------------------- ---------------------------------------------------------------------
Annual Maintenance Fee Smaller of $35 or 2% of Account Value
(Only applicable if Account Value is less
than $100,000) (Assessed annually on the Annuity's anniversary
date or upon surrender)
ANNUAL FEES/CHARGES OF THE SUB-ACCOUNTS(1)
(AS A PERCENTAGE OF THE AVERAGE DAILY NET ASSETS OF THE SUB-ACCOUNTS)
FEE/CHARGE AMOUNT DEDUCTED
Mortality & Expense Risk Charge(2) 1.50%
Administration Charge2 0.15%
Settlement Service Charge3 1.40% per year of the value of each Sub-account if the Owner's
beneficiary elects the Qualified Beneficiary
Continuation Option4 ("Qualified BCO")
Total Annual Charges of the Sub-accounts 1.65% per year of the value of each Sub-account
(1.40% per year if you are a beneficiary electing the Qualified BCO)
1: These charges are deducted daily and apply to Variable Investment Options
only.
2: The combination of the Mortality and Expense Risk Charge and Administration
Charge is referred to as the "Insurance Charge" elsewhere in this Prospectus.
3: The Mortality & Expense Risk Charge and the Administration Charge do not
apply if you are a beneficiary under the Qualified Beneficiary Continuation
Option. The Settlement Service Charge applies only if your beneficiary elects
the Qualified Beneficiary Continuation Option.
4: When an Annuity is used as an IRA, 403(b) or other "qualified investment",
upon the Owner's death a beneficiary may generally elect to continue the Annuity
and receive Minimum Distributions under the Annuity instead of receiving the
death benefit in a single payment. If a beneficiary elects this option, the
beneficiary will incur the Settlement Service Charge. Please refer to the
section of this prospectus that describes the Qualified Beneficiary Continuation
Option for more detailed information about this option, including certain
restrictions and limitations that may apply.
4
OPTIMUM FOUR PROSPECTUS
The following table provides a summary of the fees and charges you will pay if
you elect any of the following optional benefits. Not all optional benefits may
be purchased in combination with one another. You may only elect one optional
living benefit. The optional living benefits are the Guaranteed Return Option
Plus program (and where not available, Guaranteed Return Option), the Guaranteed
Minimum Withdrawal Benefit, the Guaranteed Minimum Income Benefit and the
Lifetime Five(SM) Income Benefit. For the optional death benefits, you may elect
the Highest Anniversary Value Death Benefit or the Highest Daily Value Death
Benefit together with the Enhanced Beneficiary Protection Death Benefit, or any
of these three benefits individually, but the Combination 5% Roll-up and HAV
Death Benefit may only be purchased individually. The fees and charges and each
of the optional benefits are described in more detail within this Prospectus.
YOUR OPTIONAL BENEFIT FEES AND CHARGES
OPTIONAL
BENEFIT FEE/
OPTIONAL BENEFIT CHARGE
- ------------------------------------------------------------------------------ -----------------------
GUARANTEED RETURN OPTION Plus(SM) (GRO Plus(SM))/ GUARANTEED RETURN OPTION
We offer a program that guarantees a "return of premium" at a future date, 0.25% of average daily
while allowing you to allocate all or a portion of your Account Value to net assets of the Sub-
certain Sub-accounts. accounts
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
We offer a program that guarantees your ability to withdraw amounts over time 0.35% of average daily
equal to an initial principal value, regardless of the net assets of the Sub-
impact of market performance on your Account Value. accounts
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)**
We offer a program that, after a seven-year waiting period, guarantees your 0.50% per year of the
ability to begin receiving income from your Annuity in the form of annuity average Protected
payments based on your total Purchase Payments and an annual increase of Income Value during
5% on such Purchase Payments adjusted for withdrawals (called the each year; deducted
"Protected Income Value"), regardless of the impact of market performance annually in arrears each
on your Account Value. Annuity Year
LIFETIME FIVE INCOME BENEFIT**
We offer a program that guarantees your ability to withdraw amounts equal 0.60% of average daily
to a percentage of an initial principal value, regardless of net assets of the Sub-
the impact of market performance on your Account Value, accounts
subject to our program rules accounts regarding the timing and amount of
withdrawals.
ENHANCED BENEFICIARY PROTECTION DEATH BENEFIT**
We offer an Optional Death Benefit that provides an enhanced level of 0.25% of average daily
protection for your beneficiary(ies) by providing amounts in net assets of the Sub-
addition to the basic Death Benefit that can be used to accounts
offset federal and state taxes accounts payable on any taxable gains in your
Annuity at the time of your death.
TOTAL ANNUAL
OPTIONAL BENEFIT CHARGE*
- ------------------------------------------------------------------------------ ----------------------------
GUARANTEED RETURN OPTION Plus(SM) (GRO Plus(SM))/ GUARANTEED RETURN OPTION
We offer a program that guarantees a "return of premium" at a future date, 1.90%; 1.65% for
while allowing you to allocate all or a portion of your Account Qualified BCO
Value to certain Sub-accounts.
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
- ------------------------------------------------------------------------------------------------------------
We offer a program that guarantees your ability to withdraw amounts over 2.00%; 1.75% for
time equal to an initial principal value, regardless of the impact of Qualified BCO
market performance on your Account Value.
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)**
- ------------------------------------------------------------------------------------------------------------
We offer a program that, after a seven-year waiting period, guarantees your 1.65%
ability to begin receiving income from your Annuity in the form of annuity PLUS
payments based on your total Purchase Payments and an annual increase of 0.50% per year of average
5% on such Purchase Payments adjusted for withdrawals Protected Income Value
(called the "Protected Income Value"), regardless of the
impact of market performance on your Account Value.
LIFETIME FIVE INCOME BENEFIT**
- ------------------------------------------------------------------------------------------------------------
We offer a program that guarantees your ability to withdraw amounts equal 2.25%
to a percentage of an initial principal value, regardless of the impact of
market performance on your Account Value, subject to our program rules regarding
the timing and amount of withdrawals.
ENHANCED BENEFICIARY PROTECTION DEATH BENEFIT**
- ------------------------------------------------------------------------------------------------------------
We offer an Optional Death Benefit that provides an enhanced level of 1.90%
protection for your beneficiary(ies) by providing amounts in addition to the
basic Death Benefit that can be used to offset federal and state taxes payable
on any taxable gains in your Annuity at the time of your death.
5
OPTIMUM FOUR PROSPECTUS
Summary of Contract Fees and Charges continued
OPTIONAL
BENEFIT FEE/
OPTIONAL BENEFIT CHARGE
- -------------------------------------------------------------------------------- ------------------------
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT ("HAV")**
We offer an Optional Death Benefit that provides an enhanced level of 0.25% of average daily
protection for your beneficiary(ies) by providing a death benefit net assets of the Sub-
equal to the greater of the basic Death Benefit and the accounts
Highest Anniversary Value, less proportional withdrawals.
COMBINATION 5% ROLL-UP AND HAV DEATH BENEFIT**
We offer an Optional Death Benefit that provides an enhanced level of 0.50% of average
daily protection for your beneficiary(ies) by providing the greater of net assets of the Sub-
the Highest Anniversary Value Death Benefit and a 5% accounts
annual increase on Purchase Payments adjusted for withdrawals.
HIGHEST DAILY VALUE DEATH BENEFIT ("HDV")**
We offer an Optional Death Benefit that provides an enhanced level of 0.50% of average daily
protection for your beneficiary(ies) by providing a death benefit net assets of the Sub-
equal to the greater of the basic Death Benefit and the accounts
Highest Daily Value, less proportional withdrawals.
TOTAL ANNUAL
OPTIONAL BENEFIT CHARGE*
- -------------------------------------------------------------------------------- ---------------
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT ("HAV")**
We offer an Optional Death Benefit that provides an enhanced level of 1.90%
protection for your beneficiary(ies) by providing a death benefit equal to the
greater of the basic Death Benefit and the Highest Anniversary Value, less
proportional withdrawals.
COMBINATION 5% ROLL-UP AND HAV DEATH BENEFIT**
We offer an Optional Death Benefit that provides an enhanced level of 2.15%
protection for your beneficiary(ies) by providing the greater of the Highest
Anniversary Value Death Benefit and a 5% annual increase on Purchase Payments
adjusted for withdrawals.
HIGHEST DAILY VALUE DEATH BENEFIT ("HDV")**
We offer an Optional Death Benefit that provides an enhanced level of 2.15%
protection for your beneficiary(ies) by providing a death benefit equal to the
greater of the basic Death Benefit and the Highest Daily Value, less
proportional withdrawals.
Please refer to the section of this Prospectus that describes each optional
benefit for a complete description of the benefit, including any restrictions or
limitations that may apply.
PLEASE REFER TO THE SECTION OF THIS PROSPECTUS THAT DESCRIBES EACH OPTIONAL
BENEFIT FOR A COMPLETE DESCRIPTION OF THE BENEFIT, INCLUDING ANY RESTRICTIONS OR
LIMITATIONS THAT MAY APPLY.
* The Total Annual Charge includes the Insurance Charge assessed against the
average daily net assets allocated to the sub-accounts. If you elect more than
one optional benefit, the Total Annual Charge would be increased to include the
charge for each optional benefit.
** These optional benefits are not available under the Qualified BCO.
The following table provides the range (minimum and maximum) of the total annual
expenses for the underlying mutual funds ("Portfolios") as of December 31, 2004.
Each figure is stated as a percentage of the underlying Portfolio's average
daily net assets.
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES
MINIMUM MAXIMUM
- ------------------------------------ ------- --------
Total Portfolio Operating Expense 0.63% 3.06%
The following are the investment management fees, other expenses, 12b-1 fees (if
applicable), and the total annual expenses for each underlying mutual fund
("Portfolio") as of December 31, 2004, except as noted. Each figure is stated as
a percentage of the underlying Portfolio's average daily net assets. For certain
of the underlying Portfolios, a portion of the management fee has been waived
and/or other expenses have been partially reimbursed. Any such fee waivers
and/or reimbursements have been reflected in the footnotes. The "Total Annual
Portfolio Operating Expenses" reflect the combination of the underlying
Portfolio's investment management fee, other expenses and any 12b-1 fees. The
following expenses are deducted by the underlying Portfolio before it provides
American Skandia with the daily net asset value. Any footnotes about expenses
appear after the list of all the Portfolios. The underlying Portfolio
information was provided by the underlying mutual funds and has not been
independently verified by us. See the prospectuses or statements of additional
information of the underlying Portfolios for further details. The current
prospectus and statement of additional information for the underlying Portfolios
can be obtained by calling 1-800-752-6342.
6
OPTIMUM FOUR PROSPECTUS
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS)
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES1 FEES EXPENSES
- ----------------------------------------------------------------------------------------------
AMERICAN SKANDIA TRUST:(2),(3)
AST William Blair International Growth 1.00% 0.22% None 1.22%
AST LSV International Value4 1.00% 0.37% None 1.37%
AST Small-Cap Growth5 0.90% 0.24% None 1.14%
AST DeAM Small-Cap Growth 0.95% 0.22% None 1.17%
AST Federated Aggressive Growth 0.95% 0.24% None 1.19%
AST Small-Cap Value6 0.90% 0.18% None 1.08%
AST Goldman Sachs Mid-Cap Growth 1.00% 0.25% None 1.25%
AST Neuberger Berman Mid-Cap Value 0.90% 0.15% None 1.05%
AST MFS Growth 0.90% 0.20% None 1.10%
AST Marsico Capital Growth 0.90% 0.14% None 1.04%
AST AllianceBernstein Core Value7 0.75% 0.24% None 0.99%
AST Hotchkis & Wiley Large-Cap Value 0.75% 0.19% None 0.94%
AST Lord Abbett Bond-Debenture 0.80% 0.22% None 1.02%
AST PIMCO Total Return Bond 0.65% 0.16% None 0.81%
AST PIMCO Limited Maturity Bond 0.65% 0.17% None 0.82%
AST Money Market 0.50% 0.13% None 0.63%
EVERGREEN VARIABLE ANNUITY TRUST:
International Equity 0.42% 0.30% None 0.72%
Omega 0.52% 0.16% None 0.68%
(1) As noted above, shares of the Portfolios generally are purchased through
variable insurance products. Many of the Portfolios and/or their investment
advisers and/or distributors have entered into arrangements with us as the
issuer of the Annuity under which they compensate us for providing ongoing
services in lieu of the Trust providing such services. Amounts paid by a
Portfolio under those arrangements are included under "Other Expenses." For more
information see the prospectus for each underlying portfolio and, "Service Fees
payable to American Skandia," later in this prospectus.
(2) The Portfolios' total actual annual operating expenses for the year ended
December 31, 2004 were less than the amount shown in the table due to fee
waivers, reimbursement of expenses and expense offset arrangements. These
waivers, reimbursements, and offset arrangements are voluntary and may be
terminated by American Skandia Investment Services, Inc. and Prudential
Investments LLC at any time. After accounting for the waivers, reimbursements
and offset arrangements, the Portfolios' actual annual operating expenses were:
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
AST William Blair International Growth 1.11%
AST LSV International Value 1.22%
AST DeAM Small-Cap Growth 1.02%
AST Goldman Sachs Mid-Cap Growth 1.13%
AST Neuberger Berman Mid-Cap Value 1.04%
AST MFS Growth 1.07%
AST Marsico Capital Growth 1.02%
AST Hotchkis & Wiley Large-Cap Value 0.90%
AST Lord Abbett Bond-Debenture Portfolio 0.97%
AST PIMCO Total Return Bond 0.78%
AST PIMCO Limited Maturity Bond 0.79%
AST Money Market 0.58%
(3) Until November 18, 2004, the Trust had a Distribution Plan under Rule 12b-1
to permit an affiliate of the Trust's Investment Managers to receive brokerage
commissions in connection with purchases and sales of securities held by the
Portfolios, and to use these commissions to promote the sale of shares of the
Portfolio. The Distribution Plan was terminated effective November 18, 2004. The
total annual portfolio operating expenses do not reflect any brokerage
commissions paid pursuant to the Distribution Plan prior to the Plan's
termination.
(4) Effective November 18, 2004, LSV Asset Management became the Sub-advisor of
the Portfolio. Prior to November 18, 2004, Deutsche Asset Management, Inc.
served as Sub-advisor of the Portfolio, then named "AST DeAM International
Equity Portfolio."
7
OPTIMUM FOUR PROSPECTUS
Summary of Contract Fees and Charges continued
(5) Effective May 1, 2005, Eagle Asset Management and Neuberger Berman
Management, Inc. became Co-Sub-advisors of the Portfolio. Prior to May 1, 2005,
State Street Research and Management Company served as Sub-advisor of the
Portfolio, then named "AST State Street Research Small-Cap Growth Portfolio."
(6) Effective November 18, 2004, Integrity Asset Management, Lee Munder Capital
Group, J.P. Morgan Fleming Asset Management became Co-Sub-advisors of the
Portfolio. Prior to November 18, 2004, GAMCO Advisors Inc. served as Sub-advisor
of the Portfolio, then named "AST Gabelli Small-Cap Value Portfolio."
(7) Effective May 1, 2005, the name of the Portfolio was changed from "AST
Sanford Bernstein Core Value Portfolio" to "AST AllianceBernstein Core Value
Portfolio."
8
OPTIMUM FOUR PROSPECTUS
Expense Examples
These examples are designed to assist you in understanding the various expenses
you may incur with the Annuity over certain periods of time based on specific
assumptions. The examples reflect the Contingent Deferred Sales Charges (when
applicable), Annual Maintenance Fee, Insurance Charge, and the highest total
annual portfolio operating expenses for any underlying Portfolio (offered under
the product), as well as the maximum charges for the optional benefits that are
offered under the Annuity that can be elected in combination with one another.
Below are examples showing what you would pay in expenses at the end of the
stated time periods had you invested $10,000 in the Annuity and received a 5%
annual return on assets, and elected all optional benefits available.
The examples shown assume that: (a) you only allocate Account Value to the
Sub-account with the maximum total annual portfolio operating expenses for the
underlying Portfolio (shown above), not to a Fixed Allocation; (b) the Insurance
Charge is assessed as 1.65% per year; (c) the Annual Maintenance Fee is
reflected as an asset-based charge based on an assumed average contract size;
(d) you make no withdrawals of Account Value during the period shown; (e) you
make no transfers, or other transactions for which we charge a fee for during
the period shown; (f) no tax charge applies; (g) the highest total annual
portfolio operating expenses for any underlying Portfolio offered under the
product applies; and (h) the charge for each optional benefit is reflected as an
additional charge equal to 0.60% per year of the average daily net assets of the
Sub-accounts for the Lifetime Five Income Benefit, 0.50% per year of the average
daily net assets of the Sub-accounts for the Highest Daily Value Death Benefit
and 0.25% of the average daily net assets of the Sub-accounts for the Enhanced
Beneficiary Protection Death Benefits. Amounts shown in the examples are rounded
to the nearest dollar.
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 will be less than those shown if you elect a
different combination of optional benefits than indicated in the examples or if
you allocate account value to any other available sub-accounts.
EXPENSE EXAMPLES ARE PROVIDED AS FOLLOWS: 1.) IF YOU SURRENDER THE ANNUITY AT
THE END OF THE STATED TIME PERIOD; 2.) IF YOU ANNUITIZE AT THE END OF THE STATED
TIME PERIOD; AND 3.) IF YOU DO NOT SURRENDER YOUR ANNUITY. A TABLE OF
ACCUMULATION VALUES APPEARS IN APPENDIX A TO THIS PROSPECTUS.
IF YOU SURRENDER YOUR ANNUITY AT IF YOU ANNUITIZE YOUR ANNUITY AT THE
THE END OF THE APPLICABLE TIME PERIOD: END OF THE APPLICABLE TIME PERIOD:
- -------------------------------------- -------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,213 $1,982 $2,265 $4,590 $448 $1,352 $2,265 $4,590
IF YOU DO NOT
SURRENDER YOUR ANNUITY:
-------------------------------------
1 YR 1 YR 3 YRS 5 YRS 10 YRS
$1,213 $448 $1,352 $2,265 $4,590
9
OPTIMUM FOUR PROSPECTUS
Investment Options
WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE PORTFOLIOS?
Each variable investment option is a Sub-account of American Skandia Life
Assurance Corporation Variable Account B (see "What are Separate Accounts" for
more detailed information). Each Sub-account invests exclusively in one
Portfolio. You should carefully read the prospectus for any Portfolio in which
you are interested. The following chart classifies each of the Portfolios based
on our assessment of their investment style (as of the date of this Prospectus).
The chart also provides a description of each Portfolio's investment objective
(in italics) and a short, summary description of their key policies to assist
you in determining which Portfolios may be of interest to you. There is no
guarantee that any underlying Portfolio will meet its investment objective.
The name of the advisor/sub-advisor for each Portfolio appears next to the
description. Those Portfolios whose name includes the prefix "AST" are
Portfolios of American Skandia Trust. The investment managers for AST are
American Skandia Investment Services, Incorporated, a Prudential Financial
Company, and Prudential Investments LLC, affiliated companies of American
Skandia. However, a sub-advisor, as noted below, is engaged to conduct
day-to-day investment decisions.
The Portfolios are not publicly traded mutual funds. They are only
available as investment options in variable annuity contracts and variable life
insurance policies issued by insurance companies, or in some cases, to
participants in certain qualified retirement plans. However, some of the
Portfolios available as Sub-accounts under the Annuity are managed by the same
portfolio advisor or sub-advisor as a retail mutual fund of the same or similar
name that the Portfolio may have been modeled after at its inception. Certain
retail mutual funds may also have been modeled after a Portfolio. While the
investment objective and policies of the retail mutual funds and the Portfolios
may be substantially similar, the actual investments will differ to varying
degrees. Differences in the performance of the funds can be expected, and in
some cases could be substantial. You should not compare the performance of a
publicly traded mutual fund with the performance of any similarly named
Portfolio offered as a Sub-account. Details about the investment objectives,
policies, risks, costs and management of the Portfolios are found in the
prospectuses for the underlying mutual funds. The current prospectus and
statement of additional information for the underlying Portfolios can be
obtained by calling 1-800-752-6342.
10
OPTIMUM FOUR PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
INTERNATIONAL AST WILLIAM BLAIR INTERNATIONAL GROWTH: seeks long-term capital William Blair &
EQUITY appreciation. The Portfolio invests primarily in stocks of large and medium-sized Company, L.L.C.
companies located in countries included in the Morgan Stanley Capital
International All Country World Ex-U.S. Index.
INTERNATIONAL AST LSV INTERNATIONAL VALUE (formerly AST DeAM International Equity): seeks Deutsche Asset
EQUITY capital growth. The Portfolio pursues its objective by primarily investing at least Management, Inc.
80% of the value of its assets in the equity securities of companies in
developed non-U.S. countries that are represented in the MSCI EAFE Index.
SMALL CAP AST SMALL-CAP GROWTH (formerly AST State Street Research Small-Cap Eagle Asset
GROWTH Growth): seeks long-term capital growth. The Portfolio pursues its objective by Management,
primarily investing in the common stocks of small-capitalization companies. Neuberger Berman
Management, Inc.
SMALL CAP AST DEAM SMALL-CAP GROWTH: seeks maximum growth of investors' capital Deutsche Asset
GROWTH from a portfolio of growth stocks of smaller companies. The Portfolio pursues its Management, Inc.
objective, under normal circumstances, by primarily investing
at least 80% of its total assets in the equity securities of
small-sized companies included in the Russell 2000
Growth(R) Index.
SMALL CAP AST FEDERATED AGGRESSIVE GROWTH: seeks capital growth. The Portfolio Federated Equity
GROWTH pursues its investment objective by investing primarily in the stocks of small Management
companies that are traded on national security exchanges, the NASDAQ stock Company of
exchange and the over-the-counter-market. Pennsylvania/
Federated Global
Investment
Management Corp.
SMALL CAP AST SMALL-CAP VALUE (formerly AST Gabelli Small-Cap Value): seeks to provide Integrity Asset
VALUE long-term capital growth by investing primarily in small-capitalization stocks that Management, Lee
appear to be undervalued. The Portfolio will have a non-fundamental policy to Munder Capital
invest, under normal circumstances, at least 80% of the value of its assets in Group, J.P. Morgan
small capitalization companies. Fleming Asset
Management
MID CAP AST GOLDMAN SACHS MID-CAP GROWTH: seeks long-term capital growth. The Goldman Sachs
GROWTH Portfolio pursues its investment objective, by investing primarily in equity Asset Management,
securities selected for their growth potential, and normally invests at least 80% L.P.
of the value of its assets in medium capitalization companies.
Mid AST NEUBERGER BERMAN MID-CAP VALUE: seeks capital
CAP VALUE growth. Under normal Neuberger Berman market conditions, the
Portfolio primarily invests at least 80% of its net assets
Management Inc. in the common stocks of mid-cap companies.
Under the Portfolio's value-oriented investment approach, the
Sub-advisor looks for well-managed companies whose stock
prices are undervalued and that may rise before other
investors realize their worth.
11
OPTIMUM FOUR PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
LARGE CAP AST MFS GROWTH: seeks long-term capital growth and future income. Under Massachusetts
GROWTH normal market conditions, the Portfolio invests at least 80% of its total assets in Financial Services
common stocks and related securities, such as preferred
stocks, convertible Company securities and depositary
receipts, of companies that the Sub-advisor believes offer
better than average prospects for long-term growth.
LARGE CAP AST MARSICO CAPITAL GROWTH: seeks capital growth. Income realization is not Marsico Capital
GROWTH an investment objective and any income realized on the Portfolio's investments, Management, LLC
therefore, will be incidental to the Portfolio's objective.
The Portfolio will pursue its objective by investing primarily
in common stocks of larger, more established companies.
LARGE CAP AST ALLIANCEBERNSTEIN CORE VALUE (formerly AST Sanford Bernstein Core Alliance Capital
GROWTH VALUE Value): seeks long-term capital growth by investing primarily in common stocks. Management, L.P.
The Sub-advisor expects that the majority of the Portfolio's
assets will be invested in the common stocks of large
companies that appear to be undervalued.
LARGE CAP AST HOTCHKIS & Wiley Large-Cap Value: seeks current income and long-term Hotchkis and Wiley
VALUE growth of income, as well as capital appreciation. The Portfolio invests, under Capital
normal circumstances, at least 80% of its net assets plus
borrowings for Management, LLC investment purposes in common
stocks, of large cap U.S. companies, that have a high cash
dividend or payout yield relative to the market.
FIXED AST LORD ABBETT BOND-DEBENTURE: seeks high current Lord, Abbett & Co.
INCOME income and the opportunity for capital LLC
appreciation to produce a high total return. To pursue its
objective, the Portfolio will invest, under normal
circumstances, at least 80% of the value of its assets in
fixed income securities and normally invests primarily in high
yield and investment grade debt securities, securities
convertible into common stock and preferred stocks.
FIXED AST PIMCO TOTAL RETURN BOND: seeks to maximize total Pacific Investment
INCOME return consistent with preservation of Management
capital and prudent investment management. The Portfolio will Company LLC
invest in a diversified portfolio of fixed-income (PIMCO)
securities of varying maturities. The average
portfolio duration of the Portfolio generally will vary within
a three- to six-year time frame based on the
Sub-advisor's forecast for interest rates.
FIXED INCOME AST PIMCO LIMITED MATURITY BOND: seeks to maximize total return consistent Pacific Investment
with preservation of capital and prudent investment management. The Portfolio Management
will invest in a diversified portfolio of fixed-income securities of varying Company LLC
maturities. The average portfolio duration of the Portfolio generally will vary (PIMCO)
within a one- to three-year time frame based on the Sub-advisor's forecast for
interest rates.
FIXED AST MONEY MARKET: seeks high current income while Wells Capital
INCOME maintaining high levels of liquidity. The Management, Inc.
Portfolio attempts to accomplish its objective by maintaining
a dollar-weighted average maturity of not
more than 90 days and by investing in securities which have
effective maturities of not more than 397 days.
12
OPTIMUM FOUR PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
INTERNATIONAL EVERGREEN VA INTERNATIONAL EQUITY (formerly Evergreen VA International Evergreen
EQUITY Growth): seeks long-term capital growth and secondarily, modest income. The Investment
Portfolio normally invests 80% of its assets in equity Management
securities issued by established, quality, Company, LLC
non-U.S. companies located in countries with developed
markets and may purchase across all market
capitalizations. The Portfolio normally invests at least 65%
of its assets in securities of companies in at least three
different countries (other than the U.S.).
SPECIALTY EVERGREEN VA OMEGA: seeks long-term capital growth. The Portfolio invests Evergreen
primarily, and under normal conditions, substantially all of its assets in common Investment
stocks and securities convertible into common stocks of U.S. companies across Management
all market capitalizations. Company, LLC
WHAT ARE THE FIXED ALLOCATIONS?
We offer Fixed Allocations of different durations during the accumulation
period. These "Fixed Allocations" earn a guaranteed fixed rate of interest for a
specified period of time, called the "Guarantee Period." In most states, we
offer Fixed Allocations with Guarantee Periods from 1 to 10 years. We may also
offer special purpose Fixed Allocations for use with certain optional investment
programs. We guarantee the fixed rate for the entire Guarantee Period. However,
if you withdraw or transfer Account Value before the end of the Guarantee
Period, we will adjust the value of your withdrawal or transfer based on a
formula, called a "Market Value Adjustment." The Market Value Adjustment can
either be positive or negative, depending on the movement of applicable interest
rates payable on Strips of the appropriate duration. Please refer to the section
entitled "How does the Market Value Adjustment Work?" for a description of the
formula along with examples of how it is calculated. You may allocate Account
Value to more than one Fixed Allocation at a time.
Fixed Allocations may not be available in all states. Availability of Fixed
Allocations is subject to change and may differ by state and by the annuity
product you purchase. Please call American Skandia at 1-800-752-6342 to
determine availability of Fixed Allocations in your state and for your annuity
product.
13
OPTIMUM FOUR PROSPECTUS
Fees and Charges
The charges under the contracts are designed to cover, in the aggregate, our
direct and indirect costs of selling, administering and providing benefits under
the contracts. They are also designed, in the aggregate, to compensate us for
the risks of loss we assume pursuant to the contracts. If, as we expect, the
charges that we collect from the contracts exceed our total costs in connection
with the contracts, we will earn a profit. Otherwise we will incur a loss. For
example, American Skandia may make a profit on the Insurance Charge if, over
time, the actual costs of providing the guaranteed insurance obligations under
the Annuity are less than the amount we deduct for the Insurance Charge. To the
extent we make a profit on the Insurance Charge, such profit may be used for any
other corporate purpose, including payment of other expenses that American
Skandia incurs in promoting, distributing, issuing and administering the
Annuity.
The rates of certain of our charges have been set with reference to estimates of
the amount of specific types of expenses or risks that we will incur. In most
cases, this prospectus identifies such expenses or risks in the name of the
charge; however, the fact that any charge bears the name of, or is designed
primarily to defray a particular expense or risk does not mean that the amount
we collect from that charge will never be more than the amount of such expense
or risk, nor does it mean that we may not also be compensated for such expense
or risk out of any other charges we are permitted to deduct by the terms of the
contract. A portion of the proceeds that American Skandia receives from charges
that apply solely to the variable investment options may include amounts based
on market appreciation of the variable investment option values.
WHAT ARE THE CONTRACT FEES AND CHARGES?
CONTINGENT DEFERRED SALES CHARGE: We do not deduct a sales charge from Purchase
Payments you make to your Annuity. However, we may deduct a CDSC if you
surrender your Annuity or when you make a partial withdrawal. The CDSC
reimburses us for expenses related to sales and distribution of the Annuity,
including commissions, marketing materials and other promotional expenses. The
CDSC is calculated as a percentage of your Purchase Payment being surrendered or
withdrawn during the applicable Annuity Year. For purposes of calculating the
CDSC, we consider the year following the Issue Date of your Annuity as Year 1.
The amount of the CDSC decreases over time, measured from the Issue Date of the
Annuity. The CDSC percentages are shown below.
YEARS 1 2 3 4 5+
- --------------- - - - - -
CHARGE (%) 8.5% 8.0% 7.0% 6.0% 0.0%
THE CDSC PERIOD IS BASED ON THE ISSUE DATE OF THE ANNUITY, NOT ON THE DATE
EACH PURCHASE PAYMENT IS APPLIED TO THE ANNUITY. Purchase Payments applied to
the Annuity after the Issue Date do not have their own CDSC period. During the
first four (4) Annuity Years, under certain circumstances you can withdraw a
limited amount of Account Value without paying a CDSC. This is referred to as a
"Free Withdrawal." After four (4) complete Annuity Years, you can surrender your
Annuity or make a partial withdrawal without a CDSC being deducted from the
amount being withdrawn. Free Withdrawals are not treated as a withdrawal of
Purchase Payments for purposes of calculating the CDSC on a subsequent
withdrawal or surrender. Withdrawals of amounts greater than the maximum Free
Withdrawal amount are treated as a withdrawal of Purchase Payments and will be
assessed a CDSC during Annuity Years 1 through 4. For purposes of calculating
the CDSC on a surrender, the Purchase Payments being withdrawn may be greater
than your remaining Account Value or the amount of your withdrawal request. This
is most likely to occur if you have made prior withdrawals under the Free
Withdrawal provision or if your Account Value has declined in value due to
negative market performance.
We may waive the CDSC under certain medically-related circumstances or when
taking a Minimum Distribution from an Annuity purchased as a "qualified"
investment. Free Withdrawals, Medically-Related Surrenders and Minimum
Distributions are each explained more fully in the section entitled "Access to
Your Account Value".
TRANSFER FEE: Currently, you may make twenty (20) free transfers between
investment options each Annuity Year. We will charge $10.00 for each transfer
after the twentieth in each Annuity Year. We do not consider transfers made as
part of a dollar cost averaging, automatic rebalancing or asset allocation
program when we count the twenty free transfers. All transfers made on the same
day will be treated as one (1) transfer. Renewals or transfers of Account Value
from a Fixed Allocation at the end of its Guarantee Period are not subject to
the Transfer Fee and are not counted toward the twenty free transfers. We may
reduce the number of free transfers allowable each Annuity Year (subject to a
minimum of eight) without charging
14
OPTIMUM FOUR PROSPECTUS
a Transfer Fee unless you make use of electronic means to transmit your transfer
requests. We may eliminate the Transfer Fee for transfer requests transmitted
electronically or through other means that reduce our processing costs. If
enrolled in any program that does not permit transfer requests to be transmitted
electronically, the Transfer Fee will not be waived.
ANNUAL MAINTENANCE FEE: During the accumulation period we deduct an Annual
Maintenance Fee. The Annual Maintenance Fee is $35.00 or 2% of your Account
Value invested in the variable investment options, whichever is less. This fee
will be deducted annually on the anniversary of the Issue Date of your Annuity
or, if you surrender your Annuity during the Annuity Year, the fee is deducted
at the time of surrender. Currently, the Annual Maintenance Fee is only deducted
if your Account Value is less than $100,000 on the anniversary of the Issue Date
or at the time of surrender. We may increase the Annual Maintenance Fee.
However, any increase will only apply to Annuities issued after the date of the
increase.
TAX CHARGE: Several states and some municipalities charge premium taxes or
similar taxes on annuities that we are required to pay. The amount of tax will
vary from jurisdiction to jurisdiction and is subject to change. The tax charge
currently ranges up to 31/2% of your premium and is designed to approximate the
taxes that we are required to pay. We generally will deduct the charge at the
time the tax is imposed, but may also decide to deduct the charge from each
Purchase Payment at the time of a withdrawal or surrender of your Annuity or at
the time you elect to begin receiving annuity payments. We may assess a charge
against the Sub-accounts and the Fixed Allocations equal to any taxes which may
be imposed upon the separate accounts.
We will pay company income taxes on the taxable corporate earnings created
by this separate account product. While we may consider company income taxes
when pricing our products, we do not currently include such income taxes in the
tax charges you pay under the contract. We will periodically review the issue of
charging for these taxes and may impose a charge in the future.
In calculating our corporate income tax liability, we derive certain
corporate income tax benefits associated with the investment of company assets,
including separate account assets, which are treated as company assets under
applicable income tax law. These benefits reduce our overall corporate income
tax liability. Under current law, such benefits may include foreign tax credits
and corporate dividends received deductions. We do not pass these tax benefits
through to holders of the separate account annuity contracts because (i) the
contract owners are not the owners of the assets generating these benefits under
applicable income tax law and (ii) we do not currently include company income
taxes in the tax charges you pay under the contract.
WHAT CHARGES APPLY SOLELY TO THE VARIABLE INVESTMENT OPTIONS?
INSURANCE CHARGE: We deduct an Insurance Charge daily. The charge is assessed
against the average daily assets allocated to the Sub-accounts and is equal to
1.65% on an annual basis. The Insurance Charge is a combination of the Mortality
& Expense Risk Charge (1.50%) and the Administration Charge (0.15%). The
Insurance Charge is intended to compensate American Skandia for providing the
insurance benefits under the Annuity, including the Annuity's basic death
benefit that provides guaranteed benefits to your beneficiaries even if the
market declines and the risk that persons we guarantee annuity payments to will
live longer than our assumptions. The charge also covers administrative costs
associated with providing the Annuity benefits, including preparation of the
contract, confirmation statements, annual account statements and annual reports,
legal and accounting fees as well as various related expenses. Finally, the
charge covers the risk that our assumptions about the mortality risks and
expenses under this Annuity are incorrect and that we have agreed not to
increase these charges over time despite our actual costs. We may increase the
portion of the total Insurance Charge that is deducted for administrative costs;
however, any increase will only apply to Annuities issued after the date of the
increase.
The Insurance Charge is not deducted against assets allocated to a Fixed
Allocation. However, the amount we credit to Fixed Allocations may also reflect
similar assumptions about the insurance guarantees provided under the Annuity.
Optional Benefits for which we assess a charge solely against the variable
investment options: If you elect to purchase certain optional benefits, we will
deduct an additional charge on a daily basis solely from your Account Value
allocated to the Sub-accounts. The additional charge is included in the daily
calculation of the Unit Price for each Sub-account. We may assess charges for
other optional benefits on a different basis as described elsewhere in the
prospectus.
15
OPTIMUM FOUR PROSPECTUS
Fees and Charges continued
Please refer to the sections entitled "Living Benefit Programs" and "Death
Benefit" for a description of the charge for each Optional Benefit.
WHAT FEES AND EXPENSES ARE INCURRED BY THE PORTFOLIOS?
Each Portfolio incurs total annual operating expenses comprised of an investment
management fee, other expenses and any distribution and service (12b-1) fees
that may apply. These fees and expenses are reflected daily by each Portfolio
before it provides American Skandia with the net asset value as of the close of
business each day. More detailed information about fees and expenses can be
found in the prospectuses for the Portfolios.
WHAT CHARGES APPLY TO THE FIXED ALLOCATIONS?
No specific fee or expenses are deducted when determining the rate we credit to
a Fixed Allocation. However, for some of the same reasons that we deduct the
Insurance Charge against Account Value allocated to the Sub-accounts, we also
take into consideration mortality, expense, administration, profit and other
factors in determining the interest rates we credit to Fixed Allocations. Any
CDSC or Tax Charge applies to amounts that are taken from the variable
investment options or the Fixed Allocations. A Market Value Adjustment may also
apply to transfers, certain withdrawals, surrender or annuitization from a Fixed
Allocation.
WHAT CHARGES APPLY IF I CHOOSE AN ANNUITY PAYMENT OPTION?
If you select a fixed payment option, the amount of each fixed payment will
depend on the Account Value of your Annuity when you elected to annuitize. There
is no specific charge deducted from these payments; however, the amount of each
annuity payment reflects assumptions about our insurance expenses. If you select
a variable payment option that we may offer, then the amount of your benefits
will reflect changes in the value of your Annuity and will be subject to charges
that apply under the variable immediate annuity option. Also, a tax charge may
apply (see "Tax Charge" above).
EXCEPTIONS/REDUCTIONS TO FEES AND CHARGES
We may reduce or eliminate certain fees and charges or alter the manner in which
the particular fee or charge is deducted. For example, we may reduce the amount
of the CDSC or the length of time it applies, reduce or eliminate the amount of
the Annual Maintenance Fee or reduce the portion of the total Insurance Charge
that is deducted as an Administration Charge. Generally, these types of changes
will be based on a reduction to our sales, maintenance or administrative
expenses due to the nature of the individual or group purchasing the Annuity.
Some of the factors we might consider in making such a decision are: (a) the
size and type of group; (b) the number of Annuities purchased by an Owner; (c)
the amount of Purchase Payments or likelihood of additional Purchase Payments;
and/or (d) other transactions where sales, maintenance or administrative
expenses are likely to be reduced. We will not discriminate unfairly between
Annuity purchasers if and when we reduce any fees and charges.
16
OPTIMUM FOUR PROSPECTUS
Purchasing Your Annuity
WHAT ARE OUR REQUIREMENTS FOR PURCHASING THE ANNUITY?
INITIAL PURCHASE PAYMENT: You must make a minimum initial Purchase Payment of
$10,000. However, if you decide to make payments under a systematic investment
or "bank drafting" program, we will accept a lower initial Purchase Payment
provided that, within the first Annuity Year, you make at least $10,000 in total
Purchase Payments.
Where allowed by law, we must approve any initial and additional Purchase
Payments of $1,000,000 or more. We may apply certain limitations and/or
restrictions on the Annuity as a condition of our acceptance, including limiting
the liquidity features or the Death Benefit protection provided under the
Annuity, limiting the right to make additional Purchase Payments, changing the
number of transfers allowable under the Annuity or restricting the Sub-accounts
or Fixed Allocations that are available. Other limitations and/or restrictions
may apply.
Except as noted below, Purchase Payments must be submitted by check drawn
on a U.S. bank, in U.S. dollars, and made payable to American Skandia. Purchase
Payments may also be submitted via 1035 exchange or direct transfer of funds.
Under certain circumstances, Purchase Payments may be transmitted to American
Skandia via wiring funds through your investment professional's broker-dealer
firm. Additional Purchase Payments may also be applied to your Annuity under an
arrangement called "bank drafting" where you authorize us to deduct money
directly from your bank account. We may reject any payment if it is received in
an unacceptable form. Our acceptance of a check is subject to our ability to
collect funds.
AGE RESTRICTIONS: The Owner must be age 85 or under as of the Issue Date
of the Annuity. If the Annuity is owned jointly, the oldest of the Owners must
be age 85 or under on the Issue Date. If the Annuity is owned by an entity, the
Annuitant must be age 85 or under as of the Issue Date. You should consider your
need to access your Account Value and whether the Annuity's liquidity features
will satisfy that need. If you take a distribution prior to age 591/2, you may
be subject to a 10% penalty in addition to ordinary income taxes on any gain.
The availability and level of protection of certain optional benefits may vary
based on the age of the Owner on the Issue Date of the Annuity or the date of
the Owner's death.
OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS: We will ask you to name the
Owner(s), Annuitant and one or more Beneficiaries for your Annuity.
- - Owner: The Owner(s) holds all rights under the Annuity. You may name up to
two Owners in which case all ownership rights are held jointly. Generally
joint owners are required to act jointly, however, if each owner provides
us with an instruction that we find acceptable, we will permit each owner
to act separately. All information and documents that we are required to
send you will be sent to the first named owner. This Annuity does not
provide a right of survivorship. Refer to the Glossary of Terms for a
complete description of the term "Owner."
- - Annuitant: The Annuitant is the person we agree to make annuity payments
to and upon whose life we continue to make such payments. You must name an
Annuitant who is a natural person. We do not accept a designation of joint
Annuitants during the accumulation period. Where allowed by law, you may
name one or more Contingent Annuitants. A Contingent Annuitant will become
the Annuitant if the Annuitant dies before the Annuity Date. Please refer
to the discussion of "Considerations for Contingent Annuitants" in the Tax
Considerations section of the Prospectus.
- - Beneficiary: The Beneficiary is the person(s) or entity you name to
receive the death benefit. Your beneficiary designation must be the exact
name of your beneficiary, not only a reference to the beneficiary's
relationship to you. For example, a designation of "surviving spouse"
would not be acceptable. If no beneficiary is named the death benefit will
be paid to you or your estate.
Your right to make certain designations may be limited if your Annuity is
to be used as an IRA or other "qualified" investment that is given
beneficial tax treatment under the Code. You should seek competent tax
advice on the income, estate and gift tax implications of your
designations.
17
OPTIMUM FOUR PROSPECTUS
Managing Your Annuity
MAY I CHANGE THE OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS?
You may change the Owner, Annuitant and Beneficiary designations by sending us a
request in writing. Upon an ownership change, any automated investment or
withdrawal programs will be canceled. The new owner must submit the applicable
program enrollment if they wish to participate in such a program. Where allowed
by law, such changes will be subject to our acceptance. Some of the changes we
will not accept include, but are not limited to:
- - a new Owner subsequent to the death of the Owner or the first of any joint
Owners to die, except where a spouse-Beneficiary has become the Owner as a
result of an Owner's death;
- - a new Annuitant subsequent to the Annuity Date;
- - for "non-qualified" investments, a new Annuitant prior to the Annuity Date
if the Annuity is owned by an entity; and
- - a change in Beneficiary if the Owner had previously made the designation
irrevocable.
SPOUSAL OWNERS/SPOUSAL BENEFICIARIES
If an Annuity is co-owned by spouses, we will assume that the sole primary
Beneficiary is the surviving spouse that was named as the co-owner unless you
elect an alternative Beneficiary designation. Unless you elect an alternative
Beneficiary designation, upon the death of either spousal Owner, the surviving
spouse may elect to assume ownership of the Annuity instead of taking the Death
Benefit payment. The Death Benefit that would have been payable will be the new
Account Value of the Annuity as of the date of due proof of death and any
required proof of a spousal relationship. As of the date the assumption is
effective, the surviving spouse will have all the rights and benefits that would
be available under the Annuity to a new purchaser of the same attained age. For
purposes of determining any future Death Benefit for the beneficiary of the
surviving spouse, the new Account Value will be considered as the initial
Purchase Payment. No CDSC will apply to the new Account Value. However, any
additional Purchase Payments applied after the date the assumption is effective
will be subject to all provisions of the Annuity, including the CDSC when
applicable.
SPOUSAL CONTINGENT ANNUITANT
If the Annuity is owned by an entity and the surviving spouse is named as a
Contingent Annuitant, upon the death of the Annuitant, the surviving spouse that
was named as the Contingent Annuitant will become the Annuitant. NO DEATH
BENEFIT IS PAYABLE UPON THE DEATH OF THE ANNUITANT. However, the Account Value
of the Annuity as of the date of due proof of death of the Annuitant (and any
required proof of the spousal relationship) will reflect the amount that would
have been payable had a Death Benefit been paid.
MAY I RETURN THE ANNUITY IF I CHANGE MY MIND?
If after purchasing your Annuity you change your mind and decide that you do not
want it, you may return it to us within a certain period of time known as a
right to cancel period. This is often referred to as a "free-look." Depending on
the state in which you purchased your Annuity and, in some states, if you
purchased the Annuity as a replacement for a prior contract, the right to cancel
period may be ten (10) days, twenty-one (21) days or longer, measured from the
time that you received your Annuity. If you return your Annuity during the
applicable period, we will refund your current Account Value plus any tax charge
deducted and, depending on your state's requirements, any applicable insurance
charges deducted. The amount returned to you may be higher or lower than the
original Purchase Payment(s) applied during the right to cancel period. Where
required by law, we will return your Purchase Payment(s) or the greater of your
current Account Value and the amount of your Purchase Payment(s) applied during
the right to cancel period.
MAY I MAKE ADDITIONAL PURCHASE PAYMENTS?
The minimum amount that we accept as an additional Purchase Payment is $100
unless you participate in American Skandia's Systematic Investment Plan or a
periodic purchase payment program. Unless you participate in an asset allocation
program, or unless you have provided us with other specific allocation
instructions for one, more than one, or all subsequent purchase payments, we
will allocate any additional Purchase Payments you make according to your
initial purchase payment allocation instructions. If you so instruct us, we will
allocate subsequent purchase payments according to any new allocation
instructions. Purchase Payments made while you participate in an asset
allocation program will be allocated in accordance with such program. Additional
Purchase Payments may be paid at any time before the Annuity Date.
MAY I MAKE SCHEDULED PAYMENTS DIRECTLY FROM MY BANK ACCOUNT?
You can make additional Purchase Payments to your Annuity by authorizing us to
deduct money directly from your bank account and applying it to your Annuity.
This type of program is often called "bank drafting". We call our bank drafting
program "American Skandia's Systematic Investment Plan." Purchase Payments made
through bank drafting may only be allocated to the variable investment options
when applied. Bank drafting allows you to invest in your Annuity with a lower
initial Purchase Payment, as long as you authorize payments that will equal at
least $10,000 during the first 12 months of your Annuity. We may suspend or
cancel bank drafting privileges if sufficient funds are not available from the
applicable financial institution on any date that a transaction is scheduled to
occur.
18
OPTIMUM FOUR PROSPECTUS
MAY I MAKE PURCHASE PAYMENTS THROUGH A SALARY REDUCTION PROGRAM?
These types of programs are only available with certain types of qualified
investments. If your employer sponsors such a program, we may agree to accept
periodic Purchase Payments through a salary reduction program as long as the
allocations are made only to variable investment options and the periodic
Purchase Payments received in the first year total at least $10,000.
19
OPTIMUM FOUR PROSPECTUS
Managing Your Account Value
HOW AND WHEN ARE PURCHASE PAYMENTS INVESTED?
(See "Valuing Your Investment" for a description of our procedure for pricing
initial and subsequent Purchase Payments.)
INITIAL PURCHASE PAYMENT: Once we accept your application, we invest your
net Purchase Payment in the Annuity. The net Purchase Payment is your initial
Purchase Payment minus any tax charges that may apply. On your application we
ask you to provide us with instructions for allocating your Account Value. You
can allocate Account Value to one or more variable investment options or Fixed
Allocations.
SUBSEQUENT PURCHASE PAYMENTS: Unless you participate in an asset
allocation program, or unless you have provided us with other specific
allocation instructions for one, more than one, or all subsequent Purchase
Payments, we will allocate any additional Purchase Payments you make according
to your initial purchase payment allocation instructions. If you so instruct us,
we will allocate subsequent Purchase Payments according to any new allocation
instructions. Unless you tell us otherwise, Purchase Payments made while you
participate in an asset allocation program will be allocated in accordance with
such program.
HOW DO I RECEIVE A LOYALTY CREDIT?
For annuities issued on or after June 20, 2005 (subject to state availability),
we apply a Loyalty Credit to your Annuity's Account Value at the end of your
fifth Annuity Year ("fifth Annuity Anniversary"). The Loyalty Credit is equal to
2.25% of total Purchase Payments made during the first four Annuity years less
the cumulative amount of withdrawals made (including the deduction of any CDSC
amounts) through the fifth Annuity Anniversary. If the total Purchase Payments
made during the first four Annuity Years is less than the cumulative amount of
withdrawals made on or before the fifth Annuity Anniversary, no Loyalty Credit
will be applied to your Annuity. Also, no Loyalty Credit will be applied to your
Annuity if your Account Value is zero on the fifth Annuity Anniversary. This
would include any situation where the Annuity is still in force due to the fact
that payments are being made under an optional benefit such as Lifetime Five or
the Guaranteed Minimum Withdrawal Benefit. In addition, no Loyalty Credit will
be applied to your Annuity if before the fifth Annuity Anniversary: (i) you have
surrendered your Annuity; (ii) you have annuitized your Annuity; (iii) your
beneficiary has elected our Beneficiary Continuation Option; or (iv) we have
received due proof of your death (and there has been no spousal continuation
election made). If your spouse continues the contract under our spousal
continuance option, we will apply the Loyalty Credit to your Annuity only on the
fifth Annuity Anniversary measured from the date that we originally issued you
the Annuity. Since the Loyalty Credit is applied to the Account Value only, any
guarantees that are not based on Account Value will not reflect the Loyalty
Credit. Similarly, guarantees that are made against a loss in Account Value will
not be triggered in certain very limited circumstances where they otherwise
would have been, had no Loyalty Credit been applied to the Account Value.
HOW ARE LOYALTY CREDITS APPLIED TO MY ACCOUNT VALUE?
Any Loyalty Credit that is allocated to your Account Value on the fifth Annuity
Anniversary will be allocated to the Fixed Allocations and Variable Investment
Options in the same percentages as Purchase Payments are then being allocated to
your Annuity.
Example of Applying the Loyalty Credit
Assume you make an initial Purchase Payment of $10,000. During contract year
four (i.e., prior to the fourth Annuity Anniversary) you make an additional
$10,000 Purchase Payment. During the early part of Annuity year five (i.e.,
prior to the fifth Annuity Anniversary) you make a $10,000 Purchase Payment and
later in the year make a withdrawal of $5,000. The Loyalty Credit that we will
apply to your Annuity on the fifth Annuity Anniversary is equal to 2.25% of
$15,000 (this represents the $20,000 of Purchase Payments made during the first
four Annuity Years minus the $5,000 withdrawal made in the fifth Annuity Year.
The computation disregards the additional $10,000 Purchase Payment made in the
fifth Annuity Year.) Therefore, the Loyalty Credit amount would be equal to
$337.50.
ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?
During the accumulation period you may transfer Account Value between investment
options. Transfers are not subject to taxation on any gain. We may require a
minimum of $500 in each Sub-account you allocate Account Value to at the time of
any allocation or transfer. If you request a transfer and, as a result of the
transfer, there would be less than $500 in the Sub-account, we may transfer the
remaining Account Value in the Sub-account pro rata to the other investment
options to which you transferred.
We may impose specific restrictions on financial transactions (including
transfer requests) for certain Portfolios based on the Portfolio's investment
and/or transfer restrictions. We
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OPTIMUM FOUR PROSPECTUS
may do so to conform to any present or future restriction that is imposed by any
portfolio available under this Annuity.
Currently, we charge $10.00 for each transfer after the twentieth (20th)
in each Annuity Year. Transfers made as part of a dollar cost averaging,
automatic rebalancing or asset allocation program do not count toward the twenty
free transfer limit. Renewals or transfers of Account Value from a Fixed
Allocation at the end of its Guarantee Period are not subject to the transfer
charge. We may reduce the number of free transfers allowable each Annuity Year
(subject to a minimum of eight) without charging a Transfer Fee. We may also
increase the Transfer Fee that we charge to $15.00 for each transfer after the
number of free transfers has been used up.
Once you have made 20 transfers among the Sub-accounts during an Annuity
Year, we will accept any additional transfer request during that year only if
the request is submitted to us in writing with an original signature and
otherwise is in good order. For purposes of this 20 transfer limit, we (i) do
not view a facsimile transmission as a "writing", (ii) will treat multiple
transfer requests submitted on the same business day as a single transfer, and
(iii) do not count any transfer that solely involves Sub-accounts corresponding
to the AST Money Market Portfolio, or any transfer that involves one of our
systematic programs, such as asset allocation and automated withdrawals.
Frequent transfers among Sub-accounts in response to short-term
fluctuations in markets, sometimes called "market timing," can make it very
difficult for a Portfolio manager to manage a Portfolio's investments. Frequent
transfers may cause the Portfolio to hold more cash than otherwise necessary,
disrupt management strategies, increase transaction costs, or affect
performance.
In light of the risks posed to Owners and other investors by frequent
transfers, we reserve the right to limit the number of transfers in any Annuity
Year for all existing or new Owners and to take the other actions discussed
below. We also reserve the right to limit the number of transfers in any Annuity
Year or to refuse any transfer request for an Owner or certain Owners if: (a) we
believe that excessive transfer activity (as we define it) or a specific
transfer request or group of transfer requests may have a detrimental effect on
Unit Values or the share prices of the Portfolios; or (b) we are informed by a
Portfolio (e.g., by the Portfolio's portfolio manager) that the purchase or
redemption of shares in the Portfolio must be restricted because the Portfolio
believes the transfer activity to which such purchase and redemption relates
would have a detrimental effect on the share prices of the affected Portfolio.
Without limiting the above, the most likely scenario where either of the above
could occur would be if the aggregate amount of a trade or trades represented a
relatively large proportion of the total assets of a particular Portfolio. In
furtherance of our general authority to restrict transfers as described above,
and without limiting other actions we may take in the future, we have adopted
the following specific restrictions:
- - With respect to each Sub-account (other than the AST Money Market
Sub-account), we track amounts exceeding a certain dollar threshold that
were transferred into the Sub-account. If you transfer such amount into a
particular Sub-account, and within 30 calendar days thereafter transfer
(the "Transfer Out") all or a portion of that amount into another
Sub-account, then upon the Transfer Out, the former Sub-account becomes
restricted (the "Restricted Sub-account"). Specifically, we will not
permit subsequent transfers into the Restricted Sub-account for 90
calendar days after the Transfer Out if the Restricted Sub-account invests
in a non-international Portfolio, or 180 calendar days after the Transfer
Out if the Restricted Sub-account invests in an international Portfolio.
For purposes of this rule, we (i) do not count transfers made in
connection with one of our systematic programs, such as asset allocation
and automated withdrawals; (ii) do not count any transfer that solely
involves Sub-accounts corresponding to any ProFund Portfolio and/or the
AST Money Market Portfolio; and (iii) do not categorize as a transfer the
first transfer that you make after the Issue Date, if you make that
transfer within 30 calendar days after the Issue Date. Even if an amount
becomes restricted under the foregoing rules, you are still free to redeem
the amount from your Annuity at any time.
- - We reserve the right to effect exchanges on a delayed basis for all
contracts. That is, we may price an exchange involving the Sub-accounts on
the Valuation Day subsequent to the Valuation Day on which the exchange
request was received. Before implementing such a practice, we would issue
a separate written notice to Owners that explains the practice in detail.
- - If we deny one or more transfer requests under the foregoing rules, we
will inform you or your investment professional promptly of the
circumstances concerning the denial.
- - Contract owners in New York who purchased their contracts prior to March
15, 2004 are not subject to the specific restrictions outlined in bulleted
paragraphs immediately above. In addition, there are contract owners of
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OPTIMUM FOUR PROSPECTUS
Managing Your Account Value continued
different variable annuity contracts that are funded through the same
Separate Account that are not subject to the above-referenced transfer
restrictions and, therefore, might make more numerous and frequent
transfers than contract owners who are subject to such limitations.
Finally there are contract owners of other variable annuity contracts or
variable life contracts that are issued by American Skandia as well as
other insurance companies that have the same underlying mutual fund
portfolios available to them. Since some contract owners are not subject
to the same transfer restrictions, unfavorable consequences associated
with such frequent trading within the underlying mutual fund (e.g.,
greater portfolio turnover, higher transaction costs, or performance or
tax issues) may affect all contract owners. Similarly, while contracts
managed by an investment professional or third party investment advisor
are subject to the restrictions on transfers between investment options
that are discussed above, if the advisor manages a number of contracts in
the same fashion unfavorable consequences may be associated with
management activity since it may involve the movement of a substantial
portion of an underlying mutual fund assets which may affect all contract
owners invested in the affected options. Apart from jurisdiction-specific
and contract differences in transfer restrictions, we will apply these
rules uniformly (including contracts managed by an investment professional
or third party investment advisor), and will not waive a transfer
restriction for any contract owner.
ALTHOUGH OUR TRANSFER RESTRICTIONS ARE DESIGNED TO PREVENT EXCESSIVE
TRANSFERS, THEY ARE NOT CAPABLE OF PREVENTING EVERY POTENTIAL OCCURRENCE OF
EXCESSIVE TRANSFER ACTIVITY.
DO YOU OFFER DOLLAR COST AVERAGING?
Yes. We offer Dollar Cost Averaging during the accumulation period. Dollar Cost
Averaging allows you to systematically transfer an amount periodically from one
investment option to one or more other investment options. You can choose to
transfer earnings only, principal plus earnings or a flat dollar amount. You may
elect a Dollar Cost Averaging program that transfers amounts monthly, quarterly,
semi-annually, or annually from variable investment options, or a program that
transfers amounts monthly from Fixed Allocations. By investing amounts on a
regular basis instead of investing the total amount at one time, Dollar Cost
Averaging may decrease the effect of market fluctuation on the investment of
your purchase payment. This may result in a lower average cost of units over
time. However, there is no guarantee that Dollar Cost Averaging will result in a
profit or protect against a loss in a declining market. There is no minimum
Account Value required to enroll in a Dollar Cost Averaging program and we do
not deduct a charge for participating in a Dollar Cost Averaging program.
You can Dollar Cost Average from variable investment options or Fixed
Allocations. Dollar Cost Averaging from Fixed Allocations is subject to a number
of rules that include, but are not limited to the following:
- - You may only use Fixed Allocations with Guarantee Periods of 1, 2 or 3
years.
- - You may only Dollar Cost Average earnings or principal plus earnings. If
transferring principal plus earnings, the program must be designed to last
the entire Guarantee Period for the Fixed Allocation.
- - Dollar Cost Averaging transfers from Fixed Allocations are not subject to
a Market Value Adjustment.
NOTE: When a Dollar Cost Averaging program is established from a Fixed
Allocation, the fixed rate of interest we credit to your Account Value is
applied to a declining balance due to the transfers of Account Value to the
Sub-accounts during the Guarantee Period. This will reduce the effective rate of
return on the Fixed Allocation over the Guarantee Period.
AMERICAN SKANDIA MAY OFFER FIXED ALLOCATIONS WITH GUARANTEE PERIODS OF 6
MONTHS OR 12 MONTHS EXCLUSIVELY FOR USE WITH A DOLLAR COST AVERAGING PROGRAM
("DCA FIXED ALLOCATIONS"). DCA FIXED ALLOCATIONS ARE DESIGNED TO
AUTOMATICALLY TRANSFER ACCOUNT VALUE IN EITHER 6 OR 12 PAYMENTS UNDER A
DOLLAR COST AVERAGING PROGRAM. DOLLAR COST AVERAGING TRANSFERS WILL BEGIN ON
THE DAY FOLLOWING THE DATE THE DCA FIXED ALLOCATION IS ESTABLISHED AND EACH
MONTH FOLLOWING UNTIL THE ENTIRE PRINCIPAL AMOUNT PLUS EARNINGS IS
TRANSFERRED. DCA FIXED ALLOCATIONS MAY ONLY BE ESTABLISHED WITH YOUR INITIAL
PURCHASE PAYMENT OR ADDITIONAL PURCHASE PAYMENTS. YOU MAY NOT TRANSFER
EXISTING ACCOUNT VALUE TO A DCA FIXED ALLOCATION. WE RESERVE THE RIGHT TO
TERMINATE OFFERING THESE SPECIAL PURPOSE FIXED ALLOCATIONS AT ANY TIME.
Account Value allocated to the DCA Fixed Allocation will be transferred to
the Sub-accounts you choose under the Dollar Cost Averaging program. If you
terminate the Dollar Cost Averaging program before the entire principal amount
plus earnings has been transferred to the Sub-account(s), you must transfer all
remaining Account Value to any other investment option. Unless you provide
alternate instructions at the time you terminate the Dollar Cost Averaging
program, Account Value will be transferred
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OPTIMUM FOUR PROSPECTUS
to the AST Money Market Sub-account. Transfers from Fixed Allocations as part of
a Dollar Cost Averaging program are not subject to a Market Value Adjustment.
However, a Market Value Adjustment will apply if you terminate the Dollar Cost
Averaging program before the entire principal amount plus earnings has been
transferred to the Sub-account(s).
The Dollar Cost Averaging program is not available if you elect the
Guaranteed Return Option Plus(SM), the Guaranteed Return Option or the automatic
rebalancing programs when it involves transfers out of the Fixed Allocations and
is also not available when you elect an asset allocation program.
DO YOU OFFER ANY AUTOMATIC REBALANCING PROGRAMS?
Yes. During the accumulation period, we offer automatic rebalancing among the
variable investment options you choose. You can choose to have your Account
Value rebalanced monthly, quarterly, semi-annually, or annually. On the
appropriate date, the variable investment options you chose are rebalanced to
the allocation percentages you requested. With automatic rebalancing, we
transfer the appropriate amount from the " overweighted" Sub-accounts to the
"underweighted" Sub-accounts to return your allocations to the percentages you
request. For example, over time the performance of the variable investment
options will differ, causing your percentage allocations to shift. Any transfer
to or from any variable investment option that is not part of your automatic
rebalancing program, will be made, however that variable investment option will
not become part of your rebalancing program unless we receive instructions from
you indicating that you would like such option to become part of the program.
There is no minimum Account Value required to enroll in automatic
rebalancing. All rebalancing transfers as part of an automatic rebalancing
program are not included when counting the number of transfers each year toward
the maximum number of free transfers. We do not deduct a charge for
participating in an automatic rebalancing program. Participation in the
automatic rebalancing program may be restricted if you are enrolled in certain
other optional programs.
ARE ANY ASSET ALLOCATION PROGRAMS AVAILABLE?
Yes. Certain "static asset allocation programs" are available for use with the
Annuity. These programs are considered static because once you have selected a
model portfolio, the Sub-accounts and the percentage of contract value allocated
to each Sub-account cannot be changed without your consent. The programs are
available at no additional charge. Under these programs, the Sub-account for
each asset class in each model portfolio is designated for you. Under the
programs, the values in the Sub-accounts will be rebalanced periodically back to
the indicated percentages for the applicable asset class within the model
portfolio that you have selected. For more information on the asset allocation
programs, see the Appendix entitled "Additional Information on the Asset
Allocation Programs."
Asset allocation is a sophisticated method of diversification, which
allocates assets among asset classes in order to manage investment risk and
enhance returns over the long term. However, asset allocation does not guarantee
a profit or protect against a loss. No personalized investment advice is
provided in connection with the asset allocation programs and you should not
rely on these programs as providing individualized investment recommendations to
you. The asset allocation programs do not guarantee better investment results.
We reserve the right to terminate or change the asset allocation programs at any
time. You should consult with your Investment Professional before electing any
asset allocation program.
DO YOU OFFER PROGRAMS DESIGNED TO GUARANTEE A "RETURN OF PREMIUM" AT A FUTURE
DATE?
Yes. We offer two different programs for investors who wish to invest in the
variable investment options but also wish to protect their principal, as of a
specific date in the future. They are the Balanced Investment Program and the
Guaranteed Return Option Plus(SM). (The Guaranteed Return Option Plus(SM) (GRO
Plus(SM) is not available in all states. In some states where GRO Plus is not
available we offer the Guaranteed Return Option (GRO).) Both the Balanced
Investment Program and GRO Plus allow you to allocate a portion of your Account
Value to the available variable investment options while ensuring that your
Account Value will at least equal your contributions adjusted for withdrawals
and transfers on a specified date. Under GRO Plus, Account Value is allocated to
and maintained in Fixed Allocations to the extent we, in our sole discretion,
deem it is necessary to support our guarantee under the program. This differs
from the Balanced Investment Program where a set amount is allocated to a Fixed
Allocation regardless of the performance of the underlying Sub-accounts or the
interest rate environment after the amount is allocated to a Fixed Allocation.
Generally, more of your Account Value will be allocated to the variable
investment options under the GRO Plus program than under the Balanced Investment
Pro-
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OPTIMUM FOUR PROSPECTUS
Managing Your Account Value continued
gram (although in periods of poor market performance, low interest rates and/or
as the option progresses to its maturity date, this may not be the case). You
may not want to use either of these programs if you expect to begin taking
annuity payments before the program would be completed. In addition, as with
most return of premium programs, amounts that are available to allocate to the
variable investment options may be substantially less than they would be if you
did not elect a return of premium program. This means that, if investment
experience in the variable investment options were positive, your Account Value
would grow at a slower rate than if you did not elect a return of premium
program and allocated all of your Account Value to the variable investment
options.
Balanced Investment Program
We offer a balanced investment program where a portion of your Account Value is
allocated to a Fixed Allocation and the remaining Account Value is allocated to
the variable investment options that you select. When you enroll in the Balanced
Investment Program, you choose the duration that you wish the program to last.
This determines the duration of the Guarantee Period for the Fixed Allocation.
Based on the fixed rate for the Guarantee Period chosen, we calculate the
portion of your Account Value that must be allocated to the Fixed Allocation to
grow to a specific "principal amount" (such as your initial Purchase Payment).
We determine the amount based on the rates then in effect for the Guarantee
Period you choose. If you continue the program until the end of the Guarantee
Period and make no withdrawals or transfers, at the end of the Guarantee Period,
the Fixed Allocation will have grown to equal the "principal amount".
Withdrawals or transfers from the Fixed Allocation before the end of the
Guarantee Period will terminate the program and may be subject to a Market Value
Adjustment. You can transfer the Account Value that is not allocated to the
Fixed Allocation between any of the Sub-accounts available under the Annuity.
Account Value you allocate to the variable investment options is subject to
market fluctuations and may increase or decrease in value. We do not deduct a
charge for participating in the Balanced Investment Program.
Example
Assume you invest $100,000. You choose a 10-year program and allocate a
portion of your Account Value to a Fixed Allocation with a 10-year
Guarantee Period. The rate for the 10-year Guarantee Period is 2.50%*.
Based on the fixed interest rate for the Guarantee Period chosen, the
factor is 0.781198 for determining how much of your Account Value will be
allocated to the Fixed Allocation. That means that $78,120 will be
allocated to the Fixed Allocation and the remaining Account Value
($21,880) will be allocated to the variable investment options. Assuming
that you do not make any withdrawals or transfers from the Fixed
Allocation, it will grow to $100,000 at the end of the Guarantee Period.
Of course we cannot predict the value of the remaining Account Value that
was allocated to the variable investment options.
THE GUARANTEED RETURN OPTION PLUS(SM) (GRO PLUS(SM)) guarantees that,
after a seven-year period following commencement of the program ("maturity
date") and on each anniversary of the maturity date thereafter, your Account
Value will not be less than the Account Value on the effective date of the
program. The program also offers you the option to elect a second, enhanced
guarantee amount at a higher Account Value subject to a separate maturity period
(and its anniversaries). The GRO Plus(SM) program may be appropriate if you wish
to protect a principal amount (called the "Protected Principal Value") against
market downturns as of a specific date in the future, but also wish to exercise
control of your available Account Value among the variable investment options to
participate in market experience. Under the GRO Plus(SM) program, you give us
the right to allocate amounts to Fixed Allocations as needed to support the
guarantees provided. The available Account Value is the amount not allocated to
the Fixed Allocations to support the guarantees provided. There is a fee
associated with this program. See "Living Benefit Programs," later in this
Prospectus, for more information about this program.
MAY I GIVE MY INVESTMENT PROFESSIONAL PERMISSION TO MANAGE MY ACCOUNT VALUE?
Yes. Your investment professional may direct the allocation of your Account
Value and request financial transactions between investment options while you
are living, subject to our rules and unless you tell us otherwise. IF YOUR
INVESTMENT PROFESSIONAL HAS THIS AUTHORITY, WE DEEM THAT ALL TRANSACTIONS THAT
ARE DIRECTED BY YOUR INVESTMENT PROFESSIONAL WITH RESPECT TO YOUR ANNUITY HAVE
BEEN AUTHORIZED BY YOU. You must contact us immediately if and when you revoke
such authority. We will not be responsible for acting on instructions
* The rate in this example is hypothetical and may not reflect the current rate
for Guarantee Periods of this duration.
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OPTIMUM FOUR PROSPECTUS
from your investment professional until we receive notification of the
revocation of such person's authority. We may also suspend, cancel or limit
these privileges at any time. We will notify you if we do.
MAY I AUTHORIZE MY THIRD PARTY INVESTMENT ADVISOR TO MANAGE MY ACCOUNT?
Yes. You may engage your own investment advisor to manage your account. These
investment advisors may be firms or persons who also are appointed by us, or
whose affiliated broker-dealers are appointed by us, as authorized sellers of
the Annuity. EVEN IF THIS IS THE CASE, HOWEVER, PLEASE NOTE THAT THE INVESTMENT
ADVISOR YOU ENGAGE TO PROVIDE ADVICE AND/OR MAKE TRANSFERS FOR YOU, IS NOT
ACTING ON OUR BEHALF, BUT RATHER IS ACTING ON YOUR BEHALF. We do not offer
advice about how to allocate your Account Value under any circumstance. As such,
we are not responsible for any recommendations such investment advisors make,
any investment models or asset allocation programs they choose to follow or any
specific transfers they make on your behalf.
Any fee that is charged by your investment advisor is in addition to the
fees and expenses that apply under your Annuity. If you authorize your
investment advisor to withdraw amounts from your Annuity (to the extent
permitted) to pay for the investment advisor's fee, as with any other withdrawal
from your Annuity, you may incur adverse tax consequences, a CDSC and/or a
market value adjustment. Withdrawals to pay your investment advisor generally
will also reduce the level of various living and death benefit guarantees
provided (e.g. the withdrawals will reduce proportionately the Annuity's
guaranteed minimum death benefit.) WE ARE NOT A PARTY TO THE AGREEMENT YOU HAVE
WITH YOUR INVESTMENT ADVISOR AND DO NOT VERIFY THAT AMOUNTS WITHDRAWN FROM YOUR
ANNUITY, INCLUDING AMOUNTS WITHDRAWN TO PAY FOR THE INVESTMENT ADVISOR'S FEE,
ARE WITHIN THE TERMS OF YOUR AGREEMENT WITH YOUR INVESTMENT ADVISOR. You will,
however, receive confirmations of transactions that affect your Annuity. If your
investment advisor has also acted as your investment professional with respect
to the sale of your Annuity, he or she may be receiving compensation for
services provided both as an investment professional and investment advisor.
Alternatively, the investment advisor may compensate the investment professional
from whom you purchased your annuity for the referral that led you to enter into
your investment advisory relationship with the investment advisor. If you are
interested in the details about the compensation that your investment advisor
and/or your investment professional receive in connection with your Annuity, you
should ask them for more details.
We or an affiliate of ours may provide administrative support to licensed,
registered investment professionals or investment advisors who you authorize to
make financial transactions on your behalf. We may require investment
professionals or investment advisors, who are authorized by multiple contract
owners to make financial transactions, to enter into an administrative agreement
with American Skandia as a condition of our accepting transactions on your
behalf. The administrative agreement may impose limitations on the investment
professional's or investment advisor's ability to request financial transactions
on your behalf. These limitations are intended to minimize the detrimental
impact of an investment professional who is in a position to transfer large
amounts of money for multiple clients in a particular Portfolio or type of
portfolio or to comply with specific restrictions or limitations imposed by a
Portfolio(s) of American Skandia. Contracts managed by your investment
professional also are subject to the restrictions on transfers between
investment options that are discussed in the section entitled '"ARE THERE
RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?". Since
transfer activity under contracts managed by an investment professional or third
party investment advisor may result in unfavorable consequences to all contract
owners invested in the affected options we reserve the right to limit the
investment options available to a particular Owner whose contract is managed by
the advisor or impose other transfer restrictions we deem necessary. The
administrative agreement may limit the available investment options, require
advance notice of large transactions, or impose other trading limitations on
your investment professional. Your investment professional will be informed of
all such restrictions on an ongoing basis. We may also require that your
investment professional transmit all financial transactions using the electronic
trading functionality available through our Internet website
(www.americanskandia.prudential.com). LIMITATIONS THAT WE MAY IMPOSE ON YOUR
INVESTMENT PROFESSIONAL OR INVESTMENT ADVISOR UNDER THE TERMS OF THE
ADMINISTRATIVE AGREEMENT DO NOT APPLY TO FINANCIAL TRANSACTIONS REQUESTED BY AN
OWNER ON THEIR OWN BEHALF, EXCEPT AS OTHERWISE DESCRIBED IN THIS PROSPECTUS.
HOW DO THE FIXED ALLOCATIONS WORK?
We credit the fixed interest rate to the Fixed Allocation throughout a set
period of time called a "Guarantee Period."
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OPTIMUM FOUR PROSPECTUS
Managing Your Account Value continued
Fixed Allocations currently are offered with Guarantee Periods from 1 to 10
years. We may make Fixed Allocations of different durations available in the
future, including Fixed Allocations offered exclusively for use with certain
optional investment programs. Fixed Allocations may not be available in all
states and may not always be available for all Guarantee Periods depending on
market factors and other considerations.
The interest rate credited to a Fixed Allocation is the rate in effect
when the Guarantee Period begins and does not change during the Guarantee
Period. The rates are an effective annual rate of interest. We determine the
interest rates for the various Guarantee Periods. At the time that we confirm
your Fixed Allocation, we will advise you of the interest rate in effect and the
date your Fixed Allocation matures. We may change the rates we credit new Fixed
Allocations at any time. Any change in interest rate does not affect Fixed
Allocations that were in effect before the date of the change. To inquire as to
the current rates for Fixed Allocations, please call 1-800-752-6342.
A Guarantee Period for a Fixed Allocation begins:
- - when all or part of a net Purchase Payment is allocated to that particular
Guarantee Period;
- - upon transfer of any of your Account Value to a Fixed Allocation for that
particular Guarantee Period; or
- - when you "renew" a Fixed Allocation by electing a new Guarantee Period.
To the extent permitted by law, we may establish different interest rates
for Fixed Allocations offered to a class of Owners who choose to participate in
various optional investment programs we make available. This may include, but is
not limited to, Owners who elect to use Fixed Allocations under a dollar cost
averaging program (see "Do You Offer Dollar Cost Averaging?") or a balanced
investment program (see "Do you offer programs designed to guarantee a "Return
of Premium" at a future date?"). The interest rate credited to Fixed Allocations
offered to this class of purchasers may be different than those offered to other
purchasers who choose the same Guarantee Period but who do not participate in an
optional investment program. Any such program is at our sole discretion.
AMERICAN SKANDIA MAY OFFER FIXED ALLOCATIONS WITH GUARANTEE PERIODS OF 3
MONTHS OR 6 MONTHS EXCLUSIVELY FOR USE AS A SHORT-TERM FIXED ALLOCATION
("SHORT-TERM FIXED ALLOCATIONS"). SHORT-TERM FIXED ALLOCATIONS MAY ONLY BE
ESTABLISHED WITH YOUR INITIAL PURCHASE PAYMENT OR ADDITIONAL PURCHASE
PAYMENTS. YOU MAY NOT TRANSFER EXISTING ACCOUNT VALUE TO A SHORT-TERM FIXED
ALLOCATION. WE RESERVE THE RIGHT TO TERMINATE OFFERING THESE SPECIAL PURPOSE
FIXED ALLOCATIONS AT ANY TIME.
On the Maturity Date of the Short-term Fixed Allocation, the Account Value
will be transferred to the Sub-account(s) you choose at the inception of the
program. If no instructions are provided, such Account Value will be transferred
to the AST Money Market Sub-account. Short-term Fixed Allocations may not be
renewed on the Maturity Date. If you surrender the Annuity or transfer any
Account Value from the Short-term Fixed Allocation to any other investment
option before the end of the Guarantee Period, a Market Value Adjustment will
apply.
HOW DO YOU DETERMINE RATES FOR FIXED ALLOCATIONS?
We do not have a specific formula for determining the fixed interest rates for
Fixed Allocations. Generally the interest rates we offer for Fixed Allocations
will reflect the investment returns available on the types of investments we
make to support our fixed rate guarantees. These investment types may include
cash, debt securities guaranteed by the United States government and its
agencies and instrumentalities, money market instruments, corporate debt
obligations of different durations, private placements, asset-backed obligations
and municipal bonds. In determining rates we also consider factors such as the
length of the Guarantee Period for the Fixed Allocation, regulatory and tax
requirements, liquidity of the markets for the type of investments we make,
commissions, administrative and investment expenses, our insurance risks in
relation to the Fixed Allocations, general economic trends and competition.
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OPTIMUM FOUR PROSPECTUS
Some of these considerations are similar to those we consider in determining the
Insurance Charge that we deduct from Account Value allocated to the
Sub-accounts.
We will credit interest on a new Fixed Allocation in an existing Annuity
at a rate not less than the rate we are then crediting to Fixed Allocations for
the same Guarantee Period selected by new Annuity purchasers in the same class.
The interest rate we credit for a Fixed Allocation is subject to a
minimum. Please refer to the Statement of Additional Information. In certain
states the interest rate may be subject to a minimum under state law or
regulation.
HOW DOES THE MARKET VALUE ADJUSTMENT WORK?
If you transfer or withdraw Account Value from a Fixed Allocation more than 30
days before the end of its Guarantee Period, we will adjust the value of your
investment based on a formula, called a "Market Value Adjustment" or "MVA". The
amount of any Market Value Adjustment can be either positive or negative,
depending on the movement of a combination of Strip Yields on Strips and an
Option-adjusted Spread (each as defined below) between the time that you
purchase the Fixed Allocation and the time you make a transfer or withdrawal.
The Market Value Adjustment formula compares the combination of Strip Yields for
Strips and the Option-adjusted Spreads as of the date the Guarantee Period began
with the combination of Strip Yields for Strips and the Option-adjusted Spreads
as of the date the MVA is being calculated. In certain states the amount of any
Market Value Adjustment may be limited under state law or regulation. If your
Annuity is governed by the laws of that state, any Market Value Adjustment that
applies will be subject to our rules for complying with such law or regulation.
- - "Strips" are a form of security where ownership of the interest portion of
United States Treasury securities are separated from ownership of the
underlying principal amount or corpus.
- - "Strip Yields" are the yields payable on coupon Strips of United States
Treasury securities.
- - "Option-adjusted Spread" is the difference between the yields on corporate
debt securities (adjusted to disregard options on such securities) and
government debt securities of comparable duration. We currently use the
Merrill Lynch 1 to 10 year Investment Grade Corporate Bond Index of
Option-adjusted Spreads.
MVA Formula
The MVA formula is applied separately to each Fixed Allocation to determine the
Account Value of the Fixed Allocation on a particular date. The formula is as
follows:
[(1+I) / (1+J+0.0010)]N/365
where:
I is the Strip Yield as of the start date of the Guarantee Period for
coupon Strips maturing at the end of the applicable Guarantee Period plus
the Option-adjusted Spread. If there are no Strips maturing at that time,
we will 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 being applied for
coupon Strips maturing at the end of the applicable Guarantee Period plus
the Option-adjusted Spread. If there are no Strips maturing at that time,
we will 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 the original Guarantee Period.
If you surrender your Annuity under the right to cancel provision, the MVA
formula is
[(1 + I)/(1 + J)]N/365
MVA Examples
The following hypothetical examples show the effect of the MVA in determining
Account Value. Assume the following:
- - You allocate $50,000 into a Fixed Allocation (we refer to this as the
"Allocation Date" in these examples) with a Guarantee Period of 5 years
(we refer to this as the "Maturity Date" in these examples).
- - The Strip Yields for coupon Strips beginning on the Allocation Date and
maturing on the Maturity Date plus the Option-adjusted Spread is 5.50% (I
= 5.50%).
- - You make no withdrawals or transfers until you decide to withdraw the
entire Fixed Allocation after exactly three (3) years, at which point 730
days remain before the Maturity Date (N = 730).
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OPTIMUM FOUR PROSPECTUS
Managing Your Account Value continued
Example of Positive MVA
Assume that at the time you request the withdrawal, the Strip Yields for Strips
maturing on the Maturity Date plus the Option-adjusted Spread is 4.00% (J =
4.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0010)]N/365 =
[1.055/1.041]2 = 1.027078
Interim Value = $57,881.25
Account Value after MVA = Interim Value x MVA
Factor = $59,448.56
Example of Negative MVA
Assume that at the time you request the withdrawal, the Strip Yields for Strips
maturing on the Maturity Date plus the Option-adjusted Spread is 7.00% (J =
7.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0010)]N/365 =
[1.055/1.071)]2 = 0.970345
Interim Value = $57,881.25
Account Value after MVA = Interim Value X MVA
Factor = $56,164.78.
WHAT HAPPENS WHEN MY GUARANTEE PERIOD MATURES?
The "Maturity Date" for a Fixed Allocation is the last day of the Guarantee
Period. Before the Maturity Date, you may choose to renew the Fixed Allocation
for a new Guarantee Period of the same or different length or you may transfer
all or part of that Fixed Allocation's Account Value to another Fixed Allocation
or to one or more Sub-accounts. We will not charge a MVA if you choose to renew
a Fixed Allocation on its Maturity Date or transfer the Account Value to one or
more variable investment options. We will notify you before the end of the
Guarantee Period about the fixed interest rates that we are currently crediting
to all Fixed Allocations that are being offered. The rates being credited to
Fixed Allocations may change before the Maturity Date.
IF YOU DO NOT SPECIFY HOW YOU WANT A FIXED ALLOCATION TO BE ALLOCATED ON
ITS MATURITY DATE, WE WILL THEN TRANSFER THE ACCOUNT VALUE OF THE FIXED
ALLOCATION TO THE AST MONEY MARKET SUB-ACCOUNT. You can then elect to allocate
the Account Value to any of the Sub-accounts or to a new Fixed Allocation.
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OPTIMUM FOUR PROSPECTUS
Access To Account Value
WHAT TYPES OF DISTRIBUTIONS ARE AVAILABLE TO ME?
During the accumulation period you can access your Account Value through partial
withdrawals, Systematic Withdrawals, and where required for tax purposes,
Minimum Distributions. You can also surrender your Annuity at any time. We may
deduct a portion of the Account Value being withdrawn or surrendered as a CDSC.
The CDSC will be assessed on the amount of Purchase Payments, not on the Account
Value at the time of the withdrawal or surrender. If you surrender your Annuity,
in addition to any CDSC, we may deduct the Annual Maintenance Fee, any Tax
Charge that applies and the charge for any optional benefits. We may also apply
a Market Value Adjustment to any Fixed Allocations being withdrawn or
surrendered. Certain amounts may be available to you each Annuity Year that are
not subject to a CDSC. These are called "Free Withdrawals." In addition, under
certain circumstances, we may waive the CDSC for surrenders made for qualified
medical reasons or for withdrawals made to satisfy Minimum Distribution
requirements. Unless you notify us differently, withdrawals are taken pro-rata
based on the Account Value in the investment options at the time we receive your
withdrawal request. Each of these types of distributions is described more fully
below.
ARE THERE TAX IMPLICATIONS FOR DISTRIBUTIONS?
(For more information, see "Tax Considerations".)
During the Accumulation Period
A distribution during the accumulation period is deemed to come first from any
"gain" in your Annuity and second as a return of your "tax basis", if any.
Distributions from your Annuity are generally subject to ordinary income
taxation on the amount of any investment gain unless the distribution qualifies
as a non-taxable exchange or transfer. If you take a distribution prior to the
taxpayer's age 591/2, you may be subject to a 10% penalty in addition to
ordinary income taxes on any gain. You may wish to consult a professional tax
advisor for advice before requesting a distribution.
During the Annuitization Period
During the annuitization period, a portion of each annuity payment is taxed as
ordinary income at the tax rate you are subject to at the time of the payment.
The Code and regulations have "exclusionary rules" that we use to determine what
portion of each annuity payment should be treated as a return of any tax basis
you have in the Annuity. Once the tax basis in the Annuity has been distributed,
the remaining annuity payments are taxable as ordinary income. The tax basis in
the Annuity may be based on the tax-basis from a prior contract in the case of a
1035 exchange or other qualifying transfer.
CAN I WITHDRAW A PORTION OF MY ANNUITY?
Yes, you can make a withdrawal during the accumulation period.
- - To meet liquidity needs, you can withdraw a limited amount from your
Annuity during each of Annuity Years 1-4 without a CDSC being applied. We
call this the "Free Withdrawal" amount. The Free Withdrawal amount is not
available if you choose to surrender your Annuity. Amounts withdrawn as a
Free Withdrawal do not reduce the amount of CDSC that may apply upon a
subsequent withdrawal or surrender of the Annuity. The minimum Free
Withdrawal you may request is $100.
- - You can also make withdrawals in excess of the Free Withdrawal amount. The
maximum amount will depend on the Annuity's Surrender Value as of the date
we process the withdrawal request. After any partial withdrawal, your
Annuity must have a Surrender Value of at least $1,000, or we may treat
the partial withdrawal request as a request to fully surrender your
Annuity. The minimum partial withdrawal you may request is $100.
When we determine if a CDSC applies to partial withdrawals and Systematic
Withdrawals, we will first determine what, if any, amounts qualify as a Free
Withdrawal. Those amounts are not subject to the CDSC. Partial withdrawals or
Systematic Withdrawals of amounts greater than the maximum Free Withdrawal
amount will be subject to a CDSC.
You may request a withdrawal for an exact dollar amount after deduction of
any CDSC that applies (called a "net withdrawal") or request a gross withdrawal
from which we will deduct any CDSC that applies, resulting in less money being
payable to you than the amount you requested. If you request a net withdrawal,
the amount deducted from your Account Value to pay the CDSC may also be subject
to a CDSC.
Partial withdrawals may also be available following annuitization but only
if you choose certain annuity payment options.
To request the forms necessary to make a withdrawal from your Annuity,
call 1-800-752-6342 or visit our Internet Website at
www.americanskandia.prudential.com.
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OPTIMUM FOUR PROSPECTUS
Access To Account Value continued
HOW MUCH CAN I WITHDRAW AS A FREE WITHDRAWAL? Annuity Year 1-4
The maximum Free Withdrawal amount during each of Annuity Year 1 through Annuity
Year 4 (when a CDSC would otherwise apply to a partial withdrawal or surrender
of your initial Purchase Payments) is 10% of all Purchase Payments. We may apply
a Market Value Adjustment to any Fixed Allocations. Withdrawals of amounts
greater than the maximum Free Withdrawal amount are treated as a withdrawal of
Purchase Payments and will be assessed a CDSC during Annuity Years 1 through 4.
If, during Annuity Years 1 through 4, all Purchase Payments withdrawn are
subject to a CDSC, then any subsequent withdrawals will be withdrawn from any
gain in the Annuity. If you do not make a Free Withdrawal during an Annuity
Year, you are not allowed to carry over the Free Withdrawal amount to the next
Annuity Year.
Annuity Year 5+
After Annuity Year 4, you can surrender your Annuity or make a partial
withdrawal without a CDSC being deducted from the amount being withdrawn.
NOTE: Amounts that you have withdrawn as a Free Withdrawal will not reduce
the amount of any CDSC that we deduct if, during the first four (4) Annuity
Years, you make a partial withdrawal or choose to surrender the Annuity.
Examples
1. Assume you make an initial Purchase Payment of $10,000 and make no
additional Purchase Payments. The maximum Free Withdrawal amount during
each of the first four Annuity Years would be 10% of $10,000, or $1,000.
2. Assume you make an initial Purchase Payment of $10,000 and make an
additional Purchase Payment of $5,000 in Annuity Year 2. The maximum Free
Withdrawal amount during Annuity Year 3 and 4 would be 10% of $15,000, or
$1,500. From Annuity Year 5 and thereafter, you can surrender your Annuity
or make a partial withdrawal without a CDSC being deducted from the amount
being withdrawn.
3. Assume you make an initial Purchase Payment of $10,000 and take a Free
Withdrawal of $500 in Annuity Year 2 and $1,000 in Annuity Year 3. If you
surrender your Annuity in Annuity Year 4, the CDSC will be assessed
against the initial Purchase Payment amount ($10,000), not the amount of
Purchase Payments reduced by the amounts that were withdrawn under the
Free Withdrawal provision.
IS THERE A CHARGE FOR A PARTIAL WITHDRAWAL?
A CDSC may be assessed against a partial withdrawal during the first four (4)
Annuity Years. Whether a CDSC applies and the amount to be charged depends on
whether the partial withdrawal exceeds any Free Withdrawal amount and, if so,
the number of years that have elapsed since the Issue Date of the Annuity.
1. If you request a partial withdrawal, we determine if the amount you
requested is available as a Free Withdrawal (in which case it would not be
subject to a CDSC);
2. If the amount requested exceeds the available Free Withdrawal amount, we
determine if a CDSC will apply to the partial withdrawal based on the
number of years that have elapsed since the Annuity was issued. The
maximum Free Withdrawal amount during each of Annuity Years 1 through 4 is
10% of all Purchase Payments. Withdrawals of amounts greater than the
maximum Free Withdrawal amount are treated as a withdrawal of Purchase
Payments and will be assessed a CDSC. If, during Annuity Years 1 through
4, all Purchase Payments are withdrawn subject to a CDSC, then any
subsequent withdrawals will be withdrawn from any gain in the Annuity.
CAN I MAKE PERIODIC WITHDRAWALS FROM THE ANNUITY DURING THE ACCUMULATION PERIOD?
Yes. We call these "Systematic Withdrawals." You can receive Systematic
Withdrawals of earnings only, principal plus earnings or a flat dollar amount.
Systematic Withdrawals during the first four (4) Annuity Years may be subject to
a CDSC. We will determine whether a CDSC applies and the amount in the same way
as we would for a partial withdrawal.
Systematic Withdrawals can be made from Account Value allocated to the
variable investment options or Fixed Allocations. Generally, Systematic
Withdrawals from Fixed Allocations are limited to earnings accrued after the
program of Systematic Withdrawals begins, or payments of fixed dollar amounts
that do not exceed such earnings. Systematic Withdrawals are available on a
monthly, quarterly, semi-annual or annual basis. The Surrender Value of your
Annuity must be at least $20,000 before we will allow you to begin a program of
Systematic Withdrawals.
The minimum amount for each Systematic Withdrawal is $100. If any
scheduled Systematic Withdrawal is for less than $100 (which may occur under a
program that provides payment of an amount equal to the earnings in the Annuity
for the period requested), we may postpone the withdrawal and add
30
OPTIMUM FOUR PROSPECTUS
the expected amount to the amount that is to be withdrawn on the next scheduled
Systematic Withdrawal.
DO YOU OFFER A PROGRAM FOR WITHDRAWALS UNDER SECTION 72(t) OF THE INTERNAL
REVENUE CODE?
Yes. If your Annuity is used as a funding vehicle for certain retirement plans
that receive special tax treatment under Sections 401, 403(b) or 408 of the
Code, Section 72(t) of the Code may provide an exception to the 10% penalty tax
on distributions made prior to age 591/2 if you elect to receive distributions
as a series of "substantially equal periodic payments". Distributions received
under this provision in any Annuity Year that exceed the maximum amount
available as a free withdrawal will be subject to a CDSC. We may apply a Market
Value Adjustment to any Fixed Allocations. To request a program that complies
with Section 72(t), you must provide us with certain required information in
writing on a form acceptable to us. We may require advance notice to allow us to
calculate the amount of 72(t) withdrawals. The Surrender Value of your Annuity
must be at least $20,000 before we will allow you to begin a program for
withdrawals under Section 72(t). The minimum amount for any such withdrawal is
$100.
You may also annuitize your contract and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments before age 591/2 that are not subject to the 10% penalty.
WHAT ARE MINIMUM DISTRIBUTIONS AND WHEN WOULD I NEED TO MAKE THEM?
(See "Tax Considerations" for a further discussion of Minimum Distributions.)
Minimum Distributions are a type of Systematic Withdrawal we allow to meet
distribution requirements under Sections 401, 403(b) or 408 of the Code. Under
the Code, you may be required to begin receiving periodic amounts from your
Annuity. In such case, we will allow you to make Systematic Withdrawals in
amounts that satisfy the minimum distribution rules under the Code. We do not
assess a CDSC on Minimum Distributions from your Annuity if you are required by
law to take such Minimum Distributions from your Annuity at the time it is
taken. However, a CDSC may be assessed on that portion of a Systematic
Withdrawal that is taken to satisfy the minimum distribution requirements in
relation to other savings or investment plans under other qualified retirement
plans not maintained with American Skandia.
The amount of the required Minimum Distribution for your particular
situation may depend on other annuities, savings or investments. We will only
calculate the amount of your required Minimum Distribution based on the value of
your Annuity. We require three (3) days advance written notice to calculate and
process the amount of your payments. You may elect to have Minimum Distributions
paid out monthly, quarterly, semi-annually or annually. The $100 minimum amount
that applies to Systematic Withdrawals applies to monthly Minimum Distributions
but does not apply to Minimum Distributions taken out on a quarterly,
semi-annual or annual basis.
You may also annuitize your contract and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments and satisfying the Minimum Distribution requirements under the Code.
CAN I SURRENDER MY ANNUITY FOR ITS VALUE?
Yes. During the accumulation period you can surrender your Annuity at any time.
Upon surrender, you will receive the Surrender Value. Upon surrender of your
Annuity, you will no longer have any rights under the Annuity.
For purposes of calculating the CDSC on surrender, the Purchase Payments
being withdrawn may be greater than your remaining Account Value or the amount
of your withdrawal request. This is most likely to occur if you have made prior
withdrawals under the Free Withdrawal provision or if your Account Value has
declined in value due to negative market performance. We may apply a Market
Value Adjustment to any Fixed Allocations.
Under certain annuity payment options, you may be allowed to surrender
your Annuity for its then current value.
To request the forms necessary to surrender your Annuity, call
1-800-752-6342 or visit our Internet Website at
www.americanskandia.prudential.com.
WHAT IS A MEDICALLY-RELATED SURRENDER AND HOW DO I QUALIFY?
Where permitted by law, you may request to surrender your Annuity prior to the
Annuity Date without application of any CDSC upon occurrence of a
medically-related "Contingency Event". We may apply a Market Value Adjustment to
any Fixed Allocations. The amount payable will be your Account Value.
This waiver of any applicable CDSC is subject to our rules, including but
not limited to the following:
- - the Annuitant must have been named or any change of Annuitant must have
been accepted by us, prior to the
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OPTIMUM FOUR PROSPECTUS
Access To Account Value continued
"Contingency Event" described below in order to qualify for a
medically-related surrender.
- - the Annuitant must be alive as of the date we pay the proceeds of such
surrender request;
- - if the Owner is one or more natural persons, all such Owners must also be
alive at such time;
- - we must receive satisfactory proof of the Annuitant's confinement in a
Medical Care Facility or Fatal Illness in writing on a form satisfactory
to us; and
- - this benefit is not available if the total Purchase Payments received
exceed $500,000 for all annuities issued by us with this benefit where the
same person is named as Annuitant.
A "Contingency Event" occurs if the Annuitant is:
- - first confined in a "Medical Care Facility" while your Annuity is in force
and remains confined for at least 90 days in a row; or
- - first diagnosed as having a "Fatal Illness" while your Annuity is in
force.
The definitions of "Medical Care Facility" and "Fatal Illness," as well as
additional terms and conditions, are provided in your Annuity. Specific details
and definitions in relation to this benefit may differ in certain jurisdictions.
WHAT TYPES OF ANNUITY OPTIONS ARE AVAILABLE?
We currently make annuity options available that provide fixed annuity payments,
variable payments or adjustable payments. Fixed options provide the same amount
with each payment. Variable options generally provide a payment which may
increase or decrease depending on the investment performance of the
Sub-accounts. However, currently, we also make a variable payment option that
has a guarantee feature. Adjustable options provide a fixed payment that is
periodically adjusted based on current interest rates. We do not guarantee to
make any annuity payment options available in the future other than those fixed
annuitization options guaranteed in your Annuity. Please refer to the
"Guaranteed Minimum Income Benefit" and the "Lifetime Five Income Benefit" under
"Living Benefits" below for a description of annuity options that are available
when you elect these benefits. For additional information on annuity payment
options you may request a Statement of Additional Information.
When you purchase an Annuity, or at a later date, you may choose an
Annuity Date, an annuity option and the frequency of annuity payments. You may
change your choices before the Annuity Date under the terms of your contract. A
maximum Annuity Date may be required by law. The Annuity Date may depend on the
annuity option you choose. Certain annuity options may not be available
depending on the age of the Annuitant.
Certain of these annuity options may be available to Beneficiaries who
choose to receive the Death Benefit proceeds as a series of payments instead of
a lump sum payment.
Option 1
PAYMENTS FOR LIFE: Under this option, income is payable periodically until the
death of the "key life". The "key life" (as used in this section) is the person
or persons upon whose life annuity payments are based. No additional annuity
payments are made after the death of the key life. Since no minimum number of
payments is guaranteed, this option offers the largest amount of periodic
payments of the life contingent annuity options. It is possible that only one
payment will be payable if the death of the key life occurs before the date the
second payment was due, and no other payments nor death benefits would be
payable. THIS OPTION IS CURRENTLY AVAILABLE ON A FIXED OR VARIABLE BASIS. Under
this option, you cannot make a partial or full surrender of the annuity.
Option 2
PAYMENTS BASED ON JOINT LIVES: Under this option, income is payable periodically
during the joint lifetime of two key lives, and thereafter during the remaining
lifetime of the survivor, ceasing with the last payment prior to the survivor's
death. No minimum number of payments is guaranteed under this option. It is
possible that only one payment will be payable if the death of all the key lives
occurs before the date the second payment was due, and no other payments or
death benefits would be payable. This Option is currently available on a fixed
or variable basis. Under this option, you cannot make a partial or full
surrender of the annuity.
Option 3
PAYMENTS FOR LIFE WITH A CERTAIN PERIOD: Under this option, income is payable
until the death of the key life. However, if the key life dies before the end of
the period selected (5, 10 or 15 years), the remaining payments are paid to the
Beneficiary until the end of such period. This Option is currently available on
a fixed or variable basis. If you elect to receive payments on a variable basis
under this option, you can request partial or full surrender of the annuity and
receive its then current cash value (if any) subject to our rules.
Option 4
FIXED PAYMENTS FOR A CERTAIN PERIOD: Under this option, income is payable
periodically for a specified number of years. If the payee dies before the end
of the specified number of years, the remaining payments are paid to the
Beneficiary until
32
OPTIMUM FOUR PROSPECTUS
2the end of such period. Note that under this option, payments are not based on
any assumptions of life expectancy. Therefore, that portion of the Insurance
Charge assessed to cover the risk that key lives outlive our expectations
provides no benefit to an Owner selecting this option. Under this option, you
cannot make a partial or full surrender of the annuity.
Option 5
VARIABLE PAYMENTS FOR LIFE WITH A CASH VALUE: Under this option, benefits are
payable periodically until the death of the key life. Benefits may increase or
decrease depending on the investment performance of the Sub-accounts. This
option has a cash value that also varies with the investment performance of the
Sub-account. The cash value provides a "cushion" from volatile investment
performance so that negative investment performance does not automatically
result in a decrease in the annuity payment each month, and positive investment
performance does not automatically result in an increase in the annuity payment
each month. The cushion generally "stabilizes" monthly annuity payments. Any
cash value remaining on the death of the key life is paid to the Beneficiary in
a lump sum or as periodic payments. Under this option, you can request partial
or full surrender of the Annuity and receive its then current cash value (if
any) subject to our rules.
Option 6
VARIABLE PAYMENTS FOR LIFE WITH A CASH VALUE AND GUARANTEE: Under this option,
benefits are payable as described in Option 5; except that, while the key life
is alive, the annuity payment will not be less than a guaranteed amount, which
generally is equal to the first annuity payment. We charge an additional amount
for this guarantee. Under this option, any cash value remaining on the death of
the key life is paid to the Beneficiary in a lump sum or as periodic payments.
Under this option, you can request partial or full surrender of the Annuity and
receive its then current cash value (if any) subject to our rules.
We may make additional annuity payment options available in the future.
HOW AND WHEN DO I CHOOSE THE ANNUITY PAYMENT OPTION?
Unless prohibited by law, we require that you elect either a life annuity or an
annuity with a certain period of at least 5 years if any CDSC would apply were
you to surrender your Annuity on the Annuity Date. Therefore, choosing an
Annuity Date within four (4) years of the Issue Date of the Annuity may limit
the available annuity payment options. Certain annuity payment options may not
be available if your Annuity Date occurs during the period that a CDSC would
apply.
You have a right to choose your annuity start date. If you have not
provided us with your Annuity Date or annuity payment option in writing, then:
- - a default date for the Annuity Date will be the first day of the calendar
month following the later of the Annuitant's 85th birthday or the fifth
anniversary of our receipt of your request to purchase an Annuity; and
- - the annuity payments, where allowed by law, will be calculated on a fixed
basis under Option 3, Payments for Life with 10 years certain.
If you choose to defer the Annuity Date beyond the default date, the IRS
may not consider your Annuity to be an annuity under the tax law. If that should
occur, all gain in your Annuity at that time will become immediately taxable to
you. Further, each subsequent year's increase in Account Value would be taxable
in that year. By choosing to continue to defer after the default date, you will
assume the risk that your Annuity will not be considered an annuity for federal
income tax purposes.
HOW ARE ANNUITY PAYMENTS CALCULATED?
Fixed Annuity Payments (Options 1-4)
If you choose to receive fixed annuity payments, you will receive equal
fixed-dollar payments throughout the period you select. The amount of the fixed
payment will vary depending on the annuity payment option and payment frequency
you select. Generally, the first annuity payment is determined by multiplying
the Account Value, minus any state premium taxes that may apply, by the factor
determined from our table of annuity rates. The table of annuity rates differs
based on the type of annuity chosen and the frequency of payment selected. Our
rates will not be less than our guaranteed minimum rates. These guaranteed
minimum rates are derived from the a2000 Individual Annuity Mortality Table 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.
Variable Annuity Payments
Generally, we offer three different types of variable annuity payment options.
The first annuity payment will be calculated based upon the assumed investment
return ("AIR"). You select the AIR before we start to make annuity payments. You
will not receive annuity payments until you choose an AIR. The remaining annuity
payments will fluctuate based on the performance of the Sub-accounts relative to
the AIR, as well as other factors described below. The greater the AIR, the
greater the first annuity payment.
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OPTIMUM FOUR PROSPECTUS
Access To Account Value continued
A higher AIR may result in smaller potential growth in the annuity payments. A
lower AIR results in a lower initial annuity payment. Within payment options
1-3, if the Sub-accounts you choose perform exactly the same as the AIR, then
subsequent annuity payments will be the same as the first annuity payment. If
the Sub-accounts you choose perform better than the AIR, then subsequent annuity
payments will be higher than the first annuity payment. If the Sub-accounts you
choose perform worse than the AIR, then subsequent annuity payments will be
lower than the first. Within payment options 5 and 6, the cash value for the
Annuitant (while alive) and a variable period of time during which annuity
payments will be made whether or not the Annuitant is still alive are adjusted
based on the performance of the Sub-accounts relative to the AIR; however,
subsequent annuity payments do not always increase or decrease based on the
performance of the Sub-accounts relative to the AIR.
- VARIABLE PAYMENTS (OPTIONS 1-3)
We calculate each annuity payment amount by multiplying the number
of units scheduled to be redeemed under a schedule of units for each
Sub-account by the Unit Value of each Sub-account on the annuity
payment date. We determine the schedule of units based on your
Account Value (minus any premium tax that applies) at the time you
elect to begin receiving annuity payments. The schedule of units
will vary based on the annuity payment option selected, the length
of any certain period (if applicable), the Annuitant's age and
gender (if annuity payments are due for the life of the Annuitant)
and the Unit Value of the Sub-accounts you initially selected on the
Issue Date. The calculation is performed for each Sub-account, and
the sum of the Sub-account calculations equals the amount of your
annuity payment. Other than to fund annuity payments, the number of
units allocated to each Sub-account will not change unless you
transfer among the Sub-accounts or make a withdrawal (if allowed).
You can select one of three AIRs for these options: 3%, 5% or 7%.
- STABILIZED VARIABLE PAYMENTS (OPTION 5)
This option provides guaranteed payments for life, a cash value for
the Annuitant (while alive) and a variable period of time during
which annuity payments will be made whether or not the Annuitant is
still alive. We calculate the initial annuity payment amount by
multiplying the number of units scheduled to be redeemed under a
schedule of units by the Unit Values determined on the annuitization
date. The schedule of units is established for each Sub-account you
choose on the annuitization date based on the applicable benchmark
rate, meaning the AIR, and the annuity factors. The annuity factors
reflect our assumptions regarding the costs we expect to bear in
guaranteeing payments for the lives of the Annuitant and will depend
on the benchmark rate, the annuitant's attained age and gender
(where permitted). Unlike variable payments (described above) where
each payment can vary based on Sub-account performance, this payment
option cushions the immediate impact of Sub-account performance by
adjusting the length of the time during which annuity payments will
be made whether or not the Annuitant is alive while generally
maintaining a level annuity payment amount. Sub-account performance
that exceeds a benchmark rate will generally extend this time
period, while Sub-account performance that is less than a benchmark
rate will generally shorten the period. If the period reaches zero
and the Annuitant is still alive, Annuity Payments continue,
however, the annuity payment amount will vary depending on
Sub-account performance, similar to conventional variable payments.
The AIR for this option is 4%.
- STABILIZED VARIABLE PAYMENTS WITH A GUARANTEED MINIMUM (OPTION 6)
This option provides guaranteed payments for life in the same manner
as Stabilized Variable Payments (described above). In addition to
the stabilization feature, this option also guarantees that variable
annuity payments will not be less than the initial annuity payment
amount regardless of Sub-account performance. The AIR for this
option is 3%.
The variable annuity payment options are described in greater detail in a
separate prospectus which will be provided to you at the time you elect one of
the variable annuity payment options.
Adjustable Annuity Payments
We may make an adjustable annuity payment option available. Adjustable annuity
payments are calculated similarly to fixed annuity payments except that on every
fifth (5th) anniversary of receiving annuity payments, the annuity payment
amount is adjusted upward or downward depending on the rate we are currently
crediting to annuity payments. The adjustment in the annuity payment amount does
not affect the duration of remaining annuity payments, only the amount of each
payment.
34
OPTIMUM FOUR PROSPECTUS
Living Benefit Programs
DO YOU OFFER PROGRAMS DESIGNED TO PROVIDE INVESTMENT PROTECTION FOR OWNERS WHILE
THEY ARE ALIVE?
American Skandia offers different optional benefits, for an additional charge,
that can provide investment protection for Owners while they are alive.
Notwithstanding the additional protection provided under the optional Living
Benefit Programs, the additional cost has the impact of reducing net performance
of the investment options. Each optional benefit offers a distinct type of
guarantee, regardless of the performance of variable investment options, that
may be appropriate for you depending on the manner in which you intend to make
use of your annuity while you are alive. Depending on which optional benefit you
choose, you can have substantial flexibility to invest in variable investment
options while:
- - protecting a principal amount from decreases in value due to investment
performance as of specified future dates;
- - taking withdrawals with a guarantee that you will be able to withdraw not
less than a principal amount over time; or
- - guaranteeing a minimum amount of growth will be applied to your principal,
if it is to be used as the basis for lifetime income payments beginning
after a waiting period.
Below is a brief summary of the "living benefits" that American Skandia
offers. Please refer to the benefit description for a complete description of
the terms, conditions and limitations of each optional benefit. You should
consult with your investment professional to determine if any of these optional
benefits may be appropriate for you based on your financial needs. There are
many factors to consider, but we note that among them you may want to evaluate
the tax implications of these different approaches to meeting your needs, both
between these benefits and in comparison to other potential solutions to your
needs (e.g. comparing the tax implications of the withdrawal benefit and annuity
payments).
I. The GUARANTEED RETURN OPTION PLUS(SM) (GRO PLUS(SM)) guarantees that,
after a seven-year period following commencement of the program ("maturity
date") and on each anniversary of the maturity date thereafter, your
Account Value will not be less than the Account Value on the effective
date of the program. The program also offers you the option to elect a
second, enhanced guarantee amount at a higher Account Value subject to a
separate maturity period (and its anniversaries). The GRO Plus(SM) program
may be appropriate if you wish to protect a principal amount (called the
"Protected Principal Value") against market downturns as of a specific
date in the future, but also wish to exercise control by allocating and
transferring your available Account Value among the variable investment
options to participate in market experience. Under the GRO Plus(SM)
program, you give us the right to allocate amounts to Fixed Allocations as
needed to support the guarantees provided. The available Account Value
that may be allocated among your variable investment options are those
amounts not allocated to the Fixed Allocations to support the guarantees
provided.
II. The GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) guarantees your ability
to make cumulative withdrawals over time equal to an initial principal
value (called the "Protected Value"), regardless of decreases in your
Account Value due to market losses. The GMWB program may be appropriate if
you intend to make periodic withdrawals from your Annuity and wish to
ensure that market performance will not affect your ability to receive
guaranteed minimum withdrawals. Taking income as withdrawals, rather than
annuity payments, may be less tax efficient for non-qualified uses of the
Annuity, but provides greater control over the timing and amount of
withdrawals during the accumulation period, as well as continuing the
Annuity's other benefits, such as the death benefit.
III. The GUARANTEED MINIMUM INCOME BENEFIT (GMIB) guarantees your ability,
after a minimum seven-year waiting period, to begin receiving income from
the Annuity in the form of annuity payments based on your total purchase
payments under the Annuity and an annual increase of 5% on such Purchase
Payments, adjusted for withdrawals, regardless of the impact of market
performance on your Account Value. The GMIB program may be appropriate if
you anticipate using your Annuity as a future source of periodic fixed
income payments for the remainder of your life and wish to ensure that the
basis upon which your income payments will be calculated will achieve at
least a minimum amount despite fluctuations in market performance.
IV. The LIFETIME FIVE INCOME BENEFIT guarantees your ability to withdraw
amounts equal to a percentage of a "Protected Withdrawal Value" regardless
of decreases in your Account Value due to market losses. The Lifetime Five
Benefit may be appropriate if you intend to make periodic withdrawals from
your Annuity and wish to ensure that market performance will not affect
your ability to receive guaranteed minimum withdrawals. Taking income as
withdrawals, rather than annuity payments, may be less tax efficient for
35
OPTIMUM FOUR PROSPECTUS
Living Benefit Programs continued
non-qualified uses of the Annuity, but provides greater control over the
timing and amount of withdrawals during the accumulation period, as well
as continuing the Annuity's other benefits, such as the death benefit.
GUARANTEED RETURN OPTION Plus(SM) (GRO Plus(SM))
THE GUARANTEED RETURN OPTION PLUS DESCRIBED BELOW IS ONLY BEING OFFERED IN
THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL, AND WILL BE
OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY
APPROVAL IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER
BETWEEN JURISDICTIONS ONCE APPROVED. THE PROGRAM CAN BE ELECTED BY NEW
PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY, AND CAN BE ELECTED BY EXISTING
ANNUITY OWNERS ON EITHER THE ANNIVERSARY OF THE ISSUE DATE OF THEIR ANNUITY
OR ON A DATE OTHER THAN THAT ANNIVERSARY, AS DESCRIBED BELOW UNDER "ELECTION
OF THE PROGRAM". THE GUARANTEED RETURN OPTION PLUS IS NOT AVAILABLE IF YOU
ELECT THE GUARANTEED RETURN OPTION PROGRAM (AND IT IS CURRENTLY ACTIVE), THE
GUARANTEED MINIMUM WITHDRAWAL BENEFIT RIDER, THE GUARANTEED MINIMUM INCOME
BENEFIT RIDER, THE LIFETIME FIVE INCOME BENEFIT RIDER, THE HIGHEST DAILY
VALUE DEATH BENEFIT, OR THE DOLLAR COST AVERAGING PROGRAM IF IT INVOLVES
TRANSFERS OUT OF THE FIXED ALLOCATIONS.
We offer a program that, after a seven-year period following commencement
of the program (we refer to the end of that period and any applicable subsequent
period as the "maturity date") and on each anniversary of the maturity date
thereafter while the program remains in effect, guarantees your Account Value
will not be less than your Account Value on the effective date of your program
(called the "Protected Principal Value"). The program also offers you the
opportunity to elect a second, enhanced guaranteed amount at a later date if
your Account Value has increased, while preserving the guaranteed amount
established on the effective date of your program. The enhanced guaranteed
amount (called the "Enhanced Protected Principal Value") guarantees that, after
a separate period following election of the enhanced guarantee and on each
anniversary thereafter while this enhanced guarantee amount remains in effect,
your Account Value will not be less than your Account Value on the effective
date of your election of the enhanced guarantee.
The program monitors your Account Value daily and, if necessary,
systematically transfers amounts between variable investment options you choose
and Fixed Allocations used to support the Protected Principal Value(s). The
program may be appropriate if you wish to protect a principal amount against
market downturns as of a specific date in the future, but also wish to invest in
the variable investment options to participate in market performance. There is
an additional charge if you elect the Guaranteed Return Option Plus program.
The guarantees provided by the program exist only on the applicable
maturity date(s) and on each anniversary of the maturity date(s) thereafter.
However, due to the ongoing monitoring of your Account Value and the transfer of
Account Value between the variable investment options and the Fixed Allocations
to support our future guarantees, the program may provide some protection from
significant market losses if you choose to surrender the Annuity or begin
receiving annuity payments prior to a maturity date. For this same reason, the
program may limit your ability to benefit from market increases while it is in
effect.
KEY FEATURE -- Protected Principal
Value/Enhanced Protected Principal Value
The Guaranteed Return Option Plus offers a base guarantee as well as the option
of electing an enhanced guarantee at a later date.
- - BASE GUARANTEE: Under the base guarantee, American Skandia guarantees that
on the maturity date and on each anniversary of the maturity date
thereafter that the program remains in effect, your Account Value will be
no less than the Protected Principal Value. On the maturity date and on
each anniversary after the maturity date that the program remains in
effect, if your Account Value is below the Protected Principal Value,
American Skandia will apply additional amounts to your Annuity from its
general account to increase your Account Value to be equal to the
Protected Principal Value.
- - ENHANCED GUARANTEE: On any anniversary following commencement of the
program, you can establish an enhanced guaranteed amount based on your
current Account Value. Under the enhanced guarantee, American Skandia
guarantees that at the end of a specified period following the election of
the enhanced guarantee (also referred to as its "maturity date"), and on
each anniversary of the maturity date thereafter that the enhanced
guaranteed amount remains in effect, your Account Value will be no less
than the Enhanced Protected Principal Value. YOU CAN ELECT AN ENHANCED
GUARANTEE
36
OPTIMUM FOUR PROSPECTUS
MORE THAN ONCE; HOWEVER, A SUBSEQUENT ELECTION SUPER- SEDES THE PRIOR
ELECTION OF AN ENHANCED GUARANTEE. ELECTION OF AN ENHANCED GUARANTEE DOES
NOT IMPACT THE BASE GUARANTEE. IN ADDITION, YOU MAY ELECT AN "AUTO
STEP-UP" FEATURE THAT WILL AUTOMATICALLY CREATE AN ENHANCED GUARANTEE (OR
INCREASE YOUR ENHANCED GUARANTEE, IF PREVIOUSLY ELECTED) ON EACH
ANNIVERSARY OF THE PROGRAM (AND CREATE A NEW MATURITY PERIOD FOR THE NEW
ENHANCED GUARANTEE) IF THE ACCOUNT VALUE AS OF THAT ANNIVERSARY EXCEEDS
THE PROTECTED PRINCIPAL VALUE OR ENHANCED PROTECTED PRINCIPAL VALUE BY 7%
OR MORE. YOU MAY ALSO ELECT TO TERMINATE AN ENHANCED GUARANTEE. IF YOU
ELECT TO TERMINATE THE ENHANCED GUARANTEE, THE BASE GUARANTEE WILL REMAIN
IN EFFECT. If you have elected the enhanced guarantee, on the guarantee's
maturity date and on each anniversary of the maturity date thereafter that
the enhanced guarantee amount remains in effect, if your Account Value is
below the Enhanced Protected Principal Value, American Skandia will apply
additional amounts to your Annuity from its general account to increase
your Account Value to be equal to the Enhanced Protected Principal Value.
Any amounts added to your Annuity to support our guarantees under the
program will be applied to any Fixed Allocations first and then to the
sub-accounts pro rata, based on your most recent allocation instructions in
accordance with the allocation mechanism we use under the program. We will
notify you of any amounts added to your Annuity under the program. If our
assumptions are correct and the operations relating to the administration of the
program work properly, we do not expect that we will need to add additional
amounts to the Annuity. The Protected Principal Value is referred to as the
"Base Guarantee" and the Enhanced Protected Principal Value is referred to as
the "Step-up Guarantee" in the rider we issue for this benefit.
Withdrawals under your Annuity
Withdrawals from your Annuity, while the program is in effect, will reduce the
base guarantee under the program as well as any enhanced guarantee. Cumulative
annual withdrawals up to 5% of the Protected Principal Value as of the effective
date of the program (adjusted for any subsequent Purchase Payments) will reduce
the applicable guaranteed amount by the actual amount of the withdrawal
(referred to as the "dollar-for-dollar limit"). If the amount withdrawn is
greater than the dollar-for-dollar limit, the portion of the withdrawal equal to
the dollar-for-dollar limit will be treated as described above, and the portion
of the withdrawal in excess of the dollar-for-dollar limit will reduce the base
guarantee and the enhanced guarantee proportionally, according to the formula as
described in the rider for this benefit (see the examples of this calculation
below). Withdrawals other than systematic withdrawals will be taken pro-rata
from the variable investment options and any Fixed Allocations. Systematic
withdrawals will be taken pro-rata from the Variable Investment Options and any
Fixed Allocations up to growth attributable to the Fixed Allocations and
thereafter pro-rata solely from the variable investment options. Withdrawals
will be subject to all other provisions of the Annuity, including any Contingent
Deferred Sales Charge and Market Value Adjustment that would apply.
Charges for other optional benefits under the Annuity that are deducted as
an annual charge in arrears will not reduce the applicable guaranteed amount
under the Guaranteed Return Option Plus program, however, any partial
withdrawals in payment of charges for the Plus40(TM) Optional Life Insurance
Rider (not currently offered for sale) and any third party investment advisory
service will be treated as withdrawals and will reduce the applicable guaranteed
amount.
The following examples of dollar-for-dollar and proportional reductions
assume that: 1.) the Issue Date and the effective date of the GRO Plus(SM)
program are October 13, 2004; 2.) an initial Purchase Payment of $250,000; 3.) a
base guarantee amount of $250,000; and 4.) a dollar-for-dollar limit of $12,500
(5% of $250,000):
Example 1. Dollar-for-dollar reduction
A $10,000 withdrawal is taken on November 29, 2004 (in the first Annuity Year).
No prior withdrawals have been taken. As the amount withdrawn is less than the
Dollar-for-dollar Limit:
- - The base guarantee amount is reduced by the amount withdrawn (i.e., by
$10,000, from $250,000 to $240,000).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance
of the first Annuity Year is also reduced by the amount withdrawn (from
$12,500 to $2,500).
Example 2. Dollar-for-dollar and proportional reductions
A second $10,000 withdrawal is taken on December 18, 2004 (still within the
first Annuity Year). The Account Value immediately before the withdrawal is
$180,000. As the amount withdrawn exceeds the Remaining Limit of $2,500 from
Example 1:
- - the base guarantee amount is first reduced by the Remaining Limit (from
$240,000 to $237,500);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the Remaining Limit ($10,000 -
$2,500, or $7,500).
- B is the Account Value less the Remaining Limit ($180,000 - $2,500,
or $177,500).
37
OPTIMUM FOUR PROSPECTUS
Living Benefit Programs continued
The resulting base guarantee amount is: $237,500 x (1 - $7,500 /
$177,500), or $227,464.79.
- - The Remaining Limit is set to zero (0) for the balance of the first
Annuity Year.
Example 3. Reset of the Dollar-for-dollar Limit
A $10,000 withdrawal is made on December 19, 2005 (second Annuity Year). The
Remaining Limit has been reset to the dollar-for-dollar limit of $12,500. As the
amount withdrawn is less than the dollar-for-dollar limit:
- - The base guarantee amount is reduced by the amount withdrawn (i.e.,
reduced by $10,000, from $227,464.79 to $217,464.79).
- - The Remaining Limit for the balance of the second Annuity Year is also
reduced by the amount withdrawn (from $12,500 to $2,500).
KEY FEATURE -- Allocation of Account Value
Account Value is transferred to and maintained in Fixed Allocations to the
extent we, in our sole discretion, deem it is necessary to support our
guarantee(s) under the program. We monitor fluctuations in your Account Value
each Valuation Day, as well as the prevailing interest rates on Fixed
Allocations, the remaining duration(s) until the applicable maturity date(s) and
the amount of Account Value allocated to Fixed Allocation(s) relative to a
"reallocation trigger", which determines whether Account Value must be
transferred to or from Fixed Allocation(s). While you are not notified when your
Account Value reaches a reallocation trigger, you will receive a confirmation
statement indicating the transfer of a portion of your Account Value either to
or from Fixed Allocation(s).
- - IF YOUR ACCOUNT VALUE IS GREATER THAN OR EQUAL TO THE REALLOCATION
TRIGGER, your Account Value in the variable investment options will remain
allocated according to your most recent instructions. If a portion of
Account Value was previously allocated to a Fixed Allocation to support
the applicable guaranteed amount, all or a portion of those amounts may be
transferred from the Fixed Allocation and re-allocated to the variable
investment options pro-rata according to your most recent allocation
instructions (including the model allocations under any asset allocation
program you may have elected). A Market Value Adjustment will apply when
we reallocate Account Value from a Fixed Allocation to the variable
investment options, which may result in a decrease or increase in your
Account Value.
- - IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER, a portion of
your Account Value in the variable investment options will be transferred
from your variable investment options pro rata according to your
allocations to a new Fixed Allocation(s) to support the applicable
guaranteed amount. The new Fixed Allocation(s) will have a Guarantee
Period equal to the time remaining until the applicable maturity date(s).
The Account Value allocated to the new Fixed Allocation(s) will be
credited with the fixed interest rate(s) then being credited to a new
Fixed Allocation(s) maturing on the applicable maturity date(s) (rounded
to the next highest yearly duration). The Account Value will remain
invested in each applicable Fixed Allocation until the applicable maturity
date unless, at an earlier date, your Account Value is greater than or
equal to the reallocation trigger and, therefore, amounts can be
transferred to the variable investment options while maintaining the
guaranteed protection under the program (as described above).
IF A SIGNIFICANT AMOUNT OF YOUR ACCOUNT VALUE IS SYSTEMATICALLY TRANSFERRED
TO FIXED ALLOCATIONS TO SUPPORT THE PROTECTED PRINCIPAL VALUE AND/OR THE
ENHANCED PROTECTED PRINCIPAL VALUE DURING PERIODS OF MARKET DECLINES, LOW
INTEREST RATES, AND/OR AS THE PROGRAM NEARS ITS MATURITY DATE, LESS OF YOUR
ACCOUNT VALUE MAY BE AVAILABLE TO PARTICIPATE IN THE INVESTMENT EXPERIENCE OF
THE VARIABLE INVESTMENT OPTIONS IF THERE IS A SUBSEQUENT MARKET RECOVERY.
DURING PERIODS CLOSER TO THE MATURITY DATE OF THE BASE GUARANTEE OR ANY
ENHANCED GUARANTEE, OR ANY ANNIVERSARY OF SUCH MATURITY DATE(S), A
SIGNIFICANT PORTION OF YOUR ACCOUNT VALUE MAY BE ALLOCATED TO FIXED
ALLOCATIONS TO SUPPORT ANY APPLICABLE GUARANTEED AMOUNT(S). IF YOUR ACCOUNT
VALUE IS LESS THAN THE REALLOCATION TRIGGER AND NEW FIXED ALLOCATIONS MUST BE
ESTABLISHED DURING PERIODS WHERE THE INTEREST RATE(S) BEING CREDITED TO SUCH
FIXED ALLOCATIONS IS LOW, A LARGER PORTION OF YOUR ACCOUNT VALUE MAY NEED TO
BE TRANSFERRED TO FIXED ALLOCATIONS TO SUPPORT THE APPLICABLE GUARANTEED
AMOUNT(S), CAUSING LESS OF YOUR ACCOUNT VALUE TO BE AVAILABLE TO PARTICIPATE
IN THE INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS.
Separate Fixed Allocations may be established in support of the Protected
Principal Value and the Enhanced Protected Principal
38
OPTIMUM FOUR PROSPECTUS
Value (if elected). There may also be circumstances when a Fixed Allocation will
be established only in support of the Protected Principal Value or the Enhanced
Protected Principal Value. If you elect an enhanced guarantee, it is more likely
that a portion of your Account Value may be allocated to Fixed Allocations and
will remain allocated for a longer period of time to support the Enhanced
Protected Principal Value, even during a period of positive market performance
and/or under circumstances where Fixed Allocations would not be necessary to
support the Protected Principal Value. Further, there may be circumstances where
Fixed Allocations in support of the Protected Principal Value or Enhanced
Protected Principal Value are transferred to the variable investment options
differently than each other because of the different guarantees they support.
American Skandia uses an allocation mechanism based on assumptions of
expected and maximum market volatility, interest rates and time left to the
maturity of the program to determine the reallocation trigger. The allocation
mechanism is used to determine the allocation of Account Value between Fixed
Allocations and the Sub-accounts you choose. American Skandia reserves the right
to change the allocation mechanism and the reallocation trigger at its
discretion, subject to regulatory approval where required. Changes to the
allocation mechanism and/or the reallocation trigger may be applied to existing
programs where allowed by law.
Election of the Program
The Guaranteed Return Option Plus program can be elected at the time that you
purchase your Annuity, or on any Valuation Day thereafter (prior to
annuitization). If you elect the program after the Issue Date of your Annuity,
the program will be effective as of the Valuation Day that we receive the
required documentation in good order at our home office, and the guaranteed
amount will be based on your Account Value as of that date. If you previously
elected the Guaranteed Return Option program and wish to elect the Guaranteed
Return Option Plus program, your prior Guaranteed Return Option program will be
terminated. Termination of the Guaranteed Return Option for the purpose of
electing the Guaranteed Return Option Plus, will be treated as any other
termination of the Guaranteed Return Option (see below), including the
termination of any guaranteed amount, and application of any applicable Market
Value Adjustment when amounts are transferred to the variable investment options
as a result of the termination. The Guaranteed Return Option Plus program will
then be added to your Annuity BASED ON THE CURRENT ACCOUNT VALUE.
Termination of the Program
You can elect to terminate the enhanced guarantee but maintain the protection
provided by the base guarantee. You also can terminate the Guaranteed Return
Option Plus program entirely. If you terminate the program entirely you can
subsequently elect to participate in the program again (based on the Account
Value on that date) by furnishing the documentation we require. In a rising
market, you could, for example, terminate the program on a given Valuation Day
and two weeks later reinstate the program with a higher base guarantee (and a
new maturity date). However, your ability to reinstate the program is limited by
the following: (A) in any Annuity Year, we do not permit more than two program
elections (including any election made effective on the Annuity issue date and
any election made by a surviving spouse) and (B) a program reinstatement cannot
be effected on the same business day on which a program termination was
effected. Upon termination, any Account Value in the Fixed Allocations will be
transferred to the variable investment options pro-rata based on the Account
Values in such variable investment options, or in accordance with any effective
asset allocation program. A Market Value Adjustment will apply.
The program will terminate automatically upon: (a) the death of the Owner
or the Annuitant (in an entity owned contract); (b) as of the date Account Value
is applied to begin annuity payments; or (c) upon full surrender of the Annuity.
If you elect to terminate the program, the Guaranteed Return Option Plus will no
longer provide any guarantees. The surviving spouse may elect the benefit at any
time, subject to the limitations described above, after the death of the Annuity
Owner. The surviving spouse's election will be effective on the Valuation Day
that we receive the required documentation in good order at our home office, and
the Account Value on that Valuation Day will be the Protected Principal Value.
The charge for the Guaranteed Return Option Plus program will no longer be
deducted from your Account Value upon termination of the program.
Special Considerations under the Guaranteed Return Option Plus
This program is subject to certain rules and restrictions, including, but not
limited to the following:
- - Upon inception of the program, 100% of your Account Value must be
allocated to the variable investment options. No Fixed Allocations may be
in effect as of the date that you elect to participate in the program.
However, the reallocation trigger
39
OPTIMUM FOUR PROSPECTUS
Living Benefit Programs continued
may transfer Account Value to Fixed Allocations as of the effective date
of the program under some circumstances.
- - You cannot allocate any portion of Purchase Payments or transfer Account
Value to or from a Fixed Allocation while participating in the program;
however, all or a portion of any Purchase Payments may be allocated by us
to Fixed Allocations to support the amount guaranteed. You cannot
participate in any dollar cost averaging program that transfers Account
Value from a Fixed Allocation to a variable investment option.
- - Transfers from Fixed Allocations made as a result of the allocation
mechanism under the program will be subject to the Market Value Adjustment
formula under the Annuity; however, the 0.10% liquidity factor in the
formula will not apply. A Market Value Adjustment may be either positive
or negative. Transfer amounts will be taken from the most recently
established Fixed Allocation.
- - Transfers from the Sub-accounts to Fixed Allocations or from Fixed
Allocations to the Sub-accounts under the program will not count toward
the maximum number of free transfers allowable under the Annuity.
- - Any amounts applied to your Account Value by American Skandia on the
maturity date or any anniversary of the maturity date will not be treated
as "investment in the contract" for income tax purposes.
- - Low interest rates may require allocation to Fixed Allocations even when
the current Account Value exceeds the guarantee.
- - As the time remaining until the applicable maturity date gradually
decreases the program will become increasingly sensitive to moves to Fixed
Allocations.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
Charges under the Program
We deduct a charge equal to 0.25% of the average daily net assets of the
sub-accounts for participation in the Guaranteed Return Option Plus program. The
annual charge is deducted daily. Account Value allocated to Fixed Allocations
under the program is not subject to the charge. The charge is deducted to
compensate American Skandia for: (a) the risk that your Account Value on the
maturity date is less than the amount guaranteed; and (b) administration of the
program.
GUARANTEED RETURN OPTION (GRO)
THE GUARANTEED RETURN OPTION DESCRIBED BELOW IS OFFERED ONLY IN THOSE
JURISDICTIONS WHERE WE HAVE NOT YET RECEIVED REGULATORY APPROVAL FOR THE
GUARANTEED RETURN OPTION PLUS AS OF THE DATE THE ELECTION OF THE OPTION IS
MADE. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS. THE
PROGRAM CAN BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY,
AND CAN BE ELECTED BY EXISTING ANNUITY OWNERS ON EITHER THE ANNIVERSARY OF
THE ISSUE DATE OF THEIR ANNUITY OR ON A DATE OTHER THAN THAT ANNIVERSARY, AS
DESCRIBED BELOW UNDER "ELECTION OF THE PROGRAM". THE GUARANTEED RETURN OPTION
IS NOT AVAILABLE IF YOU ELECT THE GRO PLUS RIDER, THE GUARANTEED MINIMUM
WITHDRAWAL BENEFIT RIDER, THE GUARANTEED MINIMUM INCOME BENEFIT RIDER, THE
LIFETIME FIVE INCOME BENEFIT RIDER, THE HIGHEST DAILY VALUE DEATH BENEFIT OR
THE DOLLAR COST AVERAGING PROGRAM IF IT INVOLVES TRANSFERS OUT OF THE FIXED
ALLOCATIONS.
We offer a program that, after a seven-year period following commencement
of the program (we refer to the end of that period as the "maturity date")
guarantees your Account Value will not be less than your Account Value on the
effective date of your program (called the "Protected Principal Value").
The program monitors your Account Value daily and, if necessary,
systematically transfers amounts between variable investment options you choose
and the Fixed Allocation used to support the Protected Principal Value. The
program may be appropriate if you wish to protect a principal amount against
market downturns as of a specific date in the future, but also wish to invest in
the variable investment options to participate in market performance. There is
an additional charge if you elect the Guaranteed Return Option program.
The guarantees provided by the program exist only on the applicable
maturity date. However, due to the ongoing monitoring of your Account Value and
the transfer of Account Value between the variable investment options and the
Fixed Allocation to support our future guarantee, the program may provide some
protection from significant market losses if you choose to surrender the Annuity
or begin receiving annuity payments prior
40
OPTIMUM FOUR PROSPECTUS
to a maturity date. For this same reason, the program may limit your ability to
benefit from market increases while it is in effect.
KEY FEATURE -- Protected Principal Value
- - Under the GRO option, American Skandia guarantees that on the maturity
date, your Account Value will be no less than the Protected Principal
Value. On the maturity date if your Account Value is below the Protected
Principal Value, American Skandia will apply additional amounts to your
Annuity from its general account to increase your Account Value to be
equal to the Protected Principal Value.
Any amounts added to your Annuity to support our guarantees under the
program will be applied to the Fixed Allocation first and then to the
Sub-accounts pro rata, based on your most recent allocation instructions in
accordance with the allocation mechanism we use under the program. We will
notify you of any amounts added to your Annuity under the program. If our
assumptions are correct and the operations relating to the administration of the
program work properly, we do not expect that we will need to add additional
amounts to the Annuity. The Protected Principal Value is generally referred to
as the "Guaranteed Amount" in the rider we issue for this benefit.
KEY FEATURE -- Allocation of Account Value
Account Value is transferred to and maintained in a Fixed Allocation to the
extent we, in our sole discretion, deem it is necessary to support our guarantee
under the program. We monitor fluctuations in your Account Value each Valuation
Day, as well as the prevailing interest rates on the Fixed Allocation, the
remaining duration until the applicable maturity date and the amount of Account
Value allocated to the Fixed Allocation relative to a "reallocation trigger",
which determines whether Account Value must be transferred to or from the Fixed
Allocation. While you are not notified when your Account Value reaches a
reallocation trigger, you will receive a confirmation statement indicating the
transfer of a portion of your Account Value either to or from the Fixed
Allocation.
- - IF YOUR ACCOUNT VALUE IS GREATER THAN OR EQUAL TO THE REALLOCATION
TRIGGER, your Account Value in the variable investment options will remain
allocated according to your most recent instructions. If a portion of
Account Value was previously allocated to the Fixed Allocation to support
the guaranteed amount, all or a portion of those amounts may be
transferred from the Fixed Allocation and re-allocated to the variable
investment options pro-rata according to your most recent allocation
instructions (including the model allocations under any asset allocation
program you may have elected). A Market Value Adjustment will apply when
we reallocate Account Value from the Fixed Allocation to the variable
investment options, which may result in a decrease or increase in your
Account Value.
- - IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER, a portion of
your Account Value in the variable investment options will be transferred
from your variable investment options pro rata according to your
allocations to a new Fixed Allocation to support the guaranteed amount.
The new Fixed Allocation will have a Guarantee Period equal to the time
remaining until the applicable maturity date. The Account Value allocated
to the new Fixed Allocation will be credited with the fixed interest rate
then being credited to a new Fixed Allocation maturing on the applicable
maturity date (rounded to the next highest yearly duration). The Account
Value will remain invested in the Fixed Allocation until the maturity date
unless, at an earlier date, your Account Value is greater than or equal to
the reallocation trigger and, therefore, amounts can be transferred to the
variable investment options while maintaining the guaranteed protection
under the program (as described above).
IF A SIGNIFICANT AMOUNT OF YOUR ACCOUNT VALUE IS SYSTEMATICALLY TRANSFERRED
TO THE FIXED ALLOCATION TO SUPPORT THE PROTECTED PRINCIPAL VALUE DURING
PERIODS OF MARKET DECLINES, LOW INTEREST RATES, AND/OR AS THE PROGRAM NEARS
ITS MATURITY DATE, LESS OF YOUR ACCOUNT VALUE MAY BE AVAILABLE TO PARTICIPATE
IN THE INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS IF THERE IS A
SUBSEQUENT MARKET RECOVERY. DURING PERIODS CLOSER TO THE MATURITY DATE OF THE
GUARANTEE A SIGNIFICANT PORTION OF YOUR ACCOUNT VALUE MAY BE ALLOCATED TO THE
FIXED ALLOCATION TO SUPPORT ANY APPLICABLE GUARANTEED AMOUNT. IF YOUR ACCOUNT
VALUE IS LESS THAN THE REALLOCATION TRIGGER AND A NEW FIXED ALLOCATION MUST
BE ESTABLISHED DURING PERIODS WHERE THE INTEREST RATE BEING CREDITED TO SUCH
FIXED ALLOCATIONS IS LOW, A LARGER PORTION OF YOUR ACCOUNT VALUE MAY NEED TO
BE TRANSFERRED TO THE FIXED ALLOCATION TO SUPPORT THE GUARANTEED AMOUNT,
CAUSING LESS OF YOUR ACCOUNT VALUE TO BE AVAILABLE TO PARTICIPATE IN THE
INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS.
American Skandia uses an allocation mechanism based on assumptions of
expected and maximum market volatility, inter-
41
OPTIMUM FOUR PROSPECTUS
Living Benefit Programs continued
est rates and time left to the maturity of the program to determine the
reallocation trigger. The allocation mechanism is used to determine the
allocation of Account Value between Fixed Allocation and the Sub-accounts you
choose. American Skandia reserves the right to change the allocation mechanism
and the reallocation trigger at its discretion, subject to regulatory approval
where required. Changes to the allocation mechanism and/or the reallocation
trigger may be applied to existing programs where allowed by law.
Election of the Program
The Guaranteed Return Option can be elected at the time that you purchase your
Annuity, or on any Valuation Day thereafter (prior to annuitization). If you
elect the program after the Issue Date of your Annuity, the program will be
effective as of the business day that we receive the required documentation in
good order at our home office, and the guaranteed amount will be based on your
Account Value as of that date.
Termination of the Program
The Annuity Owner also can terminate the Guaranteed Return Option program. Upon
termination, any Account Value in the Fixed Allocations will be transferred to
the variable investment options pro rata based on the Account Values in such
variable investment options, or in accordance with any effective asset
allocation program. A Market Value Adjustment will apply.
The program will terminate automatically upon: (a) the death of the Owner
or the Annuitant (in an entity owned contract); (b) as of the date Account Value
is applied to begin annuity payments; or (c) upon full surrender of the Annuity.
If you elect to terminate the program, the Guaranteed Return Option will no
longer provide any guarantees. If the surviving spouse assumes the Annuity,
he/she may re-elect the benefit on any anniversary of the Issue Date of the
Annuity or, if the deceased Owner had not previously elected the benefit, may
elect the benefit at any time. The surviving spouse's election will be effective
on the Valuation Day that we receive the required documentation in good order at
our home office, and the Account Value on that Valuation Day will be the
Protected Principal Value.
The charge for the Guaranteed Return Option program will no longer be
deducted from your Account Value upon termination of the program.
Special Considerations under the Guaranteed Return Option
This program is subject to certain rules and restrictions, including, but not
limited to the following:
- - Upon inception of the program, 100% of your Account Value must be
allocated to the variable investment options. The Fixed Allocations may
not be in effect as of the date that you elect to participate in the
program. However, the reallocation trigger may transfer Account Value to
the Fixed Allocation as of the effective date of the program under some
circumstances.
- - Annuity Owners cannot allocate any portion of Purchase Payments or
transfer Account Value to or from the Fixed Allocation while participating
in the program; however, all or a portion of any Purchase Payments may be
allocated by us to the Fixed Allocation to support the amount guaranteed.
You cannot participate in any dollar cost averaging program that transfers
Account Value from the Fixed Allocation to a variable investment option.
- - Transfers from the Fixed Allocation made as a result of the allocation
mechanism under the program will be subject to the Market Value Adjustment
formula under the Annuity; however, the 0.10% liquidity factor in the
formula will not apply. A Market Value Adjustment may be either positive
or negative. Transfer amounts will be taken from the most recently
established Fixed Allocation.
- - Transfers from the Sub-accounts to the Fixed Allocation or from the Fixed
Allocation to the Sub-accounts under the program will not count toward the
maximum number of free transfers allowable under the Annuity.
- - Any amounts applied to your Account Value by American Skandia on the
maturity date or any anniversary of the maturity date will not be treated
as "investment in the contract" for income tax purposes.
- - Low interest rates may require allocation to the Fixed Allocation even
when the current Account Value exceeds the guarantee.
- - As the time remaining until the applicable maturity date gradually
decreases the program will become increasingly sensitive to moves to the
Fixed Allocation.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an
42
OPTIMUM FOUR PROSPECTUS
Annuity Year. We may also require that you allocate your Account Value
according to an asset allocation model.
Charges under the Program
We deduct a charge equal to 0.25% of the average daily net assets of the
Sub-accounts for participation in the Guaranteed Return Option program. The
annual charge is deducted daily. In those states where the daily deduction of
the charge has not yet been approved, the annual charge is deducted annually, in
arrears. Account Value allocated to the Fixed Allocation under the program is
not subject to the charge. The charge is deducted to compensate American Skandia
for: (a) the risk that your Account Value on the maturity date is less than the
amount guaranteed; and (b) administration of the program.
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT PROGRAM DESCRIBED BELOW IS ONLY
BEING OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY
APPROVAL AND WILL BE OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE
RECEIVE REGULATORY APPROVAL IN THOSE JURISDICTIONS. CERTAIN TERMS AND
CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. CURRENTLY, THE
PROGRAM CAN ONLY BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF THEIR
ANNUITY. WE MAY OFFER THE PROGRAM TO EXISTING ANNUITY OWNERS IN THE FUTURE,
SUBJECT TO OUR ELIGIBILITY RULES AND RESTRICTIONS. THE GUARANTEED MINIMUM
WITHDRAWAL BENEFIT PROGRAM IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED
RETURN OPTION, GUARANTEED RETURN OPTION PLUS, THE GUARANTEED MINIMUM INCOME
BENEFIT RIDER OR THE LIFETIME FIVE INCOME BENEFIT RIDER.
We offer a program that guarantees your ability to withdraw amounts equal
to an initial principal value (called the "Protected Value"), regardless of the
impact of market performance on your Account Value, subject to our program rules
regarding the timing and amount of withdrawals. The program may be appropriate
if you intend to make periodic withdrawals from your Annuity and wish to ensure
that market performance will not affect your ability to protect your principal.
You are not required to make withdrawals as part of the program -- the guarantee
is not lost if you withdraw less than the maximum allowable amount of principal
each year under the rules of the program. There is an additional charge if you
elect the GMWB program; however, the charge may be waived under certain
circumstances described below.
KEY FEATURE -- Protected Value
The Protected Value is the total amount that we guarantee will be
available to you through withdrawals from your Annuity and/or benefit
payments, regardless of the impact of market performance on your Account
Value. The Protected Value is reduced with each withdrawal you make until
the Protected Value is reduced to zero. When the Protected Value is
reduced to zero due to your withdrawals, the GMWB program terminates.
Additionally, the Protected Value is used to determine the maximum annual
amount that you can withdraw from your Annuity, called the Protected
Annual Withdrawal Amount, without triggering an adjustment in the
Protected Value on a proportional basis. The Protected Value is referred
to as the "Benefit Base" in the rider we issue for this benefit.
The Protected Value is determined as of the date you make your first
withdrawal under the Annuity following your election of the GMWB program. The
initial Protected Value is equal to the greater of (A) the Account Value on the
date you elect the GMWB program, plus any additional Purchase Payments before
the date of your first withdrawal; or (B) the Account Value as of the date of
the first withdrawal from your Annuity. The Protected Value may be enhanced by
increases in your Account Value due to market performance during the period
between your election of the GMWB program and the date of your first withdrawal.
- - If you elect the GMWB program at the time you purchase your Annuity, the
Account Value will be your initial Purchase Payment.
- - IF WE OFFER THE GMWB PROGRAM TO EXISTING ANNUITY OWNERS, the Account Value
on the anniversary of the Issue Date of your Annuity following your
election of the GMWB program will be used to determine the initial
Protected Value.
- - If you make additional Purchase Payments after your first withdrawal, the
Protected Value will be increased by the amount of the additional Purchase
Payment.
You may elect to step-up your Protected Value if, due to positive market
performance, your Account Value is greater than the Protected Value. You are
eligible to step-up the Protected Value on or after the 5th Annuity anniversary
following the first withdrawal under the GMWB program. The Protected Value can
be stepped up again on or after the 5th Annuity anniversary following the
preceding step-up. If you elect to step-up the Protected Value, you must do so
during the 30-day period prior to your eligibility date. If you elect to step-up
the Protected Value under the program, and on the date you elect
43
OPTIMUM FOUR PROSPECTUS
Living Benefit Programs continued
to step-up, the charges under the GMWB program have changed for new purchasers,
your program may be subject to the new charge going forward.
Upon election of the step-up, we reset the Protected Value to be equal to
the then current Account Value. For example, assume your initial Protected Value
was $100,000 and you have made cumulative withdrawals of $40,000, reducing the
Protected Value to $60,000. On the date you are eligible to step-up the
Protected Value, your Account Value is equal to $75,000. You could elect to
step-up the Protected Value to $75,000 on the date you are eligible. Upon
election of the step-up, we also reset the Protected Annual Withdrawal Amount
(discussed immediately below) to be equal to the greater of (A) the Protected
Annual Withdrawal Amount immediately prior to the reset; and (B) 7% of the
Protected Value immediately after the reset.
KEY FEATURE -- Protected Annual
Withdrawal Amount
The initial Protected Annual Withdrawal Amount is equal to 7% of the Protected
Value. Under the GMWB program, if your cumulative withdrawals each Annuity Year
are less than or equal to the Protected Annual Withdrawal Amount, your Protected
Value will be reduced on a "dollar-for-dollar" basis (the Protected Value is
reduced by the actual amount of the withdrawal, including any CDSC or MVA that
may apply). Cumulative withdrawals in any Annuity Year that exceed the Protected
Annual Withdrawal Amount trigger a proportional adjustment to both the Protected
Value and the Protected Annual Withdrawal Amount, as described in the rider for
this benefit (see the examples of this calculation below). The Protected Annual
Withdrawal Amount is referred to as the "Maximum Annual Benefit" in the rider we
issue for this benefit.
THE GMWB PROGRAM DOES NOT AFFECT YOUR ABILITY TO MAKE WITHDRAWALS UNDER
YOUR ANNUITY OR LIMIT YOUR ABILITY TO REQUEST WITHDRAWALS THAT EXCEED THE
PROTECTED ANNUAL WITHDRAWAL AMOUNT. You are not required to withdraw all or any
portion of the Protected Annual Withdrawal Amount each Annuity Year.
- - If, cumulatively, you withdraw an amount less than the Protected Annual
Withdrawal Amount in any Annuity Year, you cannot carry-over the unused
portion of the Protected Annual Withdrawal Amount to subsequent Annuity
Years. However, because the Protected Value is only reduced by the actual
amount of withdrawals you make under these circumstances, any unused
Protected Annual Withdrawal Amount may extend the period of time until the
remaining Protected Value is reduced to zero.
- - Additional Purchase Payments will increase the Protected Annual Withdrawal
Amount by 7% of the applicable Purchase Payment.
- - If the Protected Annual Withdrawal Amount after an adjustment exceeds the
Protected Value, the Protected Annual Withdrawal Amount will be set equal
to the Protected Value.
The following examples of dollar-for-dollar and proportional reductions
and the reset of the Maximum Annual Benefit assume that: 1.) the Issue Date and
the effective date of the GMWB program are October 13, 2004; 2.) an initial
Purchase Payment of $250,000; 3.) a Protected Value of $250,000; and 4.) a
Protected Annual Withdrawal Amount of $17,500 (7% of $250,000):
Example 1. Dollar-for-dollar reduction
A $10,000 withdrawal is taken on November 13, 2005 (in the first Annuity Year).
No prior withdrawals have been taken. As the amount withdrawn is less than the
Protected Annual Withdrawal Amount:
- - The Protected Value is reduced by the amount withdrawn (i.e., by $10,000,
from $250,000 to $240,000).
- - The remaining Protected Annual Withdrawal Amount for the balance of the
first Annuity Year is also reduced by the amount withdrawn (from $17,500
to $7,500).
Example 2. Dollar-for-dollar and proportional reductions
A second $10,000 withdrawal is taken on December 13, 2004 (still within the
first Annuity Year). The Account Value immediately before the withdrawal is
$220,000. As the amount withdrawn exceeds the remaining Protected Annual
Withdrawal Amount of $7,500 from Example 1:
- - the Protected Value is first reduced by the remaining Protected Annual
Withdrawal Amount (from $240,000 to $232,500);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the remaining Protected Annual
Withdrawal Amount ($10,000 - $7,500, or $2,500).
- B is the Account Value less the remaining Protected Annual
Withdrawal Amount ($220,000 - $7,500, or $212,500).
44
OPTIMUM FOUR PROSPECTUS
The resulting Protected Value is: $232,500 x (1 - $2,500 /
$212,500), or $229,764.71.
- - the Protected Annual Withdrawal Amount is also reduced by the ratio of A
to B: The resulting Protected Annual Withdrawal Amount is: $17,500 x (1 -
$2,500 / $212,500), or $17,294.12.
- - The remaining Protected Annual Withdrawal Amount is set to zero (0) for
the balance of the first Annuity Year.
Example 3. Reset of the Maximum Annual Benefit
A $10,000 withdrawal is made on October 13, 2005 (second Annuity Year). The
remaining Protected Annual Withdrawal Amount has been reset to the Protected
Annual Withdrawal Amount of $17,294.12 from Example 2. As the amount withdrawn
is less than the remaining Protected Annual Withdrawal Amount:
- - the Protected Value is reduced by the amount withdrawn (i.e., reduced by
$10,000, from $229,764.71 to $219,764.71).
- - The remaining Protected Annual Withdrawal Amount for the balance of the
second Annuity Year is also reduced by the amount withdrawn (from
$17,294.12 to $7,294.12).
Benefits Under the GMWB Program
- - In addition to any withdrawals you make under the GMWB program, market
performance may reduce your Account Value. If your Account Value is equal
to zero, and you have not received all of your Protected Value in the form
of withdrawals from your Annuity, we will continue to make payments equal
to the remaining Protected Value in the form of fixed, periodic payments
until the remainder of the Protected Value is paid, at which time the
rider terminates. The fixed, periodic payments will each be equal to the
Protected Annual Withdrawal Amount, except for the last payment which may
be equal to the remaining Protected Value. We will determine the duration
for which periodic payments will continue by dividing the Protected Value
by the Protected Annual Withdrawal Amount. You will not have the right to
make additional Purchase Payments or receive the remaining Protected Value
in a lump sum. You can elect the frequency of payments, subject to our
rules then in effect.
- - If the death benefit under the Annuity becomes payable before you have
received all of your Protected Value in the form of withdrawals from your
Annuity, your Beneficiary has the option to elect to receive the remaining
Protected Value as an alternate death benefit payout in lieu of the amount
payable under any other death benefit provided under the Annuity. The
remaining Protected Value will be payable in the form of fixed, periodic
payments. Your beneficiary can elect the frequency of payments, subject to
our rules then in effect. We will determine the duration for which
periodic payments will continue by dividing the Protected Value by the
Protected Annual Withdrawal Amount. THE PROTECTED VALUE IS NOT EQUAL TO
THE ACCOUNT VALUE FOR PURPOSES OF THE ANNUITY'S OTHER DEATH BENEFIT
OPTIONS. THE GMWB PROGRAM DOES NOT INCREASE OR DECREASE THE AMOUNT
OTHERWISE PAYABLE UNDER THE ANNUITY'S OTHER DEATH BENEFIT OPTIONS.
GENERALLY, THE GMWB PROGRAM WOULD BE OF VALUE TO YOUR BENEFICIARY ONLY
WHEN THE PROTECTED VALUE AT DEATH EXCEEDS ANY OTHER AMOUNT AVAILABLE AS A
DEATH BENEFIT.
- - If you elect to begin receiving annuity payments before you have received
all of your Protected Value in the form of withdrawals from your Annuity,
an additional annuity payment option will be available that makes fixed
annuity payments for a certain period, determined by dividing the
Protected Value by the Protected Annual Withdrawal Amount. If you elect to
receive annuity payments calculated in this manner, the assumed interest
rate used to calculate such payments will be 0%, which is less than the
assumed interest rate on other annuity payment options we offer. This 0%
assumed interest rate results in lower annuity payments than what would
have been paid if the assumed interest rate was higher than 0%. YOU CAN
ALSO ELECT TO TERMINATE THE GMWB PROGRAM AND BEGIN RECEIVING ANNUITY
PAYMENTS BASED ON YOUR THEN CURRENT ACCOUNT VALUE (NOT THE REMAINING
PROTECTED VALUE) UNDER ANY OF THE AVAILABLE ANNUITY PAYMENT OPTions.
Other Important Considerations
- - Withdrawals under the GMWB program are subject to all of the terms and
conditions of the Annuity, including any CDSC and MVA that may apply.
- - Withdrawals made while the GMWB program is in effect will be treated, for
tax purposes, in the same way as any other withdrawals under the Annuity.
- - The GMWB program does not directly affect the Annuity's Account Value or
Surrender Value, but any withdrawal will decrease the Account Value by the
amount of the with-
45
OPTIMUM FOUR PROSPECTUS
Living Benefit Programs continued
drawal. If you surrender your Annuity, you will receive the current
Surrender Value, not the Protected Value.
- - You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the GMWB program. The GMWB program
provides a guarantee that if your Account Value declines due to market
performance, you will be able to receive your Protected Value in the form
of periodic benefit payments.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
Election of the Program
Currently, the GMWB program can only be elected at the time that you purchase
your Annuity. In the future, we may offer existing Annuity Owners the option to
elect the GMWB program after the Issue Date of their Annuity, subject to our
eligibility rules and restrictions. If you elect the GMWB program after the
Issue Date of your Annuity, the program will be effective as of the next
anniversary date. Your Account Value as of such anniversary date will be used to
calculate the initial Protected Value and the initial Protected Annual
Withdrawal Amount.
We reserve the right to restrict the maximum amount of Protected Value
that may be covered under the GMWB program under this Annuity or any other
annuities that you own that are issued by American Skandia or its affiliated
companies.
Termination of the Program
The program terminates automatically when your Protected Value reaches zero
based on your withdrawals. You may terminate the program at any time by
notifying us. If you terminate the program, any guarantee provided by the
benefit will terminate as of the date the termination is effective. The program
terminates upon your surrender of the Annuity, upon due proof of death (unless
your surviving spouse elects to continue the Annuity and the GMWB program or
your Beneficiary elects to receive the amounts payable under the GMWB program in
lieu of the death benefit) or upon your election to begin receiving annuity
payments.
The charge for the GMWB program will no longer be deducted from your
Account Value upon termination of the program.
Charges under the Program
Currently, we deduct a charge equal to 0.35% of the average daily net assets of
the Sub-accounts per year to purchase the GMWB program. The annual charge is
deducted daily. Account Value allocated to Fixed Allocations under the program
is not subject to the charge.
- - If, during the seven years following the effective date of the program,
you do not make any withdrawals, and do not make any additional Purchase
Payments after a five-year period following the effective date of the
program, the program will remain in effect; however, we will waive the
annual charge going forward. If you make an additional Purchase Payment
following the waiver of the annual charge, we will begin charging for the
program. After year seven (7) following the effective date of the program,
withdrawals will not cause a charge to be re-imposed.
- - If you elect to step-up the Protected Value under the program, and on the
date you elect to step-up, the charges under the program have changed for
new purchasers, your program may be subject to the new charge level for
the benefit.
Additional Tax Considerations for Qualified Contracts
If you purchase an Annuity as an investment vehicle for "qualified" investments,
including an IRA, SEP-IRA, Roth IRA or Tax Sheltered Annuity (or 403(b)), the
minimum distribution rules under the Code require that you begin receiving
periodic amounts from your Annuity beginning after age 701/2. The amount
required under the Code may exceed the Protected Annual Withdrawal Amount, which
will cause us to recalculate the Protected Value and the Protected Annual
Withdrawal Amount, resulting in a lower amount payable in future Annuity Years.
In addition, the amount and duration of payments under the annuity payment and
death benefit provisions may be adjusted so that the payments do not trigger any
penalty or excise taxes due to tax considerations such as minimum distribution
requirements.
46
OPTIMUM FOUR PROSPECTUS
GUARANTEED MINIMUM INCOME BENEFIT
(GMIB)
THE GUARANTEED MINIMUM INCOME BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL,
AND WILL BE OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE
REGULATORY APPROVAL IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY
DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. CURRENTLY, THE PROGRAM CAN ONLY
BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY. WE MAY OFFER
THE PROGRAM TO EXISTING ANNUITY OWNERS IN THE FUTURE, SUBJECT TO OUR
ELIGIBILITY RULES AND RESTRICTIONS. THE GUARANTEED MINIMUM INCOME BENEFIT
PROGRAM IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION PROGRAM,
GUARANTEED RETURN OPTION PLUS PROGRAM, THE GUARANTEED MINIMUM WITHDRAWAL
BENEFIT RIDER OR THE LIFETIME FIVE INCOME BENEFIT RIDER.
We offer a program that, after a seven-year waiting period, guarantees
your ability to begin receiving income from your Annuity in the form of annuity
payments based on a guaranteed minimum value (called the "Protected Income
Value") that increases after the waiting period begins, regardless of the impact
of market performance on your Account Value. The program may be appropriate for
you if you anticipate using your Annuity as a future source of periodic fixed
income payments for the remainder of your life and wish to ensure that the basis
upon which your income payments will be calculated will achieve at least a
minimum amount despite fluctuations in market performance. There is an
additional charge if you elect the GMIB program.
KEY FEATURE -- Protected Income Value
The Protected Income Value is the minimum amount that we guarantee will be
available (net of any applicable tax charge), after a waiting period of at least
seven years, as a basis to begin receiving fixed annuity payments. The Protected
Income Value is initially established on the effective date of the GMIB program
and is equal to your Account Value on such date. Currently, since the GMIB
program may only be elected at issue, the effective date is the Issue Date of
the Annuity. The Protected Income Value is increased daily based on an annual
growth rate of 5%, subject to the limitations described below. The Protected
Income Value is referred to as the "Protected Value" in the rider we issue for
this benefit. The 5% annual growth rate is referred to as the "Roll-Up
Percentage" in the rider we issue for this benefit.
The Protected Income Value is subject to a limit of 200% (2x) of the sum
of the Protected Income Value established on the effective date of the GMIB
program, or the effective date of any step-up value, plus any additional
Purchase Payments made after the waiting period begins ("Maximum Protected
Income Value"), minus the sum of any reductions in the Protected Income Value
due to withdrawals you make from the Annuity after the waiting period begins.
- - Subject to the maximum age/durational limits described immediately below,
we will no longer increase the Protected Income Value by the 5% annual
growth rate once you reach the Maximum Protected Income Value. However, we
will increase the Protected Income Value by the amount of any additional
Purchase Payments after you reach the Maximum Protected Income Value.
Further, if you make withdrawals after you reach the Maximum Protected
47
OPTIMUM FOUR PROSPECTUS
Living Benefit Programs continued
Income Value, we will reduce the Protected Income Value and the Maximum
Protected Income Value by the proportional impact of the withdrawal on
your Account Value.
- - Subject to the Maximum Protected Income Value, we will no longer increase
the Protected Income Value by the 5% annual growth rate after the later of
the anniversary date on or immediately following the Annuitant's 80th
birthday or the 7th anniversary of the later of the effective date of the
GMIB program or the effective date of the most recent step-up. However, we
will increase the Protected Income Value by the amount of any additional
Purchase Payments. Further, if you make withdrawals after the Annuitant
reaches the maximum age/duration limits, we will reduce the Protected
Income Value and the Maximum Protected Income Value by the proportional
impact of the withdrawal on your Account Value.
- - Subject to the Maximum Protected Income Value, if you make an additional
Purchase Payment, we will increase the Protected Income Value by the
amount of the Purchase Payment and will apply the 5% annual growth rate on
the new amount from the date the Purchase Payment is applied.
- - As described below, after the waiting period begins, cumulative
withdrawals each Annuity Year that are up to 5% of the Protected Income
Value on the prior anniversary of the Annuity will reduce the Protected
Income Value by the amount of the withdrawal. Cumulative withdrawals each
Annuity Year in excess of 5% of the Protected Income Value on the prior
anniversary of the Annuity, will reduce the Protected Income Value
proportionately. All withdrawals after the Maximum Protected Income Value
is reached will reduce the Protected Income Value proportionately. The 5%
annual growth rate will be applied to the reduced Protected Income Value
from the date of the withdrawal.
Stepping-Up the Protected Income Value -- You may elect to "step-up" or
"reset" your Protected Income Value if your Account Value is greater than the
current Protected Income Value. Upon exercise of the step-up provision, your
initial Protected Income Value will be reset equal to your current Account
Value. From the date that you elect to step-up the Protected Income Value, we
will apply the 5% annual growth rate to the stepped-up Protected Income Value,
as described above. You can exercise the step-up provision twice while the GMIB
program is in effect, and only while the Annuitant is less than age 76.
- - A new seven-year waiting period will be established upon the effective
date of your election to step-up the Protected Income Value. You cannot
exercise your right to begin receiving annuity payments under the GMIB
program until the end of the new waiting period.
- - The Maximum Protected Income Value will be reset as of the effective date
of any step-up. The new Maximum Protected Income Value will be equal to
200% of the sum of the Protected Income Value as of the effective date of
the step-up plus any subsequent Purchase Payments, minus the impact of any
withdrawals after the date of the step-up.
- - When determining the guaranteed annuity purchase rates for annuity
payments under the GMIB program, we will apply such rates based on the
number of years since the most recent step-up.
- - If you elect to step-up the Protected Income Value under the program, and
on the date you elect to step-up, the charges under the GMIB program have
changed for new purchasers, your program may be subject to the new charge
going forward.
- - A step-up will increase the dollar for dollar limit on the anniversary of
the Issue Date of the Annuity following such step-up.
Impact of Withdrawals on the Protected Income Value -- Cumulative
withdrawals each Annuity Year up to 5% of the Protected Income Value will reduce
the Protected Income Value on a "dollar-for-dollar" basis (the Protected Income
Value is reduced by the actual amount of the withdrawal). Cumulative withdrawals
in any Annuity Year in excess of 5% of the Protected Income Value will reduce
the Protected Income Value proportionately (see the examples of this calculation
below). The 5% annual withdrawal amount is determined on each anniversary of the
Issue Date (or on the Issue Date for the first Annuity Year) and applies to any
withdrawals during the Annuity Year. This means that the amount available for
withdrawals each Annuity Year on a "dollar-for-dollar" basis is adjusted on each
Annuity anniversary to reflect changes in the Protected Income Value during the
prior Annuity Year.
The following examples of dollar-for-dollar and proportional reductions
assume that: 1.) the Issue Date and the effective date of the GMIB program are
October 13, 2005; 2.) an initial Purchase Payment of $250,000; 3.) an initial
Protected Income Value of $250,000; and 4.) a dollar-for-dollar limit of $12,500
(5% of $250,000):
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OPTIMUM FOUR PROSPECTUS
Example 1. Dollar-for-dollar reduction
A $10,000 withdrawal is taken on November 13, 2005 (in the first Annuity Year).
No prior withdrawals have been taken. Immediately prior to the withdrawal, the
Protected Income Value is $251,038.10 (the initial value accumulated for 31 days
at an annual effective rate of 5%). As the amount withdrawn is less than the
dollar-for-dollar limit:
- - the Protected Income Value is reduced by the amount withdrawn (i.e., by
$10,000, from $251,038.10 to $241,038.10).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance
of the first Annuity Year is also reduced by the amount withdrawn (from
$12,500 to $2,500).
Example 2. Dollar-for-dollar and proportional reductions
A second $10,000 withdrawal is taken on December 13, 2005 (still within the
first Annuity Year). Immediately before the withdrawal, the Account Value is
$220,000 and the Protected Income Value is $242,006.64. As the amount withdrawn
exceeds the Remaining Limit of $2,500 from Example 1:
- - the Protected Income Value is first reduced by the Remaining Limit (from
$242,006.64 to $239,506.64);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the Remaining Limit ($10,000 -
$2,500, or $7,500).
- B is the Account Value less the Remaining Limit ($220,000 - $2,500, or
$217,500).
The resulting Protected Income Value is: $239,506.64 x (1 - $7,500 /
$217,500), or $231,247.79.
- - The Remaining Limit is set to zero (0) for the balance of the first
Annuity Year.
Example 3. Reset of the Dollar-for-dollar Limit
A $10,000 withdrawal is made on the first anniversary of the Issue Date, October
13, 2006 (second Annuity Year). Prior to the withdrawal, the Protected Income
Value is $240,838.37. The Remaining Limit is reset to 5% of this amount, or
$12,041.92. As the amount withdrawn is less than the dollar-for-dollar limit:
- - the Protected Income Value is reduced by the amount withdrawn (i.e.,
reduced by $10,000, from $240,838.37 to $230,838.37).
- - The Remaining Limit for the balance of the second Annuity Year is also
reduced by the amount withdrawn (from $12,041.92 to $2,041.92).
KEY FEATURE -- GMIB Annuity Payments
You can elect to apply the Protected Income Value to one of the available GMIB
Annuity Payment Options on any anniversary date following the initial waiting
period, or any subsequent waiting period established upon your election to
step-up the Protected Income Value. Once you have completed the waiting period,
you will have a 30-day period each year, prior to the Annuity anniversary,
during which you may elect to begin receiving annuity payments under one of the
available GMIB Annuity Payment Options. You must elect one of the GMIB Annuity
Payment Options by the anniversary of the Annuity's Issue Date on or immediately
following the Annuitant's 95th birthday, except for Annuities used as a funding
vehicle for an IRA, SEP IRA or 403(b), in which case you must elect one of the
GMIB Annuity Payment Options by the anniversary of the Annuity's Issue Date on
or immediately following the Annuitant's 92nd birthday.
The amount of each GMIB Annuity Payment will be determined based on the
age and, where permitted by law, sex of the Annuitant by applying the Protected
Income Value (net of any applicable tax charge that may be due) to the GMIB
Annuity Payment Option you choose. We use special annuity purchase rates to
calculate the amount of each payment due under the GMIB Annuity Payment Options.
These special rates for the GMIB Annuity Payment Options are calculated using an
assumed interest rate factor that provides for lower growth in the value applied
to produce annuity payments than if you elected an annuity payment option that
is not part of the GMIB program. These special rates also are calculated using
other factors such as "age setbacks" (use of an age lower than the Annuitant's
actual age) that result in lower payments than would result if you elected an
annuity payment option that is not part of the GMIB program. Use of an age
setback entails a longer assumed life for the Annuitant which in turn results in
lower annuity payments.
ON THE DATE THAT YOU ELECT TO BEGIN RECEIVING GMIB ANNUITY PAYMENTS, WE
GUARANTEE THAT YOUR PAYMENTS WILL BE CALCULATED BASED ON YOUR ACCOUNT VALUE AND
OUR THEN CURRENT ANNUITY PURCHASE RATES IF THE PAYMENT AMOUNT CALCULATED ON THIS
BASIS WOULD BE HIGHER THAN IT WOULD BE BASED ON THE PROTECTED INCOME VALUE AND
THE SPECIAL GMIB ANNUITY PURCHASE RATES.
GMIB Annuity Payment Option 1 -- Payments for Life with a Certain Period
Under this option, monthly annuity payments will be made until the death of the
Annuitant. If the Annuitant dies before having
49
OPTIMUM FOUR PROSPECTUS
Living Benefit Programs continued
received 120 monthly annuity payments, the remainder of the 120 monthly annuity
payments will be made to the Beneficiary.
GMIB Annuity Payment Option 2 -- Payments for Joint Lives with a Certain Period
Under this option, monthly annuity payments will be made until the death of both
the Annuitant and the Joint Annuitant. If the Annuitant and the Joint Annuitant
die before having received 120 monthly annuity payments, the remainder of the
120 monthly annuity payments will be made to the Beneficiary.
- - If the Annuitant dies first, we will continue to make payments until the
later of the death of the Joint Annuitant and the end of the period
certain. However, if the Joint Annuitant is still receiving annuity
payments following the end of the certain period, we will reduce the
amount of each subsequent payment to 50% of the original payment amount.
- - If the Joint Annuitant dies first, we will continue to make payments until
the later of the death of the Annuitant and the end of the period certain.
You cannot withdraw your Account Value or the Protected Income Value under
either GMIB Annuity Payment Option once annuity payments have begun. We may make
other payout frequencies available, such as quarterly, semi-annually or
annually.
Other Important Considerations
- - You should note that GMIB is designed to provide a type of insurance that
serves as a safety net only in the event your Account Value declines
significantly due to negative investment performance. If your contract
value is not significantly affected by negative investment performance, it
is unlikely that the purchase of the GMIB will result in your receiving
larger annuity payments than if you had not purchased GMIB. This is
because the assumptions that we use in computing the GMIB, such as the
annuity purchase rates, (which include assumptions as to age-setbacks and
assumed interest rates), are more conservative than the assumptions that
we use in computing annuity payout options outside of GMIB. Therefore, you
may generate higher income payments if you were to annuitize a lower
Account Value at the current annuity purchase rates, than if you were to
annuitize under the GMIB with a higher Protected Value than your Account
Value but, at the annuity purchase rates guaranteed under the GMIB. The
GMIB program does not directly affect the Annuity's Account Value,
Surrender Value or the amount payable under either the basic death benefit
provision of the Annuity or any optional death benefit provision. If you
surrender your Annuity, you will receive the current Surrender Value, not
the Protected Income Value. The Protected Income Value is only applicable
if you elect to begin receiving annuity payments under one of the GMIB
annuity options after the waiting period.
- - The Annuity offers other annuity payment options that you can elect which
do not impose an additional charge, but which do not offer to guarantee a
minimum value on which to make annuity payments.
- - Where allowed by law, we reserve the right to limit subsequent purchase
payments if we determine, at our sole discretion, that based on the timing
of your Purchase Payments and withdrawals, your Protected Income Value is
increasing in ways we did not intend. In determining whether to limit
Purchase Payments, we will look at Purchase Payments which are
disproportionately larger than your initial Purchase Payment and other
actions that may artificially increase the Protected Income Value.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
- - If you change the Annuitant after the effective date of the GMIB program,
the period of time during which we will apply the 5% annual growth rate
may be changed based on the age of the new Annuitant. If the new Annuitant
would not be eligible to elect the GMIB program based on his or her age at
the time of the change, then the GMIB program will terminate.
- - Annuity payments made under the GMIB program are subject to the same tax
treatment as any other annuity payment.
- - At the time you elect to begin receiving annuity payments under the GMIB
program or under any other annuity payment option we make available, the
protection provided by the Annuity's basic death benefit or any optional
death benefit provision you elected will no longer apply.
50
OPTIMUM FOUR PROSPECTUS
Election of the Program
Currently, the GMIB program can only be elected at the time that you purchase
your Annuity. The Annuitant must be age 75 or less as of the effective date of
the GMIB program. In the future, we may offer existing Annuity Owners the option
to elect the GMIB program after the Issue Date of their Annuity, subject to our
eligibility rules and restrictions. If you elect the GMIB program after the
Issue Date of your Annuity, the program will be effective as of the date of
election. Your Account Value as of that date will be used to calculate the
Protected Income Value as of the effective date of the program.
Termination of the Program
The GMIB program cannot be terminated by the Owner once elected. The GMIB
program automatically terminates as of the date the Annuity is fully
surrendered, on the date the death benefit is payable to your Beneficiary
(unless your surviving spouse elects to continue the Annuity), or on the date
that your Account Value is transferred to begin making annuity payments. The
GMIB program may also be terminated if you designate a new Annuitant who would
not be eligible to elect the GMIB program based on his or her age at the time of
the change.
Upon termination of the GMIB program we will deduct the charge from your
Account Value for the portion of the Annuity Year since the prior anniversary of
the Annuity's Issue Date (or the Issue Date if in the first Annuity Year).
Charges under the Program
Currently, we deduct a charge equal to 0.50% per year of the average Protected
Income Value for the period the charge applies. Because the charge is calculated
based on the average Protected Income Value, it does not increase or decrease
based on changes to the Annuity's Account Value due to market performance. The
dollar amount you pay each year will increase in any year the Protected Income
Value increases, and it will decrease in any year the Protected Income Value
decreases due to withdrawal, irrespective of whether your Account Value
increases or decreases.
The charge is deducted annually in arrears each Annuity Year on the
anniversary of the Issue Date of the Annuity. We deduct the amount of the charge
pro-rata from the Account Value allocated to the variable investment options and
the Fixed Allocations. No MVA will apply to Account Value deducted from a Fixed
Allocation. If you surrender your Annuity, begin receiving annuity payments
under the GMIB program or any other annuity payment option we make available
during an Annuity Year, or the GMIB program terminates, we will deduct the
charge for the portion of the Annuity Year since the prior anniversary of the
Annuity's Issue Date (or the Issue Date if in the first Annuity Year).
No charge applies after the Annuity Date.
LIFETIME FIVE INCOME BENEFIT (LIFETIME FIVE)
THE LIFETIME FIVE INCOME BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL AND
WILL BE OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE
REGULATORY APPROVAL IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY
DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. CURRENTLY, LIFETIME FIVE CAN BE
ELECTED ONLY ONCE EACH ANNUITY YEAR, AND ONLY WHERE THE ANNUITANT AND THE
OWNER ARE THE SAME PERSON OR, IF THE ANNUITY OWNER IS AN ENTITY, WHERE THERE
IS ONLY ONE ANNUITANT. WE RESERVE THE RIGHT TO LIMIT THE ELECTION FREQUENCY
IN THE FUTURE. BEFORE MAKING ANY SUCH CHANGE TO THE ELECTION FREQUENCY, WE
WILL PROVIDE PRIOR NOTICE TO OWNERS WHO HAVE AN EFFECTIVE LIFETIME FIVE
INCOME BENEFIT. THE ANNUITANT MUST BE AT LEAST 45 YEARS OLD WHEN THE PROGRAM
IS ELECTED. THE LIFETIME FIVE INCOME BENEFIT PROGRAM IS NOT AVAILABLE IF YOU
ELECT THE GUARANTEED RETURN OPTION, GUARANTEED RETURN OPTION PLUS, GUARANTEED
MINIMUM WITHDRAWAL BENEFIT OR THE GUARANTEED MINIMUM INCOME BENEFIT RIDER. AS
LONG AS YOUR LIFETIME FIVE INCOME BENEFIT IS IN EFFECT, YOU MUST ALLOCATE
YOUR ACCOUNT VALUE IN ACCORDANCE WITH AN ELIGIBLE MODEL UNDER OUR ASSET
ALLOCATION PROGRAMS, WHICH ARE GENERALLY DESCRIBED IN THE "ARE ANY ASSET
ALLOCATION PROGRAMS AVAILABLE?" SECTION ABOVE. FOR FURTHER INFORMATION ON
ASSET ALLOCATION PROGRAMS, PLEASE CONSULT WITH YOUR INVESTMENT PROFESSIONAL
OR CALL 1-800-752-6342.
We offer a program that guarantees your ability to withdraw amounts equal
to a percentage of an initial principal value (called the "Protected Withdrawal
Value"), regardless the impact of market performance on your Account Value, of
subject to our program rules regarding the timing and amount of withdrawals.
There are two options -- one is designed to provide an annual withdrawal amount
for life (the "Life Income Benefit") and the other is designed to provide a
greater annual withdrawal amount as long as there is Protected Withdrawal Value
(adjusted as described below) (the "Withdrawal Benefit").
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OPTIMUM FOUR PROSPECTUS
Living Benefit Programs continued
If there is no Protected Withdrawal Value, the withdrawal benefit will be zero.
You do not choose between these two options; each option will continue to be
available as long as the Annuity has an Account Value and the Lifetime Five is
in effect. Certain benefits under Lifetime Five may remain in effect even if the
Account Value of the Annuity is zero. The program may be appropriate if you
intend to make periodic withdrawals from your Annuity and wish to ensure that
market performance will not affect your ability to receive annual payments. You
are not required to make withdrawals as part of the program -- the guarantees
are not lost if you withdraw less than the maximum allowable amount each year
under the rules of the program.
KEY FEATURE -- Protected Withdrawal Value
The Protected Withdrawal Value is initially used to determine the amount of each
initial annual payment under the Life Income Benefit and the Withdrawal Benefit.
The initial Protected Withdrawal Value is determined as of the date you make
your first withdrawal under the Annuity following your election of Lifetime
Five. The initial Protected Withdrawal Value is equal to the greater of (A) the
Account Value on the date you elect Lifetime Five, plus any additional Purchase
Payments each growing at 5% per year from the date of your election of the
program, or application of the Purchase Payment to your Annuity, as applicable,
until the date of your first withdrawal or the 10th anniversary of the benefit
effective date, if earlier (B) the Account Value as of the date of the first
withdrawal from your Annuity, prior to the withdrawal, and (C) the highest
Account Value on each Annuity anniversary prior to the first withdrawal or on
the first 10 Annuity anniversaries if earlier than the date of your first
withdrawal after the benefit effective date. Each value is increased by the
amount of any subsequent Purchase Payments.
- - If you elect the Lifetime Five program at the time you purchase your
Annuity, the Account Value will be your initial Purchase Payment.
- - For existing Owners who are electing the Lifetime Five benefit, the
Account Value on the date of your election of the Lifetime Five program
will be used to determine the initial Protected Withdrawal Value.
- - If you make additional Purchase Payments after your first withdrawal, the
Protected Withdrawal Value will be increased by the amount of each
additional Purchase Payment.
You may elect to step-up your Protected Withdrawal Value if, due to
positive market performance, your Account Value is greater than the Protected
Withdrawal Value. You are eligible to step-up the Protected Withdrawal Value on
or after the 5th anniversary of the first withdrawal under the Lifetime Five
program. The Protected Withdrawal Value can be stepped up again on or after the
5th anniversary following the preceding step-up. If you elect to step-up the
Protected Withdrawal Value under the program, and on the date you elect to
step-up, the charges under the Lifetime Five program have changed for new
purchasers, your program may be subject to the new charge going forward.
Upon election of the step-up, we increase the Protected Withdrawal Value
to be equal to the then current Account Value. For example, assume your initial
Protected Withdrawal Value was $100,000 and you have made cumulative withdrawals
of $40,000, reducing the Protected Withdrawal Value to $60,000. On the date you
are eligible to step-up the Protected Withdrawal Value, your Account Value is
equal to $75,000. You could elect to step-up the Protected Withdrawal Value to
$75,000 on the date you are eligible. If your current Annual Income Amount and
Annual Withdrawal Amount are less than they would be if we did not reflect the
step-up in Protected Withdrawal Value, then we will increase these amounts to
reflect the step-up as described below.
The Protected Withdrawal Value is reduced each time a withdrawal is made
on a dollar-for-dollar basis up to 7% per Annuity Year of the Protected
Withdrawal Value and on the greater of a dollar-for-dollar basis or a pro-rata
basis for withdrawals in an Annuity Year in excess of that amount until the
Protected Withdrawal Value is reduced to zero. At that point the Annual
Withdrawal Amount will be zero until such time (if any) as the Annuity reflects
a Protected Withdrawal Value (for example, due to a step-up or additional
Purchase Payments being made into the Annuity).
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OPTIMUM FOUR PROSPECTUS
KEY FEATURE -- Annual Income Amount under the Life Income Benefit
The initial Annual Income Amount is equal to 5% of the initial Protected
Withdrawal Value. Under the Lifetime Five program, if your cumulative
withdrawals in an Annuity Year are less than or equal to the Annual Income
Amount, they will not reduce your Annual Income Amount in subsequent Annuity
Years. If your cumulative withdrawals are in excess of the Annual Income Amount
("Excess Income"), your Annual Income Amount in subsequent years will be reduced
(except with regard to required minimum distributions) by the result of the
ratio of the Excess Income to the Account Value immediately prior to such
withdrawal (see examples of this calculation below). Reductions include the
actual amount of the withdrawal, including any CDSC that may apply. A withdrawal
can be considered Excess Income under the Life Income Benefit even though it
does not exceed the Annual Withdrawal Amount under the Withdrawal Benefit. When
you elect a step-up, your Annual Income Amount increases to equal 5% of your
Account Value after the step-up if such amount is greater than your Annual
Income Amount. Your Annual Income Amount also increases if you make additional
Purchase Payments. The amount of the increase is equal to 5% of any additional
Purchase Payments. Any increase will be added to your Annual Income Amount
beginning on the day that the step-up is effective or the Purchase Payment is
made. A determination of whether you have exceeded your Annual Income Amount is
made at the time of each withdrawal; therefore a subsequent increase in the
Annual Income Amount will not offset the effect of a withdrawal that exceeded
the Annual Income Amount at the time the withdrawal was made.
KEY FEATURE -- Annual Withdrawal Amount under the Withdrawal Benefit
The initial Annual Withdrawal Amount is equal to 7% of the initial Protected
Withdrawal Value. Under the Lifetime Five program, if your cumulative
withdrawals each Annuity Year are less than or equal to the Annual Withdrawal
Amount, your Protected Withdrawal Value will be reduced on a dollar-for-dollar
basis. If your cumulative withdrawals are in excess of the Annual Withdrawal
Amount ("Excess Withdrawal"), your Annual Withdrawal Amount will be reduced
(except with regard to required minimum distributions) by the result of the
ratio of the Excess Withdrawal to the Account Value immediately prior to such
withdrawal (see the examples of this calculation below). Reductions include the
actual amount of the withdrawal, including any CDSC that may apply. When you
elect a step-up, your Annual Withdrawal Amount increases to equal 7% of your
Account Value after the step-up if such amount is greater than your Annual
Withdrawal Amount. Your Annual Withdrawal Amount also increases if you make
additional Purchase Payments. The amount of the increase is equal to 7% of any
additional Purchase Payments. A determination of whether you have exceeded your
Annual Withdrawal Amount is made at the time of each withdrawal; therefore, a
subsequent increase in the Annual Withdrawal Amount will not offset the effect
of a withdrawal that exceeded the Annual Withdrawal Amount at the time the
withdrawal was made.
The Lifetime Five program does not affect your ability to make withdrawals
under your Annuity or limit your ability to request withdrawals that exceed the
Annual Income Amount and the Annual Withdrawal Amount. You are not required to
withdraw all or any portion of the Annual Withdrawal Amount or Annual Income
Amount in each Annuity Year.
- - If, cumulatively, you withdraw an amount less than the Annual Withdrawal
Amount under the Withdrawal Benefit in any Annuity Year, you cannot
carry-over the unused portion of the Annual Withdrawal Amount to
subsequent Annuity Years. However, because the Protected Withdrawal Value
is only reduced by the actual amount of withdrawals you make under these
circumstances, any unused Annual Withdrawal Amount may extend the period
of time until the remaining Protected Withdrawal Value is reduced to zero.
- - If, cumulatively, you withdraw an amount less than the Annual Income
Amount under the Life Income Benefit in any Annuity Year, you cannot
carry-over the unused portion of the Annual Income Amount to subsequent
Annuity Years. However, because the Protected Withdrawal Value is only
reduced by the actual amount of withdrawals you make under these
circumstances, any unused Annual Income Amount may extend the period of
time until the remaining Protected Withdrawal Value is reduced to zero.
The following examples of dollar-for-dollar and proportional reductions
and the step-up of the Protected Withdrawal Value, Annual Withdrawal Amount and
Annual Income Amount assume: 1.) the Issue Date and the Effective Date of the
Lifetime Five program are February 1, 2005; 2.) an initial Purchase Payment of
$250,000; 3.) the Account Value on February 1, 2006 is equal to $265,000; 4.)
the first withdrawal occurs
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OPTIMUM FOUR PROSPECTUS
Living Benefit Programs continued
on March 1, 2006 when the Account Value is equal to $263,000; and 5.) the
Account Value on March 1, 2011 is equal to $240,000.
The initial Protected Withdrawal Value is calculated as the greatest of
(a), (b) and (c):
(a) Purchase payment accumulated at 5% per year from February 1, 2005
until March 1, 2006 (393 days) = $250,000 x 1.05(393/365) =
$263,484.33
(b) Account Value on March 1, 2006 (the date of the first withdrawal) =
$263,000
(c) Account Value on February 1, 2006 (the first Annuity Anniversary) =
$265,000
Therefore, the initial Protected Withdrawal Value is equal to $265,000.
The Annual Withdrawal Amount is equal to $18,550 under the Withdrawal Benefit
(7% of $265,000). The Annual Income Amount is equal to $13,250 under the Life
Income Benefit (5% of $265,000).
Example 1. Dollar-for-dollar reduction
If $10,000 was withdrawn (less than both the Annual Income Amount and the Annual
Withdrawal Amount) on March 1, 2006, then the following values would result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 -
$10,000 = $8,550
Annual Withdrawal Amount for future Annuity Years remains at $18,550
- - Remaining Annual Income Amount for current Annuity Year = $13,250 -
$10,000 = $3,250
Annual Income Amount for future Annuity Years remains at $13,250
- - Protected Withdrawal Value is reduced by $10,000 from $265,000 to $255,000
Example 2. Dollar-for-dollar and proportional reductions
(a) If $15,000 was withdrawn (more than the Annual Income Amount but
less than the Annual Withdrawal Amount) on March 1, 2006, then the
following values would result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 -
$15,000 = $3,550
Annual Withdrawal Amount for future Annuity Years remains at $18,550
- - Remaining Annual Income Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Income Amount ($15,000 - $13,250 =
$1,750) reduces Annual Income Amount for future Annuity Years.
- - Reduction to Annual Income Amount = Excess Income/ Account Value before
Excess Income x Annual Income Amount = $1,750 / ($263,000 - $13,250) x
$13,250 = $93
Annual Income Amount for future Annuity Years = $13,250 - $93 = $13,157
- - Protected Withdrawal Value is reduced by $15,000 from $265,000 to $250,000
(b) If $25,000 was withdrawn (more than both the Annual Income Amount
and the Annual Withdrawal Amount) on March 1, 2006, then the
following values would result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $0 Excess of
withdrawal over the Annual Withdrawal Amount ($25,000 - $18,550 = $6,450)
reduces Annual Withdrawal Amount for future Annuity Years.
- - Reduction to Annual Withdrawal Amount = Excess Withdrawal/Account Value
before Excess Withdrawal x Annual Withdrawal Amount = $6,450 / ($263,000 -
$18,550) x $18,550 = $489
Annual Withdrawal Amount for future Annuity Years = $18,550 - $489 =
$18,061
- - Remaining Annual Income Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Income Amount ($25,000 - $13,250 =
$11,750) reduces Annual Income Amount for future Annuity Years.
- - Reduction to Annual Income Amount = Excess Income/Account Value before
Excess Income x Annual Income Amount = $11,750 / ($263,000 - $13,250) x
$13,250 = $623
Annual Income Amount for future Annuity Years = $13,250 - $623 = $12,627
- - Protected Withdrawal Value is first reduced by the Annual Withdrawal
Amount ($18,550) from $265,000 to $246,450. It is further reduced by the
greater of a dollar-for-dollar reduction or a proportional reduction.
Dollar-for-dollar reduction = $25,000 - $18,550 = $6,450
- - Proportional reduction = Excess Withdrawal / Account Value before Excess
Withdrawal x Protected Withdrawal Value = $6,450 / ($263,000 - $18,550) x
$246,450 = $6,503
54
OPTIMUM FOUR PROSPECTUS
Protected Withdrawal Value = $246,450 - max {$6,450, $6,503} = $239,947
Example 3. Step-up of the Protected Withdrawal Value
If the Annual Income Amount ($13,250) is withdrawn each year starting on March
1, 2006 for a period of 5 years, the Protected Withdrawal Value on March 1, 2011
would be reduced to $198,750 {$265,000 - ($13,250 x 5)}. If a step-up is elected
on March 1, 2011, then the following values would result:
- - Protected Withdrawal Value = Account Value on March 1, 2011 = $240,000
- - Annual Income Amount is equal to the greater of the current Annual Income
Amount or 5% of the stepped-up Protected Withdrawal Value. Current Annual
Income Amount is $13,250. 5% of the stepped-up Protected Withdrawal Value
is 5% of $240,000, which is $12,000. Therefore, the Annual Income Amount
remains $13,250.
- - Annual Withdrawal Amount is equal to the greater of the current Annual
Withdrawal Amount or 7% of the stepped up Protected Withdrawal Value.
Current Annual Withdrawal Amount is $18,550. 7% of the stepped-up
Protected Withdrawal Value is 7% of $240,000, which is $16,800. Therefore
the Annual Withdrawal Amount remains $18,550.
BENEFITS UNDER THE LIFETIME FIVE PROGRAM
- - If your Account Value is equal to zero, and the cumulative withdrawals in
the current Annuity Year are greater than the Annual Withdrawal Amount,
the Lifetime Five program will terminate. To the extent that your Account
Value was reduced to zero as a result of cumulative withdrawals that are
equal to or less than the Annual Income Amount and amounts are still
payable under both the Life Income Benefit and the Withdrawal Benefit, you
will be given the choice of receiving the payments under the Life Income
Benefit or under the Withdrawal Benefit. Once you make this election we
will make an additional payment for that Annuity Year equal to either the
remaining Annual Income Amount or Annual Withdrawal Amount for the Annuity
Year, if any, depending on the option you choose. In subsequent Annuity
Years we make payments that equal either the Annual Income Amount or the
Annual Withdrawal Amount as described in this Prospectus. You will not be
able to change the option after your election and no further Purchase
Payments will be accepted under your Annuity. If you do not make an
election, we will pay you annually under the Life Income Benefit. To the
extent that cumulative withdrawals in the current Annuity Year that
reduced your Account Value to zero are more than the Annual Income Amount
but less than or equal to the Annual Withdrawal Amount and amounts are
still payable under the Withdrawal Benefit, you will receive the payments
under the Withdrawal Benefit. In the year of a withdrawal that reduced
your Account Value to zero, we will make an additional payment to equal
any remaining Annual Withdrawal Amount and make payments equal to the
Annual Withdrawal Amount in each subsequent year (until the Protected
Withdrawal Value is depleted). Once your Account Value equals zero no
further Purchase Payments will be accepted under your Annuity.
- - If annuity payments are to begin under the terms of your Annuity or if you
decide to begin receiving annuity payments and there is any Annual Income
Amount due in subsequent Annuity Years or any remaining Protected
Withdrawal Value, you can elect one of the following three options:
(1) apply your Account Value to any annuity option available; or
(2) request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We
make such annuity payments until the Annuitant's death; or
(3) request that, as of the date annuity payments are to begin, we pay
out any remaining Protected Withdrawal Value as annuity payments.
Each year such annuity payments will equal the Annual Withdrawal
Amount or the remaining Protected Withdrawal Value if less. We make
such annuity payments until the earlier of the Annuitant's death or
the date the Protected Withdrawal Value is depleted.
We must receive your request in a form acceptable to us at our office.
- - In the absence of an election when mandatory annuity payments are to
begin, we will make annual annuity payments as a single life fixed annuity
with five payments certain using the greater of the annuity rates then
currently available or the annuity rates guaranteed in your Annuity. The
amount that will be applied to provide such annuity payments will be the
greater of:
(1) the present value of future Annual Income Amount payments. Such
present value will be calculated using the greater of the single
life fixed annuity rates then currently available or the single life
fixed annuity rates guaranteed in your Annuity; and
55
OPTIMUM FOUR PROSPECTUS
Living Benefit Programs continued
(2) the Account Value.
- - If no withdrawal was ever taken, we will determine a Protected Withdrawal
Value and calculate an Annual Income Amount and an Annual Withdrawal
Amount as if you made your first withdrawal on the date the annuity
payments are to begin.
Other Important Considerations
- - Withdrawals under the Lifetime Five program are subject to all of the
terms and conditions of the Annuity, including any CDSC.
- - Withdrawals made while the Lifetime Five program is in effect will be
treated, for tax purposes, in the same way as any other withdrawals under
the Annuity. The Lifetime Five program does not directly affect the
Annuity's Account Value or Surrender Value, but any withdrawal will
decrease the Account Value by the amount of the withdrawal (plus any
applicable CDSC). If you surrender your Annuity, you will receive the
current Surrender Value, not the Protected Withdrawal Value.
- - You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the Lifetime Five program. The
Lifetime Five program provides a guarantee that if your Account Value
declines due to market performance, you will be able to receive your
Protected Withdrawal Value or Annual Income Amount in the form of periodic
benefit payments.
- - You must allocate your Account Value in accordance with an eligible model
under an available asset allocation program or in accordance with other
options that we may permit in order to elect and maintain the Lifetime
Five program. Asset allocation programs are described generally in the
"Are Any Asset Allocation Programs Available?" section above. For further
information on asset allocation programs, please consult with your
Investment Professional or call 1-800-752-6342.
Election of the Program
The Lifetime Five program can be elected at the time that you purchase your
Annuity. We also offer existing Owners the option to elect the Lifetime Five
program after the Issue Date of their Annuity, subject to our eligibility rules
and restrictions. Your Account Value as the date of election will be used as a
basis to calculate the initial Protected Withdrawal Value, the initial Protected
Annual Withdrawal Amount, and the Annual Income Amount.
Termination of the Program
The program terminates automatically when your Protected Withdrawal Value and
Annual Income Amount equals zero. You may terminate the program at any time by
notifying us. If you terminate the program, any guarantee provided by the
benefit will terminate as of the date the termination is effective. The program
terminates upon your surrender of the Annuity, upon the death of the Annuitant
(but your surviving spouse may elect a new Lifetime Five if your spouse elects
the spousal continuance option and your spouse would then be eligible to elect
the benefit if he or she was a new purchaser), upon a change in ownership of the
Annuity that changes the tax identification number of the Owner, upon change in
the Annuitant or upon your election to begin receiving annuity payments.
The charge for the Lifetime Five program will no longer be deducted from
your Account Value upon termination of the program.
Additional Tax Considerations for Qualified Contracts
If you purchase an Annuity as an investment vehicle for "qualified" investments,
including an IRA, SEP-IRA, or Tax Sheltered Annuity (or 403(b)), the minimum
distribution rules under the Code require that you begin receiving periodic
amounts from your Annuity beginning after age 70 1/2. The amount required under
the Code may exceed the Annual Withdrawal Amount and the Annual Income Amount,
which will cause us to increase the Annual Income Amount and the Annual
Withdrawal Amount in any Annuity Year that required minimum distributions due
from your Annuity are greater than such amounts. Any such payments will reduce
your Protected Withdrawal Value. In addition, the amount and duration of
payments under the annuity payment and death benefit provisions may be adjusted
so that the payments do not trigger any penalty or excise taxes due to tax
considerations such as minimum distribution requirements.
56
OPTIMUM FOUR PROSPECTUS
Death Benefit
WHAT TRIGGERS THE PAYMENT OF A DEATH BENEFIT?
The Annuity provides a Death Benefit during its accumulation period. If the
Annuity is owned by one or more natural persons, the Death Benefit is payable
upon the first death of an Owner. IF THE ANNUITY IS OWNED BY AN ENTITY, THE
DEATH BENEFIT IS PAYABLE UPON THE ANNUITANT'S DEATH, IF THERE IS NO CONTINGENT
ANNUITANT. If a Contingent Annuitant was designated before the Annuitant's death
and the Annuitant dies, then the Contingent Annuitant becomes the Annuitant and
a Death Benefit will not be paid at that time. The person upon whose death the
Death Benefit is paid is referred to below as the "decedent."
BASIC DEATH BENEFIT
The Annuity provides a basic Death Benefit at no additional charge. The
Insurance Charge we deduct daily from your Account Value allocated to the
Sub-accounts is used, in part, to pay us for the risk we assume in providing the
basic Death Benefit guarantee under the Annuity. The Annuity also offers three
different optional Death Benefits that can be purchased for an additional
charge. The additional charge is deducted to compensate American Skandia for
providing increased insurance protection under the optional Death Benefits.
NOTWITHSTANDING THE ADDITIONAL PROTECTION PROVIDED UNDER THE OPTIONAL DEATH
BENEFITS, THE ADDITIONAL COST HAS THE IMPACT OF REDUCING THE NET PERFORMANCE OF
THE INVESTMENT OPTIONS.
The basic Death Benefit is the greater of:
- - The sum of all Purchase Payments less the sum of all proportional
withdrawals.
- - The sum of your Account Value in the variable investment options and your
Interim Value in the Fixed Allocations.
"PROPORTIONAL WITHDRAWALS" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn. For
example, a withdrawal of 50% of Account Value would be considered as a 50%
reduction in Purchase Payments for purposes of calculating the basic Death
Benefit.
OPTIONAL DEATH BENEFITS
Three optional Death Benefits are offered for purchase with your Annuity to
provide an enhanced level of protection for your beneficiaries.
CURRENTLY, THESE BENEFITS ARE ONLY OFFERED IN THOSE JURISDICTIONS WHERE WE
HAVE RECEIVED REGULATORY APPROVAL AND MUST BE ELECTED AT THE TIME THAT YOU
PURCHASE YOUR ANNUITY. WE MAY, AT A LATER DATE, ALLOW EXISTING ANNUITY OWNERS
TO PURCHASE AN OPTIONAL DEATH BENEFIT SUBJECT TO OUR RULES AND ANY CHANGES OR
RESTRICTIONS IN THE BENEFITS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED AND IF YOU PURCHASE YOUR ANNUITY AS PART OF AN
EXCHANGE, REPLACEMENT OR TRANSFER, IN WHOLE OR IN PART, FROM ANY OTHER
ANNUITY WE ISSUE. THE "COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE"
DEATH BENEFIT MAY ONLY BE ELECTED INDIVIDUALLY, AND CANNOT BE ELECTED IN
COMBINATION WITH ANY OTHER OPTIONAL DEATH BENEFIT.
Enhanced Beneficiary Protection Optional Death Benefit
The Enhanced Beneficiary Protection Optional Death Benefit can provide
additional amounts to your Beneficiary that may be used to offset federal and
state taxes payable on any taxable gains in your Annuity at the time of your
death. Whether this benefit is appropriate for you may depend on your particular
circumstances, including other financial resources that may be available to your
Beneficiary to pay taxes on your Annuity should you die during the accumulation
period. No benefit is payable if death occurs on or after the Annuity Date.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT PROVIDES A
BENEFIT THAT IS PAYABLE IN ADDITION TO THE BASIC DEATH BENEFIT. If the Annuity
has one Owner, the Owner must be age 75 or less at the time the benefit is
purchased. If the Annuity has joint Owners, the oldest Owner must be age 75 or
less. If the Annuity is owned by an entity, the Annuitant must be age 75 or
less.
57
OPTIMUM FOUR PROSPECTUS
Death Benefit continued
Calculation of Enhanced Beneficiary Protection Optional Death Benefit
If you purchase the Enhanced Beneficiary Protection Optional Death Benefit, the
Death Benefit is calculated as follows:
1. the BASIC DEATH BENEFIT described above;
PLUS
2. 40% of your "GROWTH" under the Annuity, as defined below.
"GROWTH" means the sum of your Account Value in the variable investment
options and your Interim Value in the Fixed Allocations, minus the total of all
Purchase Payments reduced by the sum of all proportional withdrawals.
"PROPORTIONAL WITHDRAWALS" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT IS SUBJECT TO A
MAXIMUM OF 100% OF ALL PURCHASE PAYMENTS APPLIED TO THE ANNUITY AT LEAST 12
MONTHS PRIOR TO THE DEATH OF THE DECEDENT THAT TRIGGERS THE PAYMENT OF THE
DEATH BENEFIT.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT DESCRIBED ABOVE IS
CURRENTLY BEING OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED
REGULATORY APPROVAL. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. THE ENHANCED BENEFICIARY PROTECTION DEATH
BENEFIT IS NOT AVAILABLE IF YOU ELECT THE "COMBINATION 5% ROLL-UP AND HIGHEST
ANNIVERSARY VALUE" DEATH BENEFIT. PLEASE SEE APPENDIX D FOR A DESCRIPTION OF
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT OFFERED BEFORE
NOVEMBER 18, 2002 IN THOSE JURISDICTIONS WHERE WE RECEIVED REGULATORY
APPROVAL. PLEASE REFER TO THE SECTION ENTITLED "TAX CONSIDERATIONS" FOR A
DISCUSSION OF SPECIAL TAX CONSIDERATIONS FOR PURCHASERS OF THIS BENEFIT.
See Appendix B for examples of how the Enhanced Beneficiary Protection
Optional Death Benefit is calculated.
Highest Anniversary Value Death Benefit ("HAV")
If the Annuity has one Owner, the Owner must be age 79 or less at the time
Highest Anniversary Value Optional Death Benefit is purchased. If the Annuity
has joint Owners, the oldest Owner must be age 79 or less. If the Annuity is
owned by an entity, the Annuitant must be age 79 or less.
CERTAIN OF THE PORTFOLIOS OFFERED AS SUB-ACCOUNTS UNDER THE ANNUITY ARE
NOT AVAILABLE IF YOU ELECT THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT. IN
ADDITION, WE RESERVE THE RIGHT TO REQUIRE YOU TO USE CERTAIN ASSET ALLOCATION
MODEL(S) IF YOU ELECT THIS DEATH BENEFIT.
Calculation of Highest Anniversary Value Death Benefit
The HAV Death Benefit depends on whether death occurs before or after the Death
Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value as of the Owner's date of death.
If the Owner dies on or after the Death Benefit Target Date, the Death
Benefit equals the greater of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value on the Death Benefit Target Date plus
the sum of all Purchase Payments less the sum of all proportional
withdrawals since the Death Benefit Target Date.
THE AMOUNT DETERMINED BY THIS CALCULATION IS INCREASED BY ANY PURCHASE
PAYMENTS RECEIVED AFTER THE OWNER'S DATE OF DEATH AND DECREASED BY ANY
PROPORTIONAL WITHDRAWALS SINCE SUCH DATE.
THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT DESCRIBED ABOVE IS CURRENTLY
BEING OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY
APPROVAL. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE
APPROVED. THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT IS NOT AVAILABLE IF YOU
ELECT THE "COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE" OR THE
"HIGHEST DAILY VALUE" DEATH BENEFIT.
Please refer to the definition of Death Benefit Target Date below. This
death benefit may not be an appropriate feature where the Owner's age is near
the age specified in the Death Benefit Target Date. This is because the benefit
may not have the same potential for growth as it otherwise would, since there
will be fewer contract anniversaries before the death benefit target date is
reached. The death benefit target date under this death benefit is earlier than
the death benefit target date under the Combination 5% Roll-up and Highest
Anniversary Value Death
58
OPTIMUM FOUR PROSPECTUS
Benefit for Owners who are age 76 or older when the Annuity is issued, which may
result in a lower value on the death benefit, since there will be fewer contract
anniversaries before the death benefit target date is reached.
See Appendix B for examples of how the Highest Anniversary Value Death Benefit
is calculated.
Combination 5% Roll-up and Highest Anniversary Value Death Benefit
If the Annuity has one Owner, the Owner must be age 79 or less at the time the
Combination 5% Roll-up and HAV Optional Death Benefit is purchased. If the
Annuity has joint Owners, the oldest Owner must be age 79 or less. If the
Annuity is owned by an entity, the Annuitant must be age 79 or less.
CERTAIN OF THE PORTFOLIOS OFFERED AS SUB-ACCOUNTS UNDER THE ANNUITY ARE
NOT AVAILABLE IF YOU ELECT THE COMBINATION 5% ROLL-UP AND HAV DEATH BENEFIT. IN
ADDITION, WE RESERVE THE RIGHT TO REQUIRE YOU TO USE CERTAIN ASSET ALLOCATION
MODEL(S) IF YOU ELECT THIS DEATH BENEFIT.
CALCULATION OF THE COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH
BENEFIT
The Combination 5% Roll-up and HAV Death Benefit equals the greatest of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value death benefit described above, and
3. 5% Roll-up described below.
The calculation of the 5% Roll-up depends on whether death occurs before
or after the Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date the 5% Roll up is
equal to:
- - all Purchase Payments increasing at an annual effective interest rate of
5% starting on the date that each Purchase Payment is made and ending on
the Owner's date of death;
MINUS
- - the sum of all withdrawals, dollar for dollar up to 5% of the death
benefit's value as of the prior contract anniversary (or issue date if the
withdrawal is in the first contract year). Any withdrawals in excess of
the 5% dollar for dollar limit are proportional.
If the Owner dies on or after the Death Benefit Target Date the 5% Roll-up
is equal to:
- - the 5% Roll-up value as of the Death Benefit Target Date increased by
total Purchase Payments made after the Death Benefit Target Date;
MINUS
- - the sum of all withdrawals which reduce the 5% Roll-up proportionally.
PLEASE REFER TO THE DEFINITIONS OF DEATH BENEFIT TARGET DATE BELOW. THIS
DEATH BENEFIT MAY NOT BE AN APPROPRIATE FEATURE WHERE THE OWNER'S AGE IS NEAR
THE AGE SPECIFIED IN THE DEATH BENEFIT TARGET DATE. THIS IS BECAUSE THE
BENEFIT MAY NOT HAVE THE SAME POTENTIAL FOR GROWTH AS IT OTHERWISE WOULD,
SINCE THERE WILL BE FEWER ANNUITY ANNIVERSARIES BEFORE THE DEATH BENEFIT
TARGET DATE IS REACHED.
THE COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
DESCRIBED ABOVE IS CURRENTLY BEING OFFERED IN THOSE JURISDICTIONS WHERE WE
HAVE RECEIVED REGULATORY APPROVAL. CERTAIN TERMS AND CONDITIONS MAY DIFFER
BETWEEN JURISDICTIONS ONCE APPROVED. THE "COMBINATION 5% ROLL-UP AND HIGHEST
ANNIVERSARY VALUE" DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT ANY OTHER
OPTIONAL DEATH BENEFIT. PLEASE SEE APPENDIX D FOR A DESCRIPTION OF THE
GUARANTEED MINIMUM DEATH BENEFIT OFFERED BEFORE NOVEMBER 18, 2002 IN THOSE
JURISDICTIONS WHERE WE RECEIVED REGULATORY APPROVAL.
See Appendix B for examples of how the Combination 5% Roll-up and Highest
Anniversary Value Death Benefit is calculated.
Key Terms Used with the Highest Anniversary Value Death Benefit and the
Combination 5% Roll-up and Highest Anniversary Value Death Benefit:
- - The Death Benefit Target Date for the Highest Anniversary Value Death
Benefit is the contract anniversary on or after the 80th birthday of the
current Owner, the oldest of either joint Owner or the Annuitant, if
entity owned.
- - The Death Benefit Target Date for the Combination 5% Roll-up and HAV Death
Benefit is the later of the contract anniversary on or after the 80th
birthday of the current Owner, the oldest of either joint Owner or the
Annuitant, if entity owned, or five years after the Issue Date of the
Annuity.
- - The Highest Anniversary Value equals the highest of all previous
"Anniversary Values" less proportional withdrawals since such anniversary
and plus any Purchase Payments since such anniversary.
- - The Anniversary Value is the Account Value as of each anniversary of the
Issue Date of the Annuity. The Anniversary Value on the Issue Date is
equal to your Purchase Payment.
59
OPTIMUM FOUR PROSPECTUS
Death Benefit continued
- - Proportional withdrawals are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
Proportional withdrawals result in a reduction to the Highest Anniversary
Value or 5% Roll-up value by reducing such value in the same proportion as
the Account Value was reduced by the withdrawal as of the date the
withdrawal occurred. For example, if your Highest Anniversary Value or 5%
Roll-up value is $125,000 and you subsequently withdraw $10,000 at a time
when your Account Value is equal to $100,000 (a 10% reduction), when
calculating the optional Death Benefit we will reduce your Highest
Anniversary Value ($125,000) by 10% or $12,500.
Highest Daily Value Death Benefit ("HDV")
If the Annuity has one Owner, the Owner must be age 79 or less at the time
the Highest Daily Value Death Benefit is elected. If the Annuity has joint
Owners, the older Owner must be age 79 or less. If there are Joint Owners,
death of the Owner refers to the first to die of the Joint Owners. If the
Annuity is owned by an entity, the Annuitant must be age 79 or less and death
of the Owner refers to the death of the Annuitant.
IF YOU ELECT THIS BENEFIT, YOU MUST ALLOCATE YOUR ACCOUNT VALUE IN ACCORDANCE
WITH AN ELIGIBLE MODEL UNDER AN AVAILABLE ASSET ALLOCATION PROGRAM OR IN
ACCORDANCE WITH OTHER OPTIONS THAT WE MAY PERMIT. Because this benefit, once
elected, may not be terminated, you must keep your Account Value allocated to
an eligible model throughout the life of the Annuity. You may, however,
switch from one eligible model to another eligible model. Our asset
allocation programs are generally described in the "Are Any Asset Allocation
Programs Available?" section above. For further information on asset
allocation programs, please consult with your Investment Professional or call
1-800-752-6342.
The HDV Death Benefit depends on whether death occurs before or after the
Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the basic Death Benefit described above; and
2. the HDV as of the Owner's date of death.
If the Owner dies on or after the Death Benefit Target Date, the Death
Benefit equals the greater of:
1. the basic Death Benefit described above; and
2. the HDV on the Death Benefit Target Date plus the sum of all Purchase
Payments less the sum of all proportional withdrawals since the Death
Benefit Target Date.
The amount determined by this calculation is increased by any Purchase
Payments received after the Owner's date of death and decreased by any
proportional withdrawals since such date.
THE HIGHEST DAILY VALUE DEATH BENEFIT DESCRIBED ABOVE IS CURRENTLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL.
CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE APPROVED.
THE HIGHEST DAILY VALUE DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT THE
GUARANTEED RETURN OPTION, GUARANTEED RETURN OPTION PLUS, THE "COMBINATION 5%
ROLL-UP AND HIGHEST ANNIVERSARY VALUE" DEATH BENEFIT, OR THE HIGHEST
ANNIVERSARY VALUE DEATH BENEFIT.
Key Terms Used with the Highest Daily Value Death Benefit:
- - The Death Benefit Target Date for the Highest Daily Value Death Benefit is
the later of the Annuity anniversary on or after the 80th birthday of the
current Owner, or the older of either the joint Owner or the Annuitant, if
entity owned, or five years after the Issue Date of the Annuity.
- - The Highest Daily Value equals the highest of all previous "Daily Values"
less proportional withdrawals since such date and plus any Purchase
Payments since such date.
- - The Daily Value is the Account Value as of the end of each Valuation Day.
The Daily Value on the Issue Date is equal to your Purchase Payment.
- - Proportional withdrawals are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
Proportional withdrawals result in a reduction to the Highest Daily Value
by reducing such value in the same proportion as the Account Value was
reduced by the withdrawal as of the date the withdrawal occurred. For
example, if your Highest Daily Value is $125,000 and you subsequently
withdraw $10,000 at a time when your Account Value is equal to $100,000 (a
10% reduction), when calculating the optional Death Benefit we will reduce
your Highest Daily Value ($125,000) by 10% or $12,500. Please see Appendix
B to this prospec-
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OPTIMUM FOUR PROSPECTUS
tus for a hypothetical example of how the HDV Death Benefit is calculated.
Annuities with Joint Owners
For Annuities with Joint Owners, the Death Benefits are calculated as shown
above except that the age of the oldest of the Joint Owners is used to determine
the Death Benefit Target Date. NOTE: If you and your spouse own the Annuity
jointly, we will pay the Death Benefit to the Beneficiary. If the sole primary
Beneficiary is the surviving spouse, then the surviving spouse can elect to
assume ownership of the Annuity and continue the Annuity instead of receiving
the Death Benefit.
Annuities owned by entities
For Annuities owned by an entity, the Death Benefits are calculated as shown
above except that the age of the Annuitant is used to determine the Death
Benefit Target Date. Payment of the Death Benefit is based on the death of the
Annuitant (or Contingent Annuitant, if applicable).
Can I terminate the optional Death Benefits? Do the optional Death Benefits
terminate under other circumstances?
You can terminate the Enhanced Beneficiary Protection Death Benefit and Highest
Anniversary Value Death Benefit at any time. The "Combination 5% Roll-up and HAV
Death Benefit" and the HDV Death Benefit may not be terminated once elected. The
optional Death Benefits will terminate automatically on the Annuity Date. We may
also terminate any optional Death Benefit if necessary to comply with our
interpretation of the Code and applicable regulations.
What are the charges for the optional Death Benefits?
We deduct a charge equal to 0.25% per year of the average daily net assets of
the Sub-accounts for each of the Highest Anniversary Value Death Benefit and the
Enhanced Beneficiary Protection Death Benefit and 0.50% per year of the average
daily net assets of the Sub-accounts for the "Combination 5% Roll-up and HAV
Death Benefit" and the HDV Death Benefit. We deduct the charge for each of these
benefits to compensate American Skandia for providing increased insurance
protection under the optional Death Benefits.
Please refer to the section entitled "Tax Considerations" for additional
considerations in relation to the optional Death Benefit.
AMERICAN SKANDIA'S ANNUITY REWARDS
What is the Annuity Rewards benefit?
The Annuity Rewards Benefit offers Owners the ability to capture any market
gains since the Issue Date of their Annuity as an enhancement to their current
Death Benefit so their Beneficiaries will not receive less than the Annuity's
value as of the effective date of the benefit. Under the Annuity Rewards
Benefit, American Skandia guarantees that the Death Benefit will not be less
than:
- - your Account Value in the variable investment options plus the Interim
Value in any Fixed Allocations as of the effective date of the benefit
- - MINUS any proportional withdrawals* following the effective date of the
benefit
- - PLUS any additional Purchase Payments applied to the Annuity following the
effective date of the benefit.
The Annuity Rewards Death Benefit enhancement does not affect the basic
Death Benefit calculation and any Optional Death Benefits available under the
Annuity. If the Death Benefit amount payable under your Annuity's basic Death
Benefit or any Optional Death Benefits you purchase is greater than the enhanced
Death Benefit under the Annuity Rewards benefit on the date the Death Benefit is
calculated, your Beneficiary will receive the higher amount.
Who is eligible for the Annuity Rewards benefit?
Owners can elect the Annuity Rewards Death Benefit enhancement following the
fourth (4th) anniversary of the Annuity's Issue Date. However, on the date that
the Annuity Rewards Benefit is effective, the Account Value must be greater than
the amount that would be payable to the Beneficiary under the Death Benefit
(including any amounts payable under any optional death benefit then in effect).
The effective date must occur before annuity payments begin. There can only be
one effective date for the Annuity Rewards Death Benefit enhancement. There is
no additional charge for electing the Annuity Rewards Death Benefit enhancement.
PAYMENT OF DEATH BENEFITS
Payment of Death Benefit to Beneficiary
Except in the case of a spousal assumption as described below, in the event of
your death, the death benefit must be distributed:
* "Proportional withdrawals" are determined by calculating the percentage of the
Account Value that each withdrawal represented when withdrawn. For example, a
withdrawal of 50% of your Account Value would be treated as a 50% reduction in
the amount payable under the Death Benefit.
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OPTIMUM FOUR PROSPECTUS
Death Benefit continued
- - as a lump sum amount at any time within five (5) years of the date of
death; or
- - as a series of annuity payments not extending beyond the life expectancy
of the Beneficiary or over the life of the Beneficiary. Payments under
this option must begin within one year of the date of death.
Unless you have made an election prior to death benefit proceeds becoming
due, a Beneficiary can elect to receive the Death Benefit proceeds as a series
of fixed annuity payments (annuity payment options 1-4) or as a series of
variable annuity payments (annuity payment options 1-3 or 5 and 6). See the
section entitled "What Types of Annuity Options are Available."
Spousal Beneficiary -- Assumption of Annuity
You may name your spouse as your Beneficiary. If you and your spouse own the
Annuity jointly, we assume that the sole primary Beneficiary will be the
surviving spouse unless you elect an alternative Beneficiary designation. Unless
you elect an alternative Beneficiary designation, the spouse Beneficiary may
elect to assume ownership of the Annuity instead of taking the Death Benefit
payment. Any Death Benefit (including any optional Death Benefits) that would
have been payable to the Beneficiary will become the new Account Value as of the
date we receive due proof of death and any required proof of a spousal
relationship. As of the date the assumption is effective, the surviving spouse
will have all the rights and benefits that would be available under the Annuity
to a new purchaser of the same attained age. For purposes of determining any
future Death Benefit for the surviving spouse, the new Account Value will be
considered as the initial Purchase Payment. No CDSC will apply to the new
Account Value. However, any additional Purchase Payments applied after the date
the assumption is effective will be subject to all provisions of the Annuity,
including any CDSC that may apply to the additional Purchase Payments.
See the section entitled "Managing Your Annuity -- Spousal Contingent
Annuitant" for a discussion of the treatment of a spousal Contingent Annuitant
in the case of the death of the Annuitant in an entity owned Annuity.
Qualified Beneficiary Continuation Option
The Code provides for alternative death benefit payment options when an Annuity
is used as an IRA, 403(b) or other "qualified investment" that requires Minimum
Distributions. Upon the Owner's death under an IRA, 403(b) or other "qualified
investment", a Beneficiary may generally elect to continue the Annuity and
receive Minimum Distributions under the Annuity instead of receiving the death
benefit in a single payment. The available payment options will depend on
whether the Owner died on or before the date he or she was required to begin
receiving Minimum Distributions under the Code and whether the Beneficiary is
the surviving spouse.
- - If death occurs before the date Minimum Distributions must begin under the
Code, the Death Benefit can be paid out in either a lump sum, within five
years from the date of death, or over the life or life expectancy of the
designated Beneficiary (as long as payments begin by December 31st of the
year following the year of death). However, if the spouse is the
Beneficiary, the Death Benefit can be paid out over the life or life
expectancy of the spouse with such payments beginning no earlier than
December 31st of the year following the year of death or December 31st of
the year in which the deceased would have reached age 70 1/2, which ever
is later.
- - If death occurs after the date Minimum Distributions must begin under the
Code, the Death Benefit must be paid out at least as rapidly as under the
method then in effect.
A Beneficiary has the flexibility to take out more each year than required
under the Minimum Distribution rules. Until withdrawn, amounts in an IRA, 403(b)
or other "qualified investment" continue to be tax deferred. Amounts withdrawn
each year, including amounts that are required to be withdrawn under the Minimum
Distribution rules, are subject to tax. You may wish to consult a professional
tax advisor for tax advice as to your particular situation.
Upon election of this Qualified Beneficiary Continuation option:
- - the Annuity contract will be continued in the Owner's name, for the
benefit of the Beneficiary.
- - the Beneficiary will be charged at an amount equal to 1.40% daily against
the average daily assets allocated to the Sub-accounts.
- - the Account Value will be equal to any Death Benefit (including any
optional Death Benefit) that would have been payable to the Beneficiary if
they had taken a lump sum distribution.
- - the Beneficiary may request transfers among Sub-accounts, subject to the
same limitations and restrictions that applied
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OPTIMUM FOUR PROSPECTUS
to the Owner, except that the Sub-accounts offered will be those offered
under the Qualified Beneficiary Continuation option at the time the option
is elected.
- - the Fixed Allocations will be those offered under the Qualified
Beneficiary Continuation option at the time the option is elected.
- - no additional Purchase Payments can be applied to the Annuity.
- - other optional Benefits will be those offered under the Qualified
Beneficiary Continuation option at the time of election.
- - the basic Death Benefit and any optional Death Benefits elected by the
Owner will no longer apply to the Beneficiary.
- - the Beneficiary can request a withdrawal of all or a portion of the
Account Value at any time without application of a CDSC.
- - upon the death of the Beneficiary, any remaining Account Value will be
paid in a lump sum to the person(s) named by the Beneficiary.
- - all amounts in the Annuity must be paid out to the Beneficiary according
to the Minimum Distribution rules described above.
Your Beneficiary will be provided with a prospectus and settlement option
that will describe this option at the time he or she elects this option. Please
contact American Skandia for additional information on the availability,
restrictions and limitations that will apply to a Beneficiary under the
Qualified Beneficiary Continuation option.
Are there any exceptions to these rules for paying the Death Benefit?
Yes, there are exceptions that apply no matter how your Death Benefit is
calculated. There are exceptions to the Death Benefit if the decedent was not
the Owner or Annuitant as of the Issue Date and did not become the Owner or
Annuitant due to the prior Owner's or Annuitant's death. Any Death Benefit
(including any optional Death Benefit) that applies will be suspended for a
two-year period from the date he or she first became Owner or Annuitant. After
the two-year suspension period is completed, the Death Benefit is the same as if
this person had been an Owner or Annuitant on the Issue Date.
When do you determine the Death Benefit?
We determine the amount of the Death Benefit as of the date we receive "due
proof of death", any instructions we require to determine the method of payment
and any other written representations we require to determine the proper payment
of the Death Benefit to all Beneficiaries. "Due proof of death" may include a
certified copy of a death certificate, a certified copy of a decree of a court
of competent jurisdiction as to the finding of death or other satisfactory proof
of death. Upon our receipt of "due proof of death" we automatically transfer the
Death Benefit to the AST Money Market Sub-account until we further determine the
universe of eligible Beneficiaries. Once the universe of eligible Beneficiaries
has been determined each eligible Beneficiary may allocate his or her eligible
share of the Death Benefit to the Sub-accounts according to our rules.
Each Beneficiary must make an election as to the method they wish to
receive their portion of the Death Benefit. Absent an election of a Death
Benefit payment method, no Death Benefit can be paid to the Beneficiary. We may
require written acknowledgment of all named Beneficiaries before we can pay the
Death Benefit. DURING THE PERIOD FROM THE DATE OF DEATH UNTIL WE RECEIVE ALL
REQUIRED PAPER WORK, THE AMOUNT OF THE DEATH BENEFIT MAY BE SUBJECT TO MARKET
FLUCTUATIONS.
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OPTIMUM FOUR PROSPECTUS
Valuing Your Investment
HOW IS MY ACCOUNT VALUE DETERMINED?
During the accumulation period, the Annuity has an Account Value. The Account
Value is determined separately for each Sub-account allocation and for each
Fixed Allocation. The Account Value is the sum of the values of each Sub-account
allocation and the value of each Fixed Allocation. The Account Value does not
reflect any CDSC that may apply to a withdrawal or surrender. The Account Value
includes any Loyalty credit we apply. When determining the Account Value on a
day more than 30 days prior to a Fixed Allocation's Maturity Date, the Account
Value may include any Market Value Adjustment that would apply to a Fixed
Allocation (if withdrawn or transferred) on that day.
WHAT IS THE SURRENDER VALUE OF MY ANNUITY?
The Surrender Value of your Annuity is the value available to you on any day
during the accumulation period. The Surrender Value is defined under "Glossary
of Terms" above.
HOW AND WHEN DO YOU VALUE THE SUB-ACCOUNTS?
When you allocate Account Value to a Sub-account, you are purchasing units of
the Sub-account. Each Sub-account invests exclusively in shares of an underlying
Portfolio. The value of the Units fluctuates with the market fluctuations of the
Portfolios. The value of the Units also reflects the daily accrual for the
Insurance Charge and if you elected one or more optional benefits whose annual
charge is deducted daily, the additional charge made for such benefits. There
may be several different Unit Prices for each Sub-account to reflect the
Insurance Charge and the charges for any optional benefits. The Unit Price for
the Units you purchase will be based on the total charges for the benefits that
apply to your Annuity. See the section entitled "What Happens to My Units When
There is a Change in Daily Asset-Based Charges?" for a detailed discussion of
how Units are purchased and redeemed to reflect changes in the daily charges
that apply to your Annuity.
Each Valuation Day, we determine the price for a Unit of each Sub-account,
called the "Unit Price." The Unit Price is used for determining the value of
transactions involving Units of the Sub-accounts. We determine the number of
Units involved in any transaction by dividing the dollar value of the
transaction by the Unit Price of the Sub-account as of the Valuation Day.
Example
Assume you allocate $5,000 to a Sub-account. On the Valuation Day you make the
allocation, the Unit Price is $14.83. Your $5,000 buys 337.154 Units of the
Sub-account. Assume that later, you wish to transfer $3,000 of your Account
Value out of that Sub-account and into another Sub-account. On the Valuation Day
you request the transfer, the Unit Price of the original Sub-account has
increased to $16.79. To transfer $3,000, we sell 178.677 Units at the current
Unit Price, leaving you 158.477 Units. We then buy $3,000 of Units of the new
Sub-account at the Unit Price of $17.83. You would then have 168.255 Units of
the new Sub-account.
HOW DO YOU VALUE FIXED ALLOCATIONS?
During the Guarantee Period, we use the concept of an Interim Value. The Interim
Value can be calculated on any day and is equal to the initial value allocated
to a Fixed Allocation plus all interest credited to a Fixed Allocation as of the
date calculated. The Interim Value does not include the impact of any Market
Value Adjustment. If you made any transfers or withdrawals from a Fixed
Allocation, the Interim Value will reflect the withdrawal of those amounts and
any interest credited to those amounts before they were withdrawn. To determine
the Account Value of a Fixed Allocation on any day more than 30 days prior to
its Maturity Date, we multiply the Account Value of the Fixed Allocation times
the Market Value Adjustment factor.
WHEN DO YOU PROCESS AND VALUE TRANSACTIONS?
American Skandia is generally open to process financial transactions on those
days that the New York Stock Exchange (NYSE) is open for trading. There may be
circumstances where the NYSE does not open on a regularly scheduled date or time
or closes at an earlier time than scheduled (normally 4:00 p.m. EST). Financial
transactions requested before the close of the NYSE which meet our requirements
will be processed according to the value next determined following the close of
business. Financial transactions requested on a non-business day or after the
close of the NYSE will be processed based on the value next computed on the next
Valuation Day. There may be circumstances when the opening or closing time of
the NYSE is different than other major stock exchanges, such as NASDAQ or the
American Stock Exchange. Under such circumstances, the closing time of the NYSE
will be used when valuing and processing transactions.
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OPTIMUM FOUR PROSPECTUS
There may be circumstances where the NYSE is open, how- ever, due to
inclement weather, natural disaster or other circumstances beyond our control,
our offices may be closed or our business processing capabilities may be
restricted. Under those circumstances, your Account Value may fluctuate based on
changes in the Unit Values, but you may not be able to transfer Account Value,
or make a purchase or redemption request.
The NYSE is closed on the following nationally recognized holidays: New
Year's Day, Martin Luther King, Jr. Day, Washington's Birthday, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas. On those
dates, we will not process any financial transactions involving purchase or
redemption orders.
American Skandia will also not process financial transactions involving
purchase or redemption orders or transfers on any day that:
- - trading on the NYSE is restricted;
- - an emergency exists making redemption or valuation of securities held in
the separate account impractical; or
- - the SEC, by order, permits the suspension or postponement for the
protection of security holders.
INITIAL PURCHASE PAYMENTS: We are required to allocate your initial
Purchase Payment to the Sub-accounts within two (2) business days after we
receive all of our requirements at our office to issue the Annuity. If we do not
have all the required information to allow us to issue your Annuity, we may
retain the Purchase Payment while we try to reach you or your representative to
obtain all of our requirements. If we are unable to obtain all of our required
information within five (5) business days, we are required to return the
Purchase Payment to you at that time, unless you specifically consent to our
retaining the Purchase Payment while we gather the required information. Once we
obtain the required information, we will invest the Purchase Payment and issue
the Annuity within two (2) business days. During any period that we are trying
to obtain the required information, your money is not invested.
ADDITIONAL PURCHASE PAYMENTS: We will apply any additional Purchase
Payments on the Valuation Day that we receive the Purchase Payment at our office
with satisfactory allocation instructions. We will allocate any additional
Purchase Payments you make according to your most recent allocation instructions
if none are provided.
SCHEDULED TRANSACTIONS: "Scheduled" transactions include transfers under a
Dollar Cost Averaging, rebalancing, or asset allocation program, Systematic
Withdrawals, Minimum Distributions or annuity payments. Scheduled transactions
are processed and valued as of the date they are scheduled, unless the scheduled
day is not a Valuation Day. In that case, the transaction will be processed and
valued on the next Valuation Day, unless the next Valuation Day falls in the
subsequent calendar year, in which case the transaction will be processed and
valued on the prior Valuation Day.
UNSCHEDULED TRANSACTIONS: "Unscheduled" transactions include any other
non-scheduled transfers and requests for Partial Withdrawals or Free Withdrawals
or Surrenders. Unscheduled transactions are processed and valued as of the
Valuation Day we receive the request at our Office and have all of the required
information.
MEDICALLY-RELATED SURRENDERS & DEATH BENEFITS: Medically-related surrender
requests and Death Benefit claims require our review and evaluation before
processing. We price such transactions as of the date we receive at our Office
all supporting documentation we require for such transactions and that are
satisfactory to us.
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OPTIMUM FOUR PROSPECTUS
Valuing Your Investment continued
WHAT HAPPENS TO MY UNITS WHEN THERE IS A CHANGE IN DAILY ASSET-BASED CHARGES?
Termination of Optional Benefits: Except for the Guaranteed Minimum Income
Benefit, the Combination 5% Roll-up and Highest Anniversary Value Death Benefit
and the Highest Daily Value Death Benefit, which cannot be terminated by the
owner once elected, if any optional benefit terminates, we will no longer deduct
the charge we apply to purchase the optional benefit. Certain optional benefits
may be added after you have purchased your Annuity. On the date a charge no
longer applies or a charge for an optional benefit begins to be deducted, your
Annuity will become subject to a different daily asset-based charge. This change
may result in the number of Units attributed to your Annuity and the value of
those Units being different than it was before the charge, however, the
adjustment in the number of Units and Unit Price will not affect your Account
Value (although the change in charges that are deducted will affect your Account
Value).
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OPTIMUM FOUR PROSPECTUS
Tax Considerations
The tax considerations associated with the Annuity vary depending on whether the
contract is (i) owned by an individual and not associated with a tax-favored
retirement plan (including contracts held by a non-natural person, such as a
trust acting as an agent for a natural person), or (ii) held under a tax-favored
retirement plan. We discuss the tax considerations for these categories of
contracts below. The discussion is general in nature and describes only federal
income tax law (not state or other tax laws). It is based on current law and
interpretations, which may change. The discussion includes a description of
certain spousal rights under the contract and under tax-qualified plans. Our
administration of such spousal rights and related tax reporting accords with our
understanding of the Defense of Marriage Act (which defines a "marriage" as a
legal union between a man and a woman and a "spouse" as a person of the opposite
sex). The information provided is not intended as tax advice. You should consult
with a qualified tax advisor for complete information and advice. References to
purchase payments below relates to your cost basis in your contract. Generally,
your cost basis in a contract not associated with a tax-favored retirement plan
is the amount you pay into your contract, or into annuities exchanged for your
contract, on an after-tax basis less any withdrawals of such payments.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA or 403(b) account, which can hold other permissible assets other than the
annuity. The terms and administration of the trust or custodial account in
accordance with the laws and regulations for IRAs or 403(b)s, as applicable, are
the responsibility of the applicable trustee or custodian.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
Taxes Payable by You
We believe the contract is an annuity contract for tax purposes. Accordingly, as
a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates)
to you during the same calendar year must be treated as one annuity contract for
purposes of determining the amount subject to tax under the rules described
below.
It is possible that the Internal Revenue Service (IRS) would assert that
some or all of the charges for the optional benefits under the contract should
be treated for federal income tax purposes as a partial withdrawal from the
contract. If this were the case, the charge for this benefit could be deemed a
withdrawal and treated as taxable to the extent there are earnings in the
contract. Additionally, for owners under age 591/2, the taxable income
attributable to the charge for the benefit could be subject to a tax penalty.
If the IRS determines that the charges for one or more benefits under the
contract are taxable withdrawals, then the sole or surviving owner will be
provided with a notice from us describing available alternatives regarding these
benefits.
If you choose to defer the Annuity Date beyond the default date for your
Annuity, the IRS may not consider your contract to be an annuity under the tax
law. For more information, see "How and When Do I Choose the Annuity Payment
Option?"
Taxes on Withdrawals and Surrender
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn. You will
generally be taxed on any withdrawals from the contract while you are alive even
if the withdrawal is paid to someone else.
If you assign or pledge all or part of your contract as collateral for a
loan, the part assigned generally will be treated as a withdrawal.
If you transfer your contract for less than full consideration, such as by
gift, you will trigger tax on any gain in the contract. This rule does not apply
if you transfer the contract to your spouse or under most circumstances if you
transfer the contract incident to divorce.
Taxes on Annuity Payments
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment you receive by a fraction, the
numerator of which is your purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the contract.
After the full amount of your purchase payments have been recovered
tax-free, the full amount of the annuity payments will be taxable. If annuity
payments stop due to the death of
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OPTIMUM FOUR PROSPECTUS
Tax Considerations continued
the annuitant before the full amount of your purchase payments have been
recovered, a tax deduction may be allowed for the unrecovered amount.
Tax Penalty on Withdrawals and Annuity Payments
Any taxable amount you receive under your contract may be subject to a 10% tax
penalty. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled;
- - generally the amount paid or received is in the form of substantially
equal payments not less frequently than annually (Please note that
substantially equal payments must continue until the later of reaching age
59 1/2 or 5 years. Modification of payments during that time period will
result in retroactive application of the 10% tax penalty.); or
- - the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
Special Rules in Relation to Tax-Free Exchanges Under Section 1035
Section 1035 of the Internal Revenue Code of 1986, as amended (Code) permits
certain tax-free exchanges of a life insurance, annuity or endowment contract
for an annuity. If the annuity is purchased through a tax-free exchange of a
life insurance, annuity or endowment contract that was purchased prior to August
14, 1982, then any purchase payments made to the original contract prior to
August 14, 1982 will be treated as made to the new contract prior to that date.
(See Federal Tax Status section in the Statement of Additional Information.)
Partial surrenders may be treated in the same way as tax-free 1035
exchanges of entire contracts, therefore avoiding current taxation of any gains
in the contract as well as the 10% tax penalty on pre-age 59 1/2 withdrawals.
The IRS has reserved the right to treat transactions it considers abusive as
ineligible for this favorable partial 1035 exchange treatment. We do not know
what transactions may be considered abusive. For example we do not know how the
IRS may view early withdrawals or annuitizations after a partial exchange. In
addition, it is unclear how the IRS will treat a partial exchange from a life
insurance, endowment, or annuity contract into an immediate annuity. As of the
date of this prospectus, we will accept a partial 1035 exchange from a
non-qualified annuity into an immediate annuity as a "tax-free" exchange for
future tax reporting purposes, except to the extent that we, as a reporting and
withholding agent, believe that we would be expected to deem the transaction to
be abusive. However, some insurance companies may not recognize these partial
surrenders as tax-free exchanges and may report them as taxable distributions to
the extent of any gain distributed as well as subjecting the taxable portion of
the distribution to the 10% tax penalty. We strongly urge you to discuss any
transaction of this type with your tax advisor before proceeding with the
transaction.
Taxes Payable by Beneficiaries
The death benefit options are subject to income tax to the extent the
distribution exceeds the cost basis in the contract. The value of the death
benefit, as determined under federal law, is also included in the owner's
estate.
Generally, the same tax rules described above would also apply to amounts
received by your beneficiary. Choosing any option other than a lump sum death
benefit may defer taxes. Certain minimum distribution requirements apply upon
your death, as discussed further below.
Tax consequences to the beneficiary vary among the death benefit payment
options.
- - Choice 1: the beneficiary is taxed on earnings in the contract.
- - Choice 2: the beneficiary is taxed as amounts are withdrawn (in this case
earnings are treated as being distributed first).
- - Choice 3: the beneficiary is taxed on each payment (part will be treated
as earnings and part as return of premiums).
CONSIDERATIONS FOR CONTINGENT ANNUITANTS: There may be adverse tax
consequences if a Contingent Annuitant succeeds an Annuitant when the Annuity is
owned by a trust that is neither tax exempt nor qualifies for preferred
treatment under certain sections of the Code. In general, the Code is designed
to prevent indefinite deferral of tax. Continuing the benefit of tax deferral by
naming one or more Contingent Annuitants when the Annuity is owned by a
non-qualified trust might be deemed an attempt to extend the tax deferral for an
indefinite period. Therefore, adverse tax treatment may depend on the terms of
the trust, who is named as Contingent Annuitant, as well as the particular facts
and circumstances. You should consult your tax advisor before naming a
Contingent Annuitant if you expect to use an Annuity in such a fashion.
Reporting and Withholding on Distributions
Taxable amounts distributed from your annuity contracts are subject to federal
and state income tax reporting and withholding.
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OPTIMUM FOUR PROSPECTUS
In general, we will withhold federal income tax from the taxable portion of such
distribution based on the type of distribution. In the case of an annuity or
similar periodic payment, we will withhold as if you are a married individual
with 3 exemptions unless you designate a different withholding status. In the
case of all other distributions, we will withhold at a 10% rate. You may
generally elect not to have tax withheld from your payments. An election out of
withholding must be made on forms that we provide.
State income tax withholding rules vary and we will withhold based on the
rules of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident aliens
at a 30% rate. A different withholding rate may be applicable to a nonresident
alien based on the terms of an existing income tax treaty between the United
States and the nonresident alien's country. Please refer to the discussion below
regarding withholding rules for tax favored plans (for example, an IRA).
Regardless of the amount withheld by us, you are liable for payment of
federal and state income tax on the taxable portion of annuity distributions.
You should consult with your tax advisor regarding the payment of the correct
amount of these income taxes and potential liability if you fail to pay such
taxes.
Annuity Qualification
Diversification And Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the assets underlying the
variable investment options of the annuity contract must be diversified,
according to certain rules. We believe these diversification rules will be met.
An additional requirement for qualification for the tax treatment
described above is that we, and not you as the contract owner, must have
sufficient control over the underlying assets to be treated as the owner of the
underlying assets for tax purposes. While we also believe these investor control
rules will be met, 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. It is unclear whether such guidelines, if in fact
promulgated, would have retroactive effect. It is also unclear what effect, if
any, such guidelines may have on transfers between the investment options
offered pursuant to this Prospectus. We will take any action, including
modifications to your Annuity or the investment options, required to comply with
such guidelines if promulgated.
Please refer to the Statement of Additional information for further
information on these Diversification and Investor Control issues.
Required Distributions Upon Your Death. Upon your death, certain
distributions must be made under the contract. The required distributions depend
on whether you die before you start taking annuity payments under the contract
or after you start taking annuity payments under the contract.
If you die on or after the annuity date, the remaining portion of the
interest in the contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract
must be distributed within 5 years after the date of death. However, if a
periodic payment option is selected by your designated beneficiary and if such
payments begin within 1 year of your death, the value of the contract may be
distributed over the beneficiary's life or a period not exceeding the
beneficiary's life expectancy. Your designated beneficiary is the person to whom
benefit rights under the contract pass by reason of death, and must be a natural
person in order to elect a periodic payment option based on life expectancy or a
period exceeding five years.
If the contract is payable to (or for the benefit of) your surviving
spouse, that portion of the contract may be continued with your spouse as the
owner.
Changes In The Contract. We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract owners and you will be
given notice to the extent feasible under the circumstances.
Additional Information
You should refer to the Statement of Additional Information if:
- - The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
- - Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
- - You transfer your contract to, or designate, a beneficiary who is either
37 1/2 years younger than you or a grandchild.
- - You purchased more than one annuity contract from the same insurer within
the same calendar year (other than contracts held by tax favored plans).
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OPTIMUM FOUR PROSPECTUS
Tax Considerations continued
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
Currently, the contract may be purchased for use in connection with
individual retirement accounts and annuities (IRAs) which are subject to
Sections 408(a), 408(b) and 408A of the Code. In addition, this contract may be
purchased for use in connection with a corporate Pension and Profit-sharing plan
(subject to 401(a) of the Code), H.R. 10 plans (also known as Keogh Plans,
subject to 401(a) of the Code), Tax Sheltered Annuities (subject to 403(b) of
the Code, also known as Tax Deferred Annuities or TDAs), and Section 457 plans
(subject to 457 of the Code). This description assumes that you have satisfied
the requirements for eligibility for these products.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA or 403(b) account, which can hold other permissible assets other than the
annuity. The terms and administration of the trust or custodial account in
accordance with the laws and regulations for IRAs or 403(b)s, as applicable, are
the responsibility of the applicable trustee or custodian.
You should be aware that tax favored plans such as IRAs generally provide
income tax deferral regardless of whether they invest in annuity contracts. This
means that when a tax favored plan invests in an annuity contract, it generally
does not result in any additional taxbenefits (such as income tax deferral and
income tax free transfers).
Types of Tax Favored Plans
IRAs. If you buy a contract for use as an IRA, we will provide you a copy of the
prospectus and contract. The "IRA Disclosure Statement" contains information
about eligibility, contribution limits, tax particulars, and other IRA
information. In addition to this information (some of which is summarized
below), the IRS requires that you have a "free look" after making an initial
contribution to the contract. During this time, you can cancel the contract by
notifying us in writing, and we will refund all of the purchase payments under
the contract (or, if provided by applicable state law, the amount credited under
the contract, if greater), less any applicable federal and state income tax
withholding.
Contributions Limits/Rollovers. Because of the way the contract is
designed, you may purchase a contract for an IRA in connection with a "rollover"
of amounts from a qualified retirement plan or transfer from another IRA. In
2005 the limit is $4,000; increasing to $5,000; in 2008. After 2008 the
contribution amount will be indexed for inflation. The tax law also provides for
a catch-up provision for individuals who are age 50 and above. These taxpayers
will be permitted to contribute an additional $500, increasing to $1,000 in 2006
and years thereafter.
The "rollover" rules under the Code are fairly technical; however, an
individual (or his or her surviving spouse) may generally "roll over" certain
distributions from tax favored retirement plans (either directly or within 60
days from the date of these distributions) if he or she meets the requirements
for distribution. Once you buy the contract, you can make regular IRA
contributions under the contract (to the extent permitted by law). However, if
you make such regular IRA contributions, you should note that you will not be
able to treat the contract as a "conduit IRA," which means that you will not
retain possible favorable tax treatment if you subsequently "roll over" the
contract funds originally derived from a qualified retirement plan or TDA into
another Section 401(a) plan or TDA.
Required Provisions. Contracts that are IRAs (or endorsements that are
part of the contract) must contain certain provisions:
- - You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree
of divorce);
- - Your rights as owner are non-forfeitable;
- - You cannot sell, assign or pledge the contract;
- - The annual contribution you pay cannot be greater than the maximum amount
allowed by law, including catch-up contributions if applicable (which does
not include any rollover amounts);
- - The date on which annuity payments must begin cannot be later than April
1st of the calendar year after the calendar year you turn age 70 1/2; and
- - Death and annuity payments must meet "minimum distribution requirements"
described below.
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
- - A 10% "early distribution penalty" described below;
- - Liability for "prohibited transactions" if you, for example, borrow
against the value of an IRA; or
- - Failure to take a minimum distribution also described below. SEPs.
SEPs are a variation on a standard IRA, and contracts issued to a SEP must
satisfy the same general require-
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OPTIMUM FOUR PROSPECTUS
ments described under IRAs (above). There are, however, some differences:
- - If you participate in a SEP, you generally do not include in income any
employer contributions made to the SEP on your behalf up to the lesser of
(a) $42,000 in 2005 or (b) 25% of the employee's earned income (not
including contribution as "earned income" for these purposes). However,
for these purposes, compensation in excess of certain limits established
by the IRS will not be considered. In 2005, this limit is $210,000;
- - SEPs must satisfy certain participation and nondiscrimination requirements
not generally applicable to IRAs; and
- - SEPs for small employers permit salary deferrals up to $14,000 in 2005
with the employer making these contributions to the SEP. However, no new
"salary reduction" or "SAR-SEPs" can be established after 1996.
Individuals participating in a SARSEP who are age 50 or above by the end
of the year will be permitted to contribute an additional $4,000 in 2005,
increasing to $5,000 in 2006. Thereafter, the amount is indexed for
inflation.
You will also be provided the same information, and have the same "free
look" period, as you would have if you purchased the contract for a standard
IRA.
ROTH IRAs. Like standard IRAs, income within a Roth IRA accumulates
tax-free, and contributions are subject to specific limits. Roth IRAs have,
however, the following differences:
- - Contributions to a Roth IRA cannot be deducted from your gross income;
- - "Qualified distributions" from a Roth IRA are excludable from gross
income. A "qualified distribution" is a distribution that satisfies two
requirements: (1) the distribution must be made (a) after the owner of the
IRA attains age 59 1/2; (b) after the owner's death; (c) due to the
owner's disability; or (d) for a qualified first time homebuyer
distribution within the meaning of Section 72(t)(2)(F) of the Code; and
(2) the distribution must be made in the year that is at least five tax
years after the first year for which a contribution was made to any Roth
IRA established for the owner or five years after a rollover, transfer, or
conversion was made from a traditional IRA to a Roth IRA. Distributions
from a Roth IRA that are not qualified distributions will be treated as
made first from contributions and then from earnings, and taxed generally
in the same manner as distributions from a traditional IRA.
- - If eligible (including meeting income limitations and earnings
requirements), you may make contributions to a Roth IRA after attaining
age 70 1/2, and distributions are not required to begin upon attaining
such age or at any time thereafter.
Because of the way the contract is designed, you may purchase a contract
for a Roth IRA in connection with a "rollover" of amounts of another traditional
IRA, conduit IRA, SEP, SIMPLE-IRA or Roth IRA. The Code permits persons who meet
certain income limitations (generally, adjusted gross income under $100,000),
and who receive certain qualifying distributions from such non-Roth IRAs, to
directly rollover or make, within 60 days, a "rollover" of all or any part of
the amount of such distribution to a Roth IRA which they establish. This
conversion triggers current taxation (but is not subject to a 10% early
distribution penalty). Once the contract has been purchased, regular Roth IRA
contributions will be accepted to the extent permitted by law.
TDAs. You may own a TDA generally if you are either an employer or
employee of a tax-exempt organization (as defined under Code Section 501 (c)(3))
or a public educational organization, and you may make contributions to a TDA so
long as the employee's rights to the annuity are nonforfeitable. Contributions
to a TDA, and any earnings, are not taxable until distribution. You may also
make contributions to a TDA under a salary reduction agreement, generally up to
a maximum of $14,000 in 2005. Individuals participating in a TDA who are age 50
or above by the end of the year will be permitted to contribute an additional
$4,000 in 2005, increasing to $5,000 in 2006. Thereafter, the amount is indexed
for inflation. Further, you may roll over TDA amounts to another TDA or an IRA.
You may also roll over TDA amounts to a qualified retirement plan, a SEP and a
457 government plan. A contract may only qualify as a TDA if distributions
(other than "grandfathered" amounts held as of December 31, 1988) may be made
only on account of:
- - Your attainment of age 59 1/2;
- - Your severance of employment;
- - Your death;
- - Your total and permanent disability; or
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OPTIMUM FOUR PROSPECTUS
Tax Considerations continued
- - Hardship (under limited circumstances, and only related to salary
deferrals and any earnings attributable to these amounts).
In any event, you must begin receiving distributions from your TDA by
April 1st of the calendar year after the calendar year you turn age 70 1/2 or
retire, whichever is later.
These distribution limits do not apply either to transfers or exchanges of
investments under the contract, or to any "direct transfer" of your interest in
the contract to another TDA or to a mutual fund "custodial account" described
under Code Section 403(b)(7).
Employer contributions to TDAs are subject to the same general
contribution, nondiscrimination, and minimum participation rules applicable to
"qualified" retirement plans.
Minimum Distribution Requirements and Payment Option
If you hold the contract under an IRA (or other tax-favored plan), IRS minimum
distribution requirements must be satisfied. This means that generally payments
must start by April 1 of the year after the year you reach age 70 1/2 and must
be made for each year thereafter. The amount of the payment must at least equal
the minimum required under the IRS rules. Several choices are available for
calculating the minimum amount. More information on the mechanics of this
calculation is available on request. Please contact us at a reasonable time
before the IRS deadline so that a timely distribution is made. Please note that
there is a 50% tax penalty on the amount of any minimum distribution not made in
a timely manner.
Effective in 2006, in accordance with recent changes in laws and
regulations, required minimum distributions will be calculated based on the sum
of the contract value and the actuarial value of any additional death benefits
and benefits from optional riders that you have purchased under the contract. As
a result, the required minimum distributions may be larger than if the
calculation were based on the contract value only, which may in turn result in
an earlier (but not before the required beginning date) distribution under the
Contract and an increased amount of taxable income distributed to the contract
owner, and a reduction of death benefits and the benefits of any optional
riders.
You can use the Minimum Distribution option to satisfy the IRS minimum
distribution requirements for this contract without either beginning annuity
payments or surrendering the contract. We will distribute to you this minimum
distribution amount, less any other partial withdrawals that you made during the
year.
Although the IRS rules determine the required amount to be distributed
from your IRA each year, certain payment alternatives are still available to
you. If you own more than one IRA, you can choose to satisfy your minimum
distribution requirement for each of your IRAs by withdrawing that amount from
any of your IRAs.
Penalty for Early Withdrawals
You may owe a 10% tax penalty on the taxable part of distributions received from
an IRA, SEP, Roth IRA, TDA or qualified retirement plan before you attain age
59 1/2. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled; or
- - generally the amount paid or received is in the form of substantially
equal payments not less frequently than annually (Please note that
substantially equal payments must continue until the later of reaching age
59 1/2 or 5 years. Modification of payments during that time period will
result in retroactive application of the 10% tax penalty.).
Other exceptions to this tax may apply. You should consult your tax advisor
for further details.
Withholding
Unless a distribution is an eligible rollover distribution that is "directly"
rolled over into another qualified plan, IRA (including the IRA variations
described above), SEP, 457 government plan or TDA, we will withhold federal
income tax at the rate of 20%. This 20% withholding does not apply to
distributions from IRAs and Roth IRAs. For all other distributions, unless you
elect otherwise, we will withhold federal income tax from the taxable portion of
such distribution at an appropriate percentage. The rate of withholding on
annuity payments where no mandatory withholding is required is determined on the
basis of the withholding certificate that you file with us. If you do not file a
certificate, we will automatically withhold federal taxes on the following
basis:
- - For any annuity payments not subject to mandatory withholding, you will
have taxes withheld by us as if you are a married individual, with 3
exemptions; and
- - For all other distributions, we will withhold at a 10% rate.
We will provide you with forms and instructions concerning the right to
elect that no amount be withheld from payments in
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OPTIMUM FOUR PROSPECTUS
the ordinary course. However, you should know that, in any event, you are liable
for payment of federal income taxes on the taxable portion of the distributions,
and you should consult with your tax advisor to find out more information on
your potential liability if you fail to pay such taxes. There may be additional
state income tax withholding requirements.
ERISA Disclosure/Requirements
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevents a fiduciary and other "parties in interest" with respect to a plan
(and, for these purposes, an IRA would also constitute a "plan") from receiving
any benefit from any party dealing with the plan, as a result of the sale of the
contract. Administrative exemptions under ERISA generally permit the sale of
insurance/annuity products to plans, provided that certain information is
disclosed to the person purchasing the contract. This information has to do
primarily with the fees, charges, discounts and other costs related to the
contract, as well as any commissions paid to any agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found in the applicable sections of this Prospectus.
Information about sales representatives and commissions may be found in
the sections of this Prospectus addressing distribution of the Annuity.
Please consult your tax advisor if you have any additional questions.
Spousal Consent Rules for Retirement Plans --
Qualified Contracts
If you are married at the time your payments commence, you may be required by
federal law to choose an income option that provides survivor annuity income to
your spouse, unless your spouse waives that right. Similarly, if you are married
at the time of your death, federal law may require all or a portion of the death
benefit to be paid to your spouse, even if you designated someone else as your
beneficiary. A brief explanation of the applicable rules follows. For more
information, consult the terms of your retirement arrangement.
Defined Benefit Plans and Money Purchase Pension Plans. If you are married
at the time your payments commence, federal law requires that benefits be paid
to you in the form of a "qualified joint and survivor annuity" (QJSA), unless
you and your spouse waive that right, in writing. Generally, this means that you
will receive a reduced payment during your life and, upon your death, your
spouse will receive at least one-half of what you were receiving for life. You
may elect to receive another income option if your spouse consents to the
election and waives his or her right to receive the QJSA. If your spouse
consents to the alternative form of payment, your spouse may not receive any
benefits from the plan upon your death. Federal law also requires that the plan
pay a death benefit to your spouse if you are married and die before you begin
receiving your benefit. This benefit must be available in the form of an annuity
for your spouse's lifetime and is called a "qualified pre-retirement survivor
annuity" (QPSA). If the plan pays death benefits to other beneficiaries, you may
elect to have a beneficiary other than your spouse receive the death benefit,
but only if your spouse consents to the election and waives his or her right to
receive the QPSA. If your spouse consents to the alternate beneficiary, your
spouse will receive no benefits from the plan upon your death. Any QPSA waiver
prior to your attaining age 35 will become null and void on the first day of the
calendar year in which you attain age 35, if still employed.
Defined Contribution Plans (including 401(k) Plans and ERISA 403(b)
Plans). Spousal consent to a distribution is generally not required. Upon your
death, your spouse will receive the entire death benefit, even if you designated
someone else as your beneficiary, unless your spouse consents in writing to
waive this right. Also, if you are married and elect an annuity as a periodic
income option, federal law requires that you receive a QJSA (as described
above), unless you and your spouse consent to waive this right.
IRAs, non-ERISA 403(b) Annuities, and 457 Plans. Spousal consent to a
distribution is not required. Upon your death, any death benefit will be paid to
your designated beneficiary.
Additional Information
For additional information about federal tax law requirements applicable to tax
favored plans, see the IRA Disclosure Statement.
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OPTIMUM FOUR PROSPECTUS
General Information
HOW WILL I RECEIVE STATEMENTS AND REPORTS?
We send any statements and reports required by applicable law or regulation to
you at your last known address of record. You should therefore give us prompt
notice of any address change. We reserve the right, to the extent permitted by
law and subject to your prior consent, to provide any prospectus, prospectus
supplements, confirmations, statements and reports required by applicable law or
regulation to you through our Internet Website at
http://www.americanskandia.prudential.com or any other electronic means,
including diskettes or CD ROMs. We send a confirmation statement to you each
time a transaction is made affecting Account Value, such as making additional
Purchase Payments, transfers, exchanges or withdrawals. We also send quarterly
statements detailing the activity affecting your Annuity during the calendar
quarter. We may confirm regularly scheduled transactions, such as the Annual
Maintenance Fee, systematic withdrawals (including 72(t) payments and required
minimum distributions), bank drafting, dollar cost averaging, and static
rebalancing, in quarterly statements instead of confirming them immediately. You
should review the information in these statements carefully. You may request
additional reports. We reserve the right to charge up to $50 for each such
additional report. We may also send an annual report and a semi-annual report
containing applicable financial statements for the Separate Account and the
Portfolios, as of December 31 and June 30, respectively, to Owners or, with your
prior consent, make such documents available electronically through our Internet
Website or other electronic means.
WHO IS AMERICAN SKANDIA?
American Skandia Life Assurance Corporation, a Prudential Financial Company
("American Skandia") is a stock life insurance company domiciled in Connecticut
with licenses in all 50 states, the District of Columbia and Puerto Rico.
American Skandia is a wholly-owned subsidiary of American Skandia, Inc. ("ASI"),
whose ultimate parent is Prudential Financial, Inc. American Skandia markets its
products to broker-dealers and financial planners through an internal field
marketing staff. In addition, American Skandia markets through and in
conjunction with financial institutions such as banks that are permitted
directly, or through affiliates, to sell annuities.
American Skandia is in the business of issuing annuity and life insurance
products. American Skandia currently offers the following products: (a) flexible
premium deferred annuities and single premium fixed deferred annuities that are
registered with the SEC; (b) certain other fixed deferred annuities that are not
registered with the SEC; and (c) both fixed and variable immediate adjustable
annuities.
Effective May 1, 2003, Skandia U.S. Inc., the sole shareholder of ASI,
which is the parent of American Skandia, was purchased by Prudential Financial,
Inc. Prudential Financial, Inc. is a New Jersey insurance holding company whose
subsidiary companies serve individual and institutional customers worldwide and
include The Prudential Insurance Company of America, one of the largest life
insurance companies in the U.S. These companies offer a variety of products and
services, including life insurance, property and casualty insurance, mutual
funds, annuities, pension and retirement related services and administration,
asset management, securities brokerage, banking and trust services, real estate
brokerage franchises, and relocation services.
No company other than American Skandia has any legal responsibility to pay
amounts that it owes under its annuity and variable life insurance contracts.
However, Prudential Financial exercises significant influence over the
operations and capital structure of American Skandia.
WHAT ARE SEPARATE ACCOUNTS?
The separate accounts are where American Skandia sets aside and invests the
assets of some of our annuities. In the accumulation period, assets supporting
Account Values of the Annuities are held in a separate account established under
the laws of the State of Connecticut. We are the legal owner of assets in the
separate accounts. In the payout period, assets supporting fixed annuity
payments and any adjustable annuity payments we make available are held in our
general account. Assets supporting variable annuity payment options may be
invested in our separate accounts. Income, gains and losses from assets
allocated to these separate accounts are credited to or charged against each
such separate account without regard to other income, gains or losses of
American Skandia or of any other of our separate accounts. These assets may only
be charged with liabilities which arise from the Annuities issued by American
Skandia. The amount of our obligation in relation to allocations to the
Sub-accounts is based on the investment performance of such Sub-accounts.
However, the obligations themselves are our general corporate obligations.
Separate Account B
During the accumulation period, the assets supporting obligations based on
allocations to the variable investment options are held in Sub-accounts of
American Skandia Life Assurance
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OPTIMUM FOUR PROSPECTUS
Corporation Variable Account B, also referred to as "Separate Account B".
Separate Account B was established by us pursuant to Connecticut law on November
25, 1987. 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.
Separate Account B consists of multiple Sub-accounts. Each Sub-account
invests only in a single mutual fund or mutual fund portfolio. The name of each
Sub-account generally corresponds to the name of the underlying Portfolio. Each
Sub-account in Separate Account B may have several different Unit Prices to
reflect the Insurance Charge and the charges for any optional benefits that are
offered under this Annuity and other annuities issued by us through Separate
Account B. Separate Account B is registered with the SEC under the Investment
Company Act of 1940 ("Investment Company Act") as a unit investment trust, which
is a type of investment company. The SEC does not supervise investment policies,
management or practices of Separate Account B.
Prior to November 18, 2002, Separate Account B was organized as a single
separate account with six different Sub-account classes, each of which was
registered as a distinct unit investment trust under the Investment Company Act.
Effective November 18, 2002 each Sub-account class of Separate Account B was
consolidated into the unit investment trust formerly named American Skandia Life
Assurance Corporation Variable Account B (Class 1 Sub-accounts), which was
subsequently renamed American Skandia Life Assurance Corporation Variable
Account B. Each Sub-account of Separate Account B has multiple Unit Prices to
reflect the daily charge deducted for each combination of the applicable
Insurance Charge, Distribution Charge (when applicable) and the charge for each
optional benefit offered under Annuity contracts funded through Separate Account
B. The consolidation of Separate Account B had no impact on Annuity Owners.
We reserve the right to make changes to the Sub-accounts available under
the Annuity as we determine appropriate. We may offer new Sub-accounts,
eliminate Sub-accounts, or combine Sub-accounts at our sole discretion. We may
also close Sub-accounts to additional Purchase Payments on existing Annuity
contracts or close Sub-accounts for Annuities purchased on or after specified
dates. We may also substitute an underlying mutual fund or portfolio of an
underlying mutual fund for another underlying mutual fund or portfolio of an
underlying mutual fund, subject to our receipt of any exemptive relief that we
are required to obtain under the Investment Company Act. We will notify Owners
of changes we make to the Sub-accounts available under the Annuity.
VALUES AND BENEFITS BASED ON ALLOCATIONS TO THE SUB-ACCOUNTS WILL VARY
WITH THE INVESTMENT PERFORMANCE OF THE UNDERLYING MUTUAL FUNDS OR FUND
PORTFOLIOS, AS APPLICABLE. WE DO NOT GUARANTEE THE INVESTMENT RESULTS OF ANY
SUB-ACCOUNT. YOUR ACCOUNT VALUE ALLOCATED TO THE SUB-ACCOUNTS MAY INCREASE OR
DECREASE. YOU BEAR THE ENTIRE INVESTMENT RISK. THERE IS NO ASSURANCE THAT THE
ACCOUNT VALUE OF YOUR ANNUITY WILL EQUAL OR BE GREATER THAN THE TOTAL OF THE
PURCHASE PAYMENTS YOU MAKE TO US.
Separate Account D
During the accumulation period, assets supporting our obligations based on Fixed
Allocations are held in American Skandia Life Assurance Corporation Separate
Account D, also referred to as "Separate Account D". Such obligations are based
on the fixed interest rates we credit to Fixed Allocations and the terms of the
Annuities. These obligations do not depend on the investment performance of the
assets in Separate Account D. Separate Account D was established by us pursuant
to Connecticut law.
There are no units in Separate Account D. The Fixed Allocations are
guaranteed by our general account. An Annuity Owner who allocates a portion of
their Account Value to Separate Account D does not participate in the investment
gain or loss on assets maintained in Separate Account D. Such gain or loss
accrues solely to us. We retain the risk that the value of the assets in
Separate Account D may drop below the reserves and other liabilities we must
maintain. Should the value of the assets in Separate Account D drop below the
reserve and other liabilities we must maintain in relation to the annuities
supported by such assets, we will transfer assets from our general account to
Separate Account D to make up the difference. We have the right to transfer to
our general account any assets of Separate Account D in excess of such reserves
and other liabilities. We maintain assets in Separate Account D supporting a
number of annuities we offer.
We currently employ investment managers to manage the assets maintained in
Separate Account D. Each manager we employ is responsible for investment
management of a different portion of Separate Account D. From time to time
additional investment managers may be employed or investment managers may cease
being employed. We are under no
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OPTIMUM FOUR PROSPECTUS
General Information continued
obligation to employ or continue to employ any investment manager(s) and have
sole discretion over the investment managers we retain.
We are not obligated to invest according to specific guidelines or
strategies except as may be required by Connecticut and other state insurance
laws.
WHAT IS THE LEGAL STRUCTURE OF THE UNDERLYING FUNDS?
Each underlying mutual fund is registered as an open-end management investment
company under the Investment Company Act. Shares of the underlying mutual fund
portfolios are sold to separate accounts of life insurance companies offering
variable annuity and variable life insurance products. The shares may also be
sold directly to qualified pension and retirement plans.
Voting Rights
We are the legal owner of the shares of the underlying mutual funds in which the
Sub-accounts invest. However, under SEC rules, you have voting rights in
relation to Account Value maintained in the Sub-accounts. If an underlying
mutual fund portfolio requests a vote of shareholders, we will vote our shares
based on instructions received from Owners with Account Value allocated to that
Sub-account. Owners have the right to vote an amount equal to the number of
shares attributable to their contracts. If we do not receive voting instructions
in relation to certain shares, we will vote those shares in the same manner and
proportion as the shares for which we have received instructions. We will
furnish those Owners who have Account Value allocated to a Sub-account whose
underlying mutual fund portfolio has requested a "proxy" vote with proxy
materials and the necessary forms to provide us with their voting instructions.
Generally, you will be asked to provide instructions for us to vote on matters
such as changes in a fundamental investment strategy, adoption of a new
investment advisory agreement, or matters relating to the structure of the
underlying mutual fund that require a vote of shareholders.
American Skandia Trust (the "Trust") has obtained an exemption from the
Securities and Exchange Commission that permits its co-investment advisers,
American Skandia Investment Services, Incorporated ("ASISI") and Prudential
Investments LLC, subject to approval by the Board of Trustees of the Trust, to
change sub-advisors for a Portfolio and to enter into new sub-advisory
agreements, without obtaining shareholder approval of the changes. This
exemption (which is similar to exemptions granted to other investment companies
that are organized in a similar manner as the Trust) is intended to facilitate
the efficient supervision and management of the sub-advisors by ASISI,
Prudential Investments LLC and the Trustees. The Trust is required, under the
terms of the exemption, to provide certain information to shareholders following
these types of changes. We may add new Sub-accounts that invest in a series of
underlying funds other than the Trust that is managed by an affiliate. Such
series of funds may have a similar order from the SEC. You also should review
the prospectuses for the other underlying funds in which various Sub-accounts
invest as to whether they have obtained similar orders from the SEC.
Material Conflicts
It is possible that differences may occur between companies that offer shares of
an underlying mutual fund portfolio to their respective separate accounts
issuing variable annuities and/or variable life insurance products. Differences
may also occur surrounding the offering of an underlying mutual fund portfolio
to variable life insurance policies and variable annuity contracts that we
offer. Under certain circumstances, these differences could be considered
"material conflicts," in which case we would take necessary action to protect
persons with voting rights under our variable annuity contracts and variable
life insurance policies against persons with voting rights under other insurance
companies' variable insurance products. If a "material conflict" were to arise
between owners of variable annuity contracts and variable life insurance
policies issued by us we would take necessary action to treat such persons
equitably in resolving the conflict. "Material conflicts" could arise due to
differences in voting instructions between owners of variable life insurance and
variable annuity contracts of the same or different companies. We monitor any
potential conflicts that may exist.
Service Fees Payable to American Skandia
American Skandia or our affiliates have entered into agreements with the
investment adviser or distributor of the underlying Portfolios. Under the terms
of these agreements, American Skandia may provide administrative and support
services to the Portfolios for which it receives a fee of up to 0.75%
(currently) of the average assets allocated to the Portfolios under the Annuity
from the investment adviser, distributor and/or the fund. These agreements may
be different for each underlying mutual fund whose portfolios are offered as
Sub-accounts.
In addition, the investment adviser, sub-advisor or distributor of the
underlying Portfolios may also compensate us by providing reimbursement or
paying directly for, among other things, marketing and/or administrative
services and/or administrative services and/or other services they provide in
connection with the Annuity. These services may include, but are not limited to:
co-sponsoring various meetings and seminars attended by broker-dealer firms'
registered representatives and creating marketing material discussing the
Annuity and the available options.
76
OPTIMUM FOUR PROSPECTUS
WHO DISTRIBUTES ANNUITIES OFFERED BY AMERICAN SKANDIA?
American Skandia Marketing, Incorporated ("ASM"), a wholly-owned subsidiary of
American Skandia, Inc., is the distributor and principal underwriter of the
securities offered through this prospectus. ASM acts as the distributor of a
number of annuity and life insurance products we offer and co-distributor of
American Skandia Trust and American Skandia Advisor Funds, Inc., a family of
retail mutual funds. ASM also acts as an introducing broker-dealer through which
it receives a portion of brokerage commissions in connection with purchases and
sales of securities held by portfolios of American Skandia Trust which are
offered as underlying investment options under the Annuity.
ASM's principal business address is One Corporate Drive, Shelton,
Connecticut 06484. ASM is registered as broker-dealer under the Securities
Exchange Act of 1934 ("Exchange Act") and is a member of the National
Association of Securities Dealers, Inc. ("NASD").
The Annuity is offered on a continuous basis. ASM enters into distribution
agreements with broker-dealers who are registered under the Exchange Act and
with entities that may offer the Annuity but are exempt from registration
("firms"). Applications for the Annuity are solicited by registered
representatives of those firms. Such representatives will also be our appointed
insurance agents under state insurance law. In addition, ASM may offer the
Annuity directly to potential purchasers.
Commissions are paid to firms on sales of the Annuity according to one or
more schedules. The individual representative will receive a portion of the
compensation, depending on the practice of his or her firm. Commissions are
generally based on a percentage of Purchase Payments made, up to a maximum of
5.5%. Alternative compensation schedules are available that provide a lower
initial commission plus ongoing annual compensation based on all or a portion of
Account Value. We may also provide compensation to the distributing firm for
providing ongoing service to you in relation to the Annuity. Commissions and
other compensation paid in relation to the Annuity do not result in any
additional charge to you or to the Separate Account.
In addition, in an effort to promote the sale of our products (which may
include the placement of American Skandia and/or the Annuity on a preferred or
recommended company or product list and/or access to the firm's registered
representatives), we or ASM may enter into compensation arrangements with
certain broker-dealer firms (including Linsco/Private Ledger, Corp.) with
respect to certain or all registered representatives of such firms under which
such firms may receive separate compensation or reimbursement for, among other
things, training of sales personnel and/or marketing and/or administrative
services and/or other services they provide. These services may include, but are
not limited to: educating customers of the firm on the Annuity's features;
conducting due diligence and analysis, providing office access, operations and
systems support; holding seminars intended to educate the firm's registered
representatives and make them more knowledgeable about the Annuity; providing a
dedicated marketing coordinator; providing priority sales desk support; and
providing expedited marketing compliance approval. To the extent permitted by
NASD rules and other applicable laws and regulations, ASM may pay or allow other
promotional incentives or payments in the form of cash or non-cash compensation.
These arrangements may not be offered to all firms and the terms of such
arrangements may differ between firms. A list of the firms to whom American
Skandia pays an amount of greater than $10,000 for these arrangements is
provided in the Statement of Additional Information, which is available upon
request. You should note that firms and individual registered representatives
and branch managers within some firms participating in one of these compensation
arrangements might receive greater compensation for selling the Annuity than for
selling a different annuity that is not eligible for these compensation
arrangements. While compensation is generally taken into account as an expense
in considering the charges applicable to an annuity product, any such
compensation will be paid by us or ASM and will not result in any additional
charge to you. Overall compensation paid to the distributing firm does not
exceed, based on actuarial assumptions, 8.5% of the total Purchase Payments
made. Your registered representative can provide you with more information about
the compensation arrangements that apply upon the sale of the Annuity.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
American Skandia publishes annual and quarterly reports that are filed with the
SEC. These reports contain financial information about American Skandia that is
annually audited by an independent registered public accounting firm. American
Skandia's annual report for the year ended December 31, 2004, together with
subsequent periodic reports that American Skandia files with the SEC, are
incorporated by reference into this prospectus. You can obtain copies, at no
cost, of any and all of this information, including the American Skandia annual
report
77
OPTIMUM FOUR PROSPECTUS
General Information continued
that is not ordinarily mailed to contract owners, the more current reports and
any subsequently filed documents at no cost by contacting us at American Skandia
- -- Variable Annuities; P.O. Box 7960, Philadelphia, PA 19176 (Telephone:
203-926-1888). The SEC file number for American Skandia is 33-44202. You may
read and copy any filings made by American Skandia with the SEC at the SEC's
Public Reference Room at 450 Fifth Street, Washington, D.C. 20549-0102. You can
obtain information on the operation of the Public Reference Room by calling
(202) 942-8090. The SEC maintains an Internet site that contains reports, proxy
and information statements, and other information regarding issuers that file
electronically with the SEC at http://www.sec.gov.
FINANCIAL STATEMENTS
The financial statements of the separate account and American Skandia Life
Assurance Corporation are included in the Statement of Additional Information.
HOW TO CONTACT US
You can contact us by:
- - calling our Customer Service Team at 1-800-752-6342 during our normal
business hours, 8:30 a.m. EST to 8:00 p.m. EST, Monday through Friday, or
Skandia's telephone automated response system at 1-800-766-4530.
- - writing to us via regular mail at American Skandia -- Variable Annuities,
P.O. Box 7960, Philadelphia, PA 19176 OR for express mail American Skandia
-- Variable Annuities, 2101 Welsh Road, Dresher, PA 19025 NOTE: Failure to
send mail to the proper address may result in a delay in our receiving and
processing your request.
- - sending an email to customerservice@skandia.com or visiting our Internet
Website at www.americanskandia.com.
- - accessing information about your Annuity through our Internet Website at
www.americanskandia.com.
You can obtain account information by calling our automated response
system and at www.americanskandia.prudential.com, our Internet Website. Our
Customer Service representatives are also available during business hours to
provide you with information about your account. You can request certain
transactions through our telephone voice response system, our Internet Website
or through a customer service representative. You can provide authorization for
a third party, including your attorney-in-fact acting pursuant to a power of
attorney, to access your account information and perform certain transactions on
your account. You will need to complete a form provided by us which identifies
those transactions that you wish to authorize via telephonic and electronic
means and whether you wish to authorize a third party to perform any such
transactions. Please note that unless you tell us otherwise, we deem that all
transactions that are directed by your investment professional with respect to
your Annuity have been authorized by you. We require that you or your
representative provide proper identification before performing transactions over
the telephone or through our Internet Website. This may include a Personal
Identification Number (PIN) that will be provided to you upon issue of your
Annuity or you may establish or change your PIN by calling our automated
response system and at www.americanskandia.prudential.com, our Internet Website.
Any third party that you authorize to perform financial transactions on your
account will be assigned a PIN for your account.
Transactions requested via telephone are recorded. To the extent permitted
by law, we will not be responsible for any claims, loss, liability or expense in
connection with a transaction requested by telephone or other electronic means
if we acted on such transaction instructions after following reasonable
procedures to identify those persons authorized to perform transactions on your
Annuity using verification methods which may include a request for your Social
Security number, PIN or other form of electronic identification. We may be
liable for losses due to unauthorized or fraudulent instructions if we did not
follow such procedures.
American Skandia does not guarantee access to telephonic, facsimile,
Internet or any other electronic information or that we will be able to accept
transaction instructions via such means at all times. Regular and/or express
mail will be the only means by which we will accept transaction instructions
when telephonic, facsimile, Internet or any other electronic means are
unavailable or delayed. American Skandia reserves the right to limit, restrict
or terminate telephonic, facsimile, Internet or any other electronic transaction
privileges at any time.
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Securities Act") may be permitted to directors, officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
78
OPTIMUM FOUR PROSPECTUS
LEGAL PROCEEDINGS
As of the date of this Prospectus, American Skandia and its affiliates are not
involved in any legal proceedings outside of the ordinary course of business.
American Skandia and its affiliates are involved in pending and threatened legal
proceedings in the normal course of its business, however, we do not anticipate
that the outcome of any such legal proceedings will have a material adverse
affect on the Separate Account, or American Skandia's ability to meet its
obligations under the Annuity, or on the distribution of the Annuity.
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The following are the contents of the Statement of Additional Information:
General Information about American Skandia
- - American Skandia Life Assurance Corporation
- - American Skandia Life Assurance Corporation Variable Account B
- - American Skandia Life Assurance Corporation Separate Account D
Principal Underwriter/Distributor -- American Skandia Marketing, Incorporated
Payments Made to Promote Sale of Our Products
How the Unit Price is Determined
Additional Information on Fixed Allocations
- - How We Calculate the Market Value Adjustment
General Information
- - Voting Rights
- - Modification
- - Deferral of Transactions
- - Misstatement of Age or Sex
- - Ending the Offer
Annuitization
Experts
Legal Experts
Financial Statements
79
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APPENDIX A
OPTIMUM FOUR PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B
Separate Account B consists of multiple Sub-accounts. Each Sub-account invests
only in a single mutual fund or mutual fund portfolio. All or some of these
Sub-accounts are available as investment options for other variable annuities we
offer pursuant to different prospectuses.
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 Sub-accounts of Separate Account
B that are being offered pursuant to this Prospectus; and (b) the number of
Units outstanding for each such Sub-account as of the dates shown. Since
November 18, 2002, we have been determining, on a daily basis, multiple Unit
Prices for each Sub-account of Separate Account B. We compute multiple Unit
Prices because several of our variable annuities invest in the same
Sub-accounts, and these annuities deduct varying charges that correspond to each
combination of the applicable Insurance Charge, Distribution Charge (when
applicable) and the charges for each optional benefit. Where an asset-based
charge corresponding to a particular Sub-account within a new annuity product is
identical to that in the same Sub-account within an existing annuity, the Unit
Price for the new annuity will be identical to that of the existing annuity. In
such cases, we will for reference purposes depict, in the condensed financial
information for the new annuity, Unit Prices of the existing annuity. The year
in which operations commenced in each such Sub-account is noted in parentheses.
To the extent a Sub-account commenced operations during a particular calendar
year, the Unit Price as of the end of the period reflects only the partial year
results from the commencement of operations until December 31st of the
applicable year. When a Unit Price was first calculated for a particular
Sub-account, we set the price of that Unit at $10.00 per Unit. Thereafter, Unit
Prices vary based on market performance. Unit Prices and Units are provided for
Sub-accounts that commenced operations prior to January 1, 2005.
A-1
APPENDIX A
OPTIMUM FOUR PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B
Year Ended December 31,
------------------------------------------------
Sub-account 2004 2003 2002
- ---------------------------------------------- ------------- ------------ -----------
AST WILLIAM BLAIR INTERNATIONAL GROWTH (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 15.30 $ 13.39 9.72
Number of Units 11,265,469 5,547,558 835,523
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.21 $ 13.35 9.72
Number of Units 15,481,627 6,498,151 78,368
With GMWB
Unit Value $ 15.18 $ 13.34 --
Number of Units 1,821,923 103,740 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.13 $ 13.32 9.71
Number of Units 2,722,552 1,009,679 5,178
With any one of EBP or HAV and GMWB
Unit Value $ 15.74 $ 13.86 --
Number of Units 545,075 29,434 --
With HAV, EBP and GRO Plus
Unit Price $ 15.05 $ 13.28 --
Number of Units 325,809 32,626 --
With HAV, EBP and GMWB
Unit Price $ 11.94 -- --
Number of Units 135,829 -- --
AST LSV INTERNATIONAL VALUE (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.84 $ 10.79 8.19
Number of Units 1,897,469 1,201,268 269,995
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.27 $ 12.86 9.79
Number of Units 810,108 368,945 22,770
With GMWB
Unit Value $ 15.24 $ 12.85 --
Number of Units 69,494 5,504 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.19 $ 12.82 --
Number of Units 119,845 24,374 --
With any one of EBP or HAV and GMWB
Unit Value $ 6.69 $ 5.65 --
Number of Units 122,795 72,406 --
With HAV, EBP and GRO Plus
Unit Price $ 15.11 $ 12.79 --
Number of Units 16,366 1,767 --
With HAV, EBP and GMWB
Unit Value $ 12.70 -- --
Number of Units 5,736 -- --
A-2
APPENDIX A
OPTIMUM FOUR PROSPECTUS
Year Ended December 31,
------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------------- ------------ ------------ ------------
AST STATE STREET RESEARCH SMALL-CAP GROWTH (1)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.05 $ 9.89 6.92
Number of Units 2,242,129 3,292,593 1,970,250
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.33 $ 13.50 9.48
Number of Units 1,200,247 1,059,046 47,261
With GMWB
Unit Value $ 12.30 $ 13.49 --
Number of Units 113,913 9,676 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.26 $ 13.46 9.47
Number of Units 136,313 138,936 6,595
With any one of EBP or HAV and GMWB
Unit Value $ 15.30 $ 16.82 --
Number of Units 67,370 64,850 --
With HAV, EBP and GRO Plus
Unit Price $ 12.19 $ 13.43 --
Number of Units 23,253 4,691 --
With HAV, EBP and GMWB
Unit Value $ 9.32 -- --
Number of Units 1,043 -- --
AST DeAM SMALL-CAP GROWTH (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.98 $ 11.13 7.67
Number of Units 1,618,719 1,682,193 639,695
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.10 $ 14.06 9.71
Number of Units 779,045 480,221 12,122
With GMWB
Unit Value $ 15.07 $ 14.05 --
Number of Units 56,414 1,850 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.02 $ 14.02 9.71
Number of Units 192,105 89,708 1,728
With any one of EBP or HAV and GMWB
Unit Value $ 7.07 $ 6.61 --
Number of Units 129,475 131,605 --
With HAV, EBP and GRO Plus
Unit Price $ 14.94 $ 13.98 --
Number of Units 18,825 3,753 --
With HAV, EBP and GMWB
Unit Value $ 11.03 -- --
Number of Units 3,398 -- --
A-3
APPENDIX A
OPTIMUM FOUR PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
Year Ended December 31,
------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- ------------- ------------- ------------
AST FEDERATED AGGRESSIVE GROWTH (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 15.42 $ 12.74 7.64
Number of Units 4,808,453 3,085,373 1,255,415
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.79 $ 16.40 9.86
Number of Units 5,192,694 2,615,505 63,097
With GMWB
Unit Value $ 19.75 $ 16.38 --
Number of Units 562,771 37,078 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 19.69 $ 16.35 9.86
Number of Units 808,007 362,906 4,107
With any one of EBP or HAV and GMWB
Unit Value $ 9.70 $ 8.06 --
Number of Units 324,340 79,226 --
With HAV, EBP and GRO Plus
Unit Price $ 19.58 $ 16.30 --
Number of Units 95,514 20,181 --
With HAV, EBP and GMWB
Unit Value $ 12.64 -- --
Number of Units 53,866 -- --
AST SMALL-CAP VALUE (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 14.22 $ 12.42 9.30
Number of Units 10,785,030 10,183,346 6,141,523
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.34 $ 13.43 10.08
Number of Units 10,169,483 5,824,200 209,790
With GMWB
Unit Value $ 15.31 $ 13.41 --
Number of Units 1,007,926 100,155 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.26 $ 13.39 10.08
Number of Units 1,690,870 767,455 17,411
With any one of EBP or HAV and GMWB
Unit Value $ 15.87 $ 13.95 --
Number of Units 465,784 275,971 --
With HAV, EBP and GRO Plus
Unit Price $ 15.17 $ 13.35 --
Number of Units 166,852 34,978 --
With HAV, EBP and GMWB
Unit Value $ 12.11 -- --
Number of Units 91,011 -- --
A-4
APPENDIX A
OPTIMUM FOUR PROSPECTUS
Year Ended December 31,
------------------------------------------------
Sub-account 2004 2003 2002
- ------------------------------------------ ------------- ------------ ---------
AST GOLDMAN SACHS MID-CAP GROWTH (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.80 $ 10.31 7.97
Number of Units 4,375,813 3,027,057 1,273,118
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.55 $ 12.75 9.87
Number of Units 5,139,643 2,379,820 66,279
With GMWB
Unit Value $ 14.52 $ 12.73 --
Number of Units 516,261 37,400 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.47 $ 12.71 9.87
Number of Units 994,493 365,115 2,488
With any one of EBP or HAV and GMWB
Unit Value $ 4.24 $ 3.73 --
Number of Units 457,010 175,708 --
With HAV, EBP and GRO Plus
Unit Price $ 14.39 $ 12.68 --
Number of Units 124,672 12,201 --
With HAV, EBP and GMWB
Unit Value $ 11.91 -- --
Number of Units 33,665 -- --
AST NEUBERGER BERMAN MID-CAP VALUE (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 14.51 $ 12.01 8.96
Number of Units 11,461,684 8,530,129 5,118,558
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.08 $ 13.34 9.98
Number of Units 9,335,291 4,786,623 163,415
With GMWB
Unit Value $ 16.04 $ 13.33 --
Number of Units 937,314 87,253 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.99 $ 13.31 9.97
Number of Units 1,457,788 610,598 10,745
With any one of EBP or HAV and GMWB
Unit Value $ 15.99 $ 13.32 --
Number of Units 537,445 370,965 --
With HAV, EBP and GRO Plus
Unit Price $ 15.91 $ 13.27 --
Number of Units 154,749 21,843 --
With HAV, EBP and GMWB
Unit Value $ 12.97 -- --
Number of Units 95,076 -- --
A-5
APPENDIX A
OPTIMUM FOUR PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
Year Ended December 31,
------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- ------------- ------------- ----------
AST MFS GROWTH (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.97 $ 9.16 7.58
Number of Units 4,529,834 4,784,269 2,930,432
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.39 $ 11.41 9.47
Number of Units 2,897,175 2,222,614 134,574
With GMWB
Unit Value $ 12.37 $ 11.40 --
Number of Units 304,760 18,900 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.33 $ 11.38 9.46
Number of Units 442,758 207,063 2,437
With any one of EBP or HAV and GMWB
Unit Value $ 6.72 $ 6.21 --
Number of Units 387,463 262,995 --
With HAV, EBP and GRO Plus
Unit Price $ 12.26 $ 11.35 --
Number of Units 52,718 10,550 --
With HAV, EBP and GMWB
Unit Value $ 11.00 -- --
Number of Units 33,939 -- --
AST MARSICO CAPITAL GROWTH (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.26 $ 10.78 8.32
Number of Units 28,117,310 20,138,164 10,144,317
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.95 $ 12.30 9.51
Number of Units 30,793,077 14,975,841 457,013
With GMWB
Unit Value $ 13.92 $ 12.28 --
Number of Units 3,136,818 215,988 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.88 $ 12.26 9.51
Number of Units 4,692,895 2,031,583 30,465
With any one of EBP or HAV and GMWB
Unit Value $ 9.22 $ 8.16 --
Number of Units 2,016,277 925,591 --
With HAV, EBP and GRO Plus
Unit Price $ 13.80 $ 12.23 --
Number of Units 578,919 70,776 --
With HAV, EBP and GMWB
Unit Value $ 11.61 -- --
Number of Units 263,104 -- --
A-6
APPENDIX A
OPTIMUM FOUR PROSPECTUS
YEAR ENDED DECEMBER 31,
-------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------------ ------------- ------------- -------------
AST SANFORD BERNSTEIN CORE VALUE (2)(2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.39 $ 11.06 8.76
Number of Units 4,643,022 3,621,862 6,005,922
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.18 $ 12.69 10.08
Number of Units 3,959,115 2,277,726 386,259
With GMWB
Unit Value $ 14.15 $ 12.67 --
Number of Units 220,419 11,518 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.10 $ 12.65 10.08
Number of Units 534,389 328,567 30,510
With any one of EBP or HAV and GMWB
Unit Value $ 11.83 $ 10.62 --
Number of Units 303,689 216,416 --
With HAV, EBP and GRO Plus
Unit Price $ 14.03 $ 12.62 --
Number of Units 49,912 10,893 --
With HAV, EBP and GMWB
Unit Value $ 11.86 -- --
Number of Units 57,669 -- --
AST HOTCHKIS & WILEY LARGE-CAP VALUE
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.17 $ 9.83 8.34
Number of Units 3,717,848 2,647,064 2,110,071
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.19 $ 11.65 9.90
Number of Units 1,916,775 651,074 30,714
With GMWB
Unit Value $ 13.16 $ 11.63 --
Number of Units 173,888 21,961 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.12 $ 11.61 9.90
Number of Units 198,898 90,092 5,934
With any one of EBP or HAV and GMWB
Unit Value $ 9.78 $ 8.66 --
Number of Units 419,818 347,275 --
With HAV, EBP and GRO Plus
Unit Price $ 13.05 $ 11.58 --
Number of Units 37,159 332 --
With HAV, EBP and GMWB
Unit Value $ 11.75 -- --
Number of Units 23,032 -- --
A-7
APPENDIX A
OPTIMUM FOUR PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
--------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ----------------------------------------- -------------- -------------- --------------
AST LORD ABBETT BOND-DEBENTURE (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.26 $ 11.61 9.94
Number of Units 8,369,008 7,751,236 4,146,530
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.56 $ 11.92 10.23
Number of Units 7,337,467 4,628,945 162,571
With GMWB
Unit Value $ 12.53 $ 11.90 --
Number of Units 904,128 42,593 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.49 $ 11.88 10.23
Number of Units 1,314,641 624,019 7,474
With any one of EBP or HAV and GMWB
Unit Value $ 12.18 $ 11.60 --
Number of Units 732,155 423,485 --
With HAV, EBP and GRO Plus
Unit Price $ 12.42 $ 11.85 --
Number of Units 155,764 28,346 --
With HAV, EBP and GMWB
Unit Value $ 10.88 -- --
Number of Units 85,669 -- --
AST PIMCO TOTAL RETURN BOND (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.31 $ 10.95 10.57
Number of Units 33,208,757 26,287,388 20,544,075
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.82 $ 10.51 10.17
Number of Units 30,067,867 16,012,778 604,147
With GMWB
Unit Value $ 10.79 $ 10.49 --
Number of Units 3,495,678 378,676 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.76 $ 10.48 10.17
Number of Units 4,319,279 2,192,336 36,236
With any one of EBP or HAV and GMWB
Unit Value $ 13.09 $ 12.76 --
Number of Units 2,344,332 1,558,557 --
With HAV, EBP and GRO Plus
Unit Price $ 10.70 $ 10.45 --
Number of Units 476,033 119,982 --
With HAV, EBP and GMWB
Unit Value $ 10.32 -- --
Number of Units 323,335 -- --
A-8
APPENDIX A
OPTIMUM FOUR PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ----------------------------------------- -------------- -------------- --------------
AST PIMCO LIMITED MATURITY BOND (1995)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.55 $ 10.51 10.34
Number of Units 21,299,789 15,242,856 11,274,642
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.23 $ 10.22 10.08
Number of Units 19,103,280 5,152,783 215,314
With GMWB
Unit Value $ 10.21 $ 10.21 --
Number of Units 2,764,809 36,640 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.17 $ 10.19 10.08
Number of Units 2,785,690 636,860 80,547
With any one of EBP or HAV and GMWB
Unit Value $ 11.62 $ 11.65 --
Number of Units 1,143,298 329,629 --
With HAV, EBP and GRO Plus
Unit Price $ 10.12 $ 10.16 --
Number of Units 301,108 35,430 --
With HAV, EBP and GMWB
Unit Value $ 9.96 -- --
Number of Units 240,337 -- --
AST MONEY MARKET (1992)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.78 $ 9.86 9.96
Number of Units 29,870,585 32,730,501 36,255,772
With any one of GRO Plus, EBP or HAV
Unit Price $ 9.75 $ 9.86 9.99
Number of Units 8,152,893 7,176,983 999,737
With GMWB
Unit Value $ 9.73 $ 9.85 --
Number of Units 1,312,018 81,304 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 9.70 $ 9.83 9.99
Number of Units 1,742,703 1,118,618 70,899
With any one of EBP or HAV and GMWB
Unit Value $ 9.98 $ 10.13 --
Number of Units 234,402 35,505 --
With HAV, EBP and GRO Plus
Unit Price $ 9.65 $ 9.80 --
Number of Units 432,144 149,705 --
With HAV, EBP and GMWB
Unit Value $ 9.79 -- --
Number of Units 61,321 -- --
A-9
APPENDIX A
OPTIMUM FOUR PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- -------------------------------------------- ----------- ----------- -----------
EVERGREEN VA -- INTERNATIONAL EQUITY (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.66 $ 11.65 8.15
Number of Units 414,631 189,143 113,389
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.94 $ 12.78 9.67
Number of Units 195,986 76,749 3,669
With GMWB
Unit Value $ 12.21 $ 10.45 --
Number of Units 32,858 827 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.86 $ 12.74 --
Number of Units 67,201 6,492 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.40 $ 10.64 --
Number of Units 83,727 81,555 --
With HAV, EBP and GRO Plus
Unit Price $ 14.78 $ 12.71 --
Number of Units 7,362 1,395 --
With HAV, EBP and GMWB
Unit Value $ 12.36 -- --
Number of Units 2,878 -- --
EVERGREEN VA -- OMEGA (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.29 $ 10.71 7.78
Number of Units 570,123 404,789 39,943
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.89 $ 13.21 --
Number of Units 387,492 56,002 --
With GMWB
Unit Value $ 13.86 $ 13.19 --
Number of Units 31,153 283 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.81 $ 13.17 --
Number of Units 108,796 25,003 --
With any one of EBP or HAV and GMWB
Unit Value $ 9.40 $ 8.97 --
Number of Units 84,876 19,658 --
With HAV, EBP and GRO Plus
Unit Price $ 13.74 $ 13.13 --
Number of Units 3,028 1,855 --
With HAV, EBP and GMWB
Unit Value $ 10.92 -- --
Number of Units 30,383 -- --
1. Effective May 2, 2005 the name of the AST State Street Research Small-Cap
Growth Portfolio has changed to AST Small-Cap Growth Portfolio.
2. Effective May 2, 2005 the name of the AST Sanford Bernstein Core Value
Portfolio has changed to AST AllianceBernstein Core Value Portfolio.
A-10
APPENDIX B
OPTIMUM FOUR PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits
EXAMPLES OF ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT CALCULATION
The following are examples of how the Enhanced Beneficiary Protection Optional
Death Benefit is calculated. Each example assumes that a $50,000 initial
Purchase Payment is made. Each example assumes that there is one Owner who is
age 50 on the Issue Date and that all Account Value is maintained in the
variable investment options. The formula for determining the Enhanced
Beneficiary Protection Optional Death Benefit is as follows:
Account Value of variable
investment options plus Interim Purchase Payments -
Growth = minus
Value of Fixed Allocations proportional withdrawals
(no MVA applies)
Example with market increase
Assume that the Owner has made no withdrawals and that the Account Value has
been increasing due to positive market performance. On the date we receive due
proof of death, the Account Value is $75,000. The basic Death Benefit is
calculated as Purchase Payments minus proportional withdrawals, or Account
Value, which ever is greater. Therefore, the basic Death Benefit is equal to
$75,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to
the amount payable under the basic Death Benefit ($75,000) PLUS 40% of the
"Growth" under the Annuity.
Growth = $75,000 - [$50,000 - $0]
= $ 25,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit =
40% of Growth
= $25,000 x 0.40
= $ 10,000
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $ 85,000
Examples with market decline
Assume that the Owner has made no withdrawals and that the Account Value has
been decreasing due to declines in market performance. On the date we receive
due proof of death, the Account Value is $45,000. The basic Death Benefit is
calculated as Purchase Payments minus proportional withdrawals, or Account
Value, which ever is greater. Therefore, the basic Death Benefit is equal to
$50,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to
the amount payable under the basic Death Benefit ($50,000) PLUS the "Growth"
under the Annuity.
Growth = $45,000 - [$50,000 - $0]
= $ -5,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit =
40% of Growth
NO BENEFIT IS PAYABLE
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $ 50,000
B-1
APPENDIX B
OPTIMUM FOUR PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits continued
IN THIS EXAMPLE YOU WOULD RECEIVE NO ADDITIONAL BENEFIT FROM PURCHASING THE
ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT.
Example with market increase and withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 5 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $90,000. The basic Death Benefit is calculated as Purchase
Payments minus proportional withdrawals, or Account Value, which ever is
greater. Therefore, the basic Death Benefit is equal to $90,000. The Enhanced
Beneficiary Protection Optional Death Benefit is equal to the amount payable
under the basic Death Benefit ($90,000) PLUS 40% of the "Growth" under the
Annuity.
Growth = $90,000 - [$50,000 - ($50,000 x $15,000/$75,000)]
= $90,000 - [$50,000 - $10,000]
= $90,000 - $40,000
= $ 50,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit =
40% of Growth
= $50,000 x 0.40
= $ 20,000
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $ 110,000
EXAMPLES OF HIGHEST ANNIVERSARY VALUE DEATH BENEFIT CALCULATION
The following are examples of how the Highest Anniversary Value Death Benefit is
calculated. Each example assumes an initial Purchase Payment of $50,000. Each
example assumes that there is one Owner who is age 70 on the Issue Date and that
all Account Value is maintained in the variable investment options.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the date
we receive due proof of death, the Account Value is $75,000; however, the
Anniversary Value on the 5th anniversary of the Issue Date was $90,000. Assume
as well that the Owner has died before the Death Benefit Target Date. The Death
Benefit is equal to the greater of the Highest Anniversary Value or the basic
Death Benefit. The Death Benefit would be the Highest Anniversary Value
($90,000) because it is greater than the amount that would have been payable
under the basic Death Benefit ($75,000).
Example with withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $80,000; however, the Anniversary Value on the 5th anniversary
of the Issue Date was $90,000. Assume as well that the Owner has died before the
Death Benefit Target Date. The Death Benefit is equal to the greater of the
Highest Anniversary Value or the basic Death Benefit.
Highest Anniversary Value = $90,000 - [$90,000 x $15,000/$75,000]
= $90,000 - $18,000
= $ 72,000
Basic Death Benefit = max [$80,000, $50,000 - ($50,000 x $15,000/$75,000)]
= max [$80,000, $40,000]
= $ 80,000
The Death Benefit therefore is $80,000.
B-2
APPENDIX B
OPTIMUM FOUR PROSPECTUS
Example with death after Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals had been made prior to the
Death Benefit Target Date. Further assume that the Owner dies after the Death
Benefit Target Date, when the Account Value is $75,000. The Highest Anniversary
Value on the Death Benefit Target Date was $80,000; however, following the Death
Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had
taken a withdrawal of $5,000 when the Account Value was $70,000. The Death
Benefit is equal to the greater of the Highest Anniversary Value plus Purchase
Payments minus proportional withdrawals after the Death Benefit Target Date or
the basic Death Benefit.
Highest Anniversary Value = $80,000 + $15,000 - [($80,000 + $15,000) x $5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $ 88,214
Basic Death Benefit = max [$75,000, ($50,000 + $15,000) - {($50,000 + $15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $ 75,000
The Death Benefit therefore is $88,214.
EXAMPLES OF COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
CALCULATION
The following are examples of how the Combination 5% Roll-Up and Highest
Anniversary Value Death Benefit are calculated. Each example assumes an initial
Purchase Payment of $50,000. Each example assumes that there is one Owner who is
age 70 on the Issue Date and that all Account Value is maintained in the
variable investment options.
Example with market increase and death before Death Benefit Target Date Assume
that the Owner's Account Value has generally been increasing due to positive
market performance and that no withdrawals have been made. On the 7th
anniversary of the Issue Date we receive due proof of death, at which time the
Account Value is $75,000; however, the Anniversary Value on the 5th anniversary
of the Issue Date was $90,000. Assume as well that the Owner has died before the
Death Benefit Target Date. The Roll-Up Value is equal to initial Purchase
Payment accumulated at 5% for 6 years, or $67,005. The Death Benefit is equal to
the greatest of the Roll-Up Value, Highest Anniversary Value or the basic Death
Benefit. The Death Benefit would be the Highest Anniversary Value ($90,000)
because it is greater than both the Roll-Up Value ($67,005) and the amount that
would have been payable under the basic Death Benefit ($75,000).
Example with withdrawals
Assume that the Owner made a withdrawal of $5,000 on the 6th anniversary of the
Issue Date when the Account Value was $45,000. The Roll-Up Value on the 6th
anniversary of the Issue Date is equal to initial Purchase Payment accumulated
at 5% for 6 years, or $67,005. The 5% Dollar-for-Dollar Withdrawal Limit for the
7th annuity year is equal to 5% of the Roll-Up Value as of the 6th anniversary
of the Issue Date, or $3,350. Therefore, the remaining $1,650 of the withdrawal
results in a proportional reduction to the Roll-Up Value. On the 7th anniversary
of the Issue Date we receive due proof of death, at which time the Account Value
is $43,000; however, the Anniversary Value on the 2nd anniversary of the Issue
Date was $70,000. Assume as well that the Owner has died before the Death
Benefit Target Date. The Death Benefit is equal to the greatest of the Roll-Up
Value, Highest Anniversary Value or the basic Death Benefit.
B-3
APPENDIX B
OPTIMUM FOUR PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits continued
Roll-Up Value = {($67,005 - $3,350) - [($67,005 - $3,350) x $1,650/($45,000 - $3,350)]} x 1.05
= ($63,655 - $2,522) x 1.05
= $ 64,190
Highest Anniversary Value = $70,000 - [$70,000 x $5,000/$45,000]
= $70,000 - $7,778
= $ 62,222
Basic Death Benefit = max [$43,000, $50,000 - ($50,000 x $5,000/$45,000)]
= max [$43,000, $44,444]
= $ 44,444
The Death Benefit therefore is $64,190.
Example with death after Death Benefit Target Date
Assume that the Owner has not made any withdrawals prior to the Death Benefit
Target Date. Further assume that the Owner dies after the Death Benefit Target
Date, when the Account Value is $75,000. The Roll-Up Value on the Death Benefit
Target Date (the contract anniversary on or following the Owner's 80th birthday)
is equal to initial Purchase Payment accumulated at 5% for 10 years, or $81,445.
The Highest Anniversary Value on the Death Benefit Target Date was $85,000;
however, following the Death Benefit Target Date, the Owner made a Purchase
Payment of $15,000 and later had taken a withdrawal of $5,000 when the Account
Value was $70,000. The Death Benefit is equal to the greatest of the Roll-Up
Value, Highest Anniversary Value or the basic Death Benefit as of the Death
Benefit Target Date; each increased by subsequent purchase payments and reduced
proportionally for subsequent withdrawals.
Roll-Up Value = $81,445 + $15,000 - [($81,445 + 15,000) x $5,000/$70,000]
= $81,445 + $15,000 - $6,889
= $ 89,556
Highest Anniversary Value = $85,000 + $15,000 - [($85,000 + 15,000) x $5,000/$70,000]
= $85,000 + $15,000 - $7,143
= $ 92,857
Basic Death Benefit = max [$75,000, $50,000 + $15,000 - {(50,000 + $15,000) x
$5,000/$70,000}]
= max [$75,000, $60,357]
= $ 75,000
The Death Benefit therefore is $92,857.
EXAMPLES OF HIGHEST DAILY VALUE DEATH BENEFIT CALCULATION
The following are examples of how the HDV Death Benefit is calculated. Each
example assumes an initial Purchase Payment of $50,000. Each example assumes
that there is one Owner who is age 70 on the Issue Date.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the date
we receive due proof of death, the Account Value is $75,000; however, the
Highest Daily Value was $90,000. Assume as well that the Owner has died before
the Death Benefit Target Date. The Death Benefit is equal to the greater of the
Highest Daily Value or the basic Death Benefit. The Death Benefit would be the
HDV ($90,000) because it is greater than the amount that would have been payable
under the basic Death Benefit ($75,000).
B-4
APPENDIX B
OPTIMUM FOUR PROSPECTUS
Example with withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $80,000; however, the Highest Daily Value ($90,000) was
attained during the fifth Annuity Year. Assume as well that the Owner has died
before the Death Benefit Target Date. The Death Benefit is equal to the greater
of the Highest Daily Value (proportionally reduced by the subsequent withdrawal)
or the basic Death Benefit.
Highest Daily Value = $90,000 - [$90,000 x $15,000/$75,000]
= $90,000 - $18,000
= $ 72,000
Basic Death Benefit = max [$80,000, $50,000 - ($50,000 x $15,000/$75,000)]
= max [$80,000, $40,000]
= $ 80,000
The Death Benefit therefore is $80,000.
Example with death after Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals had been made prior to the
Death Benefit Target Date. Further assume that the Owner dies after the Death
Benefit Target Date, when the Account Value is $75,000. The Highest Daily Value
on the Death Benefit Target Date was $80,000; however, following the Death
Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had
taken a withdrawal of $5,000 when the Account Value was $70,000. The Death
Benefit is equal to the greater of the Highest Daily Value on the Death Benefit
Target Date plus Purchase Payments minus proportional withdrawals after the
Death Benefit Target Date or the basic Death Benefit.
Highest Daily Value = $80,000 + $15,000 - [($80,000 + $15,000) x $5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $ 88,214
Basic Death Benefit = max [$75,000, ($50,000 + $15,000) - {($50,000 + $15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $ 75,000
The Death Benefit therefore is $88,214.
B-5
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APPENDIX C
OPTIMUM FOUR PROSPECTUS
Appendix C -- Additional Information on Asset Allocation Programs
PROGRAM RULES
- - You can elect an asset allocator program where the Sub-accounts for each
asset class in each model portfolio are designated based on an evaluation
of available Sub-accounts. If you elect the Lifetime Five Benefit ("LT5")
or the Highest Daily Value Death Benefit ("HDV"), you must enroll in one
of the eligible model portfolios. Asset allocation is a sophisticated
method of diversification that allocates assets among asset classes in
order to manage investment risk and potentially enhance returns over the
long term. However, asset allocation does not guarantee a profit or
protect against a loss.
HOW THE ASSET ALLOCATION PROGRAM WORKS
- - Amounts will automatically be allocated in accordance with the percentages
and to Sub-accounts indicated for the model portfolio that you choose. If
you allocate your Account Value or transfer your Account Value among any
Sub-accounts that are outside of your model portfolio, we will allocate
these amounts according to the allocation percentages of the applicable
model portfolio upon the next rebalancing. You may only choose one model
portfolio at a time. When you enroll in the asset allocation program and
upon each rebalance thereafter, 100% of your Account Value allocated to
the variable Sub-accounts will be allocated to the asset allocation
program. Any Account Value not invested in the Sub-accounts will not be
part of the program.
- - ADDITIONAL PURCHASE PAYMENTS: Unless otherwise requested, any additional
Purchase Payments applied to the variable Sub-accounts in the Annuity will
be allocated to the Sub-accounts according to the allocation percentages
for the model portfolio you choose. Allocation of additional Purchase
Payments outside of your model portfolio but into a Sub-account, will be
reallocated according to the allocation percentages of the applicable
model portfolio upon the next rebalancing.
- - REBALANCING YOUR MODEL PORTFOLIO: Changes in the value of the Sub-account
will cause your Account Value allocated to the Sub-accounts to vary from
the percentage allocations of the model portfolio you select. By selecting
the asset allocation program, you have directed us to periodically (e.g.,
quarterly) rebalance your Account Value allocated to the Sub-accounts in
accordance with the percentage allocations assigned to each Sub-account
within your model portfolio at the time you elected the program or as
later modified with your consent. Some asset allocation programs will only
require that a rebalancing occur when the percent of your Account Value
allocated to the Sub-accounts are outside of the acceptable range
permitted under such asset allocation program. Note -- Any Account Value
not invested in the Sub-accounts will not be affected by any rebalance.
- - SUB-ACCOUNT CHANGES WITHIN THE MODEL PORTFOLIOS: From time to time you may
be notified of a suggested change in a Sub-account or percentage allocated
to a Sub-account within your model portfolio. If you consent (in the
manner that is then permitted or required) to the suggested change, then
it will be implemented upon the next rebalance. If you do not consent then
rebalancing will continue in accordance with your unchanged model
portfolio, unless the Sub-account is no longer available under your
Annuity, in which case your lack of consent will be deemed a request to
terminate the asset allocation program and the provisions under
"Termination or Modification of the Asset Allocation Program" will apply.
- - OWNER CHANGES IN CHOICE OF MODEL PORTFOLIO: You may change from the model
portfolio that you have elected to any other currently available model
portfolio at any time. The change will be implemented on the date we
receive all required information in the manner that is then permitted or
required.
TERMINATION OR MODIFICATION OF THE ASSET ALLOCATION PROGRAM:
- - You may request to terminate your asset allocation program at any time.
Any termination will be effective on the date that American Skandia
receives your termination request in good order. If you are enrolled in
HDV or LT5, termination of your asset allocation program must coincide
with enrollment in a then currently available and approved asset
allocation program or other approved option. However, if you are enrolled
in LT5 you may terminate the LT5 benefit in order to then terminate your
asset allocation program. American Skandia reserves the right to terminate
or modify the asset allocation program at any time with respect to any
programs.
RESTRICTIONS ON ELECTING THE ASSET ALLOCATION:
- - You cannot participate in auto-rebalancing or a DCA program while enrolled
in an asset allocation program. Upon election of an asset allocation
program, American Skandia will automatically terminate your enrollment in
any auto-rebalancing or DCA program. Finally, Systematic Withdrawals can
only be made as flat dollar amounts.
C-1
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PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS FURTHER
DETAILS ABOUT THE AMERICAN SKANDIA ANNUITY DESCRIBED IN PROSPECTUS ASAPEXII-PROS
(05/2005).
--------------------------------------
(print your name)
--------------------------------------
(address)
--------------------------------------
(city/state/zip code)
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Variable Annuity Issued by: Variable Annuity Distributed by:
AMERICAN SKANDIA LIFE AMERICAN SKANDIA
ASSURANCE CORPORATION MARKETING, INCORPORATED
A Prudential Financial Company A Prudential Financial Company
One Corporate Drive One Corporate Drive
Shelton, Connecticut 06484 Shelton, Connecticut 06484
Telephone: 1-800-766-4530 Telephone: 203-926-1888
http://www.americanskandia.prudential.com http://www.americanskandia.prudential.com
MAILING ADDRESSES:
AMERICAN SKANDIA -- VARIABLE ANNUITIES
P.O. Box 7960
Philadelphia, PA 19176
EXPRESS MAIL:
AMERICAN SKANDIA -- VARIABLE ANNUITIES
2101 Welsh Rd.
Dresher, PA 19025
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
A Prudential Financial Company
One Corporate Drive, Shelton, Connecticut 06484
AMERICAN SKANDIA XTRA CREDIT(SM) SIX
Flexible Premium Deferred Annuity
PROSPECTUS: MAY 2, 2005
This Prospectus describes American Skandia XTra Credit(SM) SIX, a flexible
premium deferred annuity (the "Annuity") offered by American Skandia Life
Assurance Corporation ("American Skandia", "we", "our" or "us"). The Annuity
may be offered as an individual annuity contract or as an interest in a group
annuity. This Prospectus describes the important features of the Annuity and
what you should consider before purchasing the Annuity. THE ANNUITY OR CERTAIN
OF ITS INVESTMENT OPTIONS AND/OR FEATURES MAY NOT BE AVAILABLE IN ALL STATES.
VARIOUS RIGHTS AND BENEFITS MAY DIFFER BETWEEN STATES TO MEET APPLICABLE LAWS
AND/OR REGULATIONS. For more information about variations applicable to your
state, please refer to your Annuity contract or consult your Investment
Professional. Certain terms are capitalized in this Prospectus. Those terms are
either defined in the Glossary of Terms or in the context of the particular
section.
American Skandia offers several different annuities which your investment
professional may be authorized to offer to you. Each annuity has different
features and benefits that may be appropriate for you based on your financial
situation, your age and how you intend to use the annuity. The different
features and benefits include variations in death benefit protection and the
ability to access your annuity's account value. The fees and charges you pay and
compensation paid to your investment professional may also be different between
each annuity.
THE VARIABLE INVESTMENT OPTIONS
The variable investment options, each a Sub-account of American Skandia Life
Assurance Corporation Variable Account B, invest in an underlying mutual fund
portfolio. Currently, portfolios of the following underlying mutual funds are
being offered: American Skandia Trust, Gartmore Variable Investment Trust, Wells
Fargo Variable Trust, A I M Advisors, Inc., Evergreen Variable Annuity Trust,
ProFunds VP, First Defined Portfolio Fund LLC and The Prudential Series Fund,
Inc.
PLEASE READ THIS PROSPECTUS
PLEASE READ THIS PROSPECTUS AND THE CURRENT PROSPECTUS FOR THE UNDERLYING
MUTUAL FUNDS. KEEP THEM FOR FUTURE REFERENCE. If you are purchasing the Annuity
as a replacement for existing variable annuity or variable life coverage, you
should consider any surrender or penalty charges you may incur when replacing
your existing coverage and that this Annuity may be subject to a contingent
deferred sales charge if you elect to surrender the Annuity or take a partial
withdrawal. You should consider your need to access the Annuity's Account Value
and whether the annuity's liquidity features will satisfy that need.
AVAILABLE INFORMATION
We have also filed a Statement of Additional Information that is available from
us, without charge, upon your request. The contents of the Statement of
Additional Information are described on page 98. This Prospectus is part of the
registration statement we filed with the SEC regarding this offering.
Additional information on us and this offering is available in the registration
statement and the exhibits thereto. You may review and 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. These documents, as well as
documents incorporated by reference, may also be obtained through the SEC's
Internet Website (http://www.sec.gov) for this registration statement as well
as for other registrants that file electronically with the SEC.
FOR FURTHER INFORMATION CALL:
- - 1-800-752-6342
THESE ANNUITIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ISSUED, GUARANTEED OR
ENDORSED BY, ANY BANK, ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC), THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY. AN INVESTMENT IN THIS ANNUITY INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF VALUE, EVEN WITH RESPECT TO AMOUNTS ALLOCATED TO THE AST MONEY
MARKET SUB-ACCOUNT. 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.
AMERICAN SKANDIA XTRA CREDIT(SM) IS A SERVICE MARK OF THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA.
Prospectus Dated: May 2, 2005 Statement of Additional Information Dated: May 2, 2005
XT6PROS505 ASXT II-SIXPROS
PLEASE SEE OUR PRIVACY POLICY AND IRA DISCLOSURE STATEMENT ATTACHED TO THE BACK
COVER OF THIS PROSPECTUS.
CONTENTS
Introduction ............................................................................. 1
Why Would I Choose to Purchase This Annuity? ........................................... 1
What Are Some of the Key Features of This Annuity? ..................................... 2
How Do I Purchase This Annuity? ........................................................ 2
Glossary of Terms ........................................................................ 3
Summary of Contract Fees and Charges ..................................................... 4
Expense Examples ......................................................................... 12
Investment Options ....................................................................... 13
What Are the Investment Objectives and Policies of the Portfolios? ..................... 13
Fees and Charges ......................................................................... 29
What Are the Contract Fees and Charges? ................................................ 29
What Charges Apply Solely to the Variable Investment Options? .......................... 30
What Fees and Expenses Are Incurred by the Portfolios? ................................. 31
What Charges Apply to the Fixed Allocations? ........................................... 31
What Charges Apply if I Choose an Annuity Payment Option? .............................. 31
Exceptions/Reductions to Fees and Charges .............................................. 31
Purchasing Your Annuity .................................................................. 32
What Are our Requirements for Purchasing the Annuity? .................................. 32
Managing Your Annuity .................................................................... 34
May I Change the Owner, Annuitant and Beneficiary Designations? ........................ 34
May I Return the Annuity if I Change my Mind? .......................................... 34
May I Make Additional Purchase Payments? ............................................... 34
May I Make Scheduled Payments Directly from my Bank Account? ........................... 34
May I Make Purchase Payments Through a Salary Reduction Program? ....................... 35
Managing Your Account Value .............................................................. 36
How and When Are Purchase Payments Invested? ........................................... 36
How Do I Receive Credits? .............................................................. 36
How Are Credits Applied to my Account Value? ........................................... 36
Are There Restrictions or Charges on Transfers Between Investment Options? ............. 38
Do You Offer Dollar Cost Averaging? .................................................... 39
Do You Offer any Automatic Rebalancing Programs? ....................................... 40
Are any Asset Allocation Programs Available? ........................................... 40
Do You Offer Programs Designed to Guarantee a "Return of Premium" at a Future Date? .... 41
May I Give my Investment Professional Permission to Manage my Account Value? ........... 42
May I Authorize my Third Party Investment Advisor to Manage my Account? ................ 42
How Do the Fixed Allocations Work? ..................................................... 43
How Do You Determine Rates for Fixed Allocations? ...................................... 44
How Does the Market Value Adjustment Work? ............................................. 44
What Happens When my Guarantee Period Matures? ......................................... 45
Access To Account Value .................................................................. 46
What Types of Distributions Are Available to Me? ....................................... 46
Are There Tax Implications for Distributions? .......................................... 46
Can I Withdraw a Portion of my Annuity? ................................................ 46
How Much Can I Withdraw as a Free Withdrawal? .......................................... 46
Is There a Charge for a Partial Withdrawal? ............................................ 47
Can I Make Periodic Withdrawals from the Annuity During the Accumulation Period? ....... 47
Do You Offer a Program for Withdrawals Under Section 72(t) of the Internal Revenue
Code? .................................................................................. 47
What Are Minimum Distributions and When Would I Need to Make Them? ..................... 48
Can I Surrender my Annuity for its Value? .............................................. 48
What is a Medically-Related Surrender and How Do I Qualify? ............................ 48
What Types of Annuity Options Are Available? ........................................... 49
(i)
CONTENTS
How and When Do I Choose the Annuity Payment Option? ............................... 50
How Are Annuity Payments Calculated? ............................................... 50
Living Benefit Programs .............................................................. 52
Do You Offer Programs Designed to Provide Investment Protection for Owners While
They Are Alive? .................................................................. 52
Guaranteed Return Option Plus(SM) (GRO Plus(SM)) ................................... 53
Guaranteed Return Option (GRO) ..................................................... 58
Guaranteed Minimum Withdrawal Benefit (GMWB) ....................................... 61
Guaranteed Minimum Income Benefit (GMIB) ........................................... 65
LifeTime Five Income Benefit (LifeTime Five) ....................................... 70
Death Benefit ........................................................................ 75
What Triggers the Payment of a Death Benefit? ...................................... 75
Basic Death Benefit ................................................................ 75
Optional Death Benefits ............................................................ 75
American Skandia's Annuity Rewards ................................................. 79
Payment of Death Benefits .......................................................... 80
Valuing Your Investment .............................................................. 83
How Is my Account Value Determined? ................................................ 83
What Is the Surrender Value of my Annuity? ......................................... 83
How and When Do You Value the Sub-Accounts? ........................................ 83
How Do You Value Fixed Allocations? ................................................ 83
When Do You Process and Value Transactions? ........................................ 83
What Happens to My Units When There is a Change In Daily Asset-Based Charges? ...... 84
Tax Considerations ................................................................... 86
General Information .................................................................. 93
How Will I Receive Statements and Reports? ......................................... 93
Who is American Skandia? ........................................................... 93
What Are Separate Accounts? ........................................................ 93
What Is the Legal Structure of the Underlying Funds? ............................... 95
Who Distributes Annuities Offered by American Skandia? ............................. 96
Incorporation of Certain Documents by Reference .................................... 96
Financial Statements ............................................................... 97
How to Contact Us .................................................................. 97
Indemnification .................................................................... 97
Legal Proceedings .................................................................. 98
Contents of the Statement of Additional Information ................................ 98
Appendix A -- Condensed Financial Information about Separate Account B ............... A-1
Appendix B -- Calculation of Optional Death Benefits ................................. B-1
Appendix C -- Plus40(TM) Optional Life Insurance Rider ............................... C-1
Appendix D -- Description and Calculation of Previously Offered Optional
Death Benefits ..................................................................... D-1
Appendix E -- Additional Information on Asset Allocation Programs .................... E-1
(ii)
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Introduction
WHY WOULD I CHOOSE TO PURCHASE THIS ANNUITY?
This Annuity is frequently used for retirement planning because it allows you to
accumulate retirement savings and also offers annuity payment options when you
are ready to begin receiving income. The Annuity also offers a choice of
different optional benefits, for an additional charge, that can provide
principal protection or guaranteed minimum income protection for Owners while
they are alive and one or more death benefits that can protect your retirement
savings if you die during a period of declining markets. It may be used as an
investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Roth
IRA, Section 401(a) plans (defined benefit plans and defined contribution plans
such as 401(k), profit sharing and money purchase plans) or Tax Sheltered
Annuity (or 403(b)). It may also be used as an investment vehicle for
"non-qualified" investments. The Annuity allows you to invest your money in a
number of variable investment options as well as in one or more fixed
allocations.
When an Annuity is purchased as a "NON-QUALIFIED" investment, you generally are
not taxed on any investment gains the Annuity earns until you make a withdrawal
or begin to receive annuity payments. This feature, referred to as
"tax-deferral", can be beneficial to the growth of your Account Value because
money that would otherwise be needed to pay taxes on investment gains each year
remains invested and can earn additional money. However, because the Annuity is
designed for long-term retirement savings, a 10% penalty tax may be applied on
withdrawals you make before you reach age 59 1/2. Annuities purchased as a
non-qualified investment are not subject to the maximum contribution limits that
may apply to a qualified investment, and are not subject to required minimum
distributions after age 70 1/2.
When an Annuity is purchased as a "QUALIFIED" investment, you should consider
that the Annuity does not provide any tax advantages in addition to the
preferential treatment already available through your retirement plan under the
Internal Revenue Code. An Annuity may offer features and benefits in addition
to providing tax deferral that other investment vehicles may not offer,
including death benefit protection for your beneficiaries, lifetime income
options, and the ability to make transfers between numerous variable investment
options offered under the Annuity. You should consult with your investment
professional as to whether the overall benefits and costs of the Annuity are
appropriate considering your overall financial plan.
If you purchase this Annuity, we apply an additional amount (an XTra Credit(SM))
to your account value with each purchase payment you make, including your
initial purchase payment and any additional purchase payments during the first
six annuity years.
- - This Annuity features an annual Insurance Charge of 0.65% and an annual
Distribution Charge of 1.00%. We only deduct the Distribution Charge
during the first 10 years following the effective date of your Annuity.
During the first 10 years, the total asset-based charges on this Annuity
are higher than many of our other annuities.
- - Unlike many other annuities, the contingent deferred sales charge (CDSC)
that may apply to a withdrawal or surrender of your Annuity is based on
the number of years since the effective date of your Annuity. We do not
assess a separate CDSC based on the date that each purchase payment is
applied. The CDSC on this Annuity is higher and is deducted for a longer
period of time as compared to our other annuities. As with any investment
product that features a CDSC, you should consider your need to access your
account value during the CDSC period and whether the liquidity provision
under the Annuity will satisfy that need. The CDSC is only deducted if you
make a withdrawal that exceeds the free withdrawal amount or choose to
surrender your Annuity. If you make a withdrawal or surrender your Annuity
which is subject to a CDSC, we do not recover the XTra Credit(SM) amount.
- - The XTra Credit(SM) amount is included in your account value. However,
American Skandia may take back the original XTra Credit(SM) amount applied
to your purchase payment if you "free-look" your Annuity or within twelve
(12) months of having received an XTra Credit amount, you die or elect to
withdraw your account value under the medically-related surrender
provision. In these situations, your Account Value could be substantially
reduced. However, any investment gain on the XTra Credit(SM) amount will
not be recovered. Additional conditions and restrictions apply. We do not
deduct a CDSC in any situation where we recover the XTra Credit(SM)
amount.
1
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Introduction continued
WHAT ARE SOME OF THE KEY FEATURES OF THIS ANNUITY?
- - This Annuity is a "flexible premium deferred annuity." It is called
"flexible premium" because you have considerable flexibility in the timing
and amount of premium payments. Generally, investors "defer" receiving
annuity payments until after an accumulation period.
- - This Annuity offers both variable investment options and Fixed
Allocations. If you allocate your Account Value to variable investment
options, the value of your Annuity will vary daily to reflect the
investment performance of the underlying investment options. Fixed
Allocations of different durations are offered that are guaranteed by us,
but may have a Market Value Adjustment if you withdraw or transfer your
Account Value before the Maturity Date.
- - The Annuity features two distinct phases -- the accumulation period and
the payout period. During the accumulation period your Account Value is
allocated to one or more investment options.
- - During the payout period, commonly called "annuitization," you can elect
to receive annuity payments (1) for life; (2) for life with a guaranteed
minimum number of payments; (3) based on joint lives; or (4) for a
guaranteed number of payments. We currently make annuity payments
available on a fixed or variable basis.
- - This Annuity offers a Credit which we add to your Annuity with each
Purchase Payment we receive in Annuity Years one (1) through six (6).
- - This Annuity offers optional benefits, for an additional charge, that can
provide principal protection or guaranteed minimum income protection for
Owners while they are alive.
- - This Annuity offers a basic Death Benefit. It also offers optional Death
Benefits that provide an enhanced level of protection for your
beneficiary(ies) for an additional charge.
- - You are allowed to withdraw a limited amount of money from your Annuity on
an annual basis without any charges, although any optional guaranteed
benefit you elect may be reduced. Other product features allow you to
access your Account Value as necessary, although a charge may apply.
- - Transfers between investment options are tax-free. Currently, you may make
twenty transfers each year free of charge. We also offer several programs
that enable you to manage your Account Value as your financial needs and
investment performance change.
HOW DO I PURCHASE THIS ANNUITY?
We sell the Annuity through licensed, registered investment professionals. You
must complete an application and submit a minimum initial purchase payment of
$10,000. We may allow you to make a lower initial purchase payment provided you
establish a bank drafting program under which purchase payments received in the
first Annuity Year total at least $10,000. If the Annuity is owned by an
individual or individuals, the oldest of those Owners must be age 75 or under,
as of the Issue Date of the Annuity. If the Annuity is owned by an entity, the
annuitant must be age 75 or under, as of the Issue Date of the Annuity. The
availability and level of protection of certain optional benefits may vary based
on the age of the Owner on the Issue Date of the Annuity or the Owner's date of
death.
2
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Glossary of Terms
Many terms used within this Prospectus are described within the text where they
appear. The description of those terms are not repeated in this Glossary of
Terms.
ACCOUNT VALUE
The value of each allocation to a Sub-account (also referred to as "variable
investment option") or a Fixed Allocation prior to the Annuity Date, plus any
earnings, and/or less any losses, distributions and charges. The Account Value
is calculated before we assess any applicable Contingent Deferred Sales Charge
("CDSC" or "surrender charge") and/or, other than on a contract anniversary,
any fee that is deducted from the contract annually in arrears. The Account
Value includes any Credits we applied to your Purchase Payments that we are
entitled to recover under certain circumstances. The Account Value is
determined separately for each Sub-account and for each Fixed Allocation, and
then totaled to determine the Account Value for your entire Annuity. The
Account Value of each Fixed Allocation on other than its Maturity Date may be
calculated using a market value adjustment.
ANNUITIZATION
The application of Account Value (or Protected Income Value for the Guaranteed
Minimum Income Benefit, if applicable) to one of the available annuity options
for the Annuitant to begin receiving periodic payments for life, for a
guaranteed minimum number of payments or for life with a guaranteed minimum
number of payments.
ANNUITY DATE
The date you choose for annuity payments to commence. A maximum Annuity Date
may apply.
ANNUITY YEAR
A 12-month period commencing on the Issue Date of the Annuity and each
successive 12-month period thereafter.
CODE
The Internal Revenue Code of 1986, as amended from time to time.
FIXED ALLOCATION
An allocation of Account Value that is to be credited a fixed rate of interest
for a specified Guarantee Period during the accumulation period.
GUARANTEE PERIOD
A period of time during the accumulation period where we credit a fixed rate of
interest on a Fixed Allocation.
INTERIM VALUE
The value of a Fixed Allocation on any date other than the Maturity Date. The
Interim Value is equal to the initial value allocated to the Fixed Allocation
plus all interest credited to the Fixed Allocation as of the date calculated,
less any transfers or withdrawals from the Fixed Allocation.
ISSUE DATE
The effective date of your Annuity.
MVA
A market value adjustment used in the determination of Account Value of each
Fixed Allocation on any day more than 30 days prior to the Maturity Date of
such Fixed Allocation.
OWNER
With an Annuity issued as an individual annuity contract, the Owner is either
an eligible entity or person named as having ownership rights in relation to
the Annuity. With an Annuity issued as a certificate under a group annuity
contract, the "Owner" refers to the person or entity who has the rights and
benefits designated as to the "Participant" in the certificate.
SURRENDER VALUE
The value of your Annuity available upon surrender prior to the Annuity Date.
It equals the Account Value as of the date we price the surrender minus any
applicable CDSC, Annual Maintenance Fee, Tax Charge, the charge for any
optional benefits, and any additional amounts we applied to your Purchase
Payments that we may be entitled to recover under certain circumstances. The
Surrender Value may be calculated using a Market Value Adjustment with respect
to amounts in any Fixed Allocation.
UNIT
A measure used to calculate your Account Value in a Sub-account during the
accumulation period.
VALUATION DAY
Every day the New York Stock Exchange is open for trading or any other day the
Securities and Exchange Commission requires mutual funds or unit investment
trusts to be valued.
3
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Summary of Contract Fees and Charges
Below is a summary of the fees and charges for the Annuity. Some fees and
charges are assessed against your Annuity while others are assessed against
assets allocated to the variable investment options. The fees and charges that
are assessed against the Annuity include the Contingent Deferred Sales Charge,
Transfer Fee, Tax Charge and Annual Maintenance Fee. The charges that are
assessed against the variable investment options are the mortality and expense
risk charge, the charge for administration of the Annuity, the Distribution
Charge, and the charge for certain optional benefits you elect, other than the
Guaranteed Minimum Income Benefit, which is assessed against the Protected
Income Value. Each underlying mutual fund portfolio assesses a charge for
investment management, other expenses and with some mutual funds, a 12b-1
charge. The prospectus for each underlying mutual fund provides more detailed
information about the expenses for the underlying mutual funds.
The following table provides a summary of the fees and charges you will pay if
you surrender the Annuity or transfer Account Value among investment options.
These fees and charges are described in more detail within this Prospectus.
YOUR TRANSACTION FEES AND CHARGES
(ASSESSED AGAINST THE ANNUITY)
FEE/CHARGE AMOUNT DEDUCTED
- --------------------------------------------------------------------------------------------------------------
9.0%
The charge is a percentage of each applicable Purchase
Payment deducted upon surrender or withdrawal. The period
during which a particular percentage applies is measured from the
Issue Date of the Annuity.
Contingent Deferred Sales Charge*
$10 (currently, $15 maximum)
(Currently, we deduct the fee after the 20th transfer each Annuity Year.
We guarantee that the number of charge free transfers per
Annuity Year will never be less than 8.)
Transfer Fee
Up to 3.5% of the value that is annuitized, depending on the
requirements of the applicable jurisdiction. This charge is deducted
generally at the time you annuitize your contract.
Tax Charge
* The following are the Contingent Deferred Sales Charges (as a percentage of
each applicable Purchase Payment) upon surrender or withdrawal. For purposes of
calculating this charge we consider the year following the Issue Date of your
Annuity as Year 1.
Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10 Yr. 11+
9.0% 9.0% 8.5% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 0.0%
4
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
The following table provides a summary of the periodic fees and charges you will
pay while you own the Annuity, excluding the underlying mutual fund Portfolio
annual expenses. These fees and charges are described in more detail within this
Prospectus.
YOUR PERIODIC FEES AND CHARGES
ANNUAL FEES/CHARGES ASSESSED AGAINST THE ANNUITY
FEE/CHARGE AMOUNT DEDUCTED
- --------------------------------------------------------------------------------------------------------------
Smaller of $35 or 2% of Account Value
(Assessed annually on the Annuity's anniversary date
Annual Maintenance Fee or upon surrender)
ANNUAL FEES/CHARGES OF THE SUB-ACCOUNTS (1)
(AS A PERCENTAGE OF THE AVERAGE DAILY NET ASSETS OF THE SUB-ACCOUNTS)
FEE/CHARGE AMOUNT DEDUCTED
- -------------------------------------------------------------------------------------------------------------------
Mortality & Expense Risk Charge(2) 0.50%
Administration Charge(2) 0.15%
Distribution Charge(3) 1.00% in Annuity Years 1-10
1.40% per year of the value of each Sub-account if the Owner's
beneficiary elects the Qualified Beneficiary Continuation
Settlement Service Charge(4) Option(5) ("Qualified BCO")
1.65% per year of the value of each Sub-account in Annuity Years
1-10; 0.65% in Annuity Years 11 and later
Total Annual Charges of the Sub-accounts (1.40% per year if you are a beneficiary electing the Qualified BCO)
1: These charges are deducted daily and apply to Variable Investment Options
only.
2: The combination of the Mortality and Expense Risk Charge and Administration
Charge is referred to as the "Insurance Charge" elsewhere in this Prospectus.
3: The Distribution Charge in Annuity Years 11+ is 0.00%.
4: The Mortality & Expense Risk Charge, the Administration Charge and the
Distribution Charge do not apply if you are a beneficiary under the Qualified
Beneficiary Continuation Option. The Settlement Service Charge applies only if
your beneficiary elects the Qualified Beneficiary Continuation Option.
5: When an Annuity is used as an IRA, 403(b) or other "qualified investment",
upon the Owner's death a beneficiary may generally elect to continue the Annuity
and receive Minimum Distributions under the Annuity instead of receiving the
death benefit in a single payment. If a beneficiary elects this option, the
beneficiary will incur the Settlement Service Charge. Please refer to the
section of this Prospectus that describes the Qualified Beneficiary Continuation
Option for more detailed information about this option, including certain
restrictions and limitations that may apply.
5
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Summary of Contract Fees and Charges continued
The following table provides a summary of the fees and charges you will pay if
you elect any of the following optional benefits. Not all optional benefits may
be purchased in combination with one another. You may only elect one optional
living benefit. The optional living benefits are the Guaranteed Return Option
Plus program (and where not available, Guaranteed Return Option), the Guaranteed
Minimum Withdrawal Benefit, the Guaranteed Minimum Income Benefit and the
Lifetime Five(SM) Income Benefit. For the optional death benefits, you may elect
the Highest Anniversary Value Death Benefit or the Highest Daily Value Death
Benefit together with the Enhanced Beneficiary Protection Death Benefit or any
of these three benefits individually, but the Combination 5% Roll-up and HAV
Death Benefit may only be purchased individually. The fees and charges of each
of the optional benefits are described in more detail within this Prospectus.
YOUR OPTIONAL BENEFIT FEES AND CHARGES
OPTIONAL
BENEFIT FEE/ TOTAL ANNUAL
OPTIONAL BENEFIT CHARGE CHARGE*
- ------------------------------------------------------------------------------- --------------------------------------
GUARANTEED RETURN OPTION PLUS(SM) (GRO PLUS(SM))/ GUARANTEED RETURN OPTION
We offer a program that guarantees a "return of premium" at a 0.25% of average daily 1.90% in Annuity Years
future date, while allowing you to allocate all or a portion of net assets of the 1-10; 0.90% in Annuity
your Account Value to certain Sub-accounts. Sub-accounts Years 11 and later;
1.65% for Qualified BCO
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
We offer a program that guarantees your ability to withdraw 0.35% of average daily 2.00% in Annuity Years
amounts equal to an initial principal value, regardless of the net assets of the 1-10; 1.00% in Annuity
impact of market performance on your Account Value. Sub-accounts Years 11 and later;
1.75% for Qualified BCO
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)**
We offer a program that, after a seven-year waiting period, 0.50% per year of the 1.65% in Annuity Years
guarantees your ability to begin receiving income from your average Protected 1-10; 0.65% in Annuity
Annuity in the form of annuity payments based on your total Income Value during Years 11 and later PLUS
Purchase Payments (and any Credits applied to such Purchase each year; deducted 0.50% per year of
Payments) and an annual increase of 5% on such Purchase Payments annually in arrears each average Protected Income
adjusted for withdrawals (called the "Protected Income Value"), Annuity Year Value
regardless of the impact of market performance on your Account
Value.
LIFETIME FIVE INCOME BENEFIT**
We offer a program that guarantees your ability to withdraw 0.60% of average daily 2.25% in Annuity Years
amounts equal to a percentage of an initial principal value, net assets of the 1-10; 1.25% in Annuity
regardless of the impact of market performance on your Account Sub-accounts Years 11 and later
Value, subject to our program rules regarding the timing and
amount of withdrawals.
ENHANCED BENEFICIARY PROTECTION DEATH BENEFIT**
We offer an Optional Death Benefit that provides an enhanced level 0.25% of average daily 1.90% in Annuity Years
of protection for your beneficiary(ies) by providing amounts in net assets of the 1-10; 0.90% in Annuity
addition to the basic Death Benefit that can be used to offset Sub-accounts Years 11 and later
federal and state taxes payable on any taxable gains in your
Annuity at the time of your death.
6
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
OPTIONAL
BENEFIT FEE/ TOTAL ANNUAL
OPTIONAL BENEFIT CHARGE CHARGE*
- ------------------------------------------------------------------------------- --------------------------------------
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT ("HAV")**
We offer an Optional Death Benefit that provides an enhanced level 0.25% of average daily 1.90% in Annuity Years
of protection for your beneficiary(ies) by providing a death net assets of the 1-10; 0.90% in Annuity
benefit equal to the greater of the basic Death Benefit and the Sub-accounts Years 11 and later
Highest Anniversary Value, less proportional withdrawals.
COMBINATION 5% ROLL-UP AND HAV DEATH BENEFIT **
We offer an Optional Death Benefit that provides an enhanced level 0.50% of average daily 2.15% in Annuity Years
of protection for your beneficiary(ies) by providing the greater net assets of the 1-10; 1.15% in Annuity
of the Highest Anniversary Value Death Benefit and a 5% annual Sub-accounts Years 11 and later
increase on Purchase Payments (and any Credits applied to such
Purchase Payments) adjusted for withdrawals.
HIGHEST DAILY VALUE DEATH BENEFIT ("HDV")**
We offer an Optional Death Benefit that provides an enhanced level 0.50% of average daily 2.15% in Annuity Years
of protection for your beneficiary(ies) by providing a death net assets of the 1-10; 1.15% in Annuity
benefit equal to the greater of the basic Death Benefit and the Sub-accounts Years 11 and later
Highest Daily Value, less proportional withdrawals.
PLEASE REFER TO THE SECTION OF THIS PROSPECTUS THAT DESCRIBES EACH OPTIONAL
BENEFIT FOR A COMPLETE DESCRIPTION OF THE BENEFIT, INCLUDING ANY RESTRICTIONS OR
LIMITATIONS THAT MAY APPLY.
* The Total Annual Charge includes the Insurance Charge and Distribution Charge
assessed against the average daily net assets allocated to the Sub-accounts. If
you elect more than one optional benefit, the Total Annual Charge would be
increased to include the charge for each optional benefit.
** These optional benefits are not available under the Qualified BCO.
The following table provides the range (minimum and maximum) of the total
annual expenses for the underlying mutual funds ("Portfolios") as of December
31, 2004. Each figure is stated as a percentage of the underlying Portfolio's
average daily net assets.
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES
MINIMUM MAXIMUM
- -------------------------------------------------------------
TOTAL PORTFOLIO OPERATING EXPENSE 0.63% 3.06%
The following are the investment management fees, other expenses, 12b-1 fees (if
applicable) and the total annual expenses for each underlying mutual fund
("Portfolio") as of December 31, 2004, except as noted. Each figure is stated as
a percentage of the underlying Portfolio's average daily net assets. For certain
of the underlying Portfolios, a portion of the management fee has been waived
and/or other expenses have been partially reimbursed. Any such fee waivers
and/or reimbursements have been reflected in the footnotes. The "Total Annual
Portfolio Operating Expenses" reflect the combination of the underlying
Portfolio's investment management fee, other expenses and any 12b-1 fees. The
following expenses are deducted by the underlying Portfolio before it provides
American Skandia with the daily net asset value. Any footnotes about expenses
appear after the list of all the Portfolios. The underlying Portfolio
information was provided by the underlying mutual funds and has not been
independently verified by us. See the prospectuses or statements of additional
information of the underlying Portfolios for further details. The current
prospectus and statement of additional information for the underlying Portfolios
can be obtained by calling 1-800-752-6342.
7
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Summary of Contract Fees and Charges continued
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS)
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
- ----------------------------------------------------------------------------------------------------
AMERICAN SKANDIA TRUST:(2, 3)
AST JPMorgan International Equity 1.00% 0.13% None 1.13%
AST William Blair International Growth 1.00% 0.22% None 1.22%
AST LSV International Value(4) 1.00% 0.37% None 1.37%
AST MFS Global Equity 1.00% 0.35% None 1.35%
AST Small-Cap Growth(5) 0.90% 0.24% None 1.14%
AST DeAM Small-Cap Growth 0.95% 0.22% None 1.17%
AST Federated Aggressive Growth 0.95% 0.24% None 1.19%
AST Small-Cap Value(6) 0.90% 0.18% None 1.08%
AST DeAM Small-Cap Value 0.95% 0.33% None 1.28%
AST Goldman Sachs Mid-Cap Growth 1.00% 0.25% None 1.25%
AST Neuberger Berman Mid-Cap Growth 0.90% 0.22% None 1.12%
AST Neuberger Berman Mid-Cap Value 0.90% 0.15% None 1.05%
AST Alger All-Cap Growth 0.95% 0.22% None 1.17%
AST Gabelli All-Cap Value 0.95% 0.26% None 1.21%
AST T. Rowe Price Natural Resources 0.90% 0.26% None 1.16%
AST AllianceBernstein Large-Cap Growth(7) 0.90% 0.23% None 1.13%
AST MFS Growth 0.90% 0.20% None 1.10%
AST Marsico Capital Growth 0.90% 0.14% None 1.04%
AST Goldman Sachs Concentrated Growth 0.90% 0.17% None 1.07%
AST DeAM Large-Cap Value 0.85% 0.26% None 1.11%
AST AllianceBernstein Growth + Value 0.90% 0.32% None 1.22%
AST AllianceBernstein Core Value(8) 0.75% 0.24% None 0.99%
AST Cohen & Steers Realty 1.00% 0.22% None 1.22%
AST AllianceBernstein Managed Index 500(9) 0.60% 0.17% None 0.77%
AST American Century Income & Growth 0.75% 0.24% None 0.99%
AST AllianceBernstein Growth & Income(10) 0.75% 0.15% None 0.90%
AST Hotchkis & Wiley Large-Cap Value 0.75% 0.19% None 0.94%
AST Global Allocation(11) 0.89% 0.26% None 1.15%
AST American Century Strategic Balanced 0.85% 0.27% None 1.12%
AST T. Rowe Price Asset Allocation 0.85% 0.27% None 1.12%
AST T. Rowe Price Global Bond 0.80% 0.27% None 1.07%
AST Goldman Sachs High Yield 0.75% 0.18% None 0.93%
AST Lord Abbett Bond-Debenture 0.80% 0.22% None 1.02%
AST PIMCO Total Return Bond 0.65% 0.16% None 0.81%
AST PIMCO Limited Maturity Bond 0.65% 0.17% None 0.82%
AST Money Market 0.50% 0.13% None 0.63%
GARTMORE VARIABLE INVESTMENT TRUST:
GVIT Developing Markets 1.15% 0.38% 0.25% 1.78%
WELLS FARGO VARIABLE TRUST ADVANTAGE:(12)
Advantage Equity Income 0.55% 0.23% 0.25% 1.03%
8
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
- ------------------------------------------------------------------------------------------------------------
RYDEX VARIABLE TRUST:
Nova 0.75% 0.71% None 1.46%
Ursa 0.90% 0.72% None 1.62%
OTC 0.75% 0.72% None 1.47%
AIM VARIABLE INSURANCE FUNDS: (13)
AIM V.I. Dynamics Fund -- Series I shares 0.75% 0.39% None 1.14%
AIM V.I. Technology Fund -- Series I shares 0.75% 0.40% None 1.15%
AIM V.I. Health Sciences Fund -- Series I shares(14) 0.75% 0.36% None 1.11%
AIM V.I. Financial Services Fund -- Series I shares 0.75% 0.37% None 1.12%
EVERGREEN VARIABLE ANNUITY TRUST:
International Equity 0.42% 0.30% None 0.72%
Growth 0.70% 0.26% None 0.96%
Omega 0.52% 0.16% None 0.68%
PROFUND VP: (15)
Access High Yield 0.75% 1.02% 0.25% 1.98%
Bull 0.75% 0.78% 0.25% 1.78%
OTC 0.75% 0.87% 0.25% 1.87%
Large-Cap Value 0.75% 1.04% 0.25% 2.04%
Large-Cap Growth 0.75% 2.06% 0.25% 3.06%
Mid-Cap Value 0.75% 0.92% 0.25% 1.92%
Mid-Cap Growth 0.75% 0.94% 0.25% 1.94%
Small-Cap Value 0.75% 0.95% 0.25% 1.95%
Small-Cap Growth 0.75% 0.90% 0.25% 1.90%
Asia 30 0.75% 0.86% 0.25% 1.86%
Europe 30 0.75% 0.78% 0.25% 1.78%
Japan 0.75% 0.85% 0.25% 1.85%
UltraBull 0.75% 0.89% 0.25% 1.89%
UltraMid-Cap 0.75% 0.94% 0.25% 1.94%
UltraSmall-Cap 0.75% 0.94% 0.25% 1.94%
UltraOTC 0.75% 0.88% 0.25% 1.88%
Bear 0.75% 0.90% 0.25% 1.90%
Short Mid-Cap 0.75% 0.90% 0.25% 1.90%
Short Small-Cap 0.75% 1.28% 0.25% 2.28%
Short OTC 0.75% 0.86% 0.25% 1.86%
Banks 0.75% 0.98% 0.25% 1.98%
Basic Materials 0.75% 0.96% 0.25% 1.96%
Biotechnology 0.75% 0.98% 0.25% 1.98%
Consumer Goods 0.75% 0.99% 0.25% 1.99%
Consumer Services 0.75% 1.20% 0.25% 2.20%
Financials 0.75% 0.92% 0.25% 1.92%
Health Care 0.75% 0.91% 0.25% 1.91%
Industrials 0.75% 0.99% 0.25% 1.99%
Internet 0.75% 0.94% 0.25% 1.94%
9
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Summary of Contract Fees and Charges continued
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
- ----------------------------------------------------------------------------------------------------
PROFUND VP: (15) cont.
Oil & Gas 0.75% 0.92% 0.25% 1.92%
Pharmaceuticals 0.75% 0.97% 0.25% 1.97%
Precious Metals 0.75% 0.87% 0.25% 1.87%
Real Estate 0.75% 0.93% 0.25% 1.93%
Semiconductor 0.75% 0.99% 0.25% 1.99%
Technology 0.75% 0.87% 0.25% 1.87%
Telecommunications 0.75% 0.95% 0.25% 1.95%
Utilities 0.75% 0.95% 0.25% 1.95%
U.S. Government Plus 0.50% 0.86% 0.25% 1.61%
Rising Rates Opportunity 0.75% 0.75% 0.25% 1.75%
FIRST DEFINED PORTFOLIO FUND, LLC: (16, 17)
First Trust(R) 10 Uncommon Values 0.60% 0.76% 0.25% 1.61%
Target Managed VIP 0.60% 1.25% 0.25% 2.10%
The Dow(sm) DART 10 0.60% 1.53% 0.25% 2.38%
Global Dividend Target 15 0.60% 1.85% 0.25% 2.70%
S&P(R) Target 24 0.60% 1.58% 0.25% 2.43%
NASDAQ(R) Target 15 0.60% 1.75% 0.25% 2.60%
Value Line(R) Target 25 0.60% 1.48% 0.25% 2.33%
The Dow Target Dividend(18) 0.60% 0.62% 0.25% 1.47%
THE PRUDENTIAL SERIES FUND, INC.:
SP William Blair International Growth 0.85% 0.45% 0.25% 1.55%
1: As noted above, shares of the Portfolios generally are purchased through
variable insurance products. Many of the Portfolios and/or their investment
advisers and/or distributors have entered into arrangements with us as the
issuer of the Annuity under which they compensate us for providing ongoing
services in lieu of the Trust providing such services. Amounts paid by a
Portfolio under those arrangements are included under "Other Expenses." For more
information see the prospectus for each underlying portfolio and, "Service Fees
payable to American Skandia," later in this prospectus.
2: The Portfolios' total actual annual operating expenses for the year ended
December 31, 2004 were less than the amount shown in the table due to fee
waivers, reimbursement of expenses and expense offset arrangements. These
waivers, reimbursements, and offset arrangements are voluntary and may be
terminated by American Skandia Investment Services, Inc. and Prudential
Investments LLC at any time. After accounting for the waivers, reimbursements
and offset arrangements, the Portfolios' actual annual operating expenses were:
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
AST William Blair International Growth 1.11%
AST LSV International Value 1.22%
AST DeAM Small-Cap Growth 1.02%
AST DeAM Small-Cap Value 1.13%
AST Goldman Sachs Mid-Cap Growth 1.13%
AST Neuberger Berman Mid-Cap Growth 1.11%
AST Neuberger Berman Mid-Cap Value 1.04%
AST AllianceBernstein Large-Cap Growth 1.10%
AST MFS Growth 1.07%
AST Marsico Capital Growth 1.02%
AST Goldman Sachs Concentrated Growth 1.00%
AST DeAM Large-Cap Value 0.99%
AST Cohen & Steers Realty 1.11%
AST AllianceBernstein Growth & Income 0.87%
AST Hotchkis & Wiley Large-Cap Value 0.90%
AST American Century Strategic Balanced 1.09%
AST T. Rowe Price Asset Allocation 1.07%
AST Lord Abbett Bond-Debenture Portfolio 0.97%
AST PIMCO Total Return Bond 0.78%
AST PIMCO Limited Maturity Bond 0.79%
AST Money Market 0.58%
10
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
3: Until November 18, 2004, the Trust had a Distribution Plan under Rule
12b-1 to permit an affiliate of the Trust's Investment Managers to receive
brokerage commissions in connection with purchases and sales of securities held
by the Portfolios, and to use these commissions to promote the sale of shares of
the Portfolio. The Distribution Plan was terminated effective November 18, 2004.
The total annual portfolio operating expenses do not reflect any brokerage
commissions paid pursuant to the Distribution Plan prior to the Plan's
termination.
4: Effective November 18, 2004, LSV Asset Management became the Sub-advisor
of the Portfolio. Prior to November 18, 2004, Deutsche Asset Management, Inc.
served as Sub-advisor of the Portfolio, then named "AST DeAM International
Equity Portfolio."
5: Effective May 1, 2005, Eagle Asset Management and Neuberger Berman
Management, Inc. became Co-Sub-advisors of the Portfolio. Prior to May 1, 2005,
State Street Research and Management Company served as Sub-advisor of the
Portfolio, then named "AST State Street Research Small-Cap Growth Portfolio."
6: Effective November 18, 2004, Integrity Asset Management, Lee Munder
Capital Group, J.P. Morgan Fleming Asset Management became Co-Sub-advisors of
the Portfolio. Prior to November 18, 2004, GAMCO Advisors Inc. served as
Sub-advisor of the Portfolio, then named "AST Gabelli Small-Cap Value
Portfolio."
7: Effective May 1, 2005, the name of the Portfolio was changed from "AST
Alliance Growth Portfolio" to "AST AllianceBernstein Large-Cap Growth
Portfolio."
8: Effective May 1, 2005, the name of the Portfolio was changed from "AST
Sanford Bernstein Core Value Portfolio" to "AST AllianceBernstein Core Value
Portfolio."
9: Effective May 1, 2005, the name of the Portfolio was changed from "AST
Sanford Bernstein Managed Index 500 Portfolio" to "AST AllianceBernstein Managed
Index 500 Portfolio."
10: Effective May 1, 2005, the name of the Portfolio was changed from "AST
Alliance Growth and Income Portfolio" to "AST AllianceBernstein Growth & Income
Portfolio."
11: The Global Asset Allocation Portfolio invests primarily in shares of other
AST Portfolios (the "Underlying Portfolios").
a: The only management fee directly paid by the Portfolio is a 0.10%
fee paid to American Skandia Investment Services, Inc. and Prudential
Investments LLC. The management fee shown in the chart for the Portfolio
is (i) that 0.10% management fee paid by the Portfolio plus (ii) an
estimate of the management fees paid by the Underlying Portfolios, which
are borne indirectly by investors in the Portfolio. The estimate was
calculated based on the percentage of the Portfolio invested in each
Underlying Portfolio as of December 31, 2004 using the management fee
rates shown in the chart above.
b: The expense information shown in the chart for the Portfolio
reflects (i) the expenses of the Portfolio itself plus (ii) an estimate of
the expenses paid by the Underlying Portfolios, which are borne indirectly
by investors in the Portfolio. The estimate was calculated based on the
percentage of the Portfolio invested in each Underlying Portfolio as of
December 31, 2004 using the expense rates for the Underlying Portfolios
shown in the above chart.
c: Effective May 1, 2005, Prudential Investment LLC provides day to day
management of the Portfolio. Prior to May 1, 2005, Deutsche Asset
Management, Inc. served as Sub-advisor of the Portfolio, then named "AST
DeAM Global Allocation Portfolio."
12: a: The Adviser of Wells Fargo Variable Trust has committed through
April 30, 2006 to waive fees and/or reimburse expenses to the extent necessary
to maintain the Fund's net operating expenses as shown.
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
Advantage Equity Income 1.00%
b: In addition, the following name changes were made effective May 1,
2005:
OLD PORTFOLIO NAME NEW PORTFOLIO NAME
Equity Income Advantage Equity Income
13: The Fund's adviser is entitled to receive reimbursement from the Fund for
fees and expenses paid for by the Fund's adviser pursuant to expense limitation
commitments between the Fund's adviser and the Fund if such reimbursement does
not cause the Fund to exceed its then-current expense limitations and the
reimbursement is made within three years after the Fund's adviser incurred the
expense.
14: Effective July 1, 2005, the "AIM V.I. Health Sciences Fund" will be
renamed "AIM V.I. Global Health Care Fund."
15: ProFund Advisors LLC has contractually agreed to waive Investment Advisory
and Management Services Fees and to reimburse other expenses to the extent Total
Annual Portfolio Operating Expenses, as a percentage of average daily net
assets, exceed 1.98% (1.73% for ProFund VP U.S. Government Plus and 1.78% for
ProFund VP Rising Rates Opportunity) through December 31, 2005. After such date,
any of the expense limitations may be terminated or revised. Amounts waived or
reimbursed in a particular fiscal year may be repaid to ProFund Advisors LLC
within three years of the waiver or reimbursement to the extent that recoupment
will not cause the Portfolio's expenses to exceed any expense limitation in
place at that time. A waiver or reimbursement lowers the expense ratio and
increases overall returns to investors.
16: The Funds' Board of Trustees reserve the right to suspend payments under
the 12b-1 Plan at any time. On May 1, 2003, 12b-1 payments were suspended for
all Funds except the First Trust 10 Uncommon Values Portfolio. Payments under
the 12b-1 Plan resumed effective May 1, 2004 for the Target Managed VIP
Portfolio, the Dow Dart 10 Portfolio, the Global Dividend Target 15 Portfolio,
the S&P Target 24 Portfolio, the Nasdaq Target 15 Portfolio and the Value Line
Target 25 Portfolio.
17: For the period September 30, 2004 through December 31, 2007, First Trust
has contractually agreed to waive fees and reimburse expenses of the Portfolios
to limit the total annual fund operating expenses (excluding brokerage expense
and extraordinary expense) to 1.37% for the First Trust 10 Uncommon Values
Portfolio and 1.47% for each of the other Portfolios' average daily net assets.
First Trust has entered into an agreement with First Defined Portfolio Fund, LLC
that will allow First Trust to recover from the Portfolios any fees waived or
reimbursed during the three year period of January 1, 2005 through December 31,
2007. However, First Trust's ability to recover such amounts is limited to the
extent that it would not exceed the amount reimbursed or waived during such
period.
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
First Trust[Reg(TM)] 10 Uncommon Values 1.37%
Target Managed VIP 1.47%
S&P Target 24 1.47%
The Dow(SM) DART 10 1.47%
Value Line(TM) Target 25 1.47%
Global Dividend Target 15 1.47%
Nasdaq Target 15 1.47%
Dow Target Dividend 1.47%
18: The Dow (SM) Target Dividend Portfolio is newly organized. Accordingly,
Other Expenses and Total Annual Portfolio Operating Expenses are based on
estimated expenses for the current fiscal year.
11
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Expense Examples
These examples are designed to assist you in understanding the various expenses
you may incur with the annuity over certain periods of time based on specific
assumptions. The examples reflect the contingent deferred sales charges, annual
maintenance fee, insurance charge, distribution charge, and the highest total
annual portfolio operating expenses for any underlying portfolio offered under
the product, as well as the maximum charges for the optional benefits that are
offered under the annuity that can be elected in combination with one another.
Below are examples showing what you would pay in expenses at the end of the
stated time periods had you invested $10,000 in the annuity and received a 5%
annual return on assets, and elected all optional benefits available.
The examples shown assume that: (a) you only allocate Account Value to the
Sub-account with the maximum total annual portfolio operating expenses for the
underlying Portfolio (shown above), not to a Fixed Allocation; (b) the Insurance
Charge is assessed as 0.65% per year; (c) the Distribution Charge is assessed as
1.00% per year in Annuity Years 1-10; (d) the Annual Maintenance Fee is
reflected as an asset-based charge based on an assumed average contract size;
(e) you make no withdrawals of Account Value during the period shown; (f) you
make no transfers, or other transactions for which we charge a fee during the
period shown; (g) no tax charge applies; (h) the highest total annual portfolio
operating expenses for any underlying Portfolio offered under the product
applies; (i) the charge for each optional benefit is reflected as an additional
charge equal to 0.60% per year of the average daily net assets of the
Sub-accounts for the Lifetime Five Income Benefit, 0.50% per year of the average
daily net assets of the Sub-accounts for the Highest Daily Value Death Benefit
and 0.25% of the average daily net assets of the Sub-accounts for the Enhanced
Beneficiary Protection Death Benefit; and (j) the Credit applicable to your
Annuity is 6% of Purchase Payments. Amounts shown in the examples are rounded to
the nearest dollar. The Credit we apply to Purchase Payments received after the
first Annuity Year is less than 6% (see "How do I Receive Credits?").
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 WILL BE LESS THAN THOSE SHOWN IF YOU ELECT A
DIFFERENT COMBINATION OF OPTIONAL BENEFITS THAN INDICATED IN THE EXAMPLES OR IF
YOU ALLOCATE ACCOUNT VALUE TO ANY OTHER AVAILABLE SUB-ACCOUNTS.
Expense Examples are provided as follows: 1.) if you surrender the Annuity at
the end of the stated time period; 2.) if you annuitize at the end of the stated
time period; and 3.) if you do not surrender your Annuity. A table of
accumulation values appears in Appendix A to this Prospectus.
IF YOU ANNUITIZE AT THE END OF
THE APPLICABLE TIME PERIOD
IF YOU SURRENDER OR ANNUITIZE YOUR ANNUITY (YOU MAY NOT ANNUITIZE IN THE IF YOU DO NOT SURRENDER
TO THE END OF THE APPLICABLE TIME PERIOD: FIRST THREE (3) ANNUITY YEARS): YOUR ANNUITY:
- -----------------------------------------------------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,678 $3,191 $4,522 $7,384 N/A N/A $3,850 $7,192 $814 $2,375 $3,850 $7,192
12
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Investment Options
WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE PORTFOLIOS?
Each variable investment option is a Sub-account of American Skandia Life
Assurance Corporation Variable Account B (see "What are Separate Accounts" for
more detailed information). Each Sub-account invests exclusively in one
Portfolio. You should carefully read the prospectus for any Portfolio in which
you are interested. The following chart classifies each of the Portfolios based
on our assessment of their investment style (as of the date of this
Prospectus). The chart also provides a description of each Portfolio's
investment objective (in italics) and a short, summary description of their key
policies to assist you in determining which Portfolios may be of interest to
you. There is no guarantee that any underlying Portfolio will meet its
investment objective.
The name of the advisor/sub-advisor for each Portfolio appears next to the
description. Those Portfolios whose name includes the prefix "AST" are
Portfolios of American Skandia Trust. The investment managers for AST are
American Skandia Investment Services, Incorporated, a Prudential Financial
Company, and Prudential Investments LLC, affiliated companies of American
Skandia. However, a sub-advisor, as noted below, is engaged to conduct
day-to-day investment decisions.
The Portfolios are not publicly traded mutual funds. They are only
available as investment options in variable annuity contracts and variable life
insurance policies issued by insurance companies, or in some cases, to
participants in certain qualified retirement plans. However, some of the
Portfolios available as Sub-accounts under the Annuity are managed by the same
portfolio advisor or sub-advisor as a retail mutual fund of the same or similar
name that the Portfolio may have been modeled after at its inception. Certain
retail mutual funds may also have been modeled after a Portfolio. While the
investment objective and policies of the retail mutual funds and the Portfolios
may be substantially similar, the actual investments will differ to varying
degrees. Differences in the performance of the funds can be expected, and in
some cases could be substantial. You should not compare the performance of a
publicly traded mutual fund with the performance of any similarly named
Portfolio offered as a Sub-account. Details about the investment objectives,
policies, risks, costs and management of the Portfolios are found in the
prospectuses for the underlying mutual funds. The current prospectus and
statement of additional information for the underlying Portfolios can be
obtained by calling 1-800-752-6342.
Effective as of the close of business JUNE 28, 2002, the AST GOLDMAN SACHS
SMALL-CAP VALUE PORTFOLIO is no longer offered as a Sub-account under the
Annuity, except as follows: if at any time on or prior to June 28, 2002 you had
any portion of your Account Value allocated to the AST Goldman Sachs Small-Cap
Value Sub-account, you may continue to allocate Account Value and make transfers
into and/or out of the AST Goldman Sachs Small-Cap Value Sub-account, including
any bank drafting, dollar cost averaging, asset allocation and rebalancing
programs. If you never had a portion of your Account Value allocated to the AST
Goldman Sachs Small-Cap Value Sub-account on or prior to June 28, 2002 or if you
purchase your Annuity after June 28, 2002, you cannot allocate Account Value to
the AST Goldman Sachs Small-Cap Value Sub-Account.
Effective MAY 1, 2004, the SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO
(FORMERLY THE SP JENNISON INTERNATIONAL GROWTH PORTFOLIO) is no longer offered
as a Sub-account under the Annuity, except as follows: if at any time prior to
May 1, 2004 you had any portion of your Account Value allocated to the SP
William Blair International Growth Sub-account, you may continue to allocate
Account Value and make transfers into and/or out of the SP William Blair
International Growth Sub-account, including any bank drafting, dollar cost
averaging, asset allocation and rebalancing programs. If you never had a portion
of your Account Value allocated to the SP William Blair International Growth
Sub-account prior to May 1, 2004 or if you purchase your Annuity on or after May
1, 2004, you cannot allocate Account Value to the SP William Blair International
Growth Sub-account.
Either of the above Sub-accounts may be offered to new Owners at some
future date; however, at the present time, there is no intention to do so. We
also reserve the right to offer or close each of the above Sub-accounts to all
Owners that owned the Annuity prior to the respective close dates.
13
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Investment Options
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
INTERNATIONAL AST JPMORGAN INTERNATIONAL EQUITY: seeks long-term capital growth by J.P. Morgan
EQUITY investing in a diversified portfolio of international equity securities. The Portfolio Fleming Asset
seeks to meet its objective by investing, under normal market conditions, at least Management
80% of its assets in a diversified portfolio of equity securities of companies
located or operating in developed non-U.S. countries and emerging markets of
the world.
INTERNATIONAL AST WILLIAM BLAIR INTERNATIONAL GROWTH: seeks long-term capital William Blair &
EQUITY appreciation. The Portfolio invests primarily in stocks of large and medium-sized Company, L.L.C.
companies located in countries included in the Morgan Stanley Capital
International All Country World Ex-U.S. Index.
INTERNATIONAL AST LSV INTERNATIONAL VALUE (formerly AST DeAM International Equity): seeks Deutsche Asset
EQUITY capital growth. The Portfolio pursues its objective by primarily investing at least Management, Inc.
80% of the value of its assets in the equity securities of companies in
developed non-U.S. countries that are represented in the MSCI EAFE Index.
INTERNATIONAL AST MFS GLOBAL EQUITY: seeks capital growth. Under normal circumstances the Massachusetts
EQUITY Portfolio invests at least 80% of its assets in equity securities of U.S. and Financial Services
foreign issuers (including issuers in developing countries). The Portfolio generally Company
seeks to purchase securities of companies with relatively large market
capitalizations relative to the market in which they are traded.
SMALL CAP AST SMALL-CAP GROWTH (formerly AST State Street Research Small-Cap Eagle Asset
GROWTH Growth): seeks long-term capital growth. The Portfolio pursues its objective by Management,
primarily investing in the common stocks of small-capitalization companies. Neuberger Berman
Management, Inc.
SMALL CAP AST DeAM SMALL-CAP GROWTH: seeks maximum growth of investors' capital Deutsche Asset
GROWTH from a portfolio of growth stocks of smaller companies. The Portfolio pursues its Management, Inc.
objective, under normal circumstances, by primarily investing at least 80% of its
total assets in the equity securities of small-sized companies included in the
Russell 2000 Growth(R) Index.
SMALL CAP AST FEDERATED AGGRESSIVE GROWTH: seeks capital growth. The Portfolio Federated Equity
GROWTH pursues its investment objective by investing primarily in the stocks of small Management
companies that are traded on national security exchanges, the NASDAQ stock Company of
exchange and the over-the-counter market. Pennsylvania/
Federated Global
Investment
Management Corp.
SMALL CAP AST GOLDMAN SACHS SMALL-CAP VALUE: seeks long-term capital appreciation. Goldman Sachs
VALUE The Portfolio will seek its objective through investments primarily in equity Asset Management,
securities that are believed to be undervalued in the marketplace. The Portfolio L.P.
primarily seeks companies that are small-sized, based on the value of their
outstanding stock.
14
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
SMALL CAP AST SMALL-CAP VALUE (formerly AST Gabelli Small-Cap Value): seeks to provide Integrity Asset
VALUE long-term capital growth by investing primarily in small-capitalization stocks that Management, Lee
appear to be undervalued. The Portfolio will have a non-fundamental policy to Munder Capital
invest, under normal circumstances, at least 80% of the value of its assets in Group, J.P. Morgan
small capitalization companies. Fleming Asset
Management
SMALL CAP AST DeAM SMALL-CAP VALUE: seeks maximum growth of investors' capital. Deutsche Asset
VALUE The Portfolio pursues its objective under normal market conditions, by primarily Management, Inc.
investing at least 80% of its total assets in the equity securities of small-sized
companies included in the Russell 2000(R) Value Index.
MID CAP AST GOLDMAN SACHS MID-CAP GROWTH: seeks long-term capital growth. The Goldman Sachs
GROWTH Portfolio pursues its investment objective by investing primarily in equity Asset Management,
securities selected for their growth potential, and normally invests at least 80% L.P.
of the value of its assets in medium capitalization companies.
MID CAP AST NEUBERGER BERMAN MID-CAP GROWTh: seeks capital growth. Under Neuberger Berman
GROWTH normal market conditions, the Portfolio primarily invests at least 80% of its net Management Inc.
assets in the common stocks of mid-cap companies. The Sub-advisor looks for
fast-growing companies that are in new or rapidly evolving industries.
MID CAP VALUE AST NEUBERGER BERMAN MID-CAP VALUE: seeks capital growth. Under normal Neuberger Berman
market conditions, the Portfolio primarily invests at least 80% of its net assets Management Inc.
in the common stocks of mid-cap companies. Under the Portfolio's value-oriented
investment approach, the Sub-advisor looks for well-managed companies whose
stock prices are undervalued and that may rise before other investors realize
their worth.
SPECIALTY AST ALGER ALL-CAP GROWTH: seeks long-term capital growth. The Portfolio Fred Alger
invests primarily in equity securities, such as common or preferred stocks that Management, Inc.
are listed on U.S. exchanges or in the over-the-counter market. The Portfolio may
invest in the equity securities of companies of all sizes, and may emphasize
either larger or smaller companies at a given time based on the Sub-advisor's
assessment of particular companies and market conditions.
SPECIALTY AST GABELLI ALL-CAP VALUE: seeks capital growth. The Portfolio pursues its GAMCO Investors,
objective by investing primarily in readily marketable equity securities including Inc.
common stocks, preferred stocks and securities that may be converted at a later
time into common stock. The Portfolio may invest in the securities of companies
of all sizes, and may emphasize either larger or smaller companies at a given
time based on the Sub-advisor's assessment of particular companies and market
conditions.
SPECIALTY AST T. ROWE PRICE NATURAL RESOURCES: seeks long-term capital growth T. Rowe Price
primarily through the common stocks of companies that own or develop natural Associates, Inc.
resources (such as energy products, precious metals and forest products) and
other basic commodities. The Portfolio normally invests primarily (at least 80% of
its total assets) in the common stocks of natural resource companies whose
earnings and tangible assets could benefit from accelerating inflation.
15
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
LARGE CAP AST ALLIANCEBERNSTEIN LARGE-CAP GROWTH (formerly AST Alliance Growth): Alliance Capital
GROWTH seeks long-term capital growth. The Portfolio invests at least 80% of its total Management, L.P.
assets in the equity securities of a limited number of large, carefully selected,
high-quality U.S. companies that are judged likely to achieve superior earnings
growth.
LARGE CAP AST MFS GROWTH: seeks long-term capital growth and future income. Under Massachusetts
GROWTH normal market conditions, the Portfolio invests at least 80% of its total assets in Financial Services
common stocks and related securities, such as preferred stocks, convertible Company
securities and depository receipts, of companies that the Sub-advisor believes
offer better than average prospects for long-term growth.
LARGE CAP AST MARSICO CAPITAL GROWTH: seeks capital growth. Income realization is not Marsico Capital
GROWTH an investment objective and any income realized on the Portfolio's investments, Management, LLC
therefore, will be incidental to the Portfolio's objective. The Portfolio will pursue
its objective by investing primarily in common stocks of larger, more established
companies.
LARGE CAP AST GOLDMAN SACHS CONCENTRATED GROWTH: seeks growth of capital in a Goldman Sachs
GROWTH manner consistent with the preservation of capital. Realization of income is not Asset Management,
a significant investment consideration and any income realized on the Portfolio's L.P.
investments, therefore, will be incidental to the Portfolio's objective. The
Portfolio will pursue its objective by investing primarily in equity securities of
companies that the Sub-advisor believes have potential to achieve capital
appreciation over the long-term.
LARGE CAP AST DEAM LARGE-CAP VALUE: seeks maximum growth of capital by investing Deutsche Asset
VALUE primarily in the value stocks of larger companies. The Portfolio pursues its Management, Inc.
objective, under normal market conditions, by primarily investing at least 80% of
the value of its assets in the equity securities of large-sized companies included
in the Russell 1000(R) Value Index.
LARGE CAP AST ALLIANCEBERNSTEIN GROWTH + VALUE: seeks capital growth by investing Alliance Capital
BLEND approximately 50% of its assets in growth stocks of large companies and Management, L.P.
approximately 50% of its assets in value stocks of large companies. The
Portfolio will invest primarily in common stocks of large U.S. companies included
in the Russell 1000(R) Index.
LARGE CAP AST ALLIANCEBERNSTEIN CORE VALUE (formerly AST Sanford Bernstein Core Alliance Capital
VALUE Value): seeks long-term capital growth by investing primarily in common stocks. Management, L.P.
The Sub-advisor expects that the majority of the Portfolio's assets will be
invested in the common stocks of large companies that appear to be
undervalued.
SPECIALTY AST COHEN & STEERS REALTY: seeks to maximize total return through Cohen & Steers
investment in real estate securities. The Portfolio pursues its investment Capital
objective by investing, under normal circumstances, at least 80% of its net Management, Inc.
assets in securities of real estate issuers.
16
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
LARGE CAP AST ALLIANCEBERNSTEIN MANAGED INDEX 500 (formerly AST Sanford Bernstein Alliance Capital
BLEND Managed Index 500): seeks to outperform the S&P 500 through stock selection Management, L.P.
resulting in different weightings of common stocks relative to the index. The
Portfolio will invest, under normal circumstances, at least 80% of its net assets
in securities included in the Standard & Poor's 500 Composite Stock Price Index.
LARGE CAP AST AMERICAN CENTURY INCOME & GROWTH: seeks capital growth with current American Century
VALUE income as a secondary objective. The Portfolio invests primarily in common Investment
stocks that offer potential for capital growth, and may, consistent with its Management, Inc.
investment objective, invest in stocks that offer potential for current income.
LARGE CAP AST ALLIANCEBERNSTEIN GROWTH & INCOME: seeks long-term growth of capital Alliance Capital
VALUE and income while attempting to avoid excessive fluctuations in market value. The Management, L.P.
Portfolio normally will invest in common stocks (and securities convertible into
common stocks).
LARGE CAP AST HOTCHKIS & WILEY LARGE-CAP VALUE: seeks current income and long-term Hotchkis and
Value growth of income, as well as capital appreciation. The Portfolio invests, under Wiley Capital
normal circumstances, at least 80% of its net assets plus borrowings for Management, LLC
investment purposes in common stocks of large cap U.S. companies that have a
high cash dividend or payout yield relative to the market.
ASSET AST GLOBAL ALLOCATION (formerly Ast Deam Global Allocation): seeks to obtain Prudential
ALLOCATION/ the highest potential total return consistent with a specified level of risk Investments LLC
BALANCED tolerance. The Portfolio seeks to achieve its investment objective by investing in
several other AST Portfolios ("Underlying Portfolios"). The Portfolio intends its
strategy of investing in combinations of Underlying Portfolios to result in
investment diversification that an investor could otherwise achieve only by
holding numerous investments.
ASSET AST AMERICAN CENTURY STRATEGIC BALANCED: seeks capital growth and current American Century
ALLOCATION/ income. The Sub-advisor intends to maintain approximately 60% of the Portfolio's Investment
BALANCED assets in equity securities and the remainder in bonds and other fixed income Management, Inc.
securities.
ASSET AST T. ROWE PRICE ASSET ALLOCATION: seeks a high level of total return T. Rowe Price
ALLOCATION/ by investing primarily in a diversified portfolio of fixed income and equity Associates, Inc.
BALANCED securities. The Portfolio normally invests approximately 60% of its total assets in
equity securities and 40% in fixed income securities. This mix may vary
depending on the Sub-advisor's outlook for the markets.
FIXED INCOME AST T. ROWE PRICE GLOBAL BOND: seeks to provide high current income and T. Rowe Price
capital growth by investing in high quality foreign and U.S. dollar-denominated International, Inc.
bonds. The Portfolio will invest at least 80% of its total assets in fixed income
securities, including high quality bonds issued or guaranteed by U.S. or foreign
governments or their agencies and by foreign authorities, provinces and
municipalities as well as investment grade corporate bonds and mortgage and
asset-backed securities of U.S. and foreign issuers.
17
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
FIXED INCOME AST GOLDMAN SACHS HIGH YIELD: seeks a high level of current income Goldman Sachs
and may also consider the potential for capital appreciation. The Portfolio Asset Management,
invests, under normal circumstances, at least 80% of its net assets plus any L.P.
borrowings for investment purposes (measured at time of purchase) in high-yield,
fixed-income securities that, at the time of purchase, are non-investment grade
securities.
FIXED INCOME AST LORD ABBETT BOND-DEBENTURE: seeks high current income and the Lord, Abbett & Co.
opportunity for capital appreciation to produce a high total return. To pursue its LLC
objective, the Portfolio will invest, under normal circumstances, at least 80% of
the value of its assets in fixed income securities and normally invests primarily
in high yield and investment grade debt securities, securities convertible into
common stock and preferred stocks.
FIXED INCOME AST PIMCO TOTAL RETURN BOND: seeks to maximize total return consistent with Pacific Investment
preservation of capital and prudent investment management. The Portfolio will Management
invest in a diversified portfolio of fixed-income securities of varying maturities. Company LLC
The average portfolio duration of the Portfolio generally will vary within a three- (PIMCO)
to six-year time frame based on the Sub-advisor's forecast for interest rates.
FIXED INCOME AST PIMCO LIMITED MATURITY BOND: seeks to maximize total return consistent Pacific Investment
with preservation of capital and prudent investment management. The Portfolio Management
will invest in a diversified portfolio of fixed-income securities of varying Company LLC
maturities. The average portfolio duration of the Portfolio generally will vary (PIMCO)
within a one- to three-year time frame based on the Sub-advisor's forecast for
interest rates.
FIXED INCOME AST MONEY MARKET: seeks high current income while maintaining high levels Wells Capital
of liquidity. The Portfolio attempts to accomplish its objective by maintaining a Management, Inc.
dollar-weighted average maturity of not more than 90 days and by investing in
securities which have effective maturities of not more than 397 days.
INTERNATIONAL GVIT DEVELOPING MARKETS: seeks long-term capital appreciation, under normal Gartmore Global
EQUITY conditions by investing at least 80% of its total assets in stocks of companies of Asset Management
any size based in the world's developing economies. Under normal market Trust/Gartmore
conditions, investments are maintained in at least six countries at all times and Global Partners
no more than 35% of total assets in any single one of them.
LARGE CAP ADVANTAGE EQUITY INCOME FUND (formerly Equity Income): seeks long-term Wells Fargo Funds
VALUE capital appreciation and above-average dividend income. The Portfolio invests in Management, LLC
the common stocks of large U.S. companies with strong return potential and
above-average dividend income. The Portfolio invests principally in securities of
companies with market capitalizations of $3 billion or more.
18
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
MID CAP AIM VARIABLE INSURANCE FUNDS -- AIM V.I. DYNAMICS FUND -- SERIES I A I M Advisors,
GROWTH SHARES (formerly an INVESCO fund): seeks long-term capital growth. The Inc.
Portfolio pursues its objective by normally investing at least 65% of its assets in
common stocks of mid-sized companies that are included in the Russell Midcap
Growth(R) Index at the time of purchase.
SPECIALTY AIM VARIABLE INSURANCE FUNDS -- AIM V.I. TECHNOLOGY FUND -- SERIES I A I M Advisors,
SHARES (formerly an INVESCO fund): seeks capital growth. The Portfolio normally Inc.
invests at least 80% of its net assets in the equity securities and equity-related
instruments of companies engaged in technology-related industries. These
include, but are not limited to, various applied technologies, hardware, software,
semiconductors, telecommunications equipment and services and service-related
companies in information technology.
SPECIALTY AIM VARIABLE INSURANCE FUNDS -- AIM V.I. HEALTH SCIENCES FUND -- A I M Advisors,
SERIES I SHARES (Effective July 1, 2005, AIM V.I. Health Sciences Fund will be Inc.
renamed AIM V.I. Global Health Care Fund) (formerly an INVESCO fund): seeks
capital growth. The Portfolio normally invests at least 80% of its net assets in
the equity securities and equity-related instruments of companies related to
health care.
SPECIALTY AIM VARIABLE INSURANCE FUNDS -- AIM V.I. FINANCIAL SERVICES FUND -- A I M Advisors,
SERIES I SHARES (formerly an INVESCO fund): seeks capital growth. The Portfolio Inc.
normally invests at least 80% of its net assets in the equity securities and
equity-related instruments of companies involved in the financial services sector.
These companies include, but are not limited to, banks, insurance companies,
investment and miscellaneous industries, and suppliers to financial services
companies.
INTERNATIONAL EVERGREEN VA INTERNATIONAL EQUITY (formerly Evergreen VA International Evergreen
EQUITY Growth): seeks long-term capital growth and secondarily, modest income. The Investment
Portfolio normally invests 80% of its assets in equity securities issued by Management
established, quality, non-U.S. companies located in countries with developed Company, LLC
markets and may purchase across all market capitalizations. The Portfolio
normally invests at least 65% of its assets in securities of companies in at least
three different countries (other than the U.S.).
SMALL CAP EVERGREEN VA GROWTH (formerly Evergreen VA Special Equity): seeks long-term Evergreen
GROWTH capital growth. The Portfolio invests at least 75% of its assets in common stocks Investment
of small- and medium-sized companies (i.e., companies whose market Management
capitalizations fall within the range of the Russell 2000(R) Growth Index, at the Company, LLC
time of purchase).
SPECIALTY EVERGREEN VA OMEGA: seeks long-term capital growth. The Portfolio invests Evergreen
primarily, and under normal conditions, substantially all of its assets in common Investment
stocks and securities convertible into common stocks of U.S. companies across Management
all market capitalizations. Company, LLC
19
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
INTERNATIONAL PROFUND VP EUROPE 30: seeks daily investment results, before fees and ProFund Advisors
EQUITY expenses, that correspond to the daily performance of the ProFunds Europe 30 LLC
Index. The ProFunds Europe 30 Index, created by ProFund Advisors, is composed
of 30 companies whose principal offices are located in Europe and whose
securities are traded on U.S. exchanges or on the NASDAQ as depositary
receipts or ordinary shares.
SPECIALTY PROFUND VP ASIA 30: seeks daily investment results, before fees and expenses ProFund Advisors
that correspond to the daily performance of the ProFunds Asia 30 Index. The LLC
ProFunds Asia 30 Index, created by ProFund Advisors, is composed of 30
companies whose principal offices are located in the Asia/Pacific region,
excluding Japan, and whose securities are traded on U.S. exchanges or on the
NASDAQ as depository receipts or ordinary shares.
SPECIALTY PROFUND VP JAPAN: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the Nikkei 225 Stock Average. Since LLC
the Japanese markets are not open when ProFund VP Japan values its shares,
ProFund VP Japan determines its success in meeting this investment objective by
comparing its daily return on a given day with the daily performance of related
futures contracts traded in the United States related to the Nikkei 225 Stock
Average.
SPECIALTY PROFUND VP BANKS: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the Dow Jones U.S. Banks Index. LLC
The Dow Jones U.S. Banks Index measures the performance of the banking
industry portion of the U.S. equity market.
SPECIALTY PROFUND VP BASIC MATERIALS: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones U.S. Basic LLC
Materials Sector Index. The Dow Jones U.S. Basic Materials Sector Index
measures the performance of the basic materials economic sector of the U.S.
equity market.
SPECIALTY PROFUND VP BIOTECHNOLOGY: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones U.S. LLC
Biotechnology Index. The Dow Jones U.S. Biotechnology Index measures the
performance of the biotechnology industry portion of the U.S. equity market.
SPECIALTY PROFUND VP CONSUMER SERVICES (formerly ProFund VP Consumer Cyclical): ProFund Advisors
seeks daily investment results, before fees and expenses that correspond to the LLC
daily performance of the Dow Jones U.S. Consumer Services Index. The Dow
Jones U.S. Consumer Services Index measures the performance of consumer
spending in the services industry of the U.S. equity market.
SPECIALTY PROFUND VP CONSUMER GOODS (formerly ProFund VP Non-Cyclical): seeks daily ProFund Advisors
investment results, before fees and expenses, that correspond to the daily LLC
performance of the Dow Jones U.S. Consumer Goods Index. The Dow Jones U.S.
Consumer Goods Index measures the performance of consumer spending in the
goods industry of the U.S. equity market.
20
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
SPECIALTY PROFUND VP OIL & Gas (formerly ProFund VP Energy): seeks daily investment ProFund Advisors
results, before fees and expenses that correspond to the daily performance of LLC
the Dow Jones U.S. Oil & Gas Index. The Dow Jones U.S. Oil & Gas Sector
Index measures the performance of the energy sector of the U.S. equity market.
SPECIALTY PROFUND VP FINANCIALS (formerly ProFund VP Financial): seeks daily investment ProFund Advisors
results, before fees and expenses that correspond to the daily performance of LLC
the Dow Jones U.S. Financials Sector Index. The Dow Jones U.S. Financials
Sector Index measures the performance of the financial services economic sector
of the U.S. equity market.
SPECIALTY PROFUND VP HEALTH CARE (formerly ProFund VP Healthcare): seeks daily ProFund Advisors
investment results, before fees and expenses that correspond to the LLC
daily performance of the Dow Jones U.S. Health Care Index. The Dow Jones
U.S. Health Care Index measures the performance of the healthcare economic
sector of the U.S. equity market.
SPECIALTY PROFUND VP INDUSTRIALS (formerly ProFund VP Industrial): seeks daily investment ProFund Advisors
results, before fees and expenses that correspond to the daily performance of LLC
the Dow Jones U.S. Industrials Index. The Dow Jones U.S. Industrials Index
measures the performance of the industrial economic sector of the U.S. equity
market.
SPECIALTY PROFUND VP INTERNET: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the Dow Jones Composite Internet LLC
Index. The Dow Jones Composite Internet Index measures the performance of
stocks in the U.S. equity markets that generate the majority of their revenues
from the Internet.
SPECIALTY PROFUND VP PHARMACEUTICALS: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones U.S. LLC
Pharmaceuticals Index. The Dow Jones U.S. Pharmaceuticals Index measures the
performance of the pharmaceuticals industry portion of the U.S. equity market.
SPECIALTY PROFUND VP PRECIOUS METALS: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones Precious LLC
Metals Index. The Dow Jones Precious Metals Index measures the performance
of the precious metals mining industry.
SPECIALTY PROFUND VP REAL ESTATE: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the Dow Jones U.S. LLC
Real Estate Index. The Dow Jones U.S. Real Estate Index measures the
performance of the real estate industry portion of the U.S. equity market.
SPECIALTY PROFUND VP SEMICONDUCTOR: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones U.S. LLC
Semiconductor Index. The Dow Jones U.S. Semiconductor Index measures the
performance of the semiconductor industry portion of the U.S. equity market.
21
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
SPECIALTY PROFUND VP TECHNOLOGY: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones U.S. LLC
Technology Sector Index. The Dow Jones U.S. Technology Sector Index measures
the performance of the technology sector of the U.S. equity market.
SPECIALTY PROFUND VP TELECOMMUNICATIONS: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the Dow Jones U.S. LLC
Telecommunications Sector Index. The Dow Jones U.S. Telecommunications
Sector Index measures the performance of the telecommunications economic
sector of the U.S. equity market.
SPECIALTY PROFUND VP UTILITIES: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the Dow Jones U.S. Utilities Sector LLC
Index. The Dow Jones U.S. Utilities Sector Index measures the performance of
the utilities economic sector of the U.S. equity market.
SPECIALTY PROFUND VP BULL: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the S&P 500(R) Index. LLC
SPECIALTY PROFUND VP BEAR: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the inverse (opposite) of the daily performance of the S&P LLC
500(R) Index. If ProFund VP Bear is successful in meeting its objective, its net
asset value should gain approximately the same, on a percentage basis, as any
decrease in the S&P 500(R) Index when the Index declines on a given day.
Conversely, its net asset value should lose approximately the same, on a
percentage basis, as any increase in the Index when the Index rises on a
given day.
SPECIALTY PROFUND VP ULTRABULL: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to twice (200%) the daily performance of the S&P LLC
500(R) Index. Prior to May 1, 2003, ProFund VP UltraBull was named "ProFund VP
Bull Plus" and sought daily investment results that corresponded to one and
one-half times (150%) the daily performance of the S&P 500(R) Index. If ProFund
VP UltraBull is successful in meeting its objective, its net asset value should
gain approximately twice as much, on a percentage basis, as the S&P 500(R)
Index when the Index rises on a given day. Conversely, its net asset value should
lose approximately twice as much, on a percentage basis, as the Index when the
Index declines on a given day.
SPECIALTY PROFUND VP OTC: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the NASDAQ-100 Index(R). "OTC" in LLC
the name of ProFund VP OTC refers to securities that do not trade on a U.S.
securities exchange registered under the Securities Exchange Act of 1934.
22
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
SPECIALTY PROFUND VP SHORT OTC: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the inverse (opposite) of the daily performance LLC
of the NASDAQ-100 Index(R). If ProFund VP Short OTC is successful in meeting its
objective, its net asset value should gain approximately the same, on a
percentage basis, as any decrease in the NASDAQ-100 Index(R) when the Index
declines on a given day. Conversely, its net asset value should lose
approximately the same, on a percentage basis, as any increase in the Index
when the Index rises on a given day. "OTC" in the name of ProFund VP Short
OTC refers to securities that do not trade on a U.S. securities exchange
registered under the Securities Exchange Act of 1934.
SPECIALTY PROFUND VP ULTRAOTC: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to twice (200%) the daily performance of the LLC
NASDAQ-100 Index(R). If ProFund VP UltraOTC is successful in meeting its
objective, its net asset value should gain approximately twice as much, on a
percentage basis, as the NASDAQ-100 Index(R) when the Index rises on a given
day. Conversely, its net asset value should lose approximately twice as much, on
a percentage basis, as the Index when the Index declines on a given day. "OTC"
in the name of ProFund VP UltraOTC refers to securities that do not trade on a
U.S. securities exchange registered under the Securities Exchange Act of 1934.
MID CAP VALUE PROFUND VP MID-CAP VALUE: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the S&P MidCap 400/ LLC
Barra Value Index(R). The S&P MidCap400/Barra Value Index(R) is a float adjusted
market capitalization weighted index comprised of the stocks in the S&P MidCap
400 Index that have comparatively low price-to-book ratios as determined before
each semiannual rebalance date.
MID CAP PROFUND VP MID-CAP GROWTH: seeks daily investment results, before fees and ProFund Advisors
GROWTH expenses, that correspond to the daily performance of the S&P MidCap 400/ LLC
Barra Growth Index(R). The S&P MidCap 400/Barra Growth Index(R) is a float
adjusted market capitalization weighted index comprised of the stocks in the
S&P MidCap 400 Index(R) that have comparatively high price-to-book ratios as
determined before each semiannual rebalance date.
SPECIALTY PROFUND VP ULTRAMID-CAP: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to twice (200%) the daily performance of the S&P LLC
MidCap 400 Index(R). If ProFund VP UltraMid-Cap is successful in meeting its
objective, its net asset value should gain approximately twice as much, on a
percentage basis, as the S&P MidCap 400 Index(R) when the Index rises on a
given day. Conversely, its net asset value should lose approximately twice as
much, on a percentage basis, as the Index when the Index declines on a
given day.
SMALL CAP PROFUND VP SMALL-CAP VALUE: seeks daily investment results, before fees and ProFund Advisors
VALUE expenses, that correspond to the daily performance of the S&P SmallCap 600/ LLC
Barra Value Index(R). The S&P SmallCap 600/Barra Value Index(R) is a float
adjusted market capitalization weighted index comprised of the stocks in the
S&P SmallCap 600/Barra Value Index(R) that have comparatively low price-to-book
ratios as determined before each semiannual rebalance date.
23
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
SMALL CAP PROFUND VP SMALL-CAP GROWTH: seeks daily investment results, before fees ProFund Advisors
GROWTH and expenses, that correspond to the daily performance of the S&P SmallCap LLC
600/Barra Growth Index(R). The S&P SmallCap 600/Barra Growth Index(R) is a float
adjusted market capitalization weighted index comprised of the stocks in the
S&P SmallCap 600/Barra Growth Index(R) that have comparatively high price-to-
book ratios as determined before each semiannual rebalance date.
SPECIALTY PROFUND VP ULTRASMALL-CAP: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to twice (200%) the daily performance of the Russell LLC
2000(R) Index. If ProFund VP UltraSmall-Cap is successful in meeting its objective,
its net asset value should gain approximately twice as much, on a percentage
basis, as the Russell 2000 Index(R) when the Index rises on a given day.
Conversely, its net asset value should lose approximately twice as much, on a
percentage basis, as the Index when the Index declines on a given day.
SPECIALTY PROFUND VP U.S. GOVERNMENT PLUS: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to one and one-quarter times (125%) the daily LLC
price movement of the most recently issued 30-year U.S. Treasury bond ("Long
Bond"). In accordance with its stated objective, the net asset value of ProFund
VP U.S. Government Plus generally should decrease as interest rates rise. If
ProFund VP U.S. Government Plus is successful in meeting its objective, its net
asset value should gain approximately one and one-quarter times (125%) as
much, on a percentage basis, as any daily increase in the price of the Long Bond
on a given day. Conversely, its net asset value should lose approximately one
and one-quarter as much, on a percentage basis, as any daily decrease in the
price of the Long Bond on a given day.
SPECIALTY PROFUND VP RISING RATES OPPORTUNITY: seeks daily investment results, before ProFund Advisors
fees and expenses, that correspond to one and one-quarter times (125%) the LLC
inverse (opposite) of the daily price movement of the most recently issued
30-year U.S. Treasury bond ("Long Bond"). In accordance with its stated
objective, the net asset value of ProFund VP Rising Rates Opportunity generally
should decrease as interest rates fall. If ProFund VP Rising Rates Opportunity is
successful in meeting its objective, its net asset value should gain approximately
one and one-quarter times as much, on a percentage basis, as any daily
decrease in the Long Bond on a given day. Conversely, its net asset value should
lose approximately one and one-quarter times as much, on a percentage basis,
as any daily increase in the Long Bond on a given day.
LARGE CAP PROFUND VP LARGE-CAP GROWTH: seeks daily investment results, before fees ProFund Advisors
GROWTH and expenses, that correspond to the daily performance of the S&P 500/Barra LLC
Growth Index(R). The S&P 500/Barra Growth Index is a float adjusted market
capitalization weighted index comprised of the stocks in the S&P 500 Index that
have comparatively high price-to-book ratios as determined before each
semiannual rebalance date.
24
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
LARGE CAP PROFUND VP LARGE-CAP VALUE: seeks daily investment results, before fees and ProFund Advisors
VALUE expenses, that correspond to the daily performance of the S&P 500/Barra Value LLC
Index(R). The S&P 500/Barra Value Index is a float adjusted market capitalization
weighted index comprised of the stocks in the S&P 500 Index that have
comparatively low price-to-book ratios as determined before each semiannual
rebalance date.
SPECIALTY PROFUND VP SHORT SMALL-CAP: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the inverse (opposite) of the daily performance of LLC
the Russell 2000(R) Index. If ProFund VP Short Small-Cap is successful in meeting
its objective, its net asset value should gain approximately the same amount, on
a percentage basis, as any decrease in the Russell 2000 Index when the Index
declines on a given day. Conversely, its net asset value should lose
approximately the same amount, on a percentage basis, as any increase in the
Index when the Index rises on a given day.
SPECIALTY PROFUND VP SHORT MID-CAP: seeks daily investment results, before fees and ProFund Advisors
expense that correspond to the inverse (opposite) of the daily performance of the LLC
S&P MidCap 400 Index(R). If ProFund VP Short Mid-Cap is successful in meeting
its objective, its net asset value should gain approximately the same amount, on
a percentage basis, as any decrease in the S&P MidCap 400 Index when the
Index declines on a given day. Conversely, its net asset value should lose
approximately the same amount, on a percentage basis, as any increase in the
Index when the Index rises on a given day.
SPECIALTY ACCESS VP HIGH YIELD: seeks to provide investment results that correspond ProFund Advisors
generally to the total return of the high yield market consistent with maintaining LLC
reasonable liquidity. The Access VP High Yield, created by ProFund Advisors, will
achieve its high yield exposure primarily through CDSs but may invest in high
yield debt instruments ("junk bonds"), Interest rate swap agreements and futures
contracts, and other debt and money market instruments without limitation,
consistent with applicable regulations. Under normal market conditions, the fund
will invest at least 80% of its net assets in credit default swaps and other
financial instruments that in combination have economic characteristics similar to
the high yield debt market and/or in high yield debt securities. The fund seeks to
maintain exposure to the high yield bond markets regardless of market
conditions and without taking defensive positions.
SPECIALTY FIRST TRUST(R) 10 UNCOMMON VALUES: seeks to provide above-average capital First Trust Advisors
appreciation. The Portfolio seeks to achieve its objective by investing primarily in L.P.
the ten common stocks selected by the Investment Policy Committee of Lehman
Brothers Inc. ("Lehman Brothers") with the assistance of the Research
Department of Lehman Brothers which, in their opinion have the greatest
potential for capital appreciation during the next year. The stocks included in the
Portfolio are adjusted annually on or about July 1st in accordance with the
selections of Lehman Brothers.
25
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
SPECIALTY TARGET MANAGED VIP: seeks to provide above-average total return. The Portfolio First Trust Advisors
seeks to achieve its objective by investing in common stocks of the most L.P.
attractive companies that are identified by a model based on six uniquely
specialized strategies -- The Dow(sm) DART 5, the European Target 20, the
Nasdaq(R) Target 15, the S&P Target 24, the Target Small Cap and the Value Line(R)
Target 25.
SPECIALTY THE DOW(SM) DART 10: seeks to provide above-average total return. The First Trust Advisors
Portfolio seeks to achieve its objective by investing in common stocks issued by L.P.
companies that are expected to provide income and to have the potential for
capital appreciation. The Portfolio invests primarily in the common stocks of the
ten companies in the DJIA that have the highest combined dividend yields and
buyback ratios on or about the applicable stock selection date.
SPECIALTY GLOBAL DIVIDEND TARGET 15 (formerly Global Target 15): seeks to provide above- First Trust Advisors
average total return. The Portfolio seeks to achieve its objective by investing in L.P.
common stocks issued by companies that are expected to provide income and to
have the potential for capital appreciation. The Portfolio invests primarily in the
common stocks of the companies which are components of the DJIA, the
Financial Times Industrial Ordinary Share Index ("FT Index") and the Hang Seng
Index. The Portfolio primarily consists of common stocks of the five companies
with the lowest per share stock prices of the ten companies in each of the
DJIA, FT Index and Hang Seng Index, respectively, that have the highest dividend
yield in the respective index on or about the applicable stock selection date.
SPECIALTY S&P(R) TARGET 24: seeks to provide above-average total return. The Portfolio First Trust Advisors
seeks to achieve its objective by investing in common stocks issued by L.P.
companies that have the potential for capital appreciation. The Portfolio invests
primarily in the common stocks of twenty-four companies selected from a subset
of the stocks included in the Standard & Poor's 500 Composite Stock Price
Index(R). The subset of stocks will be taken from each of the eight largest
economic sectors of the S&P 500 Index(R) based on the sector's market
capitalization.
SPECIALTY THE DOW (SM) TARGET DIVIDEND seeks to provide above-average total return. The First Trust Advisors
Portfolio seeks to achieve its objective by investing in common stocks issued by L.P.
companies that are expected to provide income and to have the potential for
capital appreciation. The Portfolio invests primarily in the 20 common stocks
from the Dow Jones Select Dividend Index (SM) with the best overall ranking on
both the change in return on assets over the last 12 months and price-to-book
ratio as of the close of business on or about the applicable stock selection date.
SPECIALTY VALUE LINE(R) TARGET 25: seeks to provide above-average capital appreciation. First Trust Advisors
The Portfolio seeks to achieve its objective by investing in 25 of the 100 L.P.
common stocks that Value Line(R) gives a #1 ranking for Timeliness(R) which have
recently exhibited certain positive financial attributes as of the close of business
on the applicable stock selection date through a multi-step process.
26
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
SPECIALTY NASDAQ(R) TARGET 15: seeks to provide above-average total return. The Portfolio First Trust Advisors
seeks to achieve its objective by investing in common stocks issued by L.P.
companies that are expected to have the potential for capital appreciation. The
Portfolio invests primarily in the common stocks of fifteen companies selected
from a pre-screened subset of the stocks included in the Nasdaq-100 Index(R) on
or about the applicable stock selection date through a multi-step process.
INTERNATIONAL THE PRUDENTIAL SERIES FUND, INC. -- SP William Blair International Prudential
EQUITY Growth: Seeks long-term capital appreciation. The Portfolio invests primarily in Investments LLC/
stocks of large and medium-sized companies located in countries included in the William Blair &
Morgan Stanley Capital International All Country World Ex-U.S. Index. Under Company, LLC
normal market conditions, the portfolio invests at least 80% of its net assets in
equity securities. The Portfolio's assets normally will be allocated among not
fewer than six different countries and will not concentrate investments in any
particular industry.
"Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard & Poor's 500," and
"500" are trademarks of the McGraw-Hill Companies, Inc. and have been licensed
for use by American Skandia Investment Services, Incorporated. The Portfolio is
not sponsored, endorsed, sold or promoted by Standard & Poor's and Standard &
Poor's makes no representation regarding the advisability of investing in the
Portfolio.
"Dow Jones Industrial Average(sm)", "DJIA(sm)", "Dow Industrials(sm)", "Dow
Jones Select Dividend Index(sm)", and "The Dow 10(sm)", are service marks of Dow
Jones & Company, Inc. ("Dow Jones") and have been licensed for use for certain
purposes by First Trust Advisors L.P. ("First Trust"). The portfolios,
including, and in particular the Target Managed VIP portfolio The Dow(SM) DART
10 portfolio, and The Dow(SM) Target Dividend Portfolio are not endorsed, sold
or promoted by Dow Jones, and Dow Jones makes no representation regarding the
advisability of investing in such products.
"Standard & Poor's," "S&P," "S&P 500," "Standard & Poor's 500," and "500" are
trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by
First Trust on behalf of the S&P Target 24 Portfolio and the Target Managed VIP
Portfolio. The Portfolios are not sponsored, endorsed, managed, sold or promoted
by Standard & Poor's and Standard & Poor's makes no representation regarding the
advisability of investing in the Portfolio.
"The Nasdaq 100(R)", "Nasdaq-100 Index(R)", "Nasdaq Stock Market(R)", and
"Nasdaq(R)" are trade or service marks of The Nasdaq Stock Market, Inc. (which
with its affiliates are the "Corporations") and have been licensed for use by
First Trust. The Nasdaq Target 15 Portfolio and Target Managed VIP Portfolio
have not been passed on by the Corporations as to its legality or suitability.
The Nasdaq Target 15 Portfolio and Target Managed VIP Portfolio are not issued,
endorsed, sponsored, managed, sold or promoted by the Corporations. THE
CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE NASDAQ
TARGET 15 PORTFOLIO OR THE TARGET MANAGED VIP PORTFOLIO.
"Value Line(R)," "The Value Line Investment Survey," and "Value Line
Timeliness(TM) Ranking System" are registered trademarks of Value Line
Securities, Inc. or Value Line Publishing, Inc. The Target Managed VIP(R)
Portfolio is not sponsored, recommended, sold or promoted by Value Line
Publishing, Inc., Value Line, Inc. or Value Line Securities, Inc. ("Value
Line"). Value Line makes no representation regarding the advisability of
investing in the Portfolio.
The First Trust(R) 10 Uncommon Values portfolio is not sponsored or created by
Lehman Brothers, Inc. ("Lehman Brothers"). Lehman Brothers' only relationship to
First Trust is the licensing of certain trademarks and trade names of Lehman
Brothers and of the "10 Uncommon Values" which is determined, composed and
calculated by Lehman Brothers without regard to First Trust or the First
Trust(R) 10 Uncommon Values portfolio.
Dow Jones has no relationship to the ProFunds VP, other than the licensing of
the Dow Jones sector indices and its service marks for use in connection with
the ProFunds VP. The ProFunds VP are not sponsored, endorsed, sold, or promoted
by Standard & Poor's or NASDAQ, and neither Standard & Poor's nor NASDAQ makes
any representations regarding the advisability of investing in the ProFunds VP.
WHAT ARE THE FIXED ALLOCATIONS?
We offer Fixed Allocations of different durations during the accumulation
period. These "Fixed Allocations" earn a guaranteed fixed rate of interest for a
specified period of time, called the "Guarantee Period." In most states, we
offer Fixed Allocations with Guarantee Periods from 1 to 10 years. We may also
offer special purpose Fixed Allocations for use with certain optional investment
programs. We guarantee the fixed rate for the entire Guarantee Period. However,
if you withdraw or transfer Account Value before the end of the Guarantee
Period, we will adjust the value of your withdrawal or transfer based on a
formula, called a "Market Value Adjustment." The Market Value Adjustment can
either be positive or negative, depending on the rates that are currently being
credited on Fixed Allocations. Please refer to the section entitled "How does
the Market Value Adjustment Work?" for a description of the formula along with
examples of how it is calculated. You may allocate Account Value to more than
one Fixed Allocation at a time.
Fixed Allocations may not be available in all states. Availability of
Fixed Allocations is subject to change and may differ by state and by the
annuity product you purchase. Please call American Skandia at 1-800-752-6342 to
determine availability of Fixed Allocations in your state and for your annuity
product.
27
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Fees and Charges
The charges under the contracts are designed to cover, in the aggregate, our
direct and indirect costs of selling, administering and providing benefits under
the contracts. They are also designed, in the aggregate, to compensate us for
the risks of loss we assume pursuant to the contracts. If, as we expect, the
charges that we collect from the contracts exceed our total costs in connection
with the contracts, we will earn a profit. Otherwise we will incur a loss. For
example, American Skandia may make a profit on the Insurance Charge if, over
time, the actual costs of providing the guaranteed insurance obligations under
the Annuity are less than the amount we deduct for the Insurance Charge. To the
extent we make a profit on the Insurance Charge, such profit may be used for any
other corporate purpose, including payment of other expenses that American
Skandia incurs in promoting, distributing, issuing and administering the Annuity
and to offset a portion of the costs associated with offering Credits which are
funded through American Skandia's general account
The rates of certain of our charges have been set with reference to
estimates of the amount of specific types of expenses or risks that we will
incur. In most cases, this prospectus identifies such expenses or risks in the
name of the charge; however, the fact that any charge bears the name of, or is
designed primarily to defray a particular expense or risk does not mean that the
amount we collect from that charge will never be more than the amount of such
expense or risk, nor does it mean that we may not also be compensated for such
expense or risk out of any other charges we are permitted to deduct by the terms
of the contract. A portion of the proceeds that American Skandia receives from
the charges that apply solely to the variable investment options may include
amounts based on market appreciation of the variable investment option values,
including appreciation on amounts that represent Credits.
WHAT ARE THE CONTRACT FEES AND CHARGES?
Contingent Deferred Sales Charge: We do not deduct a sales charge from Purchase
Payments you make to your Annuity. However, we may deduct a CDSC if you
surrender your Annuity or when you make a partial withdrawal. The CDSC
reimburses us for expenses related to sales and distribution of the Annuity,
including commissions, marketing materials and other promotional expenses. The
CDSC is calculated as a percentage of your Purchase Payment being surrendered or
withdrawn during the applicable Annuity Year. For purposes of calculating the
CDSC, we consider the year following the Issue Date of your Annuity as Year 1.
The amount of the CDSC decreases over time, measured from the Issue Date of the
Annuity. The CDSC percentages are shown below.
YEARS 1 2 3 4 5 6 7 8 9 10 11+
- ------------- -- -- -- -- -- -- -- -- -- --- ---
CHARGE (%) 9.0 9.0 8.5 8.0 7.0 6.0 5.0 4.0 3.0 2.0 0.0
The CDSC period is based on the Issue Date of the Annuity, not on the date
each Purchase Payment is applied to the Annuity. Purchase Payments applied to
the Annuity after the Issue Date do not have their own CDSC period. Under
certain circumstances, during the first ten (10) Annuity Years, you can withdraw
a limited amount from your Annuity without paying a CDSC. This is referred to as
a "Free Withdrawal." Free Withdrawals are not treated as a withdrawal of
Purchase Payments for purposes of calculating the CDSC on a subsequent
withdrawal or surrender. Withdrawals of amounts greater than the maximum Free
Withdrawal amount are treated as a withdrawal of Purchase Payments and will be
assessed a CDSC during Annuity Years 1 through 10. For purposes of calculating
the CDSC on a surrender, the Purchase Payments being withdrawn may be greater
than your remaining Account Value or the amount of your withdrawal request. This
is most likely to occur if you have made prior withdrawals under the Free
Withdrawal provision or if your Account Value has declined in value due to
negative market performance.
We may waive the CDSC under certain medically-related circumstances or
when taking a Minimum Distribution from an Annuity purchased as a "qualified"
investment. Free Withdrawals, Medically-Related Surrenders and Minimum
Distributions are each explained more fully in the section entitled "Access to
Your Account Value".
TRANSFER FEE: Currently, you may make twenty (20) free transfers between
investment options each Annuity Year. We will charge $10.00 for each transfer
after the twentieth in each Annuity Year. We do not consider transfers made as
part of a dollar cost averaging, automatic rebalancing or asset allocation
program when we count the twenty free transfers. All transfers made on the same
day will be treated as one (1) transfer. Renewals or transfers of Account Value
from a Fixed Allocation at the end of its Guarantee Period are not subject to
the Transfer Fee and are not counted toward the twenty free transfers. We may
reduce the number of free transfers allowable each Annuity Year (subject to a
minimum of eight) without charging a Transfer Fee unless you make use of
electronic means to transmit your transfer requests. We may eliminate the
Transfer Fee for transfer requests transmitted electronically or through
28
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
other means that reduce our processing costs. If enrolled in any program that
does not permit transfer requests to be transmitted electronically, the Transfer
Fee will not be waived.
ANNUAL MAINTENANCE FEE: During the accumulation period we deduct an Annual
Maintenance Fee. The Annual Maintenance Fee is $35.00 or 2% of your Account
Value invested in the variable investment options, whichever is less. This fee
will be deducted annually on the anniversary of the Issue Date of your Annuity
or, if you surrender your Annuity during the Annuity Year, the fee is deducted
at the time of surrender. We may increase the Annual Maintenance Fee. However,
any increase will only apply to Annuities issued after the date of the increase.
TAX CHARGE: Several states and some municipalities charge premium taxes or
similar taxes on annuities that we are required to pay. The amount of tax will
vary from jurisdiction to jurisdiction and is subject to change. The tax charge
currently ranges up to 3 1/2% of your premium and is designed to approximate the
taxes that we are required to pay. We generally will deduct the charge at the
time the tax is imposed, but may also decide to deduct the charge from each
Purchase Payment at the time of a withdrawal or surrender of your Annuity or at
the time you elect to begin receiving annuity payments. We may assess a charge
against the Sub-accounts and the Fixed Allocations equal to any taxes which may
be imposed upon the separate accounts.
We will pay company income taxes on the taxable corporate earnings created
by this separate account product. While we may consider company income taxes
when pricing our products, we do not currently include such income taxes in the
tax charges you pay under the contract. We will periodically review the issue of
charging for these taxes and may impose a charge in the future.
In calculating our corporate income tax liability, we derive certain
corporate income tax benefits associated with the investment of company assets,
including separate account assets, which are treated as company assets under
applicable income tax law. These benefits reduce our overall corporate income
tax liability. Under current law, such benefits may include foreign tax credits
and corporate dividends received deductions. We do not pass these tax benefits
through to holders of the separate account annuity contracts because (i) the
contract owners are not the owners of the assets generating these benefits under
applicable income tax law and (ii) we do not currently include company income
taxes in the tax charges you pay under the contract.
WHAT CHARGES APPLY SOLELY TO THE VARIABLE INVESTMENT OPTIONS?
INSURANCE CHARGE: We deduct an Insurance Charge daily. The charge is assessed
against the average daily assets allocated to the Sub-accounts and is equal to
0.65% on an annual basis. The Insurance Charge is a combination of the Mortality
& Expense Risk Charge (0.50%) and the Administration Charge (0.15%). The
Insurance Charge is intended to compensate American Skandia for providing the
insurance benefits under the Annuity, including the Annuity's basic death
benefit that provides guaranteed benefits to your beneficiaries even if the
market declines and the risk that persons we guarantee annuity payments to will
live longer than our assumptions. The charge also covers administrative costs
associated with providing the Annuity benefits, including preparation of the
contract, confirmation statements, annual account statements and annual reports,
legal and accounting fees as well as various related expenses. Finally, the
charge covers the risk that our assumptions about the mortality risks and
expenses under this Annuity are incorrect and that we have agreed not to
increase these charges over time despite our actual costs. We may increase the
portion of the total Insurance Charge that is deducted for administrative costs;
however, any increase will only apply to Annuities issued after the date of the
increase.
The Insurance Charge is not deducted against assets allocated to a Fixed
Allocation. However, the amount we credit to Fixed Allocations may also reflect
similar assumptions about the insurance guarantees provided under the Annuity.
DISTRIBUTION CHARGE: We deduct a Distribution Charge daily. The charge is
assessed against the average assets allocated to the Sub-accounts and is equal
to 1.00% on an annual basis in Annuity Years 1 through 10. After the end of the
first ten Annuity Years, the 1.00% charge for distribution will no longer be
assessed. The Distribution Charge is intended to compensate us for a portion of
our acquisition expenses under the Annuity, including promotion and distribution
of the Annuity and costs associated with offering Credits which are funded
through American Skandia's general account.
OPTIONAL BENEFITS FOR WHICH WE ASSESS A CHARGE SOLELY AGAINST THE VARIABLE
INVESTMENT OPTIONS: If you elect to purchase certain optional benefits, we will
deduct an
29
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Fees and Charges continued
additional charge on a daily basis solely from your Account Value allocated to
the Sub-accounts. The additional charge is included in the daily calculation of
the Unit Price for each Sub-account. We may assess charges for other optional
benefits on a different basis as described elsewhere in the Prospectus. Please
refer to the section entitled "Living Benefit Programs" and "Death Benefit" for
a description of the charge for each Optional Benefit.
WHAT FEES AND EXPENSES ARE INCURRED BY THE PORTFOLIOS?
Each Portfolio incurs total annual operating expenses comprised of an investment
management fee, other expenses and any distribution and service (12b-1) fees
that may apply. These fees and expenses are reflected daily by each Portfolio
before it provides American Skandia with the net asset value as of the close of
business each day. More detailed information about fees and expenses can be
found in the prospectuses for the Portfolios.
WHAT CHARGES APPLY TO THE FIXED ALLOCATIONS?
No specific fee or expenses are deducted when determining the rate we credit to
a Fixed Allocation. However, for some of the same reasons that we deduct the
Insurance Charge against Account Value allocated to the Sub-accounts, we also
take into consideration mortality, expense, administration, profit and other
factors in determining the interest rates we credit to Fixed Allocations. Any
CDSC or Tax Charge applies to amounts that are taken from the variable
investment options or the Fixed Allocations. A Market Value Adjustment may also
apply to transfers, certain withdrawals, surrender or annuitization from a Fixed
Allocation.
WHAT CHARGES APPLY IF I CHOOSE AN ANNUITY PAYMENT OPTION?
If you select a fixed payment option, the amount of each fixed payment will
depend on the Account Value of your Annuity when you elect to annuitize. There
is no specific charge deducted from these payments; however, the amount of each
annuity payment reflects assumptions about our insurance expenses. If you select
a variable payment option that we may offer, then the amount of your benefits
will reflect changes in the value of your Annuity and will be subject to charges
that apply under the variable immediate annuity option. Also, a tax charge may
apply (see "Tax Charge" above).
EXCEPTIONS/REDUCTIONS TO FEES AND CHARGES
We may reduce or eliminate certain fees and charges or alter the manner in which
the particular fee or charge is deducted. For example, we may reduce the amount
of the CDSC or the length of time it applies, reduce or eliminate the amount of
the Annual Maintenance Fee or reduce the portion of the total Insurance Charge
that is deducted as an Administration Charge. Generally, these types of changes
will be based on a reduction to our sales, maintenance or administrative
expenses due to the nature of the individual or group purchasing the Annuity.
Some of the factors we might consider in making such a decision are: (a) the
size and type of group; (b) the number of Annuities purchased by an Owner; (c)
the amount of Purchase Payments or likelihood of additional Purchase Payments;
and/or (d) other transactions where sales, maintenance or administrative
expenses are likely to be reduced. We will not discriminate unfairly between
Annuity purchasers if and when we reduce any fees and charges.
30
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Purchasing Your Annuity
WHAT ARE OUR REQUIREMENTS FOR PURCHASING THE ANNUITY?
INITIAL PURCHASE PAYMENT: You must make a minimum initial Purchase Payment of
$10,000. However, if you decide to make payments under a systematic investment
or "bank drafting" program, we will accept a lower initial Purchase Payment
provided that, within the first Annuity Year, you make at least $10,000 in total
Purchase Payments.
Where allowed by law, we must approve any initial and additional Purchase
Payments of $1,000,000 or more. We may apply certain limitations and/or
restrictions on the Annuity as a condition of our acceptance, including limiting
the liquidity features or the Death Benefit protection provided under the
Annuity, limiting the right to make additional Purchase Payments, changing the
number of transfers allowable under the Annuity or restricting the Sub-accounts
or Fixed Allocations that are available. Other limitations and/or restrictions
may apply.
Except as noted below, Purchase Payments must be submitted by check drawn
on a U.S. bank, in U.S. dollars, and made payable to American Skandia. Purchase
Payments may also be submitted via 1035 exchange or direct transfer of funds.
Under certain circumstances, Purchase Payments may be transmitted to American
Skandia via wiring funds through your investment professional's broker-dealer
firm. Additional Purchase Payments may also be applied to your Annuity under an
arrangement called "bank drafting" where you authorize us to deduct money
directly from your bank account. We may reject any payment if it is received in
an unacceptable form. Our acceptance of a check is subject to our ability to
collect funds.
AGE RESTRICTIONS: The Owner must be age 75 or under as of the Issue Date
of the Annuity. If the Annuity is owned jointly, the oldest of the Owners must
be age 75 or under on the Issue Date. If the Annuity is owned by an entity, the
Annuitant must be age 75 or under as of the Issue Date. You should consider your
need to access your Account Value and whether the Annuity's liquidity features
will satisfy that need. If you take a distribution prior to age 59 1/2, you may
be subject to a 10% penalty in addition to ordinary income taxes on any gain.
The availability and level of protection of certain optional benefits may vary
based on the age of the Owner on the Issue Date of the Annuity or the date of
the Owner's death.
SPECIAL CONSIDERATIONS FOR PURCHASERS OF BONUS OR CREDIT PRODUCTS
- - This Annuity features an annual Insurance Charge of 0.65% and an annual
Distribution Charge of 1.00%. We only deduct the Distribution Charge
during the first 10 years following the effective date of your Annuity.
During the first 10 years, the total asset-based charges on this Annuity
are higher than many of our other annuities.
- - The CDSC on this Annuity is higher and is deducted for a longer period of
time as compared to our other annuities. As with any investment product
that features a CDSC, you should consider your need to access your account
value during the CDSC period and whether the liquidity provision under the
Annuity will satisfy that need. The CDSC is only deducted if you make a
withdrawal that exceeds the free withdrawal amount or choose to surrender
your Annuity. If you make a withdrawal or surrender your Annuity and are
subject to a CDSC, we do not recover the XTra Credit(SM) amount.
- - The XTra Credit(SM) amount is included in your Account Value. However,
American Skandia may take back any credits applied to your Purchase
Payment if you "free-look" your Annuity or within twelve (12) months of
having received an XTra Credit amount, you die or elect to withdraw your
Account Value under the medically-related surrender provision. In these
situations, your Account Value could be substantially reduced. However,
any investment gain on the XTra Credit(SM) amount will not be recovered.
Additional conditions and restrictions apply. We do not deduct a CDSC in
any situation where we recover the XTra Credit(SM) amount.
OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS: We will ask you to name the
Owner(s), Annuitant and one or more Beneficiaries for your Annuity.
- - Owner: The Owner(s) holds all rights under the Annuity. You may name up to
two Owners in which case all ownership rights are held jointly. Generally,
joint owners are required to act jointly; however, if each owner provides
us with an instruction that we find acceptable, we will permit each owner
to act separately. All information and documents that we are required to
send you will be sent to the first named owner. This Annuity does not
provide a right of survivorship. Refer to the Glossary of Terms for a
complete description of the term "Owner."
- - Annuitant: The Annuitant is the person we agree to make annuity payments
to and upon whose life we continue to make such payments. You must name an
Annuitant who is a natural person. We do not accept a designation of joint
Annuitants during the accumulation period. Where allowed by law, you may
name one or more Contingent Annuitants. A Contingent Annuitant will become
the Annuitant if the Annuitant
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Purchasing Your Annuity continued
dies before the Annuity Date. Please refer to the discussion of
"Considerations for Contingent Annuitants" in the Tax Considerations
section of the Prospectus.
- - Beneficiary: The Beneficiary is the person(s) or entity you name to
receive the death benefit. Your beneficiary designation must be the exact
name of your beneficiary, not only a reference to the beneficiary's
relationship to you. For example, a designation of "surviving spouse"
would not be acceptable. If no beneficiary is named the death benefit will
be paid to you or your estate.
Your right to make certain designations may be limited if your Annuity is
to be used as an IRA or other "qualified" investment that is given beneficial
tax treatment under the Code. You should seek competent tax advice on the
income, estate and gift tax implications of your designations.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Managing Your Annuity
MAY I CHANGE THE OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS?
You may change the Owner, Annuitant and Beneficiary designations by sending us a
request in writing. Upon an ownership change, any automated investment or
withdrawal programs will be canceled. The new owner must submit the applicable
program enrollment if they wish to participate in such a program. Where allowed
by law, such changes will be subject to our acceptance. Some of the changes we
will not accept include, but are not limited to:
- - a new Owner subsequent to the death of the Owner or the first of any joint
Owners to die, except where a spouse-Beneficiary has become the Owner as a
result of an Owner's death;
- - a new Annuitant subsequent to the Annuity Date;
- - for "non-qualified" investments, a new Annuitant prior to the Annuity Date
if the Annuity is owned by an entity; and
- - a change in Beneficiary if the Owner had previously made the designation
irrevocable.
SPOUSAL OWNERS/SPOUSAL BENEFICIARIES
If an Annuity is co-owned by spouses, we will assume that the sole primary
Beneficiary is the surviving spouse that was named as the co-owner unless you
elect an alternative Beneficiary designation. Unless you elect an alternative
Beneficiary designation, upon the death of either spousal Owner, the surviving
spouse may elect to assume ownership of the Annuity instead of taking the Death
Benefit payment. The Death Benefit that would have been payable will be the new
Account Value of the Annuity as of the date of due proof of death and any
required proof of a spousal relationship. As of the date the assumption is
effective, the surviving spouse will have all the rights and benefits that would
be available under the Annuity to a new purchaser of the same attained age. For
purposes of determining any future Death Benefit for the beneficiary of the
surviving spouse, the new Account Value will be considered as the initial
Purchase Payment. No CDSC will apply to the new Account Value. However, any
additional Purchase Payments applied after the date the assumption is effective
will be subject to all provisions of the Annuity, including the CDSC when
applicable.
SPOUSAL CONTINGENT ANNUITANT
If the Annuity is owned by an entity and the surviving spouse is named as a
Contingent Annuitant, upon the death of the Annuitant, the surviving spouse that
was named as the Contingent Annuitant will become the Annuitant. NO DEATH
BENEFIT IS PAYABLE UPON THE DEATH OF THE ANNUITANT. However, the Account Value
of the Annuity as of the date of due proof of death of the Annuitant (and any
required proof of the spousal relationship) will reflect the amount that would
have been payable had a Death Benefit been paid.
MAY I RETURN THE ANNUITY IF I CHANGE MY MIND?
If after purchasing your Annuity you change your mind and decide that you do not
want it, you may return it to us within a certain period of time known as a
right to cancel period. This is often referred to as a "free-look." Depending on
the state in which you purchased your Annuity, and, in some states, if you
purchased the Annuity as a replacement for a prior contract, the right to cancel
period may be ten (10) days, twenty-one (21) days or longer, measured from the
time that you received your Annuity. If you return your Annuity, during the
applicable period, we will refund your current Account Value plus any tax charge
deducted, and depending on your state's requirements, any applicable insurance
charges deducted. The amount returned to you may be higher or lower than the
Purchase Payment(s) applied during the right to cancel period. Where required by
law, we will return your Purchase Payment(s), or the greater of your current
Account Value and the amount of your Purchase Payment(s) applied during the
right to cancel period. If you return your Annuity, we will not return any
Credits we applied to your Annuity based on your Purchase Payments.
MAY I MAKE ADDITIONAL PURCHASE PAYMENTS?
The minimum amount that we accept as an additional Purchase Payment is $100
unless you participate in American Skandia's Systematic Investment Plan or a
periodic purchase payment program. Unless you participate in an asset allocation
program, or unless you have provided us with other specific allocation
instructions for one, more than one, or all subsequent purchase payments, we
will allocate any additional Purchase Payments you make according to your
initial purchase payment allocation instructions. If you so instruct us, we will
allocate subsequent purchase payments according to any new allocation
instructions. Purchase payments made while you participate in an asset
allocation program will be allocated in accordance with such program. Additional
Purchase Payments may be paid at any time before the Annuity Date.
MAY I MAKE SCHEDULED PAYMENTS DIRECTLY FROM MY BANK ACCOUNT?
You can make additional Purchase Payments to your Annuity by authorizing us to
deduct money directly from your bank account and applying it to your Annuity.
This type of program is often called "bank drafting". We call our bank drafting
program "American Skandia's Systematic Investment Plan." Purchase Payments made
through bank drafting may only be allocated to the variable investment options
when applied. Bank drafting allows you to invest in your Annuity with a lower
initial
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Managing Your Annuity continued
Purchase Payment, as long as you authorize payments that will equal at least
$10,000 during the first 12 months of your Annuity. We may suspend or cancel
bank drafting privileges if sufficient funds are not available from the
applicable financial institution on any date that a transaction is scheduled to
occur.
MAY I MAKE PURCHASE PAYMENTS THROUGH A SALARY REDUCTION PROGRAM?
These types of programs are only available with certain types of qualified
investments. If your employer sponsors such a program, we may agree to accept
periodic Purchase Payments through a salary reduction program as long as the
allocations are made only to variable investment options and the periodic
Purchase Payments received in the first year total at least $10,000.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Managing Your Account Value
HOW AND WHEN ARE PURCHASE PAYMENTS INVESTED?
(See "Valuing Your Investment" for a description of our procedure for pricing
initial and subsequent Purchase Payments.)
INITIAL PURCHASE PAYMENT: Once we accept your application, we invest your
net Purchase Payment in the Annuity. The net Purchase Payment is your initial
Purchase Payment minus any tax charges that may apply. On your application we
ask you to provide us with instructions for allocating your Account Value. You
can allocate Account Value to one or more variable investment options or Fixed
Allocations.
SUBSEQUENT PURCHASE PAYMENTS: Unless you participate in an asset
allocation program, or unless you have provided us with other specific
allocation instructions for one, more than one, or all subsequent purchase
payments, we will allocate any additional Purchase Payments you make according
to your initial purchase payment allocation instructions. If you so instruct us,
we will allocate subsequent purchase payments according to any new allocation
instructions. Purchase payments made while you participate in an asset
allocation program will be allocated in accordance with such program.
HOW DO I RECEIVE CREDITS?
We apply a "Credit" to your Annuity's Account Value each time you make a
Purchase Payment during the first six (6) Annuity Years. The amount of the
Credit is payable from our general account. The amount of the Credit depends on
the Annuity Year in which the Purchase Payment(s) is made, according to the
table below:
ANNUITY YEAR CREDIT
1 6.00%
2 5.00%
3 4.00%
4 3.00%
5 2.00%
6 1.00%
7+ 0.00%
CREDITS APPLIED TO PURCHASE PAYMENTS FOR DESIGNATED CLASS OF ANNUITY OWNER
Prior to May 1, 2004, where allowed by state law, Annuities could be purchased
by a member of the class defined below, with a different table of Credits. The
Credit applied to all Purchase Payments on such Annuities is as follows based on
the Annuity Year in which the Purchase Payment was made: Year 1 -- 9.0%; Year 2
- -- 9.0%; Year 3 -- 8.5%; Year 4 -- 8.0%; Year 5 -- 7.0%; Year 6 -- 6.0%; Year 7
- -- 5.0%; Year 8 -- 4.0%; Year 9 -- 3.0%; Year 10 -- 2%; Year 11+ -- 0.0%.
The designated class of Annuity Owners included: (a) any parent company,
affiliate or subsidiary of ours; (b) an officer, director, employee, retiree,
sales representative, or in the case of an affiliated broker-dealer, registered
representative of such company; (c) a director, officer or trustee of any
underlying mutual fund; (d) a director, officer or employee of any investment
manager, sub-advisor, transfer agent, custodian, auditing, legal or
administrative services provider that is providing investment management,
advisory, transfer agency, custodianship, auditing, legal and/or administrative
services to an underlying mutual fund or any affiliate of such firm; (e) a
director, officer, employee or registered representative of a broker-dealer or
insurance agency that has a then current selling agreement with us and/or with
American Skandia Marketing, Incorporated, a Prudential Financial Company; (f) a
director, officer, employee or authorized representative of any firm providing
us or our affiliates with regular legal, actuarial, auditing, underwriting,
claims, administrative, computer support, marketing, office or other services;
(g) the then current spouse of any such person noted in (b) through (f), above;
(h) the parents of any such person noted in (b) through (g), above; (i) the
child(ren) or other legal dependent under the age of 21 of any such person noted
in (b) through (h); and (j) the siblings of any such persons noted in (b)
through (h) above.
All other terms and conditions of the Annuity apply to Owners in the
designated class.
HOW ARE CREDITS APPLIED TO MY ACCOUNT VALUE?
Each Credit is allocated to your Account Value at the time the Purchase Payment
is applied to your Account Value. The amount of the Credit is allocated to the
investment options in the same ratio as the applicable Purchase Payment is
applied.
EXAMPLES OF APPLYING CREDITS
INITIAL PURCHASE PAYMENT
Assume you make an initial Purchase Payment of $10,000. We would apply a 6.0%
Credit to your Purchase Payment and allocate the amount of the Credit ($600 =
$10,000 x .06) to your Account Value in the proportion that your Account Value
is allocated.
ADDITIONAL PURCHASE PAYMENT IN ANNUITY YEAR 2
Assume that you make an additional Purchase Payment of $5,000. We would apply a
5.0% Credit to your Purchase
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Managing Your Account Value continued
Payment and allocate the amount of the Credit ($250 = $5,000 x .05) to your
Account Value.
ADDITIONAL PURCHASE PAYMENT IN ANNUITY YEAR 6
Assume that you make an additional Purchase Payment of $15,000. We would apply a
1.0% Credit to your Purchase Payment and allocate the amount of the Credit ($150
= $15,000 x .01) to your Account Value.
The amount of any Credits applied to your Account Value can be recovered by
American Skandia under certain circumstances:
- - any Credits applied to your Account Value on Purchase Payments made within
the 12 months before the date of death will be recovered;
- - the amount available under the medically-related surrender portion of the
Annuity will not include the amount of any Credits payable on Purchase
Payments made within 12 months of the date the Annuitant first became
eligible for the medically-related surrender; and
- - if you elect to "free-look" your Annuity, the amount returned to you will
not include the amount of any Credits.
The Account Value may be substantially reduced if American Skandia
recovers the XTra Credit(SM) amount under these circumstances. However, any
investment gain on the XTra Credit(SM) amount will not be taken back. We do not
deduct a CDSC in any situation where we recover the XTra Credit(SM) amount.
During the first 10 Annuity Years, the total asset-based charges on this Annuity
(including the Insurance Charge and the Distribution Charge) are higher than
many of our other annuities, including other annuities we offer that apply
credits to purchase payments.
EXAMPLES OF RECOVERING CREDITS
The following are hypothetical examples of how Credits could be recovered by
American Skandia. These examples do not cover every potential situation.
RECOVERY FROM PAYMENT OF DEATH BENEFITS
1. Assume you purchase your Annuity with an initial Purchase Payment of
$50,000. You make an additional Purchase of $10,000 in the 6th month after
the Issue Date. Both of the Purchase Payments received a 6.0% Credit, for
a total of $3,600. If the Death Benefit becomes payable in the 9th month
after the Issue Date, the amount of the Death Benefit would be reduced by
the entire amount of the prior Credits ($3,600).
2. Assume you purchase your Annuity with an initial Purchase Payment of
$50,000. You make an additional Purchase of $10,000 in the 6th month after
the Issue Date. Both of the Purchase Payments received a 6.0% Credit, for
a total of $3,600. If death occurs in the 16th month after the Issue Date,
the amount of the Death Benefit would be reduced but only in the amount of
those Credits applied within the previous 12-months. Since the initial
Purchase Payment (and the Credits that were applied) occurred more than
12-months before the date of death, the Death Benefit would not be reduced
by the amount of the Credits applied to the initial Purchase Payment.
However, the $10,000 additional Purchase Payment was made within 12-months
of the date of death. Therefore, the amount of the Death Benefit would be
reduced by the amount of the Credits payable on the additional Purchase
Payment ($600).
3. NOTE: If the Death Benefit would otherwise have been equal to the Purchase
Payments minus any proportional withdrawals due to poor investment
performance, we will not reduce the amount of the Death Benefit by the
amount of the Credits as shown in Example 2 above.
RECOVERY FROM MEDICALLY-RELATED SURRENDERS
1. Assume you purchase your Annuity with an initial Purchase Payment of
$50,000. You receive a Credit of $3,000 ($50,000 x .06). The Annuitant is
diagnosed as terminally ill in the 6th month after the Issue Date and we
grant your request to surrender your Annuity under the medically-related
surrender provision. Assuming the Credits were applied within 12-months of
the date of diagnosis of the terminal illness, the amount that would be
payable under the medically-related surrender provision would be reduced
by the entire amount of the Credits ($3,000).
2. Assume you purchase your Annuity with an initial Purchase Payment of
$50,000. You make an additional Purchase of $10,000 in the 6th month after
the Issue Date. Both of the Purchase Payments received a 6.0% Credit, for
a total of $3,600. The Annuitant is diagnosed as terminally ill in the
16th month after the Issue Date and we grant your request to surrender
your Annuity under the medically-related surrender provision. Since the
initial Purchase Payment (and the Credits that were applied) occurred more
than 12-months before the diagnosis, the amount that would be payable upon
the medically-related surrender provision
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
would not be reduced by the amount of the Credits applied to the initial
Purchase Payment. However, the $10,000 additional Purchase Payment was
made within 12-months of the date of diagnosis. Therefore, the amount that
would be payable under the medically-related surrender provision would be
reduced by the amount of the Credits payable on the additional Purchase
Payment ($600).
General Information about Credits
- - We do not consider Credits to be "investment in the contract" for income
tax purposes.
- - You may not withdraw the amount of any Credits under the Free Withdrawal
provision. The Free Withdrawal provision only applies to withdrawals of
Purchase Payments.
ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?
During the accumulation period you may transfer Account Value between investment
options. Transfers are not subject to taxation on any gain. We may require a
minimum of $500 in each Sub-account you allocate Account Value to at the time of
any allocation or transfer. If you request a transfer and, as a result of the
transfer, there would be less than $500 in the Sub-account, we may transfer the
remaining Account Value in the Sub-account pro rata to the other investment
options to which you transferred.
We may impose specific restrictions on financial transactions (including
transfer requests) for certain Portfolios based on the Portfolio's investment
and/or transfer restrictions. We may do so to conform to any present or future
restriction that is imposed by any portfolio available under this Annuity.
Currently, any purchase, redemption or transfer involving the ProFunds VP
Sub-accounts must be received by us no later than one hour prior to any
announced closing of the applicable securities exchange (generally, 3:00 p.m.
Eastern time) to be processed on the current Valuation Day. The "cut-off" time
for such financial transactions involving a ProFunds VP Sub-account will be
extended to 1/2 hour prior to any announced closing (generally, 3:30 p.m.
Eastern time) for transactions submitted electronically through American
Skandia's Internet website (www.americanskandia.prudential.com).
Currently, we charge $10.00 for each transfer after the twentieth (20th)
in each Annuity Year. Transfers made as part of a dollar cost averaging,
automatic rebalancing, or asset allocation program do not count toward the
twenty free transfer limit. Renewals or transfers of Account Value from a Fixed
Allocation at the end of its Guarantee Period are not subject to the transfer
charge. We may reduce the number of free transfers allowable each Annuity Year
(subject to a minimum of eight) without charging a Transfer Fee unless you make
use of electronic means to transmit your transfer requests. We may also increase
the Transfer Fee that we charge to $15.00 for each transfer after the number of
free transfers has been used up. We may eliminate the Transfer Fee for transfer
requests transmitted electronically or through other means that reduce our
processing costs. If enrolled in any program that does not permit transfer
requests to be transmitted electronically, the Transfer Fee will not be waived.
Once you have made 20 transfers among the Sub-accounts during an Annuity
Year, we will accept any additional transfer request during that year only if
the request is submitted to us in writing with an original signature and
otherwise is in good order. For purposes of this 20 transfer limit, we (i) do
not view a facsimile transmission as a "writing", (ii) will treat multiple
transfer requests submitted on the same business day as a single transfer, and
(iii) do not count any transfer that solely involves Sub-accounts corresponding
to any ProFund Portfolio and/or the AST Money Market Portfolio, or any transfer
that involves one of our systematic programs, such as asset allocation and
automated withdrawals.
Frequent transfers among Sub-accounts in response to short-term
fluctuations in markets, sometimes called "market timing," can make it very
difficult for a Portfolio manager to manage a Portfolio's investments. Frequent
transfers may cause the Portfolio to hold more cash than otherwise necessary,
disrupt management strategies, increase transaction costs, or affect
performance. The Annuity offers Sub-accounts designed for Owners who wish to
engage in frequent transfers (i.e., one or more of the Sub-accounts
corresponding to the ProFund Portfolios and the AST Money Market Portfolio), and
we encourage Owners seeking frequent transfers to utilize those Sub-accounts.
In light of the risks posed to Owners and other investors by frequent
transfers, we reserve the right to limit the number of transfers in any Annuity
Year for all existing or new Owners and to take the other actions discussed
below. 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
37
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Managing Your Account Value continued
Owners if: (a) we believe that excessive transfer activity (as we define it) or
a specific transfer request or group of transfer requests may have a detrimental
effect on Unit Values or the share prices of the Portfolios; or (b) we are
informed by a Portfolio (e.g., by the Portfolio's portfolio manager) that the
purchase or redemption of shares in the Portfolio must be restricted because the
Portfolio believes the transfer activity to which such purchase and redemption
relates would have a detrimental effect on the share prices of the affected
Portfolio. Without limiting the above, the most likely scenario where either of
the above could occur would be if the aggregate amount of a trade or trades
represented a relatively large proportion of the total assets of a particular
Portfolio. In furtherance of our general authority to restrict transfers as
described above, and without limiting other actions we may take in the future,
we have adopted the following specific restrictions:
- - With respect to each Sub-account (other than the AST Money Market
Sub-account, or a Sub-account corresponding to a ProFund Portfolio), we
track amounts exceeding a certain dollar threshold that were transferred
into the Sub-account. If you transfer such amount into a particular
Sub-account, and within 30 calendar days thereafter transfer (the
"Transfer Out") all or a portion of that amount into another Sub-account,
then upon the Transfer Out, the former Sub-account becomes restricted (the
"Restricted Sub-account"). Specifically, we will not permit subsequent
transfers into the Restricted Sub-account for 90 calendar days after the
Transfer Out if the Restricted Sub-account invests in a non-international
Portfolio, or 180 calendar days after the Transfer Out if the Restricted
Sub-account invests in an international Portfolio. For purposes of this
rule, we (i) do not count transfers made in connection with one of our
systematic programs, such as asset allocation and automated withdrawals
(ii) do not count any transfer that solely involves Sub-accounts
corresponding to any ProFund Portfolio and/or the AST Money Market
Portfolio; and (iii) do not categorize as a transfer the first transfer
that you make after the Issue Date, if you make that transfer within 30
calendar days after the Issue Date. Even if an amount becomes restricted
under the foregoing rules, you are still free to redeem the amount from
your Annuity at any time.
- - We reserve the right to effect exchanges on a delayed basis for all
contracts. That is, we may price an exchange involving the Sub-accounts on
the business day subsequent to the Valuation Day on which the exchange
request was received. Before implementing such a practice, we would issue
a separate written notice to Owners that explains the practice in detail.
- - If we deny one or more transfer requests under the foregoing rules, we
will inform you or your investment professional promptly of the
circumstances concerning the denial.
- - Contract owners in New York who purchased their contracts prior to March
15, 2004 are not subject to the specific restrictions outlined in bulleted
paragraphs immediately above. In addition, there are contract owners of
different variable annuity contracts that are funded through the same
Separate Account that are not subject to the above-referenced transfer
restrictions and, therefore, might make more numerous and frequent
transfers than contract owners who are subject to such limitations.
Finally, there are contract owners of other variable annuity contracts or
variable life contracts that are issued by American Skandia as well as
other insurance companies that have the same underlying mutual fund
portfolios available to them. Since some contract owners are not subject
to the same transfer restrictions, unfavorable consequences associated
with such frequent trading within the underlying mutual fund (e.g.,
greater portfolio turnover, higher transaction costs, or performance or
tax issues) may affect all contract owners. Similarly, while contracts
managed by an investment professional or third party investment advisor
are subject to the restrictions on transfers between investment options
that are discussed above, if the advisor manages a number of contracts in
the same fashion unfavorable consequences may be associated with
management activity since it may involve the movement of a substantial
portion of an underlying mutual fund's assets which may affect all
contract owners invested in the affected options. Apart from
jurisdiction-specific and contract differences in transfer restrictions,
we will apply these rules uniformly (including contracts managed by an
investment professional or third party investment advisor), and will not
waive a transfer restriction for any contract owner.
ALTHOUGH OUR TRANSFER RESTRICTIONS ARE DESIGNED TO PREVENT EXCESSIVE
TRANSFERS, THEY ARE NOT CAPABLE OF PREVENTING EVERY POTENTIAL OCCURRENCE OF
EXCESSIVE TRANSFER ACTIVITY.
DO YOU OFFER DOLLAR COST AVERAGING?
Yes. We offer Dollar Cost Averaging during the accumulation period. Dollar Cost
Averaging allows you to systematically
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
transfer an amount periodically from one investment option to one or more other
investment options. You can choose to transfer earnings only, principal plus
earnings or a flat dollar amount. You may elect a Dollar Cost Averaging program
that transfers amounts monthly, quarterly, semi-annually, or annually from
variable investment options, or a program that transfers amounts monthly from
Fixed Allocations. By investing amounts on a regular basis instead of investing
the total amount at one time, Dollar Cost Averaging may decrease the effect of
market fluctuation on the investment of your purchase payment. This may result
in a lower average cost of units over time. However, there is no guarantee that
Dollar Cost Averaging will result in a profit or protect against a loss in a
declining market. There is no minimum Account Value required to enroll in a
Dollar Cost Averaging program and we do not deduct a charge for participating in
a Dollar Cost Averaging program.
You can Dollar Cost Average from variable investment options or Fixed
Allocations. Dollar Cost Averaging from Fixed Allocations is subject to a number
of rules that include, but are not limited to the following:
- - You may only use Fixed Allocations with Guarantee Periods of 1, 2 or 3
years.
- - You may only Dollar Cost Average earnings or principal plus earnings. If
transferring principal plus earnings, the program must be designed to last
the entire Guarantee Period for the Fixed Allocation.
- - Dollar Cost Averaging transfers from Fixed Allocations are not subject to
a Market Value Adjustment.
NOTE: When a Dollar Cost Averaging program is established from a Fixed
Allocation, the fixed rate of interest we credit to your Account Value is
applied to a declining balance due to the transfers of Account Value to the
Sub-accounts during the Guarantee Period. This will reduce the effective rate of
return on the Fixed Allocation over the Guarantee Period.
Dollar Cost Averaging program is not available if you elect the Guaranteed
Return Option Plus(SM), the Guaranteed Return Option or the automatic
rebalancing programs when it involves transfers out of the Fixed Allocations and
is also not available when you have elected an asset allocation program.
DO YOU OFFER ANY AUTOMATIC REBALANCING PROGRAMS?
Yes. During the accumulation period, we offer automatic rebalancing among the
variable investment options you choose. You can choose to have your Account
Value rebalanced monthly, quarterly, semi-annually, or annually. On the
appropriate date, the variable investment options you chose are rebalanced to
the allocation percentages you requested. With automatic rebalancing, we
transfer the appropriate amount from the "overweighted" Sub-accounts to the
"underweighted" Sub-accounts to return your allocations to the percentages you
request. For example, over time the performance of the variable investment
options will differ, causing your percentage allocations to shift. Any transfer
to or from any variable investment option that is not part of your automatic
rebalancing program, will be made, however that variable investment option will
not become part of your rebalancing program unless we receive instructions from
you indicating that you would like such option to become part of the program.
There is no minimum Account Value required to enroll in automatic
rebalancing. All rebalancing transfers as part of an automatic rebalancing
program are not included when counting the number of transfers each year toward
the maximum number of free transfers. We do not deduct a charge for
participating in an automatic rebalancing program. Participation in the
Automatic Rebalancing program may be restricted if you are enrolled in certain
other optional programs.
ARE ANY ASSET ALLOCATION
PROGRAMS AVAILABLE?
Yes. Certain "static asset allocation programs" are available for use with the
Annuity. These programs are considered static because once you have selected a
model portfolio, the Sub-accounts and the percentage of contract value allocated
to each Sub-account cannot be changed without your consent. The programs are
available at no additional charge. Under these programs, the Sub-account for
each asset class in each model portfolio is designated for you. Under the
programs, the values in the Sub-accounts will be rebalanced periodically back to
the indicated percentages for the applicable asset class within the model
portfolio that you have selected. For more information on the asset allocation
programs see the Appendix entitled "Additional Information on the Asset
Allocation Programs".
Asset allocation is a sophisticated method of diversification, which
allocates assets among asset classes in order to manage investment risk and
enhance returns over the long term. However, asset allocation does not guarantee
a profit or protect against a loss. No personalized investment advice is
provided in connection with the asset allocation programs and you should not
rely on these programs as providing individualized investment recommendations to
you. The asset allocation programs do not guarantee better investment results.
We
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Managing Your Account Value continued
reserve the right to terminate or change the asset allocation programs at any
time. You should consult with your Investment Professional before electing any
asset allocation program.
DO YOU OFFER PROGRAMS DESIGNED TO GUARANTEE A "RETURN OF PREMIUM" AT A FUTURE
DATE?
Yes. We offer two different programs for investors who wish to invest in the
variable investment options but also wish to protect their principal, as of a
specific date in the future. They are the Balanced Investment Program and the
Guaranteed Return Option Plus(SM). (The Guaranteed Return Option Plus (GRO
Plus(SM)) is not available in all states. In some states where GRO Plus is not
available we offer the Guaranteed Return Option (GRO)). Both the Balanced
Investment Program and GRO Plus allow you to allocate a portion of your Account
Value to the available variable investment options while ensuring that your
Account Value will at least equal your contributions adjusted for withdrawals
and transfers on a specified date. Under GRO Plus, Account Value is allocated to
and maintained in Fixed Allocations to the extent we, in our sole discretion,
deem it is necessary to support our guarantee under the program. This differs
from the Balanced Investment Program where a set amount is allocated to a Fixed
Allocation regardless of the performance of the underlying Sub-accounts or the
interest rate environment after the amount is allocated to a Fixed Allocation.
Generally, more of your Account Value will be allocated to the variable
investment options under the GRO Plus program than under the Balanced Investment
Program (although in periods of poor market performance, low interest rates
and/or as the option progresses to its maturity date, this may not be the case).
You may not want to use either of these programs if you expect to begin taking
annuity payments before the program would be completed. In addition, as with
most return of premium programs, amounts that are available to allocate to the
variable investment options may be substantially less than they would be if you
did not elect a return of premium program. This means that, if investment
experience in the variable investment options were positive, your Account Value
would grow at a slower rate than if you did not elect a return of premium
program and allocated all of your Account Value to the variable investment
options.
Balanced Investment Program
We offer a balanced investment program where a portion of your Account Value is
allocated to a Fixed Allocation and the remaining Account Value is allocated to
the variable investment options that you select. When you enroll in the Balanced
Investment Program, you choose the duration that you wish the program to last.
This determines the duration of the Guarantee Period for the Fixed Allocation.
Based on the fixed rate for the Guarantee Period chosen, we calculate the
portion of your Account Value that must be allocated to the Fixed Allocation to
grow to a specific "principal amount" (such as your initial Purchase Payment).
We determine the amount based on the rates then in effect for the Guarantee
Period you choose. If you continue the program until the end of the Guarantee
Period and make no withdrawals or transfers, at the end of the Guarantee Period,
the Fixed Allocation will have grown to equal the "principal amount".
Withdrawals or transfers from the Fixed Allocation before the end of the
Guarantee Period will terminate the program and may be subject to a Market Value
Adjustment. You can transfer the Account Value that is not allocated to the
Fixed Allocation between any of the Sub-accounts available under the Annuity.
Account Value you allocate to the variable investment options is subject to
market fluctuations and may increase or decrease in value. We do not deduct a
charge for participating in the Balanced Investment Program.
EXAMPLE
Assume you invest $100,000. You choose a 10-year program and allocate a
portion of your Account Value to a Fixed Allocation with a 10-year
Guarantee Period. The rate for the 10-year Guarantee Period is 2.50%*.
Based on the fixed interest rate for the Guarantee Period chosen, the
factor is 0.781198 for determining how much of your Account Value will be
allocated to the Fixed Allocation. That means that $78,120 will be
allocated to the Fixed Allocation and the remaining Account Value
($21,880) will be allocated to the variable investment options. Assuming
that you do not make any withdrawals or transfers from the Fixed
Allocation, it will grow to $100,000 at the end of the Guarantee Period.
Of course we cannot predict the value of the remaining Account Value that
was allocated to the variable investment options.
* The rate in this example is hypothetical and may not reflect the current rate
for Guarantee Periods of this duration.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
The Guaranteed Return Option Plus (GRO Plus) guaran- tees that, after a
seven-year period following commencement of the program ("maturity date") and on
each anniversary of the maturity date thereafter, your Account Value will not be
less than the Account Value on the effective date of the program. The program
also offers you the option to elect a second, enhanced guarantee amount at a
higher Account Value subject to a separate maturity period (and its
anniversaries). The GRO Plus program may be appropriate if you wish to protect a
principal amount (called the "Protected Principal Value") against market
downturns as of a specific date in the future, but also wish to exercise control
of your available Account Value among the variable investment options to
participate in market experience. Under the GRO Plus program, you give us the
right to allocate amounts to Fixed Allocations as needed to support the
guarantees provided. The available Account Value is the amount not allocated to
the Fixed Allocations to support the guarantees provided. There is a fee
associated with this program. See "Living Benefit Programs," later in this
Prospectus, for more information about this program.
MAY I GIVE MY INVESTMENT PROFESSIONAL PERMISSION TO MANAGE MY ACCOUNT VALUE?
Yes. If you agree (or generally, for annuities issued prior to May 1, 2005,
unless you told us otherwise), your Investment Professional may direct the
allocation of your Account Value and request financial transactions between
investment options while you are living, subject to our rules, and unless you
tell us otherwise. IF YOUR INVESTMENT PROFESSIONAL HAS THIS AUTHORITY, WE DEEM
THAT ALL TRANSACTIONS THAT ARE DIRECTED BY YOUR INVESTMENT PROFESSIONAL WITH
RESPECT TO YOUR ANNUITY HAVE BEEN AUTHORIZED BY YOU. You must contact us
immediately if and when you revoke such authority. We will not be responsible
for acting on instructions from your Investment Professional until we receive
notification of the revocation of such person's authority. We may also suspend,
cancel or limit these privileges at any time. We will notify you if we do.
MAY I AUTHORIZE MY THIRD PARTY INVESTMENT ADVISOR TO MANAGE MY ACCOUNT?
Yes. You may engage your own investment advisor to manage your account. These
investment advisors may be firms or persons who also are appointed by us, or
whose affiliated broker-dealers are appointed by us, as authorized sellers of
the Annuity. Even if this is the case, however, please note that the investment
advisor you engage to provide advice and/or make transfers for you, is not
acting on our behalf, but rather is acting on your behalf. We do not offer
advice about how to allocate your Account Value under any circumstance. As such,
we are not responsible for any recommendations such investment advisors make,
any investment models or asset allocation programs they choose to follow or any
specific transfers they make on your behalf.
Any fee that is charged by your investment advisor is in addition to the
fees and expenses that apply under your Annuity. If you authorize your
investment advisor to withdraw amounts from your Annuity (to the extent
permitted) to pay for the investment advisor's fee, as with any other withdrawal
from your Annuity, you may incur adverse tax consequences, a CDSC and/or a
Market Value Adjustment. Withdrawals to pay your investment advisor generally
will also reduce the level of various living and death benefit guarantees
provided (e.g. the withdrawals will reduce proportionately the Annuity's
guaranteed minimum death benefit.) WE ARE NOT A PARTY TO THE AGREEMENT YOU HAVE
WITH YOUR INVESTMENT ADVISOR AND DO NOT VERIFY THAT AMOUNTS WITHDRAWN FROM YOUR
ANNUITY, INCLUDING AMOUNTS WITHDRAWN TO PAY FOR THE INVESTMENT ADVISOR'S FEE,
ARE WITHIN THE TERMS OF YOUR AGREEMENT WITH YOUR INVESTMENT ADVISOR. You will,
however, receive confirmations of transactions that affect your Annuity. If your
investment advisor has also acted as your Investment Professional with respect
to the sale of your Annuity, he or she may be receiving compensation for
services provided both as an Investment Professional and investment advisor.
Alternatively, the investment advisor may compensate the Investment Professional
from whom you purchased your Annuity for the referral that led you to enter into
your investment advisory relationship with the investment advisor. If you are
interested in the details about the compensation that your investment advisor
and/or your Investment Professional receive in connection with your Annuity, you
should ask them for more details.
We or an affiliate of ours may provide administrative support to licensed,
registered Investment Professionals or investment advisors who you authorize to
make financial transactions on your behalf. We may require Investment
Professionals or investment advisors, who are authorized by multiple contract
owners to make financial transactions, to enter into an administrative agreement
with American Skandia as a condition of our accepting transactions on your
behalf. The administrative agreement may impose limitations on the investment
professional's or investment advisor's ability to request financial
41
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Managing Your Account Value continued
transactions on your behalf. These limitations are intended to minimize the
detrimental impact of an investment professional who is in a position to
transfer large amounts of money for multiple clients in a particular Portfolio
or type of portfolio or to comply with specific restrictions or limitations
imposed by a Portfolio(s) on American Skandia. Contracts managed by your
investment professional also are subject to the restrictions on transfers
between investment options that are discussed in the section entitled "ARE THERE
RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?". Since
transfer activity under contracts managed by an investment professional or third
party investment advisor may result in unfavorable consequences to all contract
owners invested in the affected options we reserve the right to limit the
investment options available to a particular Owner whose contract is managed by
the advisor or impose other transfer restrictions we deem necessary. The
administrative agreement may limit the available investment options, require
advance notice of large transactions, or impose other trading limitations on
your investment professional. Your investment professional will be informed of
all such restrictions on an ongoing basis. We may also require that your
investment professional transmit all financial transactions using the electronic
trading functionality available through our Internet website
(www.americanskandia.prudential.com). LIMITATIONS THAT WE MAY IMPOSE ON YOUR
INVESTMENT PROFESSIONAL OR INVESTMENT ADVISOR UNDER THE TERMS OF THE
ADMINISTRATIVE AGREEMENT DO NOT APPLY TO FINANCIAL TRANSACTIONS REQUESTED BY AN
OWNER ON THEIR OWN BEHALF, EXCEPT AS OTHERWISE DESCRIBED IN THIS PROSPECTUS.
HOW DO THE FIXED ALLOCATIONS WORK?
We credit the fixed interest rate to the Fixed Allocation throughout a set
period of time called a "Guarantee Period." Fixed Allocations currently are
offered with Guarantee Periods from 1 to 10 years. We may make Fixed Allocations
of different durations available in the future including Fixed Allocations
offered exclusively for use with certain optional investment programs. Fixed
Allocations may not be available in all states and may not always be available
for all Guarantee Periods depending on market factors and other considerations.
The interest rate credited to a Fixed Allocation is the rate in effect
when the Guarantee Period begins and does not change during the Guarantee
Period. The rates are an effective annual rate of interest. We determine the
interest rates for the various Guarantee Periods. At the time that we confirm
your Fixed Allocation, we will advise you of the interest rate in effect and the
date your Fixed Allocation matures. We may change the rates we credit new Fixed
Allocations at any time. Any change in interest rate does not affect Fixed
Allocations that were in effect before the date of the change. To inquire as to
the current rates for Fixed Allocations, please call 1-800-752-6342.
A Guarantee Period for a Fixed Allocation begins:
- - when all or part of a net Purchase Payment is allocated to that particular
Guarantee Period;
- - upon transfer of any of your Account Value to a Fixed Allocation for that
particular Guarantee Period; or
- - when you "renew" a Fixed Allocation by electing a new Guarantee Period.
To the extent permitted by law, we may establish different interest rates for
Fixed Allocations offered to a class of Owners who choose to participate in
various optional investment programs we make available. This may include, but is
not limited to, Owners who elect to use Fixed Allocations under a dollar cost
averaging program (see "Do You Offer Dollar Cost Averaging?") or a balanced
investment program (see "Do you offer programs designed to guarantee a "Return
of Premium" at a future date?"). The interest rate credited to Fixed Allocations
offered to this class of purchasers may be different than those offered to other
purchasers who choose the same Guarantee Period but who do not participate in an
optional investment program. Any such program is at our sole discretion.
American Skandia may offer Fixed Allocations with Guarantee Periods of 3 months
or 6 months exclusively for use as a short-term Fixed Allocation ("Short-term
Fixed Allocations"). Short-term Fixed Allocations may only be established with
your initial Purchase Payment or additional Purchase Payments. You may not
transfer existing Account Value to a Short-term Fixed Allocation. We reserve the
right to terminate offering these special purpose Fixed Allocations at any time.
On the Maturity Date of the Short-term Fixed Allocation, the Account Value
will be transferred to the Sub-account(s) you choose at the inception of the
program. If no instructions are provided, such Account Value will be transferred
to the AST Money Market Sub-account. Short-term Fixed Allocations may not be
renewed on the Maturity Date. If you surrender the
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Annuity or transfer any Account Value from the Short-term Fixed Allocation to
any other investment option before the end of the Guarantee Period, a Market
Value Adjustment will apply.
HOW DO YOU DETERMINE RATES FOR FIXED ALLOCATIONS?
We do not have a specific formula for determining the fixed interest rates for
Fixed Allocations. Generally the interest rates we offer for Fixed Allocations
will reflect the investment returns available on the types of investments we
make to support our fixed rate guarantees. These investment types may include
cash, debt securities guaranteed by the United States government and its
agencies and instrumentalities, money market instruments, corporate debt
obligations of different durations, private placements, asset-backed obligations
and municipal bonds. In determining rates we also consider factors such as the
length of the Guarantee Period for the Fixed Allocation, regulatory and tax
requirements, liquidity of the markets for the type of investments we make,
commissions, administrative and investment expenses, our insurance risks in
relation to the Fixed Allocations, general economic trends and competition. Some
of these considerations are similar to those we consider in determining the
Insurance Charge that we deduct from Account Value allocated to the
Sub-accounts. We will credit interest on a new Fixed Allocation in an existing
Annuity at a rate not less than the rate we are then crediting to Fixed
Allocations for the same Guarantee Period selected by new Annuity purchasers in
the same class.
The interest rate we credit for a Fixed Allocation is subject to a
minimum. Please refer to the Statement of Additional Information. In certain
states the interest rate may be subject to a minimum under state law or
regulation.
HOW DOES THE MARKET VALUE ADJUSTMENT WORK?
If you transfer or withdraw Account Value from a Fixed Allocation more than 30
days before the end of its Guarantee Period, we will adjust the value of your
investment based on a formula, called a "Market Value Adjustment" or "MVA". The
amount of any Market Value Adjustment can be either positive or negative,
depending on the movement of a combination of Strip Yields on Strips and an
Option-adjusted Spread (each as defined below) between the time that you
purchase the Fixed Allocation and the time you make a transfer or withdrawal.
The Market Value Adjustment formula compares the combination of Strip Yields for
Strips and the Option-adjusted Spreads as of the date the Guarantee Period began
with the combination of Strip Yields for Strips and the Option-adjusted Spreads
as of the date the MVA is being calculated. In certain states the amount of any
Market Value Adjustment may be limited under state law or regulation. If your
Annuity is governed by the laws of that state, any Market Value Adjustment that
applies will be subject to our rules for complying with such law or regulation.
- - "Strips" are a form of security where ownership of the interest portion of
United States Treasury securities are separated from ownership of the
underlying principal amount or corpus.
- - "Strip Yields" are the yields payable on coupon Strips of United States
Treasury securities.
- - "Option-adjusted Spread" is the difference between the yields on corporate
debt securities (adjusted to disregard options on such securities) and
government debt securities of comparable duration. We currently use the
Merrill Lynch 1 to 10 year Investment Grade Corporate Bond Index of
Option-adjusted Spreads.
MVA FORMULA
The MVA formula is applied separately to each Fixed Allocation to determine the
Account Value of the Fixed Allocation on a particular date. The formula is as
follows:
[(1+I) / (1+J+0.0010)](N/365)
where:
I is the Strip Yield as of the start date of the Guarantee Period for
coupon Strips maturing at the end of the applicable Guarantee Period plus
the Option-adjusted Spread. If there are no Strips maturing at that time,
we will 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 being applied for
coupon Strips maturing at the end of the applicable Guarantee Period plus
the Option-adjusted Spread. If there are no Strips maturing at that time,
we will 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 the original Guarantee Period.
If you surrender your Annuity under the right to cancel provision, the MVA
formula is
[(1 + I)/(1 + J)](N/365).
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Managing Your Account Value continued
MVA Examples
The following hypothetical examples show the effect of the MVA in determining
Account Value. Assume the following:
- - You allocate $50,000 into a Fixed Allocation (we refer to this as the
"Allocation Date" in these examples) with a Guarantee Period of 5 years
(we refer to this as the "Maturity Date" in these examples).
- - The Strip Yields for coupon Strips beginning on the Allocation Date and
maturing on the Maturity Date plus the Option-adjusted Spread is 5.50% (I
= 5.50%).
- - You make no withdrawals or transfers until you decide to withdraw the
entire Fixed Allocation after exactly three (3) years, at which point 730
days remain before the Maturity Date (N = 730).
EXAMPLE OF POSITIVE MVA
Assume that at the time you request the withdrawal, the Strip Yields for Strips
maturing on the Maturity Date plus the Option-adjusted Spread is 4.00% (J =
4.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0010)]N/365 =
[1.055/1.041]2 = 1.027078
Interim Value = $57,881.25
Account Value after MVA = Interim Value x MVA
Factor = $59,448.56
Example of Negative MVA
Assume that at the time you request the withdrawal, the Strip Yields for Strips
maturing on the Maturity Date plus the Option-adjusted Spread is 7.00% (J =
7.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0010)]N/365 =
[1.055/1.071)]2 = 0.970345
Interim Value = $57,881.25
Account Value after MVA = Interim Value x MVA
Factor = $56,164.78.
WHAT HAPPENS WHEN MY GUARANTEE PERIOD MATURES?
The "Maturity Date" for a Fixed Allocation is the last day of the Guarantee
Period. Before the Maturity Date, you may choose to renew the Fixed Allocation
for a new Guarantee Period of the same or different length or you may transfer
all or part of that Fixed Allocation's Account Value to another Fixed Allocation
or to one or more Sub-accounts. We will notify you before the end of the
Guarantee Period about the fixed interest rates that we are currently crediting
to all Fixed Allocations that are being offered. The rates being credited to
Fixed Allocations may change before the Maturity Date. We will not charge a MVA
if you choose to renew a Fixed Allocation on its Maturity Date or transfer the
Account Value to one or more variable investment options.
IF YOU DO NOT SPECIFY HOW YOU WANT A FIXED ALLOCATION TO BE ALLOCATED ON
ITS MATURITY DATE, WE WILL THEN TRANSFER THE ACCOUNT VALUE OF THE FIXED
ALLOCATION TO THE AST MONEY MARKET SUB-ACCOUNT. You can then elect to allocate
the Account Value to any of the Sub-accounts or to a new Fixed Allocation.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Access To Account Value
WHAT TYPES OF DISTRIBUTIONS ARE AVAILABLE TO ME?
During the accumulation period you can access your Account Value through partial
withdrawals, Systematic Withdrawals, and where required for tax purposes,
Minimum Distributions. You can also surrender your Annuity at any time. We may
deduct a portion of the Account Value being withdrawn or surrendered as a CDSC.
The CDSC will be assessed on the amount of Purchase Payments, not on the Account
Value at the time of the withdrawal or surrender. If you surrender your Annuity,
in addition to any CDSC, we may deduct the Annual Maintenance Fee, any Tax
Charge that applies and the charge for any optional benefits. We may also apply
a Market Value Adjustment to any Fixed Allocations being withdrawn or
surrendered. Certain amounts may be available to you each Annuity Year that are
not subject to a CDSC. These are called "Free Withdrawals." In addition, under
certain circumstances, we may waive the CDSC for surrenders made for qualified
medical reasons or for withdrawals made to satisfy Minimum Distribution
requirements. Unless you notify us differently, withdrawals are taken pro-rata
based on the Account Value in the investment options at the time we receive your
withdrawal request. Each of these types of distributions is described more fully
below.
ARE THERE TAX IMPLICATIONS FOR DISTRIBUTIONS?
(For more information, see "Tax Considerations".)
DURING THE ACCUMULATION PERIOD
A distribution during the accumulation period is deemed to come first from any
"gain" in your Annuity and second as a return of your "tax basis", if any.
Distributions from your Annuity are generally subject to ordinary income
taxation on the amount of any investment gain unless the distribution qualifies
as a non-taxable exchange or transfer. If you take a distribution prior to the
taxpayer's age 59 1/2, you may be subject to a 10% penalty in addition to
ordinary income taxes on any gain. You may wish to consult a professional tax
advisor for advice before requesting a distribution.
DURING THE ANNUITIZATION PERIOD
During the annuitization period, a portion of each annuity payment is taxed as
ordinary income at the tax rate you are subject to at the time of the payment.
The Code and regulations have "exclusionary rules" that we use to determine what
portion of each annuity payment should be treated as a return of any tax basis
you have in the Annuity. Once the tax basis in the Annuity has been distributed,
the remaining annuity payments are taxable as ordinary income. The tax basis in
the Annuity may be based on the tax-basis from a prior contract in the case of a
1035 exchange or other qualifying transfer.
CAN I WITHDRAW A PORTION OF MY ANNUITY?
Yes, you can make a withdrawal during the accumulation period.
- - To meet liquidity needs, you can withdraw a limited amount from your
Annuity during each of Annuity Years 1-10 without a CDSC being applied. We
call this the "Free Withdrawal" amount. The Free Withdrawal amount is not
available if you choose to surrender your Annuity. Amounts withdrawn as a
Free Withdrawal do not reduce the amount of CDSC that may apply upon a
subsequent withdrawal or surrender of the Annuity. The minimum Free
Withdrawal you may request is $100.
- - You can also make withdrawals in excess of the Free Withdrawal amount. The
maximum amount that you may withdraw will depend on the Annuity's
Surrender Value as of the date we process the withdrawal request. After
any partial withdrawal, your Annuity must have a Surrender Value of at
least $1,000, or we may treat the partial withdrawal request as a request
to fully surrender your Annuity. The minimum partial withdrawal you may
request is $100.
When we determine if a CDSC applies to partial withdrawals and Systematic
Withdrawals, we will first determine what, if any, amounts qualify as a Free
Withdrawal. Those amounts are not subject to the CDSC. Partial withdrawals or
Systematic Withdrawals of amounts greater than the maximum Free Withdrawal
amount will be subject to a CDSC.
You may request a withdrawal for an exact dollar amount after deduction of
any CDSC that applies (called a "net withdrawal") or request a gross withdrawal
from which we will deduct any CDSC that applies, resulting in less money being
payable to you than the amount you requested. If you request a net withdrawal,
the amount deducted from your Account Value to pay the CDSC may also be subject
to a CDSC.
Partial withdrawals may also be available following annuitization but only
if you choose certain annuity payment options.
To request the forms necessary to make a withdrawal from your Annuity,
call 1-800-752-6342 or visit our Internet Website at
www.americanskandia.prudential.com.
HOW MUCH CAN I WITHDRAW AS A FREE WITHDRAWAL?
ANNUITY YEARS 1-10
The maximum Free Withdrawal amount during each of Annuity Years 1 through 10
(when a CDSC would otherwise apply to a partial withdrawal or surrender of your
initial Purchase Payment) is 10% of all Purchase Payments. We may apply a Market
Value Adjustment to any Fixed Allocations. If you do not make a Free Withdrawal
during an Annuity Year, you are not allowed to carry over the Free Withdrawal
amount to the next Annuity Year. Withdrawals of amounts greater than the maximum
Free Withdrawal
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Access To Account Value continued
amount are treated as a withdrawal of Purchase Payments and
will be assessed a CDSC during Annuity Years 1 through 10.
NOTE: Amounts that you have withdrawn as a Free Withdrawal will not reduce
the amount of any CDSC that we deduct if, during the first ten (10) Annuity
Years, you make a partial withdrawal or choose to surrender the Annuity. If,
during Annuity Years 1 through 10, all Purchase Payments withdrawn are subject
to a CDSC, then any subsequent withdrawals will be withdrawn from any gain in
the Annuity, which may include Credits.
ANNUITY YEARS 11+
After Annuity Year 10, you can surrender your Annuity or make a partial
withdrawal without a CDSC being deducted from the amount being withdrawn.
EXAMPLES
1. Assume you make an initial Purchase Payment of $10,000 and make no
additional Purchase Payments. The maximum Free Withdrawal amount during
each of the first ten Annuity Years would be 10% of $10,000, or $1,000.
2. Assume you make an initial Purchase Payment of $10,000 and make an
additional Purchase Payment of $5,000 in Annuity Year 2. The maximum Free
Withdrawal amount during Annuity Year 3 through 10 would be 10% of
$15,000, or $1,500. From Annuity Year 11 and thereafter, you can surrender
your Annuity or make a partial withdrawal without a CDSC being deducted
from the amount being withdrawn. 3. Assume you make an initial Purchase
Payment of $10,000 and take a Free Withdrawal of $500 in Annuity Year 2
and $1,000 in Annuity Year 3. If you surrender your Annuity in Annuity
Year 5, the CDSC will be assessed against the initial Purchase Payment
amount ($10,000), not the amount of Purchase Payments reduced by the
amounts that were withdrawn under the Free Withdrawal provision.
IS THERE A CHARGE FOR A PARTIAL WITHDRAWAL?
A CDSC may be assessed against a partial withdrawal during the first ten (10)
Annuity Years. Whether a CDSC applies and the amount to be charged depends on
whether the Partial Withdrawal exceeds any Free Withdrawal amount and, if so,
the number of years that have elapsed since the Issue Date of the Annuity.
1. If you request a partial withdrawal, we determine if the amount you
requested is available as a Free Withdrawal (in which case it would not be
subject to a CDSC);
2. If the amount requested exceeds the available Free Withdrawal amount, we
determine if a CDSC will apply to the partial withdrawal based on the
number of years that have elapsed since the Annuity was issued. Any CDSC
will only apply to the amount withdrawn that exceeds the Free Withdrawal
amount. The maximum Free Withdrawal amount during each of Annuity Years 1
through 10 is 10% of all Purchase Payments. Withdrawals of amounts greater
than the maximum Free Withdrawal amount are treated as a withdrawal of
Purchase Payments and will be assessed a CDSC. If, during Annuity Years 1
through 10, all Purchase Payments are withdrawn subject to a CDSC, then
any subsequent withdrawals will be withdrawn from any gain in the Annuity,
which may include Credits.
CAN I MAKE PERIODIC WITHDRAWALS FROM THE ANNUITY DURING THE ACCUMULATION
PERIOD?
Yes. We call these "Systematic Withdrawals." You can receive Systematic
Withdrawals of earnings only, principal plus earnings or a flat dollar amount.
Systematic Withdrawals may be subject to a CDSC. We will determine whether a
CDSC applies and the amount in the same way as we would for a partial
withdrawal.
Systematic Withdrawals can be made from Account Value allocated to the
variable investment options or Fixed Allocations. Generally, Systematic
Withdrawals from Fixed Allocations are limited to earnings accrued after the
program of Systematic Withdrawals begins, or payments of fixed dollar amounts
that do not exceed such earnings. Systematic Withdrawals are available on a
monthly, quarterly, semi-annual or annual basis. The Surrender Value of your
Annuity must be at least $20,000 before we will allow you to begin a program of
Systematic Withdrawals.
The minimum amount for each Systematic Withdrawal is $100. If any
scheduled Systematic Withdrawal is for less than $100 (which may occur under a
program that provides payment of an amount equal to the earnings in the Annuity
for the period requested), we may postpone the withdrawal and add the expected
amount to the amount that is to be withdrawn on the next scheduled Systematic
Withdrawal.
DO YOU OFFER A PROGRAM FOR WITHDRAWALS UNDER SECTION 72(t) OF THE INTERNAL
REVENUE CODE?
Yes. If your Annuity is used as a funding vehicle for certain retirement plans
that receive special tax treatment under Sections 401, 403(b) or 408 of the
Code, Section 72(t) of the Code may provide an exception to the 10% penalty tax
on distributions made prior to
46
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
age 59 1/2 if you elect to receive distributions as a series of "sub-
stantially equal periodic payments". Distributions received under this provision
in any Annuity Year that exceed the maximum amount available as a free
withdrawal will be subject to a CDSC. We may apply a Market Value Adjustment to
any Fixed Allocations. To request a program that complies with Section 72(t),
you must provide us with certain required information in writing on a form
acceptable to us. We may require advance notice to allow us to calculate the
amount of 72(t) withdrawals. The Surrender Value of your Annuity must be at
least $20,000 before we will allow you to begin a program for withdrawals under
Section 72(t). The minimum amount for any such withdrawal is $100.
You may also annuitize your contract and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments before age 591/2 that are not subject to the 10% penalty.
WHAT ARE MINIMUM DISTRIBUTIONS AND WHEN WOULD I NEED TO MAKE THEM?
(See "Tax Considerations" for a further discussion of Minimum Distributions.)
Minimum Distributions are a type of Systematic Withdrawal we allow to meet
distribution requirements under Sections 401, 403(b) or 408 of the Code. Under
the Code, you may be required to begin receiving periodic amounts from your
Annuity. In such case, we will allow you to make Systematic Withdrawals in
amounts that satisfy the minimum distribution rules under the Code. We do not
assess a CDSC on Minimum Distributions from your Annuity if you are required by
law to take such Minimum Distributions from your Annuity at the time it is
taken. However, a CDSC may be assessed on that portion of a Systematic
Withdrawal that is taken to satisfy the minimum distribution requirements in
relation to other savings or investment plans under other qualified retirement
plans not maintained with American Skandia.
The amount of the required Minimum Distribution for your particular
situation may depend on other annuities, savings or investments. We will only
calculate the amount of your required Minimum Distribution based on the value of
your Annuity. We require three (3) days advance written notice to calculate and
process the amount of your payments. You may elect to have Minimum Distributions
paid out monthly, quarterly, semi-annually or annually. The $100 minimum amount
that applies to Systematic Withdrawals applies to monthly minimum distributions
but does not apply to minimum distributions taken out on a quarterly,
semi-annual or annual basis.
You may also annuitize your contract and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments and satisfying the Minimum Distribution requirements under the Code.
CAN I SURRENDER MY ANNUITY FOR ITS VALUE?
Yes. During the accumulation period you can surrender your Annuity at any time.
Upon surrender, you will receive the Surrender Value. Upon surrender of your
Annuity, you will no longer have any rights under the Annuity.
For purposes of calculating the CDSC on surrender, the Purchase Payments
being withdrawn may be greater than your remaining Account Value or the amount
of your withdrawal request. This is most likely to occur if you have made prior
withdrawals under the Free Withdrawal provision or if your Account Value has
declined in value due to negative market performance. We may apply a Market
Value Adjustment to any Fixed Allocations.
Under certain annuity payment options, you may be allowed to surrender
your Annuity for its then current value.
To request the forms necessary to surrender your Annuity, call
1-800-752-6342 or visit our Internet Website at
www.americanskandia.prudential.com.
WHAT IS A MEDICALLY-RELATED SURRENDER AND HOW DO I QUALIFY?
Where permitted by law, you may request to surrender your Annuity prior to the
Annuity Date without application of any CDSC upon occurrence of a
medically-related "Contingency Event". We may apply a Market Value Adjustment to
any Fixed Allocations. The amount payable will be your Account Value minus: (a)
the amount of any Credits applied within 12 months of the applicable
"Contingency Event" as defined below; and (b) the amount of any Credits added in
conjunction with any Purchase Payments received after our receipt of your
request for a medically-related surrender (i.e. Purchase Payments received at
such time pursuant to a salary reduction program).
This waiver of any applicable CDSC is subject to our rules, including but not
limited to the following:
- - the Annuitant must have been named or any change of Annuitant must have
been accepted by us, prior to the "Contingency Event" described below in
order to qualify for a medically-related surrender;
- - the Annuitant must be alive as of the date we pay the proceeds of such
surrender request;
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Access To Account Value continued
- - if the Owner is one or more natural persons, all such Owners must also be
alive at such time;
- - we must receive satisfactory proof of the Annuitant's confinement in a
Medical Care Facility or Fatal Illness in writing on a form satisfactory
to us; and
- - this benefit is not available if the total Purchase Payments received
exceed $500,000 for all annuities issued by us with this benefit where the
same person is named as Annuitant.
A "Contingency Event" occurs if the Annuitant is:
- - first confined in a "Medical Care Facility" while your Annuity is in force
and remains confined for at least 90 days in a row; or
- - first diagnosed as having a "Fatal Illness" while your Annuity is in
force.
The definitions of "Medical Care Facility" and "Fatal Illness," as well as
additional terms and conditions, are provided in your Annuity. Specific details
and definitions in relation to this benefit may differ in certain jurisdictions.
WHAT TYPES OF ANNUITY OPTIONS ARE AVAILABLE?
We currently make annuity options available that provide fixed annuity payments,
variable payments or adjustable payments. Fixed options provide the same amount
with each payment. Variable options generally provide a payment which may
increase or decrease depending on the investment performance of the
Sub-accounts. However, currently, we also make a variable payment option that
has a guarantee feature. Adjustable options provide a fixed payment that is
periodically adjusted based on current interest rates. WE DO NOT GUARANTEE TO
MAKE ANY ANNUITY PAYMENT OPTIONS AVAILABLE IN THE FUTURE OTHER THAN THOSE FIXED
ANNUITIZATION OPTIONS GUARANTEED IN YOUR ANNUITY. Please refer to "The
Guaranteed Minimum Income Benefit" and "The Lifetime Five Income Benefit" under
"Living Benefits" below for a description of annuity options that are available
when you elect these benefits. For additional information on annuity payment
options you may request a Statement of Additional Information.
When you purchase an Annuity, or at a later date, you may choose an
Annuity Date, an annuity option and the frequency of annuity payments. You may
not choose an Annuity Date that occurs in the first three Annuity Years. You may
change your choices before the Annuity Date under the terms of your contract. A
maximum Annuity Date may be required by law. The Annuity Date may depend on the
annuity option you choose. Certain annuity options may not be available
depending on the age of the Annuitant. You may not annuitize and receive annuity
payments within the first three Annuity Years.
Certain of these annuity options may be available to Beneficiaries who
choose to receive the Death Benefit proceeds as a series of payments instead of
a lump sum payment.
OPTION 1
PAYMENTS FOR LIFE: Under this option, income is payable periodically until the
death of the "key life". The "key life" (as used in this section) is the person
or persons upon whose life annuity payments are based. No additional annuity
payments are made after the death of the key life. Since no minimum number of
payments is guaranteed, this option offers the largest amount of periodic
payments of the life contingent annuity options. It is possible that only one
payment will be payable if the death of the key life occurs before the date the
second payment was due, and no other payments nor death benefits would be
payable. THIS OPTION IS CURRENTLY AVAILABLE ON A FIXED OR VARIABLE BASIS. Under
this option, you cannot make a partial or full surrender of the annuity.
OPTION 2
PAYMENTS BASED ON JOINT LIVES: Under this option, income is payable periodically
during the joint lifetime of two key lives, and thereafter during the remaining
lifetime of the survivor, ceasing with the last payment prior to the survivor's
death. No minimum number of payments is guaranteed under this option. It is
possible that only one payment will be payable if the death of all the key lives
occurs before the date the second payment was due, and no other payments or
death benefits would be payable. This Option is currently available on a fixed
or variable basis. Under this option, you cannot make a partial or full
surrender of the annuity.
OPTION 3
PAYMENTS FOR LIFE WITH A CERTAIN PERIOD: Under this option, income is payable
until the death of the key life. However, if the key life dies before the end of
the period selected (5, 10 or 15 years), the remaining payments are paid to the
Beneficiary until the end of such period. THIS OPTION IS CURRENTLY AVAILABLE ON
A FIXED OR VARIABLE BASIS. If you elect to receive payments on a variable basis
under this option, you can request partial or full surrender of the annuity and
receive its then current cash value (if any) subject to our rules.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
OPTION 4
FIXED PAYMENTS FOR A CERTAIN PERIOD: Under this option, income is payable
periodically for a specified number of years. If the payee dies before the end
of the specified number of years, the remaining payments are paid to the
Beneficiary until the end of such period. Note that under this option, payments
are not based on any assumptions of life expectancy. Therefore, that portion of
the Insurance Charge assessed to cover the risk that key lives outlive our
expectations provides no benefit to an Owner selecting this option. Under this
option, you cannot make a partial or full surrender of the annuity.
OPTION 5
VARIABLE PAYMENTS FOR LIFE WITH A CASH VALUE: Under this option, benefits are
payable periodically until the death of the key life. Benefits may increase or
decrease depending on the investment performance of the Sub-accounts. This
option has a cash value that also varies with the investment performance of the
Sub-account. The cash value provides a "cushion" from volatile investment
performance so that negative investment performance does not automatically
result in a decrease in the annuity payment each month, and positive investment
performance does not automatically result in an increase in the annuity payment
each month. The cushion generally "stabilizes" monthly annuity payments. Any
cash value remaining on the death of the key life is paid to the Beneficiary in
a lump sum or as periodic payments. Under this option, you can request partial
or full surrender of the annuity and receive its then current cash value (if
any) subject to our rules.
OPTION 6
VARIABLE PAYMENTS FOR LIFE WITH A CASH VALUE AND GUARANTEE: Under this option,
benefits are payable as described in Option 5; except that, while the key life
is alive, the annuity payment will not be less than a guaranteed amount, which
generally is equal to the first annuity payment. WE CHARGE AN ADDITIONAL AMOUNT
FOR THIS GUARANTEE. Under this option, any cash value remaining on the death of
the key life is paid to the Beneficiary in a lump sum or as periodic payments.
Under this option, you can request partial or full surrender of the annuity and
receive its then current cash value (if any) subject to our rules. We may make
additional annuity payment options available in the future.
HOW AND WHEN DO I CHOOSE THE ANNUITY PAYMENT OPTION?
Unless prohibited by law, we require that you elect either a life annuity or an
annuity with a certain period of at least 5 years if any CDSC would apply were
you to surrender your Annuity on the Annuity Date. Therefore, choosing an
Annuity Date within ten (10) years of the Issue Date of the Annuity may limit
the available annuity payment options. Certain annuity payment options may not
be available if your Annuity Date occurs during the period that a CDSC would
apply.
You have a right to choose your annuity start date. If you have not
provided us with your Annuity Date or annuity payment option in writing, then:
- - A DEFAULT DATE for the Annuity Date will be the first day of the calendar
month following the later of the Annuitant's 85th birthday or the fifth
anniversary of our receipt of your request to purchase an Annuity; and
- - the annuity payments, where allowed by law, will be calculated on a fixed
basis under Option 3, Payments for Life with 10 years certain.
If you choose to defer the Annuity Date beyond the default date, the IRS
may not consider your contract to be an annuity under the tax law. If that
should occur, all gain in your contract at that time will become immediately
taxable to you. Further, each subsequent year's increase in contract value would
be taxable in that year. By choosing to continue to defer after the default
date, you will assume the risk that your contract will not be considered an
annuity for federal income tax purposes.
HOW ARE ANNUITY PAYMENTS CALCULATED?
FIXED ANNUITY PAYMENTS (OPTIONS 1-4)
If you choose to receive fixed annuity payments, you will receive equal
fixed-dollar payments throughout the period you select. The amount of the fixed
payment will vary depending on the annuity payment option and payment frequency
you select. Generally, the first annuity payment is determined by multiplying
the Account Value, minus any state premium taxes that may apply, by the factor
determined from our table of annuity rates. The table of annuity rates differs
based on the type of annuity chosen and the frequency of payment selected. Our
rates will not be less than our guaranteed minimum rates. These guaranteed
minimum rates are derived from the a2000 Individual Annuity Mortality Table 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.
VARIABLE ANNUITY PAYMENTS
Generally, we offer three different types of variable annuity payment options.
The first annuity payment will be calculated based
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Access To Account Value continued
upon the assumed investment return ("AIR"). You select the AIR before we start
to make annuity payments. You will not receive annuity payments until you choose
an AIR. The remaining annuity payments will fluctuate based on the performance
of the Sub-accounts relative to the AIR, as well as, other factors described
below. The greater the AIR, the greater the first annuity payment. A higher AIR
may result in smaller potential growth in the annuity payments. A lower AIR
results in a lower initial annuity payment. Within payment options 1-3, if the
Sub-accounts you choose perform exactly the same as the AIR, then subsequent
annuity payments will be the same as the first annuity payment. If the
Sub-accounts you choose perform better than the AIR, then subsequent annuity
payments will be higher than the first annuity payment. If the Sub-accounts you
choose perform worse than the AIR, then subsequent annuity payments will be
lower than the first. Within payment options 5 and 6, the cash value for the
Annuitant (while alive) and a variable period of time during which annuity
payments will be made whether or not the Annuitant is still alive are adjusted
based on the performance of the Sub-accounts relative to the AIR; however,
subsequent annuity payments do not always increase or decrease based on the
performance of the Sub-accounts relative to the AIR.
- VARIABLE PAYMENTS (OPTIONS 1-3)
We calculate each annuity payment amount by multiplying the number
of units scheduled to be redeemed under a schedule of units for each
Sub-account by the Unit Value of each Sub-account on the annuity
payment date. We determine the schedule of units based on your
Account Value (minus any premium tax that applies) at the time you
elect to begin receiving annuity payments. The schedule of units
will vary based on the annuity payment option selected, the length
of any certain period (if applicable), the Annuitant's age and
gender (if annuity payments are due for the life of the Annuitant)
and the Unit Value of the Sub-accounts you initially selected on the
Issue Date. The calculation is performed for each Sub-account, and
the sum of the Sub-account calculations equals the amount of your
annuity payment. Other than to fund annuity payments, the number of
units allocated to each Sub-account will not change unless you
transfer among the Sub-accounts or make a withdrawal (if allowed).
You can select one of three AIRs for these options: 3%, 5% or 7%.
- STABILIZED VARIABLE PAYMENTS (OPTION 5)
This option provides guaranteed payments for life, a cash value for
the Annuitant (while alive) and a variable period of time during
which annuity payments will be made whether or not the Annuitant is
still alive. We calculate the initial annuity payment amount by
multiplying the number of units scheduled to be redeemed under a
schedule of units by the Unit Values determined on the annuitization
date. The schedule of units is established for each Sub-account you
choose on the annuitization date based on the applicable benchmark
rate, meaning the AIR, and the annuity factors. The annuity factors
reflect our assumptions regarding the costs we expect to bear in
guaranteeing payments for the lives of the Annuitant and will depend
on the benchmark rate, the annuitant's attained age and gender
(where permitted). Unlike variable payments (described above) where
each payment can vary based on Sub-account performance, this payment
option cushions the immediate impact of Sub-account performance by
adjusting the length of the time during which annuity payments will
be made whether or not the Annuitant is alive while generally
maintaining a level annuity payment amount. Sub-account performance
that exceeds a benchmark rate will generally extend this time
period, while Sub-account performance that is less than a benchmark
rate will generally shorten the period. If the period reaches zero
and the Annuitant is still alive, Annuity Payments continue,
however, the annuity payment amount will vary depending on
Sub-account performance, similar to conventional variable payments.
The AIR for this option is 4%.
- STABILIZED VARIABLE PAYMENTS WITH A GUARANTEED MINIMUM (OPTION 6)
This option provides guaranteed payments for life in the same manner
as Stabilized Variable Payments (described above). In addition to
the stabilization feature, this option also guarantees that variable
annuity payments will not be less than the initial annuity payment
amount regardless of Sub-account performance. The AIR for this
option is 3%.
The variable annuity payment options are described in greater detail in a
separate prospectus which will be provided to you at the time you elect one of
the variable annuity payment options.
ADJUSTABLE ANNUITY PAYMENTS
We may make an adjustable annuity payment option available. Adjustable annuity
payments are calculated similarly to fixed annuity payments except that on every
fifth (5th) anniversary of receiving annuity payments, the annuity payment
amount is adjusted upward or downward depending on the rate we are currently
crediting to annuity payments. The adjustment in the annuity payment amount does
not affect the duration of remaining annuity payments, only the amount of each
payment.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Living Benefit Programs
DO YOU OFFER PROGRAMS DESIGNED TO PROVIDE INVESTMENT PROTECTION FOR OWNERS WHILE
THEY ARE ALIVE?
American Skandia offers different optional benefits, for an additional charge,
that can provide investment protection for Owners while they are alive.
Notwithstanding the additional protection provided under the optional Living
Benefit Programs, the additional cost has the impact of reducing net performance
of the investment options. Each optional benefit offers a distinct type of
guarantee, regardless of the performance of variable investment options, that
may be appropriate for you depending on the manner in which you intend to make
use of your annuity while you are alive. Depending on which optional benefit you
choose, you can have substantial flexibility to invest in variable investment
options while:
- - protecting a principal amount from decreases in value as of specified
future dates due to investment performance;
- - taking withdrawals with a guarantee that you will be able to withdraw not
less than a principal amount over time; or
- - guaranteeing a minimum amount of growth will be applied to your principal,
if it is to be used as the basis for lifetime income payments beginning
after a waiting period.
Below is a brief summary of the "living benefits" that American Skandia
offers. Please refer to the benefit description for a complete description of
the terms, conditions and limitations of each optional benefit. You should
consult with your investment professional to determine if any of these optional
benefits may be appropriate for you based on your financial needs. There are
many factors to consider, but we note that among them you may want to evaluate
the tax implications of these different approaches to meeting your needs, both
between these benefits and in comparison to other potential solutions to your
needs (e.g. comparing the tax implications of the withdrawal benefit and annuity
payments).
I. The GUARANTEED RETURN OPTION PLUS(SM) (GRO PLUS(SM) guarantees that, after
a seven-year period following commencement of the program ("maturity
date") and on each anniversary of the maturity date thereafter, your
Account Value will not be less than the Account Value on the effective
date of the program. The program also offers you the option to elect a
second, enhanced guarantee amount at a higher Account Value subject to a
separate maturity period (and its anniversaries). The GRO Plus(SM) program
may be appropriate if you wish to protect a principal amount (called the
"Protected Principal Value") against market downturns as of a specific
date in the future, but also wish to exercise control by allocating and
transferring your available Account Value among the variable investment
options to participate in market experience. Under the GRO Plus(SM)
program, you give us the right to allocate amounts to Fixed Allocations as
needed to support the guarantees provided. The available Account Value
that may be allocated among your variable investment options are those
amounts not allocated to the Fixed Allocations to support the guarantees
provided.
II. The GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) guarantees your ability
to make cumulative withdrawals over time equal to an initial principal
value (called the "Protected Value"), regardless of decreases in your
Account Value due to market losses. The GMWB program may be appropriate if
you intend to make periodic withdrawals from your Annuity and wish to
ensure that market performance will not affect your ability to receive
guaranteed minimum withdrawals. Taking income as withdrawals, rather than
annuity payments, may be less tax efficient for non-qualified uses of the
Annuity, but provides greater control over the timing and amount of
withdrawals during the accumulation period, as well as continuing the
Annuity's other benefits, such as the death benefit.
III. The GUARANTEED MINIMUM INCOME BENEFIT (GMIB) guarantees your ability,
after a minimum seven-year waiting period, to begin receiving income from
the Annuity in the form of annuity payments based on your total Purchase
Payments (and any Credits applied to such Purchase Payments) under the
contract and an annual increase of 5% on such Purchase Payments, adjusted
for withdrawals, regardless of the impact of market performance on your
Account Value. The GMIB program may be appropriate if you anticipate using
your Annuity as a future source of periodic fixed income payments for the
remainder of your life and wish to ensure that the basis upon which your
income payments will be calculated will achieve at least a minimum amount
despite fluctuations in market performance.
IV. The LIFETIME FIVE INCOME BENEFIT guarantees your ability to withdraw
amounts equal to a percentage of a "Protected Withdrawal Value" regardless
of decreases in your Account Value due to market losses. The Lifetime Five
Benefit may be appropriate if you intend to make periodic withdrawals from
your Annuity and wish to ensure that market performance will not affect
your ability to receive guaranteed
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Living Benefit Programs continued
minimum withdrawals. Taking income as withdrawals, rather than annuity payments,
may be less tax efficient for non-qualified uses of the Annuity, but provides
greater control over the timing and amount of withdrawals during the
accumulation period, as well as continuing the Annuity's other benefits, such as
the death benefit.
GUARANTEED RETURN OPTION PLUS(SM) (GRO PLUS(SM))
THE GUARANTEED RETURN OPTION PLUS DESCRIBED BELOW IS ONLY BEING OFFERED IN THOSE
JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL, AND WILL BE OFFERED
SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY APPROVAL IN THOSE
JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS
ONCE APPROVED. THE PROGRAM CAN BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF
THEIR ANNUITY, AND CAN BE ELECTED BY EXISTING ANNUITY OWNERS ON EITHER THE
ANNIVERSARY OF THE ISSUE DATE OF THEIR ANNUITY OR ON A DATE OTHER THAN THAT
ANNIVERSARY, AS DESCRIBED BELOW UNDER "ELECTION OF THE PROGRAM". THE GUARANTEED
RETURN OPTION PLUS IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION
PROGRAM (AND IT IS CURRENTLY ACTIVE), THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT
RIDER, THE GUARANTEED MINIMUM INCOME BENEFIT RIDER, THE LIFETIME FIVE INCOME
BENEFIT RIDER, THE HIGHEST DAILY VALUE DEATH BENEFIT, OR THE DOLLAR COST
AVERAGING PROGRAM IF IT INVOLVES TRANSFERS OUT OF THE FIXED ALLOCATIONS.
We offer a program that, after a seven-year period following commencement
of the program (we refer to the end of that period and any applicable subsequent
period as the "maturity date") and on each anniversary of the maturity date
thereafter while the program remains in effect, guarantees your Account Value
will not be less than your Account Value on the effective date of your program
(called the "Protected Principal Value"). The program also offers you the
opportunity to elect a second, enhanced guaranteed amount at a later date if
your Account Value has increased, while preserving the guaranteed amount
established on the effective date of your program. The enhanced guaranteed
amount (called the "Enhanced Protected Principal Value") guarantees that, after
a separate period following election of the enhanced guarantee and on each
anniversary thereafter while this enhanced guarantee amount remains in effect,
your Account Value will not be less than your Account Value on the effective
date of your election of the enhanced guarantee.
The program monitors your Account Value daily and, if necessary,
systematically transfers amounts between variable investment options you choose
and Fixed Allocations used to support the Protected Principal Value(s). The
program may be appropriate if you wish to protect a principal amount against
market downturns as of a specific date in the future, but also wish to invest in
the variable investment options to participate in market performance. There is
an additional charge if you elect the Guaranteed Return Option Plus program.
The guarantees provided by the program exist only on the applicable
maturity date(s) and on each anniversary of the maturity date(s) thereafter.
However, due to the ongoing monitoring of your Account Value and the transfer of
Account Value between the variable investment options and the Fixed Allocations
to support our future guarantees, the program may provide some protection from
significant market losses if you choose to surrender the Annuity or begin
receiving annuity payments prior to a maturity date. For this same reason, the
program may limit your ability to benefit from market increases while it is in
effect.
KEY FEATURE -- PROTECTED PRINCIPAL VALUE/ ENHANCED PROTECTED PRINCIPAL VALUE
The Guaranteed Return Option Plus offers a base guarantee as well as the option
of electing an enhanced guarantee at a later date.
- - BASE GUARANTEE: Under the base guarantee, American Skandia guarantees that
on the maturity date and on each anniversary of the maturity date
thereafter that the program remains in effect, your Account Value will be
no less than the Protected Principal Value. On the maturity date and on
each anniversary after the maturity date that the program remains in
effect, if your Account Value is below the Protected Principal Value,
American Skandia will apply additional amounts to your Annuity from its
general account to increase your Account Value to be equal to the
Protected Principal Value.
- - ENHANCED GUARANTEE: On any anniversary following commencement of the
program, you can establish an enhanced guaranteed amount based on your
current Account Value. Under the enhanced guarantee, American Skandia
guarantees that at the end of a specified period following the election of
the enhanced guarantee (also referred to as its "maturity date"), and on
each anniversary of the maturity date thereafter that the enhanced
guaranteed amount remains in effect, your
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Account Value will be no less than the Enhanced Protected Principal Value.
YOU CAN ELECT AN ENHANCED GUARANTEE MORE THAN ONCE; HOWEVER, A SUBSEQUENT
ELECTION SUPERSEDES THE PRIOR ELECTION OF AN ENHANCED GUARANTEE. ELECTION
OF AN ENHANCED GUARANTEE DOES NOT IMPACT THE BASE GUARANTEE. IN ADDITION,
YOU MAY ELECT AN "AUTO STEP-UP" FEATURE THAT WILL AUTOMATICALLY CREATE AN
ENHANCED GUARANTEE (OR INCREASE YOUR ENHANCED GUARANTEE, IF PREVIOUSLY
ELECTED) ON EACH ANNIVERSARY OF THE PROGRAM (AND CREATE A NEW MATURITY
PERIOD FOR THE NEW ENHANCED GUARANTEE) IF THE ACCOUNT VALUE AS OF THAT
ANNIVERSARY EXCEEDS THE PROTECTED PRINCIPAL VALUE OR ENHANCED PROTECTED
PRINCIPAL VALUE BY 7% OR MORE. YOU MAY ALSO ELECT TO TERMINATE AN ENHANCED
GUARANTEE. IF YOU ELECT TO TERMINATE THE ENHANCED GUARANTEE, THE BASE
GUARANTEE WILL REMAIN IN EFFECT. If you have elected the enhanced
guarantee, on the guarantee's maturity date and on each anniversary of the
maturity date thereafter that the enhanced guarantee amount remains in
effect, if your Account Value is below the Enhanced Protected Principal
Value, American Skandia will apply additional amounts to your Annuity from
its general account to increase your Account Value to be equal to the
Enhanced Protected Principal Value.
Any amounts added to your Annuity to support our guarantees under the
program will be applied to any Fixed Allocations first and then to the
sub-accounts pro rata, based on your most recent allocation instructions in
accordance with the allocation mechanism we use under the program. We will
notify you of any amounts added to your Annuity under the program. If our
assumptions are correct and the operations relating to the administration of the
program work properly, we do not expect that we will need to add additional
amounts to the Annuity. The Protected Principal Value is referred to as the
"Base Guarantee" and the Enhanced Protected Principal Value is referred to as
the "Step-up Guarantee" in the rider we issue for this benefit.
WITHDRAWALS UNDER YOUR ANNUITY
Withdrawals from your Annuity, while the program is in effect, will reduce the
base guarantee under the program as well as any enhanced guarantee. Cumulative
annual withdrawals up to 5% of the Protected Principal Value as of the effective
date of the program (adjusted for any subsequent Purchase Payments and any
Credits applied to such Purchase Payments) will reduce the applicable guaranteed
amount by the actual amount of the withdrawal (referred to as the
"dollar-for-dollar limit"). If the amount withdrawn is greater than the
dollar-for-dollar limit, the portion of the withdrawal equal to the
dollar-for-dollar limit will be treated as described above, and the portion of
the withdrawal in excess of the dollar-for-dollar limit will reduce the base
guarantee and the enhanced guarantee proportionally, according to the formula as
described in the rider for this benefit (see the examples of this calculation
below). Withdrawals other than Systematic Withdrawals will be taken pro-rata
from the variable investment options and any Fixed Allocations. Systematic
Withdrawals will be taken pro-rata from the variable investment options and any
Fixed Allocations up to growth attributable to the Fixed Allocations and
thereafter pro-rata solely from the variable investment options. Withdrawals
will be subject to all other provisions of the Annuity, including any Contingent
Deferred Sales Charge and Market Value Adjustment that would apply.
Charges for other optional benefits under the Annuity that are deducted as
an annual charge in arrears will not reduce the applicable guaranteed amount
under the Guaranteed Return Option Plus program, however, any partial
withdrawals in payment of charges for the Plus40(TM) Optional Life Insurance
Rider (not currently offered for sale) and any third party investment advisory
service will be treated as withdrawals and will reduce the applicable guaranteed
amount.
The following examples of dollar-for-dollar and proportional reductions
assume that: 1.) the Issue Date and the effective date of the GRO Plus(SM)
program are October 13, 2004; 2.) an initial Purchase Payment of $250,000
(includes any Credits); 3.) a base guarantee amount of $250,000; and 4.) a
dollar-for-dollar limit of $12,500 (5% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 29, 2004 (in the first Annuity Year).
No prior withdrawals have been taken. As the amount withdrawn is less than the
Dollar-for-dollar Limit:
- - The base guarantee amount is reduced by the amount withdrawn (i.e., by
$10,000, from $250,000 to $240,000).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance
of the first Annuity Year is also reduced by the amount withdrawn (from
$12,500 to $2,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on December 18, 2004 (still within the
first Annuity Year). The Account Value immediately before the withdrawal is
$180,000. As the amount withdrawn exceeds the Remaining Limit of $2,500 from
Example 1:
- - the base guarantee amount is first reduced by the Remaining Limit (from
$240,000 to $237,500);
53
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Living Benefit Programs continued
- - The result is then further reduced by the ratio of A to B,
where:
- A is the amount withdrawn less the Remaining Limit ($10,000 -
$2,500, or $7,500).
- B is the Account Value less the Remaining Limit ($180,000 - $2,500,
or $177,500).
The resulting base guarantee amount is: $237,500 - (1 - $7,500 /
$177,500), or $227,464.79.
- The Remaining Limit is set to zero (0) for the balance of the first
Annuity Year.
EXAMPLE 3. RESET OF THE DOLLAR-FOR-DOLLAR LIMIT
A $10,000 withdrawal is made on December 19, 2005 (second Annuity Year). The
Remaining Limit has been reset to the dollar-for-dollar limit of $12,500. As
the amount withdrawn is less than the dollar-for-dollar limit:
- - The base guarantee amount is reduced by the amount withdrawn (i.e.,
reduced by $10,000, from $227,464.79 to $217,464.79).
- - The Remaining Limit for the balance of the second Annuity Year is also
reduced by the amount withdrawn (from $12,500 to $2,500).
KEY FEATURE -- ALLOCATION OF ACCOUNT VALUE
Account Value is transferred to and maintained in Fixed Allocations to the
extent we, in our sole discretion, deem it is necessary to support our
guarantee(s) under the program. We monitor fluctuations in your Account Value
each Valuation Day, as well as the prevailing interest rates on Fixed
Allocations, the remaining duration(s) until the applicable maturity date(s)
and the amount of Account Value allocated to Fixed Allocation(s) relative to a
"reallocation trigger", which determines whether Account Value must be
transferred to or from Fixed Allocation(s). While you are not notified when
your Account Value reaches a reallocation trigger, you will receive a
confirmation statement indicating the transfer of a portion of your Account
Value either to or from Fixed Allocation(s).
- - IF YOUR ACCOUNT VALUE IS GREATER THAN OR EQUAL TO THE REALLOCATION
TRIGGER, your Account Value in the variable investment options will remain
allocated according to your most recent instructions. If a portion of
Account Value was previously allocated to a Fixed Allocation to support
the applicable guaranteed amount, all or a portion of those amounts may be
transferred from the Fixed Allocation and re-allocated to the variable
investment options pro-rata according to your most recent allocation
instructions (including the model allocations under any asset allocation
program you may have elected). A Market Value Adjustment will apply when
we reallocate Account Value from a Fixed Allocation to the variable
investment options, which may result in a decrease or increase in your
Account Value.
- - IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER, a portion of
your Account Value in the variable investment options will be transferred
from your variable investment options pro rata according to your
allocations to a new Fixed Allocation(s) to support the applicable
guaranteed amount. The new Fixed Allocation(s) will have a Guarantee
Period equal to the time remaining until the applicable maturity date(s).
The Account Value allocated to the new Fixed Allocation(s) will be
credited with the fixed interest rate(s) then being credited to a new
Fixed Allocation(s) maturing on the applicable maturity date(s) (rounded
to the next highest yearly duration). The Account Value will remain
invested in each applicable Fixed Allocation until the applicable maturity
date unless, at an earlier date, your Account Value is greater than or
equal to the reallocation trigger and, therefore, amounts can be
transferred to the variable investment options while maintaining the
guaranteed protection under the program (as described above).
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
IF A SIGNIFICANT AMOUNT OF YOUR ACCOUNT VALUE IS SYSTEMATICALLY TRANSFERRED TO
FIXED ALLOCATIONS TO SUPPORT THE PROTECTED PRINCIPAL VALUE AND/OR THE ENHANCED
PROTECTED PRINCIPAL VALUE DURING PERIODS OF MARKET DECLINES, LOW INTEREST RATES,
AND/OR AS THE PROGRAM NEARS ITS MATURITY DATE, LESS OF YOUR ACCOUNT VALUE MAY BE
AVAILABLE TO PARTICIPATE IN THE INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT
OPTIONS IF THERE IS A SUBSEQUENT MARKET RECOVERY. DURING PERIODS CLOSER TO THE
MATURITY DATE OF THE BASE GUARANTEE OR ANY ENHANCED GUARANTEE, OR ANY
ANNIVERSARY OF SUCH MATURITY DATE(S), A SIGNIFICANT PORTION OF YOUR ACCOUNT
VALUE MAY BE ALLOCATED TO FIXED ALLOCATIONS TO SUPPORT ANY APPLICABLE GUARANTEED
AMOUNT(S). IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER AND NEW
FIXED ALLOCATIONS MUST BE ESTABLISHED DURING PERIODS WHERE THE INTEREST RATE(S)
BEING CREDITED TO SUCH FIXED ALLOCATIONS IS LOW, A LARGER PORTION OF YOUR
ACCOUNT VALUE MAY NEED TO BE TRANSFERRED TO FIXED ALLOCATIONS TO SUPPORT THE
APPLICABLE GUARANTEED AMOUNT(S), CAUSING LESS OF YOUR ACCOUNT VALUE TO BE
AVAILABLE TO PARTICIPATE IN THE INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT
OPTIONS.
Separate Fixed Allocations may be established in support of the Protected
Principal Value and the Enhanced Protected Principal Value (if elected). There
may also be circumstances when a Fixed Allocation will be established only in
support of the Protected Principal Value or the Enhanced Protected Principal
Value. If you elect an enhanced guarantee, it is more likely that a portion of
your Account Value may be allocated to Fixed Allocations and will remain
allocated for a longer period of time to support the Enhanced Protected
Principal Value, even during a period of positive market performance and/or
under circumstances where Fixed Allocations would not be necessary to support
the Protected Principal Value. Further, there may be circumstances where Fixed
Allocations in support of the Protected Principal Value or Enhanced Protected
Principal Value are transferred to the variable investment options differently
than each other because of the different guarantees they support.
American Skandia uses an allocation mechanism based on assumptions of
expected and maximum market volatility, interest rates and time left to the
maturity of the program to determine the reallocation trigger. The allocation
mechanism is used to determine the allocation of Account Value between Fixed
Allocations and the Sub-accounts you choose. American Skandia reserves the right
to change the allocation mechanism and the reallocation trigger at its
discretion, subject to regulatory approval where required. Changes to the
allocation mechanism and/or the reallocation trigger may be applied to existing
programs where allowed by law.
ELECTION OF THE PROGRAM
The Guaranteed Return Option Plus program can be elected at the time that you
purchase your Annuity, or on any Valuation Day thereafter (prior to
annuitization). If you elect the program after the Issue Date of your Annuity,
the program will be effective as of the Valuation Day that we receive the
required documentation in good order at our home office, and the guaranteed
amount will be based on your Account Value as of that date. If you previously
elected the Guaranteed Return Option program and wish to elect the Guaranteed
Return Option Plus program, your prior Guaranteed Return Option program will be
terminated. Termination of the Guaranteed Return Option for the purpose of
electing the Guaranteed Return Option Plus, will be treated as any other
termination of the Guarantee Return Option (see below), including the
termination of any guaranteed amount, and application of any applicable market
value adjustment when amounts are transferred to the variable investment
options as a result of the termination. The Guaranteed Return Option Plus
program will then be added to your Annuity BASED ON THE CURRENT ACCOUNT VALUE.
TERMINATION OF THE PROGRAM
You can elect to terminate the enhanced guarantee but maintain the protection
provided by the base guarantee. You also can terminate the Guaranteed Return
Option Plus program entirely. If you terminate the program entirely, you can
subsequently elect to participate in the program again (based on the Account
Value on that date) by furnishing the documentation we require. In a rising
market, you could, for example, terminate the program on a given Valuation Day
and two weeks later reinstate the program with a higher base guarantee (and a
new maturity date). However, your ability to reinstate the program is limited
by the following: (A) in any Annuity Year, we do not permit more than two
program elections (including any election made effective on the Annuity issue
date and any election made by a surviving spouse) and (B) a program
reinstatement cannot be effected on the same Valuation Day on which a program
termination was effected. Upon termination, any Account Value in the Fixed
Allocations will be transferred to the variable investment options pro rata
based on the Account
55
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Living Benefit Programs continued
Values in such variable investment options, or in accordance with any effective
asset allocation program. A Market Value Adjustment will apply.
The program will terminate automatically upon: (a) the death of the Owner
or the Annuitant (in an entity owned contract); (b) as of the date Account
Value is applied to begin annuity payments; or (c) upon full surrender of the
Annuity. If you elect to terminate the program, the Guaranteed Return Option
Plus will no longer provide any guarantees. The surviving spouse may elect the
benefit at any time, subject to the limitations described above, after the
death of the Annuity Owner. The surviving spouse's election will be effective
on the Valuation Day that we receive the required documentation in good order
at our home office, and the Account Value on that Valuation Day will be the
Protected Principal Value.
The charge for the Guaranteed Return Option Plus program will no longer be
deducted from your Account Value upon termination of the program.
SPECIAL CONSIDERATIONS UNDER THE GUARANTEED RETURN OPTION PLUS
This program is subject to certain rules and restrictions, including, but not
limited to the following:
- - Upon inception of the program, 100% of your Account Value must be
allocated to the variable investment options. No Fixed Allocations may be
in effect as of the date that you elect to participate in the program.
However, the reallocation trigger may transfer Account Value to Fixed
Allocations as of the effective date of the program under some
circumstances.
- - You cannot allocate any portion of Purchase Payments (including any
Credits applied to such Purchase Payments) or transfer Account Value to or
from a Fixed Allocation while participating in the program; however, all
or a portion of any Purchase Payments (including any Credits applied to
such Purchase Payments) may be allocated by us to Fixed Allocations to
support the amount guaranteed. You cannot participate in any dollar cost
averaging program that transfers Account Value from a Fixed Allocation to
a variable investment option.
- - Transfers from Fixed Allocations made as a result of the allocation
mechanism under the program will be subject to the Market Value Adjustment
formula under the Annuity; however, the 0.10% liquidity factor in the
formula will not apply. A Market Value Adjustment may be either positive
or negative. Transfer amounts will be taken from the most recently
established Fixed Allocation.
- - Transfers from the Sub-accounts to Fixed Allocations or from Fixed
Allocations to the Sub-accounts under the program will not count toward
the maximum number of free transfers allowable under the Annuity.
- - Any amounts applied to your Account Value by American Skandia on the
maturity date or any anniversary of the maturity date will not be treated
as "investment in the contract" for income tax purposes.
- - Low interest rates may require allocation to Fixed Allocations even when
the current Account Value exceeds the guarantee.
- - As the time remaining until the applicable maturity date gradually
decreases the program will become increasingly sensitive to moves to Fixed
Allocations.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
56
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
CHARGES UNDER THE PROGRAM
We deduct a charge equal to 0.25% of the average daily net assets of the
Sub-accounts for participation in the Guaranteed Return Option Plus program.
The annual charge is deducted daily. Account Value allocated to Fixed
Allocations under the program is not subject to the charge. The charge is
deducted to compensate American Skandia for: (a) the risk that your Account
Value on the maturity date is less than the amount guaranteed; and (b)
administration of the program.
GUARANTEED RETURN OPTION (GRO)
THE GUARANTEED RETURN OPTION DESCRIBED BELOW IS OFFERED ONLY IN THOSE
JURISDICTIONS WHERE WE HAVE NOT YET RECEIVED REGULATORY APPROVAL FOR THE
GUARANTEED RETURN OPTION PLUS AS OF THE DATE THE ELECTION OF THE OPTION IS
MADE. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS. THE
PROGRAM CAN BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY,
AND CAN BE ELECTED BY EXISTING ANNUITY OWNERS ON EITHER THE ANNIVERSARY OF
THE ISSUE DATE OF THEIR ANNUITY OR ON A DATE OTHER THAN THAT ANNIVERSARY, AS
DESCRIBED BELOW UNDER "ELECTION OF THE PROGRAM". THE GUARANTEED RETURN
OPTION IS NOT AVAILABLE IF YOU ELECT THE GRO PLUS RIDER, THE GUARANTEED
MINIMUM WITHDRAWAL BENEFIT RIDER, THE GUARANTEED MINIMUM INCOME BENEFIT
RIDER, THE LIFETIME FIVE INCOME BENEFIT RIDER, THE HIGHEST DAILY VALUE DEATH
BENEFIT, OR THE DOLLAR COST AVERAGING PROGRAM IF IT INVOLVES TRANSFERS OUT
OF THE FIXED ALLOCATIONS.
We offer a program that, after a seven-year period following commencement
of the program (we refer to the end of that period as the "maturity date")
guarantees your Account Value will not be less than your Account Value on the
effective date of your program (called the "Protected Principal Value").
The program monitors your Account Value daily and, if necessary,
systematically transfers amounts between variable investment options you choose
and the Fixed Allocation used to support the Protected Principal Value. The
program may be appropriate if you wish to protect a principal amount against
market downturns as of a specific date in the future, but also wish to invest in
the variable investment options to participate in market performance. There is
an additional charge if you elect the Guaranteed Return Option program.
The guarantees provided by the program exist only on the applicable
maturity date. However, due to the ongoing monitoring of your Account Value and
the transfer of Account Value between the variable investment options and the
Fixed Allocation to support our future guarantee, the program may provide some
protection from significant market losses if you choose to surrender the Annuity
or begin receiving annuity payments prior to a maturity date. For this same
reason, the program may limit your ability to benefit from market increases
while it is in effect.
KEY FEATURE -- PROTECTED PRINCIPAL VALUE
- - Under the GRO option, American Skandia guarantees that on the maturity
date, your Account Value will be no less than the Protected Principal
Value. On the maturity date if your Account Value is below the Protected
Principal Value, American Skandia will apply additional amounts to your
Annuity from its general account to increase your Account Value to be
equal to the Protected Principal Value.
Any amounts added to your Annuity to support our guarantees under the
program will be applied to the Fixed Allocation first and then to the
Sub-accounts pro-rata, based on your most recent allocation instructions in
accordance with the allocation mechanism we use under the program. We will
notify you of any amounts added to your Annuity under the program. If our
assumptions are correct and the operations relating to the administration of the
program work properly, we do not expect that we will need to add additional
amounts to the Annuity. The Protected Principal Value is generally referred to
as the "Guaranteed Amount" in the rider we issue for this benefit.
KEY FEATURE -- ALLOCATION OF ACCOUNT VALUE
Account Value is transferred to and maintained in a Fixed Allocation to the
extent we, in our sole discretion, deem it is necessary to support our guarantee
under the program. We monitor fluctuations in your Account Value each Valuation
Day, as well as the prevailing interest rates on the Fixed Allocation, the
remaining duration until the applicable maturity date and the amount of Account
Value allocated to the Fixed Allocation relative to a "reallocation trigger",
which determines whether Account Value must be transferred to or from the Fixed
Allocation. While you are not notified when your Account Value reaches a
reallocation trigger, you will receive a confirmation statement indicating the
transfer of a portion of your Account Value either to or from the Fixed
Allocation.
- - IF YOUR ACCOUNT VALUE IS GREATER THAN OR EQUAL TO THE REALLOCATION
TRIGGER, your Account Value in the variable investment options will remain
allocated according to your
57
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Living Benefit Programs continued
most recent instructions. If a portion of Account Value was previously
allocated to the Fixed Allocation to support the guaranteed amount, all or
a portion of those amounts may be transferred from the Fixed Allocation
and re-allocated to the variable investment options pro-rata according to
your most recent allocation instructions (including the model allocations
under any asset allocation program you may have elected). A Market Value
Adjustment will apply when we reallocate Account Value from the Fixed
Allocation to the variable investment options, which may result in a
decrease or increase in your Account Value.
- - IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER, a portion of
your Account Value in the variable investment options will be transferred
from your variable investment options pro rata according to your
allocations to a new Fixed Allocation to support the guaranteed amount.
The new Fixed Allocation will have a Guarantee Period equal to the time
remaining until the applicable maturity date. The Account Value allocated
to the new Fixed Allocation will be credited with the fixed interest rate
then being credited to a new Fixed Allocation maturing on the applicable
maturity date (rounded to the next highest yearly duration). The Account
Value will remain invested in the Fixed Allocation until the maturity date
unless, at an earlier date, your Account Value is greater than or equal to
the reallocation trigger and, therefore, amounts can be transferred to the
variable investment options while maintaining the guaranteed protection
under the program (as described above).
IF A SIGNIFICANT AMOUNT OF YOUR ACCOUNT VALUE IS SYSTEMATICALLY TRANSFERRED TO
THE FIXED ALLOCATION TO SUPPORT THE PROTECTED PRINCIPAL VALUE DURING PERIODS OF
MARKET DECLINES, LOW INTEREST RATES, AND/OR AS THE PROGRAM NEARS ITS MATURITY
DATE, LESS OF YOUR ACCOUNT VALUE MAY BE AVAILABLE TO PARTICIPATE IN THE
INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS IF THERE IS A
SUBSEQUENT MARKET RECOVERY. DURING PERIODS CLOSER TO THE MATURITY DATE OF THE
GUARANTEE A SIGNIFICANT PORTION OF YOUR ACCOUNT VALUE MAY BE ALLOCATED TO THE
FIXED ALLOCATION TO SUPPORT ANY APPLICABLE GUARANTEED AMOUNT. IF YOUR ACCOUNT
VALUE IS LESS THAN THE REALLOCATION TRIGGER AND A NEW FIXED ALLOCATION MUST BE
ESTABLISHED DURING PERIODS WHERE THE INTEREST RATE BEING CREDITED TO SUCH FIXED
ALLOCATIONS IS LOW, A LARGER PORTION OF YOUR ACCOUNT VALUE MAY NEED TO BE
TRANSFERRED TO THE FIXED ALLOCATION TO SUPPORT THE GUARANTEED AMOUNT, CAUSING
LESS OF YOUR ACCOUNT VALUE TO BE AVAILABLE TO PARTICIPATE IN THE INVESTMENT
EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS.
American Skandia uses an allocation mechanism based on assumptions of
expected and maximum market volatility, interest rates and time left to the
maturity of the program to determine the reallocation trigger. The allocation
mechanism is used to determine the allocation of Account Value between Fixed
Allocation and the Sub-accounts you choose. American Skandia reserves the right
to change the allocation mechanism and the reallocation trigger at its
discretion, subject to regulatory approval where required. Changes to the
allocation mechanism and/or the reallocation trigger may be applied to existing
programs where allowed by law.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
ELECTION OF THE PROGRAM
The Guaranteed Return Option can be elected at the time that you purchase your
Annuity, or on any Valuation Day thereafter (prior to annuitization). If you
elect the program after the Issue Date of your Annuity, the program will be
effective as of the Valuation Day that we receive the required documentation in
good order at our home office, and the guaranteed amount will be based on your
Account Value as of that date.
TERMINATION OF THE PROGRAM
The Annuity Owner also can terminate the Guaranteed Return Option program. Upon
termination, any Account Value in the Fixed Allocations will be transferred to
the variable investment options pro rata based on the Account Values in such
variable investment options, or in accordance with any effective asset
allocation program. A Market Value Adjustment will apply.
The program will terminate automatically upon: (a) the death of the Owner
or the Annuitant (in an entity owned contract); (b) as of the date Account Value
is applied to begin annuity payments; or (c) upon full surrender of the Annuity.
If you elect to terminate the program, the Guaranteed Return Option will no
longer provide any guarantees. If the surviving spouse assumes the Annuity,
he/she may re-elect the benefit on any anniversary of the Issue Date of the
Annuity or, if the deceased Owner had not previously elected the benefit, may
elect the benefit at any time. The surviving spouse's election will be effective
on the Valuation Day that we receive the required documentation in good order at
our home office, and the Account Value on that Valuation Day will be the
Protected Principal Value.
The charge for the Guaranteed Return Option program will no longer be
deducted from your Account Value upon termination of the program.
SPECIAL CONSIDERATIONS UNDER THE GUARANTEED RETURN OPTION
This program is subject to certain rules and restrictions, including, but not
limited to the following:
- - Upon inception of the program, 100% of your Account Value must be
allocated to the variable investment options. The Fixed Allocations may
not be in effect as of the date that you elect to participate in the
program. However, the reallocation trigger may transfer Account Value to
the Fixed Allocation as of the effective date of the program under some
circumstances.
- - Annuity Owners cannot allocate any portion of Purchase Payments (including
any Credits applied to such Purchase Payments) or transfer Account Value
to or from the Fixed Allocation while participating in the program;
however, all or a portion of any Purchase Payments (including any Credits
applied to such Purchase Payments) may be allocated by us to the Fixed
Allocation to support the amount guaranteed. You cannot participate in any
dollar cost averaging program that transfers Account Value from the Fixed
Allocation to a variable investment option.
- - Transfers from the Fixed Allocation made as a result of the allocation
mechanism under the program will be subject to the Market Value Adjustment
formula under the Annuity; however, the 0.10% liquidity factor in the
formula will not apply. A Market Value Adjustment may be either positive
or negative. Transfer amounts will be taken from the most recently
established Fixed Allocation.
- - Transfers from the Sub-accounts to the Fixed Allocation or from the Fixed
Allocation to the Sub-accounts under the program will not count toward the
maximum number of free transfers allowable under the Annuity.
- - Any amounts applied to your Account Value by American Skandia on the
maturity date or any anniversary of the maturity date will not be treated
as "investment in the contract" for income tax purposes.
- - Low interest rates may require allocation to the Fixed Allocation even
when the current Account Value exceeds the guarantee.
- - As the time remaining until the applicable maturity date gradually
decreases the program will become increasingly sensitive to moves to the
Fixed Allocation.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program.
- - We reserve the right to transfer any Account Value in a prohibited
investment option to an eligible investment option. Should we prohibit
access to any investment option, any transfers required to move Account
Value to eligible investment options will not be counted in determining
the number of free transfers during an Annuity Year. We may also require
that you allocate your Account Value according to an asset allocation
model.
59
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Living Benefit Programs continued
CHARGES UNDER THE PROGRAM
We deduct a charge equal to 0.25% of the average daily net assets of the
sub-accounts for participation in the Guaranteed Return Option program. The
annual charge is deducted daily. Account Value allocated to Fixed Allocations
under the program is not subject to the charge. The charge is deducted to
compensate American Skandia for: (a) the risk that your Account Value on the
maturity date is less than the amount guaranteed; and (b) administration of the
program.
Effective November 18, 2002, American Skandia changed the manner in which the
annual charge for the Guaranteed Return Option is deducted to the method
described above. The annual charge for the Guaranteed Return Option for Owners
who elected the benefit between January 23, 2002 and November 15, 2002 and
subsequent to November 19, 2002 in those states where the daily deduction of the
charge has not been approved, is deducted annually, in arrears, according to the
prospectus in effect as of the date the program was elected. Owners who
terminate and then re-elect the Guaranteed Return Option or elect to restart the
Guaranteed Return Option at any time after November 18, 2002 will be subject to
the charge method described above.
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL AND
WILL BE OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY
APPROVAL IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. CURRENTLY, THE PROGRAM CAN ONLY BE ELECTED BY NEW
PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY. WE MAY OFFER THE PROGRAM TO
EXISTING ANNUITY OWNERS IN THE FUTURE, SUBJECT TO OUR ELIGIBILITY RULES AND
RESTRICTIONS. THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT PROGRAM IS NOT AVAILABLE
IF YOU ELECT THE GUARANTEED RETURN OPTION, GUARANTEED RETURN OPTION PLUS, THE
GUARANTEED MINIMUM INCOME BENEFIT RIDER, OR THE LIFETIME FIVE INCOME BENEFIT
RIDER.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
We offer a program that guarantees your ability to with- draw amounts
equal to an initial principal value (called the "Protected Value"), regardless
of the impact of market performance on your Account Value, subject to our
program rules regarding the timing and amount of withdrawals. The program may be
appropriate if you intend to make periodic withdrawals from your Annuity and
wish to ensure that market performance will not affect your ability to protect
your principal. You are not required to make withdrawals as part of the program
- -- the guarantee is not lost if you withdraw less than the maximum allowable
amount of principal each year under the rules of the program. There is an
additional charge if you elect the GMWB program; however, the charge may be
waived under certain circumstances described below.
KEY FEATURE -- PROTECTED VALUE
The Protected Value is the total amount that we guarantee will be available to
you through withdrawals from your Annuity and/or benefit payments, regardless of
the impact of market performance on your Account Value. The Protected Value is
reduced with each withdrawal you make until the Protected Value is reduced to
zero. When the Protected Value is reduced to zero due to your withdrawals, the
GMWB program terminates. Additionally, the Protected Value is used to determine
the maximum annual amount that you can withdraw from your Annuity, called the
Protected Annual Withdrawal Amount, without triggering an adjustment in the
Protected Value on a proportional basis. The Protected Value is referred to as
the "Benefit Base" in the rider we issue for this benefit.
The Protected Value is determined as of the date you make your first
withdrawal under the Annuity following your election of the GMWB program. The
initial Protected Value is equal to the greater of (A) the Account Value on the
date you elect the GMWB program, plus any additional Purchase Payments and any
Credits that may be applied to such Purchase Payments before the date of your
first withdrawal; or (B) the Account Value as of the date of the first
withdrawal from your Annuity. The Protected Value may be enhanced by increases
in your Account Value due to market performance during the period between your
election of the GMWB program and the date of your first withdrawal.
- - If you elect the GMWB program at the time you purchase your Annuity, the
Account Value will be your initial Purchase Payment plus any Credit
applied to such Purchase Payment.
- - IF WE OFFER THE GMWB PROGRAM TO EXISTING ANNUITY OWNERS, the Account Value
on the anniversary of the Issue Date of your Annuity following your
election of the GMWB program will be used to determine the initial
Protected Value.
- - If you make additional Purchase Payments after your first withdrawal, the
Protected Value will be increased by the amount of the additional Purchase
Payment and any Credits that we apply to the Purchase Payment.
You may elect to step-up your Protected Value if, due to positive market
performance, your Account Value is greater than the Protected Value. You are
eligible to step-up the Protected Value on or after the 5th contract anniversary
following the first withdrawal under the GMWB program. The Protected Value can
be stepped up again on or after the 5th contract anniversary following the
preceding step-up. If you elect to step-up the Protected Value, you must do so
during the 30-day period prior to your eligibility date. If you elect to step-up
the Protected Value under the program, and on the date you elect to step-up, the
charges under the GMWB program have changed for new purchasers, your program may
be subject to the new charge going forward.
Upon election of the step-up, we reset the Protected Value to be equal to
the then current Account Value. For example, assume your initial Protected Value
was $100,000 and you have made cumulative withdrawals of $40,000, reducing the
Protected Value to $60,000. On the date you are eligible to step-up the
Protected Value, your Account Value is equal to $75,000. You could elect to
step-up the Protected Value to $75,000 on the date you are eligible. Upon
election of the step-up, we also reset the Protected Annual Withdrawal Amount
(discussed immediately below) to be equal to the greater of (A) the Protected
Annual Withdrawal Amount immediately prior to the reset; and (B) 7% of the
Protected Value immediately after the reset.
KEY FEATURE -- PROTECTED ANNUAL WITHDRAWAL AMOUNT
The initial Protected Annual Withdrawal Amount is equal to 7% of the Protected
Value. Under the GMWB program, if your cumulative withdrawals each Annuity Year
are less than or equal to the Protected Annual Withdrawal Amount, your
Protected Value will be reduced on a "dollar-for-dollar" basis (the Protected
Value is reduced by the actual amount of the withdrawal, including any CDSC or
MVA that may apply). Cumulative withdrawals in any Annuity Year that exceed the
Protected Annual Withdrawal Amount trigger a proportional adjustment to both
the Protected Value and the Protected Annual Withdrawal Amount, as described
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Living Benefit Programs continued
in the rider for this benefit (see the examples of this calculation below). The
Protected Annual Withdrawal Amount is referred to as the "Maximum Annual
Benefit" in the rider we issue for this benefit.
THE GMWB PROGRAM DOES NOT AFFECT YOUR ABILITY TO MAKE WITHDRAWALS UNDER YOUR
ANNUITY OR LIMIT YOUR ABILITY TO REQUEST WITHDRAWALS THAT EXCEED THE PROTECTED
ANNUAL WITHDRAWAL AMOUNT. You are not required to withdraw all or any portion
of the Protected Annual Withdrawal Amount each Annuity Year.
- - If, cumulatively, you withdraw an amount less than the Protected Annual
Withdrawal Amount in any Annuity Year, you cannot carry-over the unused
portion of the Protected Annual Withdrawal Amount to subsequent Annuity
Years. However, because the Protected Value is only reduced by the actual
amount of withdrawals you make under these circumstances, any unused
Protected Annual Withdrawal Amount may extend the period of time until the
remaining Protected Value is reduced to zero.
- - Additional Purchase Payments will increase the Protected Annual Withdrawal
Amount by 7% of the applicable Purchase Payment (and any Credits we apply
to such Purchase Payment).
- - If the Protected Annual Withdrawal Amount after an adjustment exceeds the
Protected Value, the Protected Annual Withdrawal Amount will be set equal
to the Protected Value.
The following examples of dollar-for-dollar and proportional reductions
and the reset of the Maximum Annual Benefit assume that: 1.) the Issue Date and
the effective date of the GMWB program are October 13, 2004; 2.) an initial
Purchase Payment of $250,000 (includes any Credits); 3.) a Protected Value of
$250,000; and 4.) a Protected Annual Withdrawal Amount of $17,500 (7% of
$250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 13, 2004 (in the first Annuity Year).
No prior withdrawals have been taken. As the amount withdrawn is less than the
Protected Annual Withdrawal Amount:
- - The Protected Value is reduced by the amount withdrawn (i.e., by $10,000,
from $250,000 to $240,000).
- - The remaining Protected Annual Withdrawal Amount for the balance of the
first Annuity Year is also reduced by the amount withdrawn (from $17,500
to $7,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on December 13, 2004 (still within the
first Annuity Year). The Account Value immediately before the withdrawal is
$220,000. As the amount withdrawn exceeds the remaining Protected Annual
Withdrawal Amount of $7,500 from Example 1:
- - the Protected Value is first reduced by the remaining Protected Annual
Withdrawal Amount (from $240,000 to $232,500);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the remaining Protected Annual
Withdrawal Amount ($10,000 - $7,500, or $2,500).
- B is the Account Value less the remaining Protected Annual
Withdrawal Amount ($220,000 - $7,500, or $212,500).
The resulting Protected Value is: $232,500 x (1 - $2,500 / $212,500), or
$229,764.71.
- - the Protected Annual Withdrawal Amount is also reduced by the ratio of A
to B: The resulting Protected Annual Withdrawal Amount is: $17,500 x (1 -
$2,500 / $212,500), or $17,294.12.
- - The remaining Protected Annual Withdrawal Amount is set to zero (0) for
the balance of the first Annuity Year.
EXAMPLE 3. RESET OF THE MAXIMUM ANNUAL BENEFIT
A $10,000 withdrawal is made on October 13, 2005 (second Annuity Year). The
remaining Protected Annual Withdrawal Amount has been reset to the Protected
Annual Withdrawal Amount of $17,294.12 from Example 2. As the amount withdrawn
is less than the remaining Protected Annual Withdrawal Amount:
- - the Protected Value is reduced by the amount withdrawn (i.e., reduced by
$10,000, from $229,764.71 to $219,764.71).
- - The remaining Protected Annual Withdrawal Amount for the balance of the
second Annuity Year is also reduced by the amount withdrawn (from
$17,294.12 to $7,294.12).
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
BENEFITS UNDER THE GMWB PROGRAM
- - In addition to any withdrawals you make under the GMWB program, market
performance may reduce your Account Value. If your Account Value is equal
to zero, and you have not received all of your Protected Value in the form
of withdrawals from your Annuity, we will continue to make payments equal
to the remaining Protected Value in the form of fixed, periodic payments
until the remainder of the Protected Value is paid, at which time the
rider terminates. The fixed, periodic payments will each be equal to the
Protected Annual Withdrawal Amount, except for the last payment which may
be equal to the remaining Protected Value. We will determine the duration
for which periodic payments will continue by dividing the Protected Value
by the Protected Annual Withdrawal Amount. You will not have the right to
make additional Purchase Payments or receive the remaining Protected Value
in a lump sum. You can elect the frequency of payments, subject to our
rules then in effect.
- - If the death benefit under the Annuity becomes payable before you have
received all of your Protected Value in the form of withdrawals from your
Annuity, your Beneficiary has the option to elect to receive the remaining
Protected Value as an alternate death benefit payout in lieu of the amount
payable under any other death benefit provided under the Annuity. The
remaining Protected Value will be payable in the form of fixed, periodic
payments. Your beneficiary can elect the frequency of payments, subject to
our rules then in effect. We will determine the duration for which
periodic payments will continue by dividing the Protected Value by the
Protected Annual Withdrawal Amount. THE PROTECTED VALUE IS NOT EQUAL TO
THE ACCOUNT VALUE FOR PURPOSES OF THE ANNUITY'S OTHER DEATH BENEFIT
OPTIONS. THE GMWB PROGRAM DOES NOT INCREASE OR DECREASE THE AMOUNT
OTHERWISE PAYABLE UNDER THE ANNUITY'S OTHER DEATH BENEFIT OPTIONS.
GENERALLY, THE GMWB PROGRAM WOULD BE OF VALUE TO YOUR BENEFICIARY ONLY
WHEN THE PROTECTED VALUE AT DEATH EXCEEDS ANY OTHER AMOUNT AVAILABLE AS A
DEATH BENEFIT.
- - If you elect to begin receiving annuity payments before you have received
all of your Protected Value in the form of withdrawals from your Annuity,
an additional annuity payment option will be available that makes fixed
annuity payments for a certain period, determined by dividing the
Protected Value by the Protected Annual Withdrawal Amount. If you elect to
receive annuity payments calculated in this manner, the assumed interest
rate used to calculate such payments will be 0%, which is less than the
assumed interest rate on other annuity payment options we offer. This 0%
assumed interest rate results in lower annuity payments than what would
have been paid if the assumed interest rate was higher than 0%. YOU CAN
ALSO ELECT TO TERMINATE THE GMWB PROGRAM AND BEGIN RECEIVING ANNUITY
PAYMENTS BASED ON YOUR THEN CURRENT ACCOUNT VALUE (NOT THE REMAINING
PROTECTED VALUE) UNDER ANY OF THE AVAILABLE ANNUITY PAYMENT OPTIONS.
OTHER IMPORTANT CONSIDERATIONS
- - Withdrawals under the GMWB program are subject to all of the terms and
conditions of the Annuity, including any CDSC and MVA that may apply.
- - Withdrawals made while the GMWB program is in effect will be treated, for
tax purposes, in the same way as any other withdrawals under the Annuity.
- - The GMWB program does not directly affect the Annuity's Account Value or
Surrender Value, but any withdrawal will decrease the Account Value by the
amount of the withdrawal. If you surrender your Annuity, you will receive
the current Surrender Value, not the Protected Value.
- - You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the GMWB program. The GMWB program
provides a guarantee that if your Account Value declines due to market
performance, you will be able to receive your Protected Value in the form
of periodic benefit payments.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity year. We may also require that you allocate
your Account Value according to an asset allocation model.
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Living Benefit Programs continued
ELECTION OF THE PROGRAM
Currently, the GMWB program can only be elected at the time that you purchase
your Annuity. In the future, we may offer existing Annuity Owners the option to
elect the GMWB program after the Issue Date of their Annuity, subject to our
eligibility rules and restrictions. If you elect the GMWB program after the
Issue Date of your Annuity, the program will be effective as of the next
anniversary date. Your Account Value as of such anniversary date will be used to
calculate the initial Protected Value and the initial Protected Annual
Withdrawal Amount.
We reserve the right to restrict the maximum amount of Protected Value
that may be covered under the GMWB program under this Annuity or any other
annuities that you own that are issued by American Skandia or its affiliated
companies.
TERMINATION OF THE PROGRAM
The program terminates automatically when your Protected Value reaches zero
based on your withdrawals. You may terminate the program at any time by
notifying us. If you terminate the program, any guarantee provided by the
benefit will terminate as of the date the termination is effective. The program
terminates upon your surrender of the Annuity, upon due proof of death (unless
your surviving spouse elects to continue the Annuity and the GMWB program or
your Beneficiary elects to receive the amounts payable under the GMWB program in
lieu of the death benefit) or upon your election to begin receiving annuity
payments.
The charge for the GMWB program will no longer be deducted from your
Account Value upon termination of the program.
CHARGES UNDER THE PROGRAM
Currently, we deduct a charge equal to 0.35% of the average daily net assets of
the Sub-accounts per year to purchase the GMWB program. The annual charge is
deducted daily. Account Value allocated to Fixed Allocations under the program
is not subject to the charge.
- - If, during the seven years following the effective date of the program,
you do not make any withdrawals, and do not make any additional Purchase
Payments after a five-year period following the effective date of the
program, the program will remain in effect; however, we will waive the
annual charge going forward. If you make an additional Purchase Payment
following the waiver of the annual charge, we will begin charging for the
program. After year seven (7) following the effective date of the program,
withdrawals will not cause a charge to be re-imposed.
- - If you elect to step-up the Protected Value under the program, and on the
date you elect to step-up, the charges under the program have changed for
new purchasers, your program may be subject to the new charge level for
the benefit.
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS
If you purchase an Annuity as an investment vehicle for "qualified" investments,
including an IRA, SEP-IRA, Roth IRA or Tax Sheltered Annuity (or 403(b)), the
minimum distribution rules under the Code require that you begin receiving
periodic amounts from your Annuity beginning after age 70 1/2. The amount
required under the Code may exceed the Protected Annual Withdrawal Amount, which
will cause us to recalculate the Protected Value and the Protected Annual
Withdrawal Amount, resulting in a lower amount payable in future Annuity Years.
In addition, the amount and duration of payments under the annuity payment and
death benefit provisions may be adjusted so that the payments do not trigger any
penalty or excise taxes due to tax considerations such as minimum distribution
requirements.
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
THE GUARANTEED MINIMUM INCOME BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL, AND
WILL BE OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY
APPROVAL IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. CURRENTLY, THE PROGRAM CAN ONLY BE ELECTED BY NEW
PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY. WE MAY OFFER THE PROGRAM TO
EXISTING ANNUITY OWNERS IN THE FUTURE, SUBJECT TO OUR ELIGIBILITY RULES AND
RESTRICTIONS. THE GUARANTEED MINIMUM INCOME BENEFIT PROGRAM IS NOT AVAILABLE IF
YOU ELECT THE GUARANTEED RETURN OPTION PROGRAM, GUARANTEED RETURN OPTION PLUS
PROGRAM, THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT RIDER, OR THE LIFETIME FIVE
INCOME BENEFIT RIDER.
We offer a program that, after a seven-year waiting period, guarantees
your ability to begin receiving income from your Annuity in the form of annuity
payments based on a guaranteed minimum value (called the "Protected Income
Value") that increases after the waiting period begins, regardless of the impact
of market performance on your Account Value. The pro-
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
gram may be appropriate for you if you anticipate using your Annuity as a future
source of periodic fixed income payments for the remainder of your life and wish
to ensure that the basis upon which your income payments will be calculated will
achieve at least a minimum amount despite fluctuations in market performance.
There is an additional charge if you elect the GMIB program.
KEY FEATURE -- PROTECTED INCOME VALUE
The Protected Income Value is the minimum amount that we guarantee will be
available (net of any applicable tax), after a waiting period of at least seven
years, as a basis to begin receiving fixed annuity payments. The Protected
Income Value is initially established on the effective date of the GMIB program
and is equal to your Account Value on such date. Currently, since the GMIB
program may only be elected at issue, the effective date is the Issue Date of
the Annuity. The Protected Income Value is increased daily based on an annual
growth rate of 5%, subject to the limitations described below. The Protected
Income Value is referred to as the "Protected Value" in the rider we issue for
this benefit. The 5% annual growth rate is referred to as the "Roll-Up
Percentage" in the rider we issue for this benefit.
The Protected Income Value is subject to a limit of 200% (2X) of the sum
of the Protected Income Value established on the effective date of the GMIB
program, or the effective date of any step-up value, plus any additional
Purchase Payments and any Credits that are applied to such Purchase Payments
made after the waiting period begins ("Maximum Protected Income Value"), minus
the sum of any reductions in the Protected Income Value due to withdrawals you
make from the Annuity after the waiting period begins.
- - Subject to the maximum age/durational limits described immediately below,
we will no longer increase the Protected Income Value by the 5% annual
growth rate once you reach the Maximum Protected Income Value. However, we
will increase the Protected Income Value by the amount of any additional
Purchase Payments and any Credits applied to such Purchase Payments after
you reach the Maximum Protected Income Value. Further, if you make
withdrawals after you reach the Maximum Protected Income Value, we will
reduce the Protected Income Value and the Maximum Protected Income Value
by the proportional impact of the withdrawal on your Account Value.
- - Subject to the Maximum Protected Income Value, we will no longer increase
the Protected Income Value by the 5% annual growth rate after the later of
the anniversary date on or immediately following the Annuitant's 80th
birthday or the 7th anniversary of the later of the effective date of the
GMIB program or the effective date of the most recent step-up. However, we
will increase the Protected Income Value by the amount of any additional
Purchase Payments and any Credits applied to such Purchase Payments.
Further, if you make withdrawals after the Annuitant reaches the maximum
age/ duration limits, we will reduce the Protected Income Value and the
Maximum Protected Income Value by the proportional impact of the
withdrawal on your Account Value.
- - Subject to the Maximum Protected Income Value, if you make an additional
Purchase Payment, we will increase the Protected Income Value by the
amount of the Purchase Payment (including any Credits that may be applied
to your Account Value based on such Purchase Payment) and will apply the
5% annual growth rate on the new amount from the date the Purchase Payment
is applied.
- - As described below, after the waiting period begins, cumulative
withdrawals each Annuity Year that are up to 5% of the Protected Income
Value on the prior anniversary of the Annuity will reduce the Protected
Income Value by the amount of the withdrawal. Cumulative withdrawals each
Annuity Year in excess of 5% of the Protected Income Value on the prior
anniversary of the Annuity, will reduce the Protected Income Value
proportionately. All withdrawals after the Maximum Protected Income Value
is reached will reduce the Protected Income Value proportionately. The 5%
annual growth rate will be applied to the reduced Protected Income Value
from the date of the withdrawal.
Stepping-Up the Protected Income Value -- You may elect to "step-up" or
"reset" your Protected Income Value if your Account Value is greater than the
current Protected Income Value. Upon exercise of the step-up provision, your
initial Protected Income Value will be reset equal to your current Account
Value. From the date that you elect to step-up the Protected Income Value, we
will apply the 5% annual growth rate to the stepped-up Protected Income Value,
as described above. You can exercise the step-up provision twice while the GMIB
program is in effect, and only while the Annuitant is less than age 76.
- - A new seven-year waiting period will be established upon the effective
date of your election to step-up the Protected Income Value. You cannot
exercise your right to begin
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Living Benefit Programs continued
receiving annuity payments under the GMIB program until the end of the new
waiting period.
- - The Maximum Protected Income Value will be reset as of the effective date
of any step-up. The new Maximum Protected Income Value will be equal to
200% of the sum of the Protected Income Value as of the effective date of
the step-up plus any subsequent Purchase Payments and any Credits applied
to such Purchase Payments, minus the impact of any withdrawals after the
date of the step-up.
- When determining the guaranteed annuity purchase rates for annuity
payments under the GMIB program, we will apply such rates based on
the number of years since the most recent step-up.
- If you elect to step-up the Protected Income Value under the
program, and on the date you elect to step-up, the charges under the
GMIB program have changed for new purchasers, your program may be
subject to the new charge going forward.
- A step-up will increase the dollar for dollar limit on the
anniversary of the Issue Date of the Annuity following such step-up.
Impact of Withdrawals on the Protected Income Value -- Cumulative
withdrawals each Annuity Year up to 5% of the Protected Income Value will reduce
the Protected Income Value on a "dollar-for-dollar" basis (the Protected Income
Value is reduced by the actual amount of the withdrawal). Cumulative withdrawals
in any Annuity Year in excess of 5% of the Protected Income Value will reduce
the Protected Income Value proportionately (see the examples of this calculation
below). The 5% annual withdrawal amount is determined on each anniversary of the
Issue Date (or on the Issue Date for the first Annuity Year) and applies to any
withdrawals during the Annuity Year. This means that the amount available for
withdrawals each Annuity Year on a "dollar-for-dollar" basis is adjusted on each
contract anniversary to reflect changes in the Protected Income Value during the
prior Annuity Year.
The following examples of dollar-for-dollar and proportional reductions
assume that: 1.) the Issue Date and the effective date of the GMIB program are
October 13, 2005; 2.) an initial Purchase Payment of $250,000 (includes any
Credits); 3.) an initial Protected Income Value of $250,000; and 4.) a dollar-
for-dollar limit of $12,500 (5% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 13, 2005 (in the first Annuity Year).
No prior withdrawals have been taken. Immediately prior to the withdrawal, the
Protected Income Value is $251,038.10 (the initial value accumulated for 31
days at an annual effective rate of 5%). As the amount withdrawn is less than
the dollar-for-dollar limit:
- - the Protected Income Value is reduced by the amount withdrawn (i.e., by
$10,000, from $251,038.10 to $241,038.10).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance
of the first Annuity Year is also reduced by the amount withdrawn (from
$12,500 to $2,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on December 13, 2005 (still within the
first Annuity Year). Immediately before the withdrawal, the Account Value is
$220,000 and the Protected Income Value is $242,006.64. As the amount withdrawn
exceeds the Remaining Limit of $2,500 from Example 1:
- - the Protected Income Value is first reduced by the Remaining Limit (from
$242,006.64 to $239,506.64);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the Remaining Limit ($10,000 -
$2,500, or $7,500).
- B is the Account Value less the Remaining Limit ($220,000 - $2,500,
or $217,500).
The resulting Protected Income Value is: $239,506.64 x (1 - $7,500 /
$217,500), or $231,247.79.
- The Remaining Limit is set to zero (0) for the balance of the first
Annuity Year.
EXAMPLE 3. RESET OF THE DOLLAR-FOR-DOLLAR LIMIT
A $10,000 withdrawal is made on the first anniversary of the Issue Date,
October 13, 2006 (second Annuity Year). Prior to the withdrawal, the Protected
Income Value is $240,838.37. The Remaining Limit is reset to 5% of this amount,
or $12,041.92. As the amount withdrawn is less than the dollar-for-dollar
limit:
- - the Protected Income Value is reduced by the amount withdrawn (i.e.,
reduced by $10,000, from $240,838.37 to $230,838.37).
- - The Remaining Limit for the balance of the second Annuity Year is also
reduced by the amount withdrawn (from $12,041.92 to $2,041.92).
KEY FEATURE -- GMIB ANNUITY PAYMENTS
You can elect to apply the Protected Income Value to one of the available GMIB
Annuity Payment Options on any anniversary date following the initial waiting
period, or any subsequent waiting period established upon your election to
step-up the Protected Income Value. Once you have completed the waiting period,
you
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
will have a 30-day period each year, prior to the contract anniver- sary, during
which you may elect to begin receiving annuity payments under one of the
available GMIB Annuity Payment Options. You must elect one of the GMIB Annuity
Payment Options by the anniversary of the Annuity's Issue Date on or immediately
following the Annuitant's 95th birthday, except for Annuities used as a funding
vehicle for an IRA, SEP IRA or 403(b), in which case you must elect one of the
GMIB Annuity Payment Options by the anniversary of the Annuity's Issue Date on
or immediately following the Annuitant's 92nd birthday.
The amount of each GMIB Annuity Payment will be determined based on the age and,
where permitted by law, sex of the Annuitant by applying the Protected Income
Value (net of any applicable tax charge that may be due) to the GMIB Annuity
Payment Option you choose. We use special annuity purchase rates to calculate
the amount of each payment due under the GMIB Annuity Payment Options. These
special rates for the GMIB Annuity Payment Options are calculated using an
assumed interest rate factor that provides for lower growth in the value applied
to produce annuity payments than if you elected an annuity payment option that
is not part of the GMIB program. These special rates also are calculated using
other factors such as "age setbacks" (use of an age lower than the Annuitant's
actual age) that result in lower payments than would result if you elected an
annuity payment option that is not part of the GMIB program. Use of an age
setback entails a longer assumed life for the Annuitant which in turn results in
lower annuity payments.
ON THE DATE THAT YOU ELECT TO BEGIN RECEIVING GMIB ANNUITY PAYMENTS, WE
GUARANTEE THAT YOUR PAYMENTS WILL BE CALCULATED BASED ON YOUR ACCOUNT VALUE AND
OUR THEN CURRENT ANNUITY PURCHASE RATES IF THE PAYMENT AMOUNT CALCULATED ON THIS
BASIS WOULD BE HIGHER THAN IT WOULD BE BASED ON THE PROTECTED INCOME VALUE AND
THE SPECIAL GMIB ANNUITY PURCHASE RATES.
GMIB ANNUITY PAYMENT OPTION 1 -- PAYMENTS FOR LIFE WITH A CERTAIN PERIOD
Under this option, monthly annuity payments will be made until the death of the
Annuitant. If the Annuitant dies before having received 120 monthly annuity
payments, the remainder of the 120 monthly annuity payments will be made to the
Beneficiary.
GMIB ANNUITY PAYMENT OPTION 2 -- PAYMENTS FOR JOINT LIVES WITH A CERTAIN PERIOD
Under this option, monthly annuity payments will be made until the death of both
the Annuitant and the Joint Annuitant. If the Annuitant and the Joint Annuitant
die before having received 120 monthly annuity payments, the remainder of the
120 monthly annuity payments will be made to the Beneficiary.
- - If the Annuitant dies first, we will continue to make payments until the
later of the death of the Joint Annuitant and the end of the period
certain. However, if the Joint Annuitant is still receiving annuity
payments following the end of the certain period, we will reduce the
amount of each subsequent payment to 50% of the original payment amount.
- - If the Joint Annuitant dies first, we will continue to make payments until
the later of the death of the Annuitant and the end of the period certain.
You cannot withdraw your Account Value or the Protected Income Value under
either GMIB Annuity Payment Option once annuity payments have begun. We may make
other payout frequencies available, such as quarterly, semi-annually or
annually.
OTHER IMPORTANT CONSIDERATIONS
- - YOU SHOULD NOTE THAT GMIB IS DESIGNED TO PROVIDE A TYPE OF INSURANCE THAT
SERVES AS A SAFETY NET ONLY IN THE EVENT YOUR ACCOUNT VALUE DECLINES
SIGNIFICANTLY DUE TO NEGATIVE INVESTMENT PERFORMANCE. IF YOUR CONTRACT
VALUE IS NOT SIGNIFICANTLY AFFECTED BY NEGATIVE INVESTMENT PERFORMANCE, IT
IS UNLIKELY THAT THE PURCHASE OF THE GMIB WILL RESULT IN YOUR RECEIVING
LARGER ANNUITY PAYMENTS THAN IF YOU HAD NOT PURCHASED GMIB. This is
because the assumptions that we use in computing the GMIB, such as the
annuity purchase rates, (which include assumptions as to age-setbacks and
assumed interest rates), are more conservative than the assumptions that
we use in computing annuity payout options outside of GMIB. Therefore, you
may generate higher income payments if you were to annuitize a lower
Account Value at the current annuity purchase rates, than if you were to
annuitize under the GMIB with a higher Protected Value than your Account
Value but, at the annuity purchase rates guaranteed under the GMIB. The
GMIB program does not directly affect the Annuity's Account Value,
Surrender Value or the amount payable under either the basic death benefit
provision of the Annuity or any optional death benefit provision. If you
surrender your Annuity, you will receive the current Surrender Value, not
the Protected Income Value. The Protected Income Value is only applicable
if you elect to begin receiving annuity payments under one of the GMIB
annuity options after the waiting period.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Living Benefit Programs continued
- - The Annuity offers other annuity payment options that you can elect which
do not impose an additional charge, but which do not offer to guarantee a
minimum value on which to make annuity payments.
- Where allowed by law, we reserve the right to limit subsequent
purchase payments if we determine, at our sole discretion, that
based on the timing of your Purchase Payments and withdrawals, your
Protected Income Value is increasing in ways we did not intend. In
determining whether to limit Purchase Payments, we will look at
Purchase Payments which are disproportionately larger than your
initial Purchase Payment and other actions that may artificially
increase the Protected Income Value.
- We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We
reserve the right to transfer any Account Value in a prohibited
investment option to an eligible investment option. Should we
prohibit access to any investment option, any transfers required to
move Account Value to eligible investment options will not be
counted in determining the number of free transfers during an
Annuity Year. We may also require that you allocate your Account
Value according to an asset allocation model.
- If you change the Annuitant after the effective date of the GMIB
program, the period of time during which we will apply the 5% annual
growth rate may be changed based on the age of the new Annuitant. If
the new Annuitant would not be eligible to elect the GMIB program
based on his or her age at the time of the change, then the GMIB
program will terminate.
- Annuity payments made under the GMIB program are subject to the same
tax treatment as any other annuity payment.
- At the time you elect to begin receiving annuity payments under the
GMIB program or under any other annuity payment option we make
available, the protection provided by the Annuity's basic death
benefit or any optional death benefit provision you elected will no
longer apply.
ELECTION OF THE PROGRAM
Currently, the GMIB program can only be elected at the time that you purchase
your Annuity. The Annuitant must be age 75 or less as of the effective date of
the GMIB program. In the future, we may offer existing Annuity Owners the option
to elect the GMIB program after the Issue Date of their Annuity, subject to our
eligibility rules and restrictions. If you elect the GMIB program after the
Issue Date of your Annuity, the program will be effective as of the date of
election. Your Account Value as of the that date will be used to calculate the
Protected Income Value as of the effective date of the program.
TERMINATION OF THE PROGRAM
The GMIB program cannot be terminated by the Owner once elected. The GMIB
program automatically terminates as of the date the Annuity is fully
surrendered, on the date the death benefit is payable to your Beneficiary
(unless your surviving spouse elects to continue the Annuity), or on the date
that your Account Value is transferred to begin making annuity payments. The
GMIB program may also be terminated if you designate a new Annuitant who would
not be eligible to elect the GMIB program based on his or her age at the time of
the change.
Upon termination of the GMIB program we will deduct the charge from your
Account Value for the portion of the Annuity Year since the prior anniversary of
the Annuity's Issue Date (or the Issue Date if in the first Annuity Year).
CHARGES UNDER THE PROGRAM
Currently, we deduct a charge equal to 0.50% per year of the average Protected
Income Value for the period the charge applies. Because the charge is
calculated based on the average Protected Income Value, it does not increase or
decrease based on changes to the Annuity's Account Value due to market
performance. The dollar amount you pay each year will increase in any year the
Protected Income Value increases, and it will decrease in any year the
Protected Income Value decreases due to withdrawal, irrespective of whether
your Account Value increases or decreases.
The charge is deducted annually in arrears each Annuity Year on the
anniversary of the Issue Date of the Annuity. We deduct the amount of the charge
pro-rata from the Account Value allocated to the variable investment options and
the Fixed Allocations. No MVA will apply to Account Value deducted from a Fixed
Allocation. If you surrender your Annuity, begin receiving annuity payments
under the GMIB program or any other annuity payment option we make available
during an Annuity Year, or the GMIB program terminates, we will deduct the
charge for the portion of the Annuity Year since the prior anniversary of the
Annuity's Issue Date (or the Issue Date if in the first Annuity Year).
No charge applies after the Annuity Date.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
LIFETIME FIVE INCOME BENEFIT (LIFETIME FIVE)
THE LIFETIME FIVE INCOME BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING OFFERED
IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL AND WILL BE
OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY APPROVAL
IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. CURRENTLY, LIFETIME FIVE CAN BE ELECTED ONLY ONCE
EACH ANNUITY YEAR, AND ONLY WHERE THE ANNUITANT AND THE OWNER ARE THE SAME
PERSON OR, IF THE ANNUITY OWNER IS AN ENTITY, WHERE THERE IS ONLY ONE ANNUITANT.
WE RESERVE THE RIGHT TO LIMIT THE ELECTION FREQUENCY IN THE FUTURE. BEFORE
MAKING ANY SUCH CHANGE TO THE ELECTION FREQUENCY, WE WILL PROVIDE PRIOR NOTICE
TO OWNERS WHO HAVE AN EFFECTIVE LIFETIME FIVE INCOME BENEFIT. THE ANNUITANT MUST
BE AT LEAST 45 YEARS OLD WHEN THE PROGRAM IS ELECTED. THE LIFETIME FIVE INCOME
BENEFIT PROGRAM IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION,
GUARANTEED RETURN OPTION PLUS, GUARANTEED MINIMUM WITHDRAWAL BENEFIT OR THE
GUARANTEED MINIMUM INCOME BENEFIT RIDER. AS LONG AS YOUR LIFETIME FIVE INCOME
BENEFIT IS IN EFFECT, YOU MUST ALLOCATE YOUR ACCOUNT VALUE IN ACCORDANCE WITH AN
ELIGIBLE MODEL UNDER OUR ASSET ALLOCATION PROGRAMS, WHICH ARE GENERALLY
DESCRIBED IN THE "ARE ANY ASSET ALLOCATION PROGRAMS AVAILABLE?" SECTION ABOVE.
FOR FURTHER INFORMATION ON ASSET ALLOCATION PROGRAMS, PLEASE CONSULT WITH
YOUR INVESTMENT PROFESSIONAL OR CALL 1-800-752-6342.
We offer a program that guarantees your ability to withdraw amounts equal
to a percentage of an initial principal value (called the "Protected Withdrawal
Value"), regardless of the impact of market performance on your Account Value,
subject to our program rules regarding the timing and amount of withdrawals.
There are two options -- one is designed to provide an annual withdrawal amount
for life (the "Life Income Benefit") and the other is designed to provide a
greater annual withdrawal amount as long as there is Protected Withdrawal Value
(adjusted as described below) (the "Withdrawal Benefit"). If there is no
Protected Withdrawal Value, the withdrawal benefit will be zero. You do not
choose between these two options; each option will continue to be available as
long as the Annuity has an Account Value and the Lifetime Five is in effect.
Certain benefits under Lifetime Five may remain in effect even if the Account
Value of the Annuity is zero. The program may be appropriate if you intend to
make periodic withdrawals from your Annuity and wish to ensure that market
performance will not affect your ability to receive annual payments. You are not
required to make withdrawals as part of the program -- the guarantees are not
lost if you withdraw less than the maximum allowable amount each year under the
rules of the program.
KEY FEATURE -- PROTECTED WITHDRAWAL VALUE
The Protected Withdrawal Value is initially used to determine the amount of
each initial annual payment under the Life Income Benefit and the Withdrawal
Benefit. The initial Protected Withdrawal Value is determined as of the date
you make your first withdrawal under the Annuity following your election of
Lifetime Five. The initial Protected Withdrawal Value is equal to the greater
of (A) the Account Value on the date you elect Lifetime Five, plus any
additional Purchase Payments and associated Credits each growing at 5% per year
from the date of your election of the program, or application of the Purchase
Payment and associated Credit to your Annuity, as applicable, until the date of
your first withdrawal or the 10th anniversary of the benefit effective date, if
earlier (B) the Account Value as of the date of the first withdrawal from your
Annuity, prior to the withdrawal, and (C) the highest Account Value on each
Annuity anniversary prior to the first withdrawal or on the first 10 Annuity
anniversaries if earlier than the date of your first withdrawal after the
benefit effective date. Each value is increased by the amount of any subsequent
Purchase Payments and associated Credits.
- - If you elect the Lifetime Five program at the time you purchase your
Annuity, the Account Value will be your initial Purchase Payment plus the
amount of any associated Credits.
- - For existing Owners who are electing the Lifetime Five benefit, the
Account Value on the date of your election of the Lifetime Five program
will be used to determine the initial Protected Withdrawal Value.
- - If you make additional Purchase Payments after your first withdrawal, the
Protected Withdrawal Value will be increased by the amount of each
additional Purchase Payment plus associated Credits.
You may elect to step-up your Protected Withdrawal Value if, due to
positive market performance, your Account Value is greater than the Protected
Withdrawal Value. You are eligible to step-up the Protected Withdrawal Value on
or after the 5th anniversary of the first withdrawal under the Lifetime Five
program. The Protected Withdrawal Value can be stepped up again on or after the
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Living Benefit Programs continued
5th anniversary following the preceding step-up. If you elect to step-up the
Protected Withdrawal Value under the program, and on the date you elect to
step-up, the charges under the Lifetime Five program have changed for new
purchasers, your program may be subject to the new charge going forward.
Upon election of the step-up, we increase the Protected Withdrawal Value
to be equal to the then current Account Value. For example, assume your initial
Protected Withdrawal Value was $100,000 and you have made cumulative withdrawals
of $40,000, reducing the Protected Withdrawal Value to $60,000. On the date you
are eligible to step-up the Protected Withdrawal Value, your Account Value is
equal to $75,000. You could elect to step-up the Protected Withdrawal Value to
$75,000 on the date you are eligible. If your current Annual Income Amount and
Annual Withdrawal Amount are less than they would be if we did not reflect the
step-up in Protected Withdrawal Value, then we will increase these amounts to
reflect the step-up as described below.
The Protected Withdrawal Value is reduced each time a withdrawal is made
on a dollar-for-dollar basis up to 7% per Annuity Year of the Protected
Withdrawal Value and on the greater of a dollar-for-dollar basis or a pro rata
basis for withdrawals in an Annuity Year in excess of that amount until the
Protected Withdrawal Value is reduced to zero. At that point the Annual
Withdrawal Amount will be zero until such time (if any) as the Annuity reflects
a Protected Withdrawal Value (for example, due to a step-up or additional
Purchase Payments being made into the Annuity).
KEY FEATURE -- ANNUAL INCOME AMOUNT UNDER THE LIFE INCOME BENEFIT
The initial Annual Income Amount is equal to 5% of the initial Protected
Withdrawal Value. Under the Lifetime Five program, if your cumulative
withdrawals in an Annuity Year are less than or equal to the Annual Income
Amount, they will not reduce your Annual Income Amount in subsequent Annuity
Years. If your cumulative withdrawals are in excess of the Annual Income Amount
("Excess Income"), your Annual Income Amount in subsequent years will be reduced
(except with regard to required minimum distributions) by the result of the
ratio of the Excess Income to the Account Value immediately prior to such
withdrawal (see examples of this calculation below). Reductions include the
actual amount of the withdrawal, including any CDSC that may apply. A withdrawal
can be considered Excess Income under the Life Income Benefit even though it
does not exceed the Annual Withdrawal Amount under the Withdrawal Benefit. When
you elect a step-up, your Annual Income Amount increases to equal 5% of your
Account Value after the step-up if such amount is greater than your Annual
Income Amount. Your Annual Income Amount also increases if you make additional
Purchase Payments. The amount of the increase is equal to 5% of any additional
Purchase Payments plus any associated Credits. Any increase will be added to
your Annual Income Amount beginning on the day that the step-up is effective or
the Purchase Payment is made. A determination of whether you have exceeded your
Annual Income Amount is made at the time of each withdrawal; therefore a
subsequent increase in the Annual Income Amount will not offset the effect of a
withdrawal that exceeded the Annual Income Amount at the time the withdrawal was
made.
KEY FEATURE -- ANNUAL WITHDRAWAL AMOUNT UNDER THE WITHDRAWAL BENEFIT
The initial Annual Withdrawal Amount is equal to 7% of the initial Protected
Withdrawal Value. Under the Lifetime Five program, if your cumulative
withdrawals each Annuity Year are less than or equal to the Annual Withdrawal
Amount, your Protected Withdrawal Value will be reduced on a dollar-for-dollar
basis. If your cumulative withdrawals are in excess of the Annual Withdrawal
Amount ("Excess Withdrawal"), your Annual Withdrawal Amount will be reduced
(except with regard to required minimum distributions) by the result of the
ratio of the Excess Withdrawal to the Account Value immediately prior to such
withdrawal (see the examples of this calculation below). Reductions include the
actual amount of the withdrawal, including any CDSC that may apply. When you
elect a step-up, your Annual Withdrawal Amount increases to equal 7% of your
Account Value after the step-up if such amount is greater than your Annual
Withdrawal Amount. Your Annual Withdrawal Amount also increases if you make
additional Purchase Payments. The amount of the increase is equal to 7% of any
additional Purchase Payments. A determination of whether you have exceeded your
Annual Withdrawal Amount is made at the time of each withdrawal; therefore, a
subsequent increase in the Annual Withdrawal Amount will not offset the effect
of a withdrawal that exceeded the Annual Withdrawal Amount at the time the
withdrawal was made.
The Lifetime Five program does not affect your ability to make withdrawals
under your Annuity or limit your ability to request withdrawals that exceed the
Annual Income Amount
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
and the Annual Withdrawal Amount. You are not required to withdraw all or any
portion of the Annual Withdrawal Amount or Annual Income Amount in each Annuity
Year.
- - If, cumulatively, you withdraw an amount less than the Annual Withdrawal
Amount under the Withdrawal Benefit in any Annuity Year, you cannot
carry-over the unused portion of the Annual Withdrawal Amount to
subsequent Annuity Years. However, because the Protected Withdrawal Value
is only reduced by the actual amount of withdrawals you make under these
circumstances, any unused Annual Withdrawal Amount may extend the period
of time until the remaining Protected Withdrawal Value is reduced to zero.
- - If, cumulatively, you withdraw an amount less than the Annual Income
Amount under the Life Income Benefit in any Annuity Year, you cannot
carry-over the unused portion of the Annual Income Amount to subsequent
Annuity Years. However, because the Protected Withdrawal Value is only
reduced by the actual amount of withdrawals you make under these
circumstances, any unused Annual Income Amount may extend the period of
time until the remaining Protected Withdrawal Value is reduced to zero.
The following examples of dollar-for-dollar and proportional reductions
and the step-up of the Protected Withdrawal Value, Annual Withdrawal Amount and
Annual Income Amount assume: 1.) the Issue Date and the Effective Date of the
Lifetime Five program are February 1, 2005; 2.) an initial Purchase Payment of
$250,000 (includes any Credits); 3.) the Account Value on February 1, 2006 is
equal to $265,000; 4.) the first withdrawal occurs on March 1, 2006 when the
Account Value is equal to $263,000; and 5.) the Account Value on March 1, 2011
is equal to $240,000.
The initial Protected Withdrawal Value is calculated as the greatest of
(a), (b) and (c):
(a) Purchase payment accumulated at 5% per year from February 1, 2005
until March 1, 2006 (393 days) = $250,000 x 1.05(393/365) =
$263,484.33
(b) Account Value on March 1, 2006 (the date of the first withdrawal) =
$263,000
(c) Account Value on February 1, 2006 (the first Annuity Anniversary) =
$265,000
Therefore, the initial Protected Withdrawal Value is equal to $265,000.
The Annual Withdrawal Amount is equal to $18,550 under the Withdrawal Benefit
(7% of $265,000). The Annual Income Amount is equal to $13,250 under the Life
Income Benefit (5% of $265,000).
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
If $10,000 was withdrawn (less than both the Annual Income Amount and the
Annual Withdrawal Amount) on March 1, 2006, then the following values would
result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 -
$10,000 = $8,550
Annual Withdrawal Amount for future Annuity Years remains at $18, 550
- - Remaining Annual Income Amount for current Annuity Year = $13,250 -
$10,000 = $3,250
Annual Income Amount for future Annuity Years remains at $13,250
- - Protected Withdrawal Value is reduced by $10,000 from $265,000 to $255,000
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
(a) If $15,000 was withdrawn (more than the Annual Income Amount but
less than the Annual Withdrawal Amount) on March 1, 2006, then the
following values would result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 -
$15,000 = $3,550
Annual Withdrawal Amount for future Annuity Years remains at $18,550
- - Remaining Annual Income Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Income Amount ($15,000 - $13,250 =
$1,750) reduces Annual Income Amount for future Annuity Years.
- - Reduction to annual income amount = excess income/ Account Value before
Excess Income x Annual Income Amount = $1,750 / ($263,000 - $13,250) x
$13,250 = $93
Annual Income Amount for future Annuity Years = $13,250 - $93 = $13,157
- - Protected Withdrawal Value is reduced by $15,000 from $265,000 to $250,000
(b) If $25,000 was withdrawn (more than both the Annual Income Amount
and the Annual Withdrawal Amount) on March 1, 2006, then the
following values would result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $0 Excess of
withdrawal over the Annual Withdrawal Amount ($25,000 - $18,550 = $6,450)
reduces Annual Withdrawal Amount for future Annuity Years.
- - Reduction to Annual Withdrawal Amount = Excess Withdrawal/Account Value
before Excess Withdrawal x
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Living Benefit Programs continued
Annual Withdrawal Amount = $6,450 / ($263,000 - $18,550) x $18,550 = $489
Annual Withdrawal Amount for future Annuity Years = $18,550 - $489 =
$18,061
- - Remaining Annual Income Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Income Amount ($25,000 - $13,250 =
$11,750) reduces Annual Income Amount for future Annuity Years.
- - Reduction to Annual Income Amount = Excess Income/ Account Value before
Excess Income x Annual Income Amount = $11,750 / ($263,000 - $13,250) x
$13,250 = $623
Annual Income Amount for future Annuity Years = $13,250 - $623 = $12,627
- - Protected Withdrawal Value is first reduced by the Annual Withdrawal
Amount ($18,550) from $265,000 to $246,450. It is further reduced by the
greater of a dollar-for-dollar reduction or a proportional reduction.
Dollar-for-dollar reduction = $25,000 - $18,550 = $6,450
- - Proportional reduction = Excess Withdrawal / Account Value before Excess
Withdrawal x Protected Withdrawal Value = $6,450 / ($263,000 - $18,550) x
$246,450 = $6,503
Protected Withdrawal Value = $246,450 - max {$6,450, $6,503} = $239,947
EXAMPLE 3. STEP-UP OF THE PROTECTED WITHDRAWAL VALUE
If the Annual Income Amount ($13,250) is withdrawn each year starting on March
1, 2006 for a period of 5 years, the Protected Withdrawal Value on March 1,
2011 would be reduced to $198,750 {$265,000 - ($13,250 x 5)}. If a step-up is
elected on March 1, 2011, then the following values would result:
- - Protected Withdrawal Value = Account Value on March 1, 2011 = $240,000
- - Annual Income Amount is equal to the greater of the current Annual Income
Amount or 5% of the stepped up Protected Withdrawal Value. Current Annual
Income Amount is $13,250. 5% of the stepped-up Protected Withdrawal Value
is 5% of $240,000, which is $12,000. Therefore, the Annual Income Amount
remains $13,250.
- - Annual Withdrawal Amount is equal to the greater of the current Annual
Withdrawal Amount or 7% of the stepped up Protected Withdrawal Value.
Current Annual Withdrawal Amount is $18,550. 7% of the stepped-up
Protected Withdrawal Value is 7% of $240,000, which is $16,800. Therefore
the Annual Withdrawal Amount remains $18,550.
BENEFITS UNDER THE LIFETIME FIVE PROGRAM
- - If your Account Value is equal to zero, and the cumulative withdrawals in
the current Annuity Year are greater than the Annual Withdrawal Amount,
the Lifetime Five program will terminate. To the extent that your Account
Value was reduced to zero as a result of cumulative withdrawals that are
equal to or less than the Annual Income Amount and amounts are still
payable under both the Life Income Benefit and the Withdrawal Benefit, you
will be given the choice of receiving the payments under the Life Income
Benefit or under the Withdrawal Benefit. Once you make this election we
will make an additional payment for that Annuity Year equal to either the
remaining Annual Income Amount or Annual Withdrawal Amount for the Annuity
Year, if any, depending on the option you choose. In subsequent Annuity
Years we make payments that equal either the Annual Income Amount or the
Annual Withdrawal Amount as described in this Prospectus. You will not be
able to change the option after your election and no further Purchase
Payments will be accepted under your Annuity. If you do not make an
election, we will pay you annually under the Life Income Benefit. To the
extent that cumulative withdrawals in the current Annuity Year that
reduced your Account Value to zero are more than the Annual Income Amount
but less than or equal to the Annual Withdrawal Amount and amounts are
still payable under the Withdrawal Benefit, you will receive the payments
under the Withdrawal Benefit. In the year of a withdrawal that reduced
your Account Value to zero, we will make an additional payment to equal
any remaining Annual Withdrawal Amount and make payments equal to the
Annual Withdrawal Amount in each subsequent year (until the Protected
Withdrawal Value is depleted). Once your Account Value equals zero no
further Purchase Payments will be accepted under your Annuity.
- - If annuity payments are to begin under the terms of your Annuity or if you
decide to begin receiving annuity payments and there is any Annual Income
Amount due in subsequent Annuity Years or any remaining Protected
Withdrawal Value, you can elect one of the following three options:
(1) apply your Account Value to any annuity option available; or
(2) request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We
make such annuity payments until the Annuitant's death; or
(3) request that, as of the date annuity payments are to begin, we pay
out any remaining Protected Withdrawal Value as
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
annuity payments. Each year such annuity payments will equal the Annual
Withdrawal Amount or the remaining Protected Withdrawal Value if less. We
make such annuity payments until the earlier of the Annuitant's death or
the date the Protected Withdrawal Value is depleted.
We must receive your request in a form acceptable to us at our office.
- - In the absence of an election when mandatory annuity payments are to
begin, we will make annual annuity payments as a single life fixed annuity
with five payments certain using the greater of the annuity rates then
currently available or the annuity rates guaranteed in your Annuity. The
amount that will be applied to provide such annuity payments will be the
greater of:
(1) the present value of future Annual Income Amount payments. Such
present value will be calculated using the greater of the single
life fixed annuity rates then currently available or the single life
fixed annuity rates guaranteed in your Annuity; and
(2) the Account Value.
- - If no withdrawal was ever taken, we will determine a Protected Withdrawal
Value and calculate an Annual Income Amount and an Annual Withdrawal
Amount as if you made your first withdrawal on the date the annuity
payments are to begin.
OTHER IMPORTANT CONSIDERATIONS
- - Withdrawals under the Lifetime Five program are subject to all of the
terms and conditions of the Annuity, including any CDSC.
- - Withdrawals made while the Lifetime Five program is in effect will be
treated, for tax purposes, in the same way as any other withdrawals under
the Annuity. The Lifetime Five program does not directly affect the
Annuity's Account Value or Surrender Value, but any withdrawal will
decrease the Account Value by the amount of the withdrawal (plus any
applicable CDSC). If you surrender your Annuity, you will receive the
current Surrender Value, not the Protected Withdrawal Value.
- - You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the Lifetime Five program. The
Lifetime Five program provides a guarantee that if your Account Value
declines due to market performance, you will be able to receive your
Protected Withdrawal Value or Annual Income Amount in the form of periodic
benefit payments.
- - You must allocate your Account Value in accordance with an eligible model
under an available asset allocation program or in accordance with other
options that we may permit in order to elect and maintain the Lifetime
Five program. Asset allocation programs are described generally in the
"Are Any Asset Allocation Programs Available?" section above. For further
information on asset allocation programs, please consult with your
Investment Professional or call 1-800-752-6342.
ELECTION OF THE PROGRAM
The Lifetime Five program can be elected at the time that you purchase your
Annuity. We also offer existing Owners the option to elect the Lifetime Five
program after the Issue Date of their Annuity, subject to our eligibility rules
and restrictions. Your Account Value as the date of election will be used as a
basis to calculate the initial Protected Withdrawal Value, the initial Protected
Annual Withdrawal Amount, and the Annual Income Amount.
TERMINATION OF THE PROGRAM
The program terminates automatically when your Protected Withdrawal Value and
Annual Income Amount equals zero. You may terminate the program at any time by
notifying us. If you terminate the program, any guarantee provided by the
benefit will terminate as of the date the termination is effective. The program
terminates upon your surrender of the Annuity, upon the death of the Annuitant
(but your surviving spouse may elect a new Lifetime Five if your spouse elects
the spousal continuance option and your spouse would then be eligible to elect
the benefit if he or she was a new purchaser), upon a change in ownership of
the Annuity that changes the tax identification number of the Owner, upon
change in the Annuitant or upon your election to begin receiving annuity
payments.
The charge for the Lifetime Five program will no longer be deducted from
your Account Value upon termination of the program.
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS
If you purchase an Annuity as an investment vehicle for "qualified" investments,
including an IRA, SEP-IRA, or Tax Sheltered Annuity (or 403(b)), the minimum
distribution rules under the Code require that you begin receiving periodic
amounts from your Annuity beginning after age 70 1/2. The amount required under
the Code may exceed the Annual Withdrawal Amount and the Annual Income Amount,
which will cause us to increase the Annual Income Amount and the Annual
Withdrawal Amount in any Annuity Year that required minimum distributions due
from your Annuity are greater than such amounts. Any such payments will reduce
your Protected Withdrawal Value. In addition, the amount and duration of
payments under the annuity payment and death benefit provisions may be adjusted
so that the payments do not trigger any penalty or excise taxes due to tax
considerations such as minimum distribution requirements.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Death Benefit
WHAT TRIGGERS THE PAYMENT OF A DEATH BENEFIT?
The Annuity provides a Death Benefit during its accumulation period. If the
Annuity is owned by one or more natural persons, the Death Benefit is payable
upon the first death of an Owner. If the Annuity is owned by an entity, the
Death Benefit is payable upon the Annuitant's death, if there is no Contingent
Annuitant. If a Contingent Annuitant was designated before the Annuitant's death
and the Annuitant dies, then the Contingent Annuitant becomes the Annuitant and
a Death Benefit will not be paid at that time. The person upon whose death the
Death Benefit is paid is referred to below as the "decedent."
BASIC DEATH BENEFIT
The Annuity provides a basic Death Benefit at no additional charge. The
Insurance Charge we deduct daily from your Account Value allocated to the
Sub-accounts is used, in part, to pay us for the risk we assume in providing
the basic Death Benefit guarantee under the Annuity. The Annuity also offers
three different optional Death Benefits that can be purchased for an additional
charge. The additional charge is deducted to compensate American Skandia for
providing increased insurance protection under the optional Death Benefits.
NOTWITHSTANDING THE ADDITIONAL PROTECTION PROVIDED UNDER THE OPTIONAL DEATH
BENEFITS, THE ADDITIONAL COST HAS THE IMPACT OF REDUCING THE NET PERFORMANCE OF
THE INVESTMENT OPTIONS. UNDER CERTAIN CIRCUMSTANCES, YOUR DEATH BENEFIT MAY BE
REDUCED BY THE AMOUNT OF ANY CREDITS WE APPLIED TO YOUR PURCHASE PAYMENTS. (See
"How are Credits Applied to My Account Value".)
The BASIC DEATH BENEFIT is the greater of:
- - The sum of all Purchase Payments less the sum of all proportional
withdrawals.
- - The sum of your Account Value in the variable investment options and your
Interim Value in the Fixed Allocations, less the amount of any Credits
applied within 12-months prior to the date of death.
"PROPORTIONAL WITHDRAWALS" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn. For
example, a withdrawal of 50% of Account Value would be considered as a 50%
reduction in Purchase Payments for purposes of calculating the basic Death
Benefit.
OPTIONAL DEATH BENEFITS
Three optional Death Benefits are offered for purchase with your Annuity to
provide an enhanced level of protection for your beneficiaries.
CURRENTLY, THESE BENEFITS ARE ONLY OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE
RECEIVED REGULATORY APPROVAL AND MUST BE ELECTED AT THE TIME THAT YOU PURCHASE
YOUR ANNUITY. WE MAY, AT A LATER DATE, ALLOW EXISTING ANNUITY OWNERS TO PURCHASE
AN OPTIONAL DEATH BENEFIT SUBJECT TO OUR RULES AND ANY CHANGES OR RESTRICTIONS
IN THE BENEFITS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS
ONCE APPROVED AND IF YOU PURCHASE YOUR ANNUITY AS PART OF AN EXCHANGE,
REPLACEMENT OR TRANSFER, IN WHOLE OR IN PART, FROM ANY OTHER ANNUITY WE ISSUE.
THE "COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE" DEATH BENEFIT MAY
ONLY BE ELECTED INDIVIDUALLY, AND CANNOT BE ELECTED IN COMBINATION WITH ANY
OTHER OPTIONAL DEATH BENEFIT. UNDER CERTAIN CIRCUMSTANCES, EACH OPTIONAL DEATH
BENEFIT THAT YOU ELECT MAY BE REDUCED BY THE AMOUNT OF CREDITS APPLIED TO YOUR
PURCHASE PAYMENTS.
ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT
The Enhanced Beneficiary Protection Optional Death Benefit can provide
additional amounts to your Beneficiary that may be used to offset federal and
state taxes payable on any taxable gains in your Annuity at the time of your
death. Whether this benefit is appropriate for you may depend on your particular
circumstances, including other financial resources that may be available to your
Beneficiary to pay taxes on your Annuity should you die during the accumulation
period. No benefit is payable if death occurs on or after the Annuity Date.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT PROVIDES A
BENEFIT THAT IS PAYABLE IN ADDITION TO THE BASIC DEATH BENEFIT. If the Annuity
has one Owner, the Owner must be age 75 or less at the time the benefit is
purchased. If the Annuity has joint Owners, the oldest Owner must be age 75 or
less. If the Annuity is owned by an entity, the Annuitant must be age 75 or
less.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
CALCULATION OF ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT
If you purchase the Enhanced Beneficiary Protection Optional Death Benefit, the
Death Benefit is calculated as follows:
1. the BASIC DEATH BENEFIT described above;
PLUS
2. 40% of your "GROWTH" under the Annuity, as defined below.
"GROWTH" means the sum of your Account Value in the variable investment
options and your Interim Value in the Fixed Allocations, minus the total of all
Purchase Payments, less the amount of any Credits applied within 12-months prior
to the date of death, reduced by the sum of all proportional withdrawals.
"PROPORTIONAL WITHDRAWALS" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT IS SUBJECT TO A
MAXIMUM OF 100% OF ALL PURCHASE PAYMENTS APPLIED TO THE ANNUITY AT LEAST 12
MONTHS PRIOR TO THE DEATH OF THE DECEDENT THAT TRIGGERS THE PAYMENT OF THE DEATH
BENEFIT.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT DESCRIBED ABOVE IS
CURRENTLY BEING OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY
APPROVAL. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE
APPROVED. PLEASE SEE APPENDIX D FOR A DESCRIPTION OF THE ENHANCED BENEFICIARY
PROTECTION OPTIONAL DEATH BENEFIT OFFERED BEFORE NOVEMBER 18, 2002 IN THOSE
JURISDICTIONS WHERE WE RECEIVED REGULATORY APPROVAL. PLEASE REFER TO THE SECTION
ENTITLED "TAX CONSIDERATIONS" FOR A DISCUSSION OF SPECIAL TAX CONSIDERATIONS FOR
PURCHASERS OF THIS BENEFIT. THE ENHANCED BENEFICIARY PROTECTION DEATH BENEFIT IS
NOT AVAILABLE IF YOU ELECT THE "COMBINATION 5% ROLL-UP AND THE HIGHEST
ANNIVERSARY VALUE" DEATH BENEFIT.
See Appendix B for examples of how the Enhanced Beneficiary Protection
Optional Death Benefit is calculated.
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT ("HAV")
If the Annuity has one Owner, the Owner must be age 79 or less at the time
Highest Anniversary Value Optional Death Benefit is purchased. If the Annuity
has joint Owners, the oldest Owner must be age 79 or less. If the Annuity is
owned by an entity, the Annuitant must be age 79 or less.
CERTAIN OF THE PORTFOLIOS OFFERED AS SUB-ACCOUNTS UNDER THE ANNUITY ARE
NOT AVAILABLE IF YOU ELECT THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT. IN
ADDITION, WE RESERVE THE RIGHT TO REQUIRE YOU TO USE CERTAIN ASSET ALLOCATION
MODEL(S) IF YOU ELECT THIS DEATH BENEFIT.
CALCULATION OF HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
The HAV Death Benefit depends on whether death occurs before or after the Death
Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value as of the Owner's date of death. If the
Owner dies on or after the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value on the Death Benefit Target Date plus the
sum of all Purchase Payments less the sum of all proportional withdrawals
since the Death Benefit Target Date.
THE AMOUNT DETERMINED BY THIS CALCULATION IS INCREASED BY ANY PURCHASE
PAYMENTS RECEIVED AFTER THE OWNER'S DATE OF DEATH AND DECREASED BY ANY
PROPORTIONAL WITHDRAWALS SINCE SUCH DATE. THE AMOUNT CALCULATED IN ITEMS 1 & 2
ABOVE (BEFORE, ON OR AFTER THE DEATH BENEFIT TARGET DATE) MAY BE REDUCED BY ANY
CREDITS UNDER CERTAIN CIRCUMSTANCES.
THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT DESCRIBED ABOVE IS CURRENTLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL.
CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. THE
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT THE
"COMBINATION 5% ROLL-UP AND THE HIGHEST ANNIVERSARY VALUE" OR THE "HIGHEST DAILY
VALUE" DEATH BENEFIT. PLEASE SEE APPENDIX D FOR A DESCRIPTION OF THE GUARANTEED
MINIMUM DEATH BENEFIT OFFERED BEFORE NOVEMBER 18, 2002 IN THOSE JURISDICTIONS
WHERE WE RECEIVED REGULATORY APPROVAL.
See Appendix B for examples of how the Highest Anniversary Value Death
Benefit is calculated.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Death Benefit continued
Please refer to the definition of Death Benefit Target Date below. This
death benefit may not be an appropriate feature where the Owner's age is near
the age specified in the Death Benefit Target Date. This is because the benefit
may not have the same potential for growth as it otherwise would, since there
will be fewer contract anniversaries before the death benefit target date is
reached. The death benefit target date under this death benefit is earlier than
the death benefit target date under the Combination 5% Roll-up and Highest
Anniversary Value Death Benefit for Owners who are age 76 or older when the
Annuity is issued, which may result in a lower value on the death benefit, since
there will be fewer contract anniversaries before the death benefit target date
is reached.
COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
If the Annuity has one Owner, the Owner must be age 79 or less at the time the
Combination 5% Roll-up and HAV Optional Death Benefit is purchased. If the
Annuity has joint Owners, the oldest Owner must be age 79 or less. If the
Annuity is owned by an entity, the Annuitant must be age 79 or less.
CERTAIN OF THE PORTFOLIOS OFFERED AS SUB-ACCOUNTS UNDER THE ANNUITY ARE
NOT AVAILABLE IF YOU ELECT THE COMBINATION 5% ROLL-UP AND HAV DEATH BENEFIT. IN
ADDITION, WE RESERVE THE RIGHT TO REQUIRE YOU TO USE CERTAIN ASSET ALLOCATION
MODEL(S) IF YOU ELECT THIS DEATH BENEFIT.
CALCULATION OF THE COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH
BENEFIT
The Combination 5% Roll-up and HAV Death Benefit equals the greatest of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value death benefit described above, and
3. 5% Roll-up described below.
The calculation of the 5% Roll-up depends on whether death occurs before
or after the Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date the 5% Roll up is
equal to:
- - all Purchase Payments (including any Credits applied to such Purchase
Payments more than twelve (12) months prior to date of death) increasing
at an annual effective interest rate of 5% starting on the date that each
Purchase Payment is made and ending on the Owner's date of death;
MINUS
- - the sum of all withdrawals, dollar for dollar up to 5% of the death
benefit's value as of the prior contract anniversary (or issue date if the
withdrawal is in the first contract year). Any withdrawals in excess of
the 5% dollar for dollar limit are proportional.
If the Owner dies on or after the Death Benefit Target Date the 5% Roll-up
is equal to:
- - the 5% Roll-up value as of the Death Benefit Target Date increased by
total Purchase Payments (including any Credits applied to such Purchase
Payments more than twelve (12) months prior to date of death) made after
the Death Benefit Target Date;
MINUS
- - the sum of all withdrawals which reduce the 5% Roll-up proportionally.
THE AMOUNTS CALCULATED IN ITEMS 1, 2 AND 3 ABOVE (BEFORE, ON OR AFTER THE
DEATH BENEFIT TARGET DATE) MAY BE REDUCED BY ANY CREDITS UNDER CERTAIN
CIRCUMSTANCES.
PLEASE REFER TO THE DEFINITIONS OF DEATH BENEFIT TARGET DATE BELOW. THIS
DEATH BENEFIT MAY NOT BE AN APPROPRIATE FEATURE WHERE THE OWNER'S AGE IS NEAR
THE AGE SPECIFIED IN THE DEATH BENEFIT TARGET DATE. THIS IS BECAUSE THE BENEFIT
MAY NOT HAVE THE SAME POTENTIAL FOR GROWTH AS IT OTHERWISE WOULD, SINCE THERE
WILL BE FEWER CONTRACT ANNIVERSARIES BEFORE THE DEATH BENEFIT TARGET DATE IS
REACHED.
THE "COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE" DEATH BENEFIT
DESCRIBED ABOVE IS CURRENTLY BEING OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE
RECEIVED REGULATORY APPROVAL. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. PLEASE SEE APPENDIX D FOR A DESCRIPTION OF THE
GUARANTEED MINIMUM DEATH BENEFIT OFFERED BEFORE NOVEMBER 18, 2002 IN THOSE
JURISDICTIONS WHERE WE RECEIVED REGULATORY APPROVAL. THE "COMBINATION 5% ROLL-UP
AND HIGHEST ANNIVERSARY VALUE" DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT ANY
OTHER OPTIONAL DEATH BENEFIT. PLEASE SEE APPENDIX D FOR A DESCRIPTION OF THE
GUARANTEED MINIMUM DEATH BENEFIT OFFERED BEFORE NOVEMBER 18, 2002 IN THOSE
JURISDICTIONS WHERE WE RECEIVED REGULATORY APPROVAL.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
See Appendix B for examples of how the Combination 5% Roll-up and Highest
Anniversary Value Death Benefit is calculated.
KEY TERMS USED WITH THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT AND THE
COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT:
- - The Death Benefit Target Date for the Highest Anniversary Value Death
Benefit is the contract anniversary on or after the 80th birthday of the
current Owner, the oldest of either joint Owner or the Annuitant, if
entity owned.
- - The Death Benefit Target Date for the Combination 5% Roll-up and HAV Death
Benefit is the later of the contract anniversary on or after the 80th
birthday of the current Owner, the oldest of either joint Owner or the
Annuitant, if entity owned, or five years after the Issue Date of the
Annuity.
- - The Highest Anniversary Value equals the highest of all previous
"Anniversary Values" less proportional withdrawals since such anniversary
and plus any Purchase Payments since such anniversary.
- - The Anniversary Value is the Account Value as of each anniversary of the
Issue Date of the Annuity. The Anniversary Value on the Issue Date is
equal to your Purchase Payment.
- - Proportional withdrawals are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
Proportional withdrawals result in a reduction to the Highest Anniversary
Value or 5% Roll-up value by reducing such value in the same proportion as
the Account Value was reduced by the withdrawal as of the date the
withdrawal occurred. For example, if your Highest Anniversary Value or 5%
Roll-up value is $125,000 and you subsequently withdraw $10,000 at a time
when your Account Value is equal to $100,000 (a 10% reduction), when
calculating the optional Death Benefit we will reduce your Highest
Anniversary Value ($125,000) by 10% or $12,500.
HIGHEST DAILY VALUE DEATH BENEFIT ("HDV")
If the Annuity has one Owner, the Owner must be age 79 or less at the time the
Highest Daily Value Death Benefit is elected. If the Annuity has joint Owners,
the older Owner must be age 79 or less. If there are Joint Owners, death of the
Owner refers to the first to die of the Joint Owners. If the Annuity is owned by
an entity, the Annuitant must be age 79 or less and death of the Owner refers to
the death of the Annuitant.
IF YOU ELECT THIS BENEFIT, YOU MUST ALLOCATE YOUR ACCOUNT VALUE IN
ACCORDANCE WITH AN ELIGIBLE MODEL UNDER AN AVAILABLE ASSET ALLOCATION PROGRAM OR
IN ACCORDANCE WITH OTHER OPTIONS THAT WE MAY PERMIT. Because this benefit, once
elected, may not be terminated, you must keep your Account Value allocated to an
eligible model throughout the life of the Annuity. You may, however, switch from
one eligible model to another eligible model. Our asset allocation programs are
generally described in the "Are Any Asset Allocation Programs Available?"
section above. For further information on asset allocation programs, please
consult with your Investment Professional or call 1-800-752-6342.
The HDV Death Benefit depends on whether death occurs before or after the
Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the basic Death Benefit described above (including any credits
applied to such Purchase Payments more than twelve (12) months prior
to the date of death); and
2. the HDV as of the Owner's date of death.
If the Owner dies on or after the Death Benefit Target Date, the Death
Benefit equals the greater of:
1. the basic Death Benefit described above (including any credits
applied to such Purchase Payments more than twelve (12) months prior
to the date of death); and
2. the HDV on the Death Benefit Target Date plus the sum of all
Purchase Payments less the sum of all proportional withdrawals since
the Death Benefit Target Date.
The amount determined by this calculation is increased by any Purchase
Payments received after the Owner's date of death and decreased by any
proportional withdrawals since such date. The amount may also be increased by
any Credits under certain circumstances.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Death Benefit continued
THE HIGHEST DAILY VALUE DEATH BENEFIT DESCRIBED ABOVE IS CURRENTLY BEING OFFERED
IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL. CERTAIN TERMS
AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. THE HIGHEST DAILY
VALUE DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION,
GUARANTEE RETURN OPTION PLUS, THE "COMBINATION 5% ROLL-UP AND HIGHEST
ANNIVERSARY VALUE" DEATH BENEFIT, OR THE HIGHEST ANNIVERSARY VALUE DEATH
BENEFIT. PLEASE SEE APPENDIX D FOR A DESCRIPTION OF THE GUARANTEED MINIMUM DEATH
BENEFIT OFFERED BEFORE NOVEMBER 18, 2002 IN THOSE JURISDICTIONS WHERE WE
RECEIVED REGULATORY APPROVAL.
KEY TERMS USED WITH THE HIGHEST DAILY VALUE DEATH BENEFIT:
- - The Death Benefit Target Date for the Highest Daily Value Death Benefit is
the later of the Annuity anniversary on or after the 80th birthday of the
current Owner, or the older of either the joint Owner or the Annuitant, if
entity owned, or five years after the Issue Date of the Annuity.
- - The Highest Daily Value equals the highest of all previous "Daily Values"
less proportional withdrawals since such date and plus any Purchase
Payments (and associated Credits) since such date.
- - The Daily Value is the Account Value as of the end of each Valuation Day.
The Daily Value on the Issue Date is equal to your Purchase Payment (plus
any associated Credit).
- - Proportional withdrawals are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
Proportional withdrawals result in a reduction to the Highest Daily Value
by reducing such value in the same proportion as the Account Value was
reduced by the withdrawal as of the date the withdrawal occurred. For
example, if your Highest Daily Value is $125,000 and you subsequently
withdraw $10,000 at a time when your Account Value is equal to $100,000 (a
10% reduction), when calculating the optional Death Benefit we will reduce
your Highest Daily Value ($125,000) by 10% or $12,500.
Please see Appendix B to this Prospectus for a hypothetical example of how
the HDV Death Benefit is calculated.
ANNUITIES WITH JOINT OWNERS
For Annuities with Joint Owners, the Death Benefits are calculated as shown
above except that the age of the oldest of the Joint Owners is used to
determine the Death Benefit Target Date. NOTE: If you and your spouse own the
Annuity jointly, we will pay the Death Benefit to the Beneficiary. If the sole
primary Beneficiary is the surviving spouse, then the surviving spouse can
elect to assume ownership of the Annuity and continue the Annuity instead of
receiving the Death Benefit.
ANNUITIES OWNED BY ENTITIES
For Annuities owned by an entity, the Death Benefits are calculated as shown
above except that the age of the Annuitant is used to determine the Death
Benefit Target Date. Payment of the Death Benefit is based on the death of the
Annuitant (or Contingent Annuitant, if applicable).
CAN I TERMINATE THE OPTIONAL DEATH BENEFITS? DO THE OPTIONAL DEATH BENEFITS
TERMINATE UNDER OTHER CIRCUMSTANCES?
You can terminate the Enhanced Beneficiary Protection Death Benefit and Highest
Anniversary Value Death Benefit at any time. The "Combination 5% Roll-up and HAV
Death Benefit" and the HDV Death Benefit may not be terminated once elected. The
optional Death Benefits will terminate automatically on the Annuity Date. We may
also terminate any optional Death Benefit if necessary to comply with our
interpretation of the Code and applicable regulations.
WHAT ARE THE CHARGES FOR THE OPTIONAL DEATH BENEFITS?
We deduct a charge equal to 0.25% per year of the average daily net assets of
the Sub-accounts for each of the Highest Anniversary Value Death Benefit and the
Enhanced Beneficiary Protection Death Benefit and 0.50% per year of the average
daily net assets of the Sub-accounts for the "Combination 5% Roll-up and HAV
Death Benefit" and the HDV Death Benefit. We deduct the charge for each of these
benefits to compensate American Skandia for providing increased insurance
protection under the optional Death Benefits.
Please refer to the section entitled "Tax Considerations" for additional
considerations in relation to the optional Death Benefit.
AMERICAN SKANDIA'S ANNUITY REWARDS
WHAT IS THE ANNUITY REWARDS BENEFIT?
The Annuity Rewards benefit offers Owners the ability to capture any market
gains since the Issue Date of their Annuity as
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
an enhancement to their current Death Benefit so their Benefi- ciaries will not
receive less than the Annuity's value as of the effective date of the benefit.
Under the Annuity Rewards benefit, American Skandia guarantees that the Death
Benefit will not be less than:
- - your Account Value in the variable investment options plus the Interim
Value in any Fixed Allocations as of the effective date of the benefit
- - MINUS any proportional withdrawals* following the effective date of the
benefit
- - PLUS any additional Purchase Payments applied to the Annuity following the
effective date of the benefit.
The Annuity Rewards Death Benefit enhancement does not affect the basic
Death Benefit calculation or any Optional Death Benefits available under the
Annuity. If the Death Benefit amount payable under your Annuity's basic Death
Benefit or any Optional Death Benefits you purchase is greater than the enhanced
Death Benefit under the Annuity Rewards benefit on the date the Death Benefit is
calculated, your Beneficiary will receive the higher amount.
WHO IS ELIGIBLE FOR THE ANNUITY REWARDS BENEFIT?
Owners can elect the Annuity Rewards Death Benefit enhancement following the
tenth (10th) anniversary of the Annuity's Issue Date. However, the Account Value
on the date that the Annuity Rewards Benefit is effective must be greater than
the amount that would be payable to the Beneficiary under the Death Benefit
(including any amounts payable under any optional death benefit then in effect).
The effective date must occur before annuity payments begin. There can only be
one effective date for the Annuity Rewards Death Benefit enhancement. There is
no additional charge for electing the Annuity Rewards Death Benefit enhancement.
PAYMENT OF DEATH BENEFITS
PAYMENT OF DEATH BENEFIT TO BENEFICIARY
Except in the case of a spousal assumption as described below, in the event of
your death, the death benefit must be distributed:
- - as a lump sum amount at any time within five (5) years of the date of
death; or
- - as a series of annuity payments not extending beyond the life expectancy
of the Beneficiary or over the life of the Beneficiary. Payments under
this option must begin within one year of the date of death.
Unless you have made an election prior to death benefit proceeds becoming
due, a Beneficiary can elect to receive the Death Benefit proceeds as a series
of fixed annuity payments (annuity payment options 1-4) or as a series of
variable annuity payments (annuity payment options 1-3 or 5 and 6). See the
section entitled "What Types of Annuity Options are Available."
SPOUSAL BENEFICIARY -- ASSUMPTION OF ANNUITY
You may name your spouse as your Beneficiary. If you and your spouse own the
Annuity jointly, we assume that the sole primary Beneficiary will be the
surviving spouse unless you elect an alternative Beneficiary designation. Unless
you elect an alternative Beneficiary designation, the spouse Beneficiary may
elect to assume ownership of the Annuity instead of taking the Death Benefit
payment. Any Death Benefit (including any optional Death Benefits) that would
have been payable to the Beneficiary will become the new Account Value as of the
date we receive due proof of death and any required proof of a spousal
relationship. As of the date the assumption is effective, the surviving spouse
will have all the rights and benefits that would be available under the Annuity
to a new purchaser of the same attained age. For purposes of determining any
future Death Benefit for the surviving spouse, the new Account Value will be
considered as the initial Purchase Payment. No CDSC will apply to the new
Account Value. However, any additional Purchase Payments applied after the date
the assumption is effective will be subject to all provisions of the Annuity,
including any CDSC that may apply to the additional Purchase Payments.
See the section entitled "Managing Your Annuity -- Spousal Contingent
Annuitant" for a discussion of the treatment of a spousal Contingent Annuitant
in the case of the death of the Annuitant in an entity owned Annuity.
QUALIFIED BENEFICIARY CONTINUATION OPTION
The Code provides for alternative death benefit payment options when an Annuity
is used as an IRA, 403(b) or other "qualified investment" that requires Minimum
Distributions. Upon the Owner's death under an IRA, 403(b) or other "qualified
investment", a Beneficiary may generally elect to continue the Annuity and
receive Minimum Distributions under the Annuity instead of receiving the death
benefit in a single payment. The available payment options will depend on
whether the Owner died on or before the date he or she was required to begin
receiving Minimum Distributions under the Code and whether the Beneficiary is
the surviving spouse.
* "Proportional withdrawals" are determined by calculating the percentage of the
Account Value that each withdrawal represented when withdrawn. For example, a
withdrawal of 50% of your Account Value would be treated as a 50% reduction in
the amount payable under the Death Benefit.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Death Benefit continued
- - If death occurs BEFORE the date Minimum Distributions must begin under the
Code, the Death Benefit can be paid out in either a lump sum, within five
years from the date of death, or over the life or life expectancy of the
designated Beneficiary (as long as payments begin by December 31st of the
year following the year of death). However, if the spouse is the
Beneficiary, the Death Benefit can be paid out over the life or life
expectancy of the spouse with such payments beginning no earlier than
December 31st of the year following the year of death or December 31st of
the year in which the deceased would have reached age 70 1/2, which ever
is later.
- - If death occurs AFTER the date Minimum Distributions must begin under the
Code, the Death Benefit must be paid out at least as rapidly as under the
method then in effect.
A Beneficiary has the flexibility to take out more each year than required
under the Minimum Distribution rules. Until withdrawn, amounts in an IRA, 403(b)
or other "qualified investment" continue to be tax deferred. Amounts withdrawn
each year, including amounts that are required to be withdrawn under the Minimum
Distribution rules, are subject to tax. You may wish to consult a professional
tax advisor for tax advice as to your particular situation.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Upon election of this Qualified Beneficiary Continuation option:
- - the Annuity contract will be continued in the Owner's name, for the
benefit of the Beneficiary.
- - the Beneficiary will be charged at an amount equal to 1.40% daily against
the average daily assets allocated to the Sub-accounts.
- - the Account Value will be equal to any Death Benefit (including any
optional Death Benefit) that would have been payable to the Beneficiary if
they had taken a lump sum distribution.
- - the Beneficiary may request transfers among Sub-accounts, subject to the
same limitations and restrictions that applied to the Owner, except that
the Sub-accounts offered will be those offered under the Qualified
Beneficiary Continuation option at the time the option is elected.
- - the Fixed Allocations will be those offered under the Qualified
Beneficiary Continuation option at the time the option is elected.
- - no additional Purchase Payments can be applied to the Annuity.
- - other optional Benefits will be those offered under the Qualified
Beneficiary Continuation option at the time of election.
- - the basic Death Benefit and any optional Death Benefits elected by the
Owner will no longer apply to the Beneficiary.
- - the Beneficiary can request a withdrawal of all or a portion of the
Account Value at any time without application of a CDSC.
- - upon the death of the Beneficiary, any remaining Account Value will be
paid in a lump sum to the person(s) named by the Beneficiary.
- - all amounts in the Annuity must be paid out to the Beneficiary according
to the Minimum Distribution rules described above.
Your Beneficiary will be provided with a prospectus and settlement option
that will describe this option at the time he or she elects this option. Please
contact American Skandia for additional information on the availability,
restrictions and limitations that will apply to a Beneficiary under the
Qualified Beneficiary Continuation option.
ARE THERE ANY EXCEPTIONS TO THESE RULES FOR PAYING THE DEATH BENEFIT?
Yes, there are exceptions that apply no matter how your Death Benefit is
calculated. There are exceptions to the Death Benefit if the decedent was not
the Owner or Annuitant as of the Issue Date and did not become the Owner or
Annuitant due to the prior Owner's or Annuitant's death. Any Death Benefit
(including any optional Death Benefit) that applies will be suspended for a
two-year period from the date he or she first became Owner or Annuitant. After
the two-year suspension period is completed, the Death Benefit is the same as if
this person had been an Owner or Annuitant on the Issue Date.
WHEN DO YOU DETERMINE THE DEATH BENEFIT?
We determine the amount of the Death Benefit as of the date we receive "due
proof of death", any instructions we require to determine the method of payment
and any other written representations we require to determine the proper
payment of the Death Benefit to all Beneficiaries. "Due proof of death" may
include a certified copy of a death certificate, a certified copy of a decree
of a court of competent jurisdiction as to the finding of death or other
satisfactory proof of death. Upon our receipt of "due proof of death" we
automatically transfer the Death Benefit to the AST Money Market Sub-account
until we further determine the universe of eligible Beneficiaries. Once the
universe of eligible Beneficiaries has been determined each eligible
Beneficiary may allocate his or her eligible share of the Death Benefit to the
Sub-accounts according to our rules.
Each Beneficiary must make an election as to the method they wish to
receive their portion of the Death Benefit. Absent an election of a Death
Benefit payment method, no Death Benefit can be paid to the Beneficiary. We may
require written acknowledgment of all named Beneficiaries before we can pay the
Death Benefit. DURING THE PERIOD FROM THE DATE OF DEATH UNTIL WE RECEIVE ALL
REQUIRED PAPER WORK, THE AMOUNT OF THE DEATH BENEFIT MAY BE SUBJECT TO MARKET
FLUCTUATIONS.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Valuing Your Investment
HOW IS MY ACCOUNT VALUE DETERMINED?
During the accumulation period, the Annuity has an Account Value. The Account
Value is determined separately for each Sub-account allocation and for each
Fixed Allocation. The Account Value is the sum of the values of each Sub-account
allocation and the value of each Fixed Allocation. The Account Value does not
reflect any CDSC that may apply to a withdrawal or surrender. The Account Value
includes any Credits we applied to your Purchase Payments that we are entitled
to recover under certain circumstances. When determining the Account Value on
any day other than 30 days prior to a Fixed Allocation's Maturity Date, the
Account Value may include any Market Value Adjustment that would apply to a
Fixed Allocation (if withdrawn or transferred) on that day.
WHAT IS THE SURRENDER VALUE OF MY ANNUITY?
The Surrender Value of your Annuity is the value available to you on any day
during the accumulation period. The Surrender Value is defined under "Glossary
of Terms" above.
HOW AND WHEN DO YOU VALUE THE SUB-ACCOUNTS?
When you allocate Account Value to a Sub-account, you are purchasing units of
the Sub-account. Each Sub-account invests exclusively in shares of an underlying
Portfolio. The value of the Units fluctuates with the market fluctuations of the
Portfolios. The value of the Units also reflects the daily accrual for the
Insurance Charge, the Distribution Charge (if applicable), and if you elected
one or more optional benefits whose annual charge is deducted daily, the
additional charge made for such benefits. There may be several different Unit
Prices for each Sub-account to reflect the Insurance Charge, Distribution Charge
and the charges for any optional benefits. The Unit Price for the Units you
purchase will be based on the total charges for the benefits that apply to your
Annuity. See the section entitled "What Happens to My Units When There is a
Change in Daily Asset-Based Charges?" for a detailed discussion of how Units are
purchased and redeemed to reflect changes in the daily charges that apply to
your Annuity.
Each Valuation Day, we determine the price for a Unit of each Sub-account,
called the "Unit Price." The Unit Price is used for determining the value of
transactions involving Units of the Sub-accounts. We determine the number of
Units involved in any transaction by dividing the dollar value of the
transaction by the Unit Price of the Sub-account as of the Valuation Day.
EXAMPLE
Assume you allocate $5,000 to a Sub-account. On the Valuation Day you make the
allocation, the Unit Price is $14.83. Your $5,000 buys 337.154 Units of the
Sub-account. Assume that later, you wish to transfer $3,000 of your Account
Value out of that Sub-account and into another Sub-account. On the Valuation Day
you request the transfer, the Unit Price of the original Sub-account has
increased to $16.79. To transfer $3,000, we sell 178.677 Units at the current
Unit Price, leaving you 158.477 Units. We then buy $3,000 of Units of the new
Sub-account at the Unit Price of $17.83. You would then have 168.255 Units of
the new Sub-account.
HOW DO YOU VALUE FIXED ALLOCATIONS?
During the Guarantee Period, we use the concept of an Interim Value. The Interim
Value can be calculated on any day and is equal to the initial value allocated
to a Fixed Allocation plus all interest credited to a Fixed Allocation as of the
date calculated. The Interim Value does not include the impact of any Market
Value Adjustment. If you made any transfers or withdrawals from a Fixed
Allocation, the Interim Value will reflect the withdrawal of those amounts and
any interest credited to those amounts before they were withdrawn. To determine
the Account Value of a Fixed Allocation on any day more than 30 days prior to
its Maturity Date, we multiply the Account Value of the Fixed Allocation times
the Market Value Adjustment factor.
WHEN DO YOU PROCESS AND VALUE TRANSACTIONS?
American Skandia is generally open to process financial transactions on those
days that the New York Stock Exchange (NYSE) is open for trading. There may be
circumstances where the NYSE does not open on a regularly scheduled date or time
or closes at an earlier time than scheduled (normally 4:00 p.m. EST). Financial
transactions requested before the close of the NYSE which meet our requirements
will be processed according to the value next determined following the close of
business. Financial transactions requested on a non-business day or after the
close of the NYSE will be processed based on the value next computed on the next
Valuation Day. There may be circumstances when the opening or closing time of
the NYSE is different than other major stock exchanges, such as NASDAQ or the
American Stock Exchange. Under such circumstances, the closing time of the NYSE
will be used when valuing and processing transactions.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
There may be circumstances where the NYSE is open, how- ever, due to
inclement weather, natural disaster or other circumstances beyond our control,
our offices may be closed or our business processing capabilities may be
restricted. Under those circumstances, your Account Value may fluctuate based on
changes in the Unit Values, but you may not be able to transfer Account Value,
or make a purchase or redemption request.
The NYSE is closed on the following nationally recognized holidays: New
Year's Day, Martin Luther King, Jr. Day, Washington's Birthday, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas. On those
dates, we will not process any financial transactions involving purchase or
redemption orders.
American Skandia will also not process financial transactions involving
purchase or redemption orders or transfers on any day that:
- - trading on the NYSE is restricted;
- - an emergency exists making redemption or valuation of securities held in
the separate account impractical; or
- - the SEC, by order, permits the suspension or postponement for the
protection of security holders.
INITIAL PURCHASE PAYMENTS: We are required to allocate your initial
Purchase Payment to the Sub-accounts within two (2) business days after we
receive all of our requirements at our office to issue the Annuity. If we do not
have all the required information to allow us to issue your Annuity, we may
retain the Purchase Payment while we try to reach you or your representative to
obtain all of our requirements. If we are unable to obtain all of our required
information within five (5) business days, we are required to return the
Purchase Payment at that time, unless you specifically consent to our retaining
the Purchase Payment while we gather the required information. Once we obtain
the required information, we will invest the Purchase Payment and issue the
Annuity within two (2) business days. During any period that we are trying to
obtain the required information, your money is not invested.
ADDITIONAL PURCHASE PAYMENTS: We will apply any additional Purchase
Payments on the Valuation Day that we receive the Purchase Payment at our office
with satisfactory allocation instructions. We will allocate any additional
Purchase Payments you make according to your most recent allocation instructions
if none are provided.
SCHEDULED TRANSACTIONS: "Scheduled" transactions include transfers under a
Dollar Cost Averaging, rebalancing, or asset allocation program, Systematic
Withdrawals, Minimum Distributions or annuity payments. Scheduled transactions
are processed and valued as of the date they are scheduled, unless the scheduled
day is not a Valuation Day. In that case, the transaction will be processed and
valued on the next Valuation Day, unless the next Valuation Day falls in the
subsequent calendar year, in which case the transaction will be processed and
valued on the prior Valuation Day.
UNSCHEDULED TRANSACTIONS: "Unscheduled" transactions include any other
non-scheduled transfers and requests for Partial Withdrawals or Free Withdrawals
or Surrenders. Unscheduled transactions are processed and valued as of the
Valuation Day we receive the request at our Office and have all of the required
information.
MEDICALLY-RELATED SURRENDERS & DEATH BENEFITS: Medically-related surrender
requests and Death Benefit claims require our review and evaluation before
processing. We price such transactions as of the date we receive at our Office
all supporting documentation we require for such transactions and that are
satisfactory to us.
TRANSACTIONS IN PROFUNDS VP SUB-ACCOUNTS: Generally, purchase or
redemption orders or transfer requests must be received by us by no later than
the close of the NYSE to be processed on the current Valuation Day. However, any
purchase or redemption order or transfer request involving the ProFunds VP
Sub-accounts must be received by us no later than one hour prior to any
announced closing of the applicable securities exchange (generally, 3:00 p.m.
Eastern time) to be processed on the current Valuation Day. The "cut-off" time
for such financial transactions involving a ProFunds VP Sub-account will be
extended to 1/2 hour prior to any announced closing (generally, 3:30 p.m.
Eastern time) for transactions submitted electronically through American
Skandia's Internet website (www.americanskandia.prudential.com). You cannot
request a transaction involving the purchase, redemption or transfer of Units in
one of the ProFunds VP Sub-accounts between the applicable "cut-off" time and
4:00 p.m. Transactions received after 4:00 p.m. will be treated as received by
us on the next Valuation Day.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Valuing Your Investment continued
WHAT HAPPENS TO MY UNITS WHEN THERE IS A CHANGE IN DAILY ASSET-BASED CHARGES?
TERMINATION OF OPTIONAL BENEFITS: Except for Guaranteed Minimum Income Benefit,
the Combination 5% Roll-up and Highest Anniversary Value Death Benefit and the
Highest Daily Value Death Benefit which cannot be terminated by the owner once
elected, if any optional benefit terminates, we will no longer deduct the charge
we apply to purchase the optional benefit. Certain optional benefits may be
added after you have purchased your Annuity. On the date a charge no longer
applies or a charge for an optional benefit begins to be deducted, your Annuity
will become subject to a different daily asset-based charge. This charge may
result in the number of Units attributed to your Annuity and the value of those
Units being different than it was before the change; however, the adjustment in
the number of Units and Unit Price will not affect your Account Value (although
the change in charges that are deducted will affect your Account Value).
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Tax Considerations
The tax considerations associated with the Annuity vary depending on whether the
contract is (i) owned by an individual and not associated with a tax-favored
retirement plan (including contracts held by a non-natural person, such as a
trust acting as an agent for a natural person), or (ii) held under a tax-favored
retirement plan. We discuss the tax considerations for these categories of
contracts below. The discussion is general in nature and describes only federal
income tax law (not state or other tax laws). It is based on current law and
interpretations, which may change. The discussion includes a description of
certain spousal rights under the contract and under tax-qualified plans. Our
administration of such spousal rights and related tax reporting accords with our
understanding of the Defense of Marriage Act (which defines a "marriage" as a
legal union between a man and a woman and a "spouse" as a person of the opposite
sex). The information provided is not intended as tax advice. You should consult
with a qualified tax advisor for complete information and advice. References to
purchase payments below relates to your cost basis in your contract. Generally,
your cost basis in a contract not associated with a tax-favored retirement plan
is the amount you pay into your contract, or into annuities exchanged for your
contract, on an after-tax basis less any withdrawals of such payments.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA or 403(b) account, which can hold other permissible assets other than the
annuity. The terms and administration of the trust or custodial account in
accordance with the laws and regulations for IRAs or 403(b)s, as applicable, are
the responsibility of the applicable trustee or custodian.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
TAXES PAYABLE BY YOU
We believe the contract is an annuity contract for tax purposes. Accordingly, as
a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates)
to you during the same calendar year must be treated as one annuity contract for
purposes of determining the amount subject to tax under the rules described
below.
It is possible that the Internal Revenue Service (IRS) would assert that
some or all of the charges for the optional benefits under the contract should
be treated for federal income tax purposes as a partial withdrawal from the
contract. If this were the case, the charge for this benefit could be deemed a
withdrawal and treated as taxable to the extent there are earnings in the
contract. Additionally, for owners under age 59 1/2, the taxable income
attributable to the charge for the benefit could be subject to a tax penalty.
If the IRS determines that the charges for one or more benefits under the
contract are taxable withdrawals, then the sole or surviving owner will be
provided with a notice from us describing available alternatives regarding
these benefits.
If you choose to defer the Annuity Date beyond the default date for your
Annuity, the IRS may not consider your contract to be an annuity under the tax
law. For more information, see "How and When Do I Choose the Annuity Payment
Option?".
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn. You
will generally be taxed on any withdrawals from the contract while you are
alive even if the withdrawal is paid to someone else.
If you assign or pledge all or part of your contract as collateral for a
loan, the part assigned generally will be treated as a withdrawal.
If you transfer your contract for less than full consideration, such as by
gift, you will trigger tax on any gain in the contract. This rule does not apply
if you transfer the contract to your spouse or under most circumstances if you
transfer the contract incident to divorce.
TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment you receive by a fraction, the
numerator of which is your purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the contract.
After the full amount of your purchase payments have been recovered
tax-free, the full amount of the annuity payments will be taxable. If annuity
payments stop due to the death of the annuitant before the full amount of your
purchase payments have been recovered, a tax deduction may be allowed for the
unrecovered amount.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Tax Considerations continued
TAX PENALTY ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount you receive under your contract may be subject to a 10% tax
penalty. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled;
- - generally the amount paid or received is in the form of substantially
equal payments not less frequently than annually. (Please note that
substantially equal payments must continue until the later of reaching age
59 1/2 or 5 years.) Modification of payments during that time period will
result in retroactive application of the 10% tax penalty.); or
- - the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
SPECIAL RULES IN RELATION TO TAX-FREE EXCHANGES UNDER SECTION 1035
Section 1035 of the Internal Revenue Code of 1986, as amended (Code) permits
certain tax-free exchanges of a life insurance, annuity or endowment contract
for an annuity. If the annuity is purchased through a tax-free exchange of a
life insurance, annuity or endowment contract that was purchased prior to August
14, 1982, then any purchase payments made to the original contract prior to
August 14, 1982 will be treated as made to the new contract prior to that date.
(See Federal Tax Status section in the Statement of Additional Information.)
Partial surrenders may be treated in the same way as tax-free 1035
exchanges of entire contracts, therefore avoiding current taxation of any gains
in the contract as well as the 10% tax penalty on pre-age 59 1/2 withdrawals.
The IRS has reserved the right to treat transactions it considers abusive as
ineligible for this favorable partial 1035 exchange treatment. We do not know
what transactions may be considered abusive. For example we do not know how the
IRS may view early withdrawals or annuitizations after a partial exchange. In
addition, it is unclear how the IRS will treat a partial exchange from a life
insurance, endowment, or annuity contract into an immediate annuity. As of the
date of this prospectus, we will accept a partial 1035 exchange from a
non-qualified annuity into an immediate annuity as a "tax-free" exchange for
future tax reporting purposes, except to the extent that we, as a reporting and
withholding agent, believe that we would be expected to deem the transaction to
be abusive. However, some insurance companies may not recognize these partial
surrenders as tax-free exchanges and may report them as taxable distributions to
the extent of any gain distributed as well as subjecting the taxable portion of
the distribution to the 10% tax penalty. We strongly urge you to discuss any
transaction of this type with your tax advisor before proceeding with the
transaction.
TAXES PAYABLE BY BENEFICIARIES
The death benefit options are subject to income tax to the extent the
distribution exceeds the cost basis in the contract. The value of the death
benefit, as determined under federal law, is also included in the owner's
estate.
Generally, the same tax rules described above would also apply to amounts
received by your beneficiary. Choosing any option other than a lump sum death
benefit may defer taxes. Certain minimum distribution requirements apply upon
your death, as discussed further below.
Tax consequences to the beneficiary vary among the death benefit payment
options.
- - Choice 1: the beneficiary is taxed on earnings in the contract.
- - Choice 2: the beneficiary is taxed as amounts are withdrawn (in this case
earnings are treated as being distributed first).
- - Choice 3: the beneficiary is taxed on each payment (part will be treated
as earnings and part as return of premiums).
CONSIDERATIONS FOR CONTINGENT ANNUITANTS: There may be adverse tax consequences
if a Contingent Annuitant succeeds an Annuitant when the Annuity is owned by a
trust that is neither tax exempt nor qualifies for preferred treatment under
certain sections of the Code. In general, the Code is designed to prevent
indefinite deferral of tax. Continuing the benefit of tax deferral by naming one
or more Contingent Annuitants when the Annuity is owned by a non-qualified trust
might be deemed an attempt to extend the tax deferral for an indefinite period.
Therefore, adverse tax treatment may depend on the terms of the trust, who is
named as Contingent Annuitant, as well as the particular facts and
circumstances. You should consult your tax advisor before naming a Contingent
Annuitant if you expect to use an Annuity in such a fashion.
REPORTING AND WITHHOLDING ON DISTRIBUTIONS
Taxable amounts distributed from your annuity contracts are subject to federal
and state income tax reporting and withholding. In general, we will withhold
federal income tax from the taxable portion of such distribution based on the
type of distribution. In the case of an annuity or similar periodic payment,
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
we will withhold as if you are a married individual with 3 exemptions unless you
designate a different withholding status. In the case of all other
distributions, we will withhold at a 10% rate. You may generally elect not to
have tax withheld from your payments. An election out of withholding must be
made on forms that we provide.
State income tax withholding rules vary and we will withhold based on the
rules of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident aliens
at a 30% rate. A different withholding rate may be applicable to a nonresident
alien based on the terms of an existing income tax treaty between the United
States and the nonresident alien's country. Please refer to the discussion below
regarding withholding rules for tax favored plans (for example, an IRA).
Regardless of the amount withheld by us, you are liable for payment of
federal and state income tax on the taxable portion of annuity distributions.
You should consult with your tax advisor regarding the payment of the correct
amount of these income taxes and potential liability if you fail to pay such
taxes.
ANNUITY QUALIFICATION
Diversification And Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the assets underlying the
variable investment options of the annuity contract must be diversified,
according to certain rules. We believe these diversification rules will be met.
An additional requirement for qualification for the tax treatment
described above is that we, and not you as the contract owner, must have
sufficient control over the underlying assets to be treated as the owner of the
underlying assets for tax purposes. While we also believe these investor control
rules will be met, 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. It is unclear whether such guidelines, if in fact
promulgated, would have retroactive effect. It is also unclear what effect, if
any, such guidelines may have on transfers between the investment options
offered pursuant to this Prospectus. We will take any action, including
modifications to your Annuity or the investment options, required to comply with
such guidelines if promulgated.
Please refer to the Statement of Additional information for further
information on these Diversification and Investor Control issues.
Required Distributions Upon Your Death. Upon your death, certain
distributions must be made under the contract. The required distributions depend
on whether you die before you start taking annuity payments under the contract
or after you start taking annuity payments under the contract.
If you die on or after the annuity date, the remaining portion of the
interest in the contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract
must be distributed within 5 years after the date of death. However, if a
periodic payment option is selected by your designated beneficiary and if such
payments begin within 1 year of your death, the value of the contract may be
distributed over the beneficiary's life or a period not exceeding the
beneficiary's life expectancy. Your designated beneficiary is the person to whom
benefit rights under the contract pass by reason of death, and must be a natural
person in order to elect a periodic payment option based on life expectancy or a
period exceeding five years.
If the contract is payable to (or for the benefit of) your surviving
spouse, that portion of the contract may be continued with your spouse as the
owner.
Changes In The Contract. We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract owners and you will be
given notice to the extent feasible under the circumstances.
ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
- - The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
- - Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
- - You transfer your contract to, or designate, a beneficiary who is either
37 1/2 years younger than you or a grandchild.
- - You purchased more than one annuity contract from the same insurer within
the same calendar year (other than contracts held by tax favored plans).
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
Currently, the contract may be purchased for use in connection with
individual retirement accounts and annuities (IRAs)
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Tax Considerations continued
which are subject to Sections 408(a), 408(b) and 408A of the Code. In addition,
this contract may be purchased for use in connection with a corporate Pension
and Profit-sharing plan (subject to 401(a) of the Code), H.R. 10 plans (also
known as Keogh Plans, subject to 401(a) of the Code), Tax Sheltered Annuities
(subject to 403(b) of the Code, also known as Tax Deferred Annuities or TDAs),
and Section 457 plans (subject to 457 of the Code). This description assumes
that you have satisfied the requirements for eligibility for these products.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA or 403(b) account, which can hold other permissible assets other than the
annuity. The terms and administration of the trust or custodial account in
accordance with the laws and regulations for IRAs or 403(b)s, as applicable, are
the responsibility of the applicable trustee or custodian.
You should be aware that tax favored plans such as IRAs generally provide
income tax deferral regardless of whether they invest in annuity contracts. This
means that when a tax favored plan invests in an annuity contract, it generally
does not result in any additional tax benefits (such as income tax deferral and
income tax free transfers).
TYPES OF TAX FAVORED PLANS
IRAs. If you buy a contract for use as an IRA, we will provide you a copy of the
prospectus and contract. The "IRA Disclosure Statement" contains information
about eligibility, contribution limits, tax particulars, and other IRA
information. In addition to this information (some of which is summarized
below), the IRS requires that you have a "free look" after making an initial
contribution to the contract. During this time, you can cancel the contract by
notifying us in writing, and we will refund all of the purchase payments under
the contract (or, if provided by applicable state law, the amount credited under
the contract, if greater), less any applicable federal and state income tax
withholding.
Contributions Limits/Rollovers. Because of the way the contract is
designed, you may purchase a contract for an IRA in connection with a "rollover"
of amounts from a qualified retirement plan or transfer from another IRA. In
2005 the limit is $4,000; increasing to $5,000 in 2008. After 2008 the
contribution amount will be indexed for inflation. The tax law also provides for
a catch-up provision for individuals who are age 50 and above. These taxpayers
will be permitted to contribute an additional $500, increasing to $1,000 in 2006
and years thereafter.
The "rollover" rules under the Code are fairly technical; however, an
individual (or his or her surviving spouse) may generally "roll over" certain
distributions from tax favored retirement plans (either directly or within 60
days from the date of these distributions) if he or she meets the requirements
for distribution. Once you buy the contract, you can make regular IRA
contributions under the contract (to the extent permitted by law). However, if
you make such regular IRA contributions, you should note that you will not be
able to treat the contract as a "conduit IRA," which means that you will not
retain possible favorable tax treatment if you subsequently "roll over" the
contract funds originally derived from a qualified retirement plan or TDA into
another Section 401(a) plan or TDA.
Required Provisions. Contracts that are IRAs (or endorsements that are
part of the contract) must contain certain provisions:
- - You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree
of divorce);
- - Your rights as owner are non-forfeitable;
- - You cannot sell, assign or pledge the contract;
- - The annual contribution you pay cannot be greater than the maximum amount
allowed by law, including catch-up contributions if applicable (which does
not include any rollover amounts);
- - The date on which annuity payments must begin cannot be later than April
1st of the calendar year after the calendar year you turn age 70 1/2; and
- - Death and annuity payments must meet "minimum distribution requirements"
described below.
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
- - A 10% "early distribution penalty" described below;
- - Liability for "prohibited transactions" if you, for example, borrow
against the value of an IRA; or
- - Failure to take a minimum distribution also described below. SEPs. SEPs
are a variation on a standard IRA, and contracts issued to a SEP must
satisfy the same general require-
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
ments described under IRAs (above). There are, however, some differences:
- - If you participate in a SEP, you generally do not include in income any
employer contributions made to the SEP on your behalf up to the lesser of
(a) $42,000 in 2005 or (b) 25% of the employee's earned income (not
including contribution as "earned income" for these purposes). However,
for these purposes, compensation in excess of certain limits established
by the IRS will not be considered. In 2005, this limit is $210,000;
- - SEPs must satisfy certain participation and nondiscrimination requirements
not generally applicable to IRAs; and
- - SEPs for small employers permit salary deferrals up to $14,000 in 2005
with the employer making these contributions to the SEP. However, no new
"salary reduction" or "SAR-SEPs" can be established after 1996.
Individuals participating in a SARSEP who are age 50 or above by the end
of the year will be permitted to contribute an additional $4,000 in 2005,
increasing to $5,000 in 2006. Thereafter, the amount is indexed for
inflation.
You will also be provided the same information, and have the same "free
look" period, as you would have if you purchased the contract for a standard
IRA.
ROTH IRAs. Like standard IRAs, income within a Roth IRA accumulates
tax-free, and contributions are subject to specific limits. Roth IRAs have,
however, the following differences:
- - Contributions to a Roth IRA cannot be deducted from your gross income;
- - "Qualified distributions" from a Roth IRA are excludable from gross
income. A "qualified distribution" is a distribution that satisfies two
requirements: (1) the distribution must be made (a) after the owner of the
IRA attains age 59 1/2; (b) after the owner's death; (c) due to the
owner's disability; or (d) for a qualified first time homebuyer
distribution within the meaning of Section 72(t)(2)(F) of the Code; and
(2) the distribution must be made in the year that is at least five tax
years after the first year for which a contribution was made to any Roth
IRA established for the owner or five years after a rollover, transfer, or
conversion was made from a traditional IRA to a Roth IRA. Distributions
from a Roth IRA that are not qualified distributions will be treated as
made first from contributions and then from earnings, and taxed generally
in the same manner as distributions from a traditional IRA.
- - If eligible (including meeting income limitations and earnings
requirements), you may make contributions to a Roth IRA after attaining
age 70 1/2, and distributions are not required to begin upon attaining
such age or at any time thereafter.
Because of the way the contract is designed, you may purchase a contract
for a Roth IRA in connection with a "rollover" of amounts of another traditional
IRA, conduit IRA, SEP, SIMPLE-IRA or Roth IRA. The Code permits persons who meet
certain income limitations (generally, adjusted gross income under $100,000),
and who receive certain qualifying distributions from such non-Roth IRAs, to
directly rollover or make, within 60 days, a "rollover" of all or any part of
the amount of such distribution to a Roth IRA which they establish. This
conversion triggers current taxation (but is not subject to a 10% early
distribution penalty). Once the contract has been purchased, regular Roth IRA
contributions will be accepted to the extent permitted by law.
TDAs. You may own a TDA generally if you are either an employer or
employee of a tax-exempt organization (as defined under Code Section 501 (c)(3))
or a public educational organization, and you may make contributions to a TDA so
long as the employee's rights to the annuity are nonforfeitable. Contributions
to a TDA, and any earnings, are not taxable until distribution. You may also
make contributions to a TDA under a salary reduction agreement, generally up to
a maximum of $14,000 in 2005. Individuals participating in a TDA who are age 50
or above by the end of the year will be permitted to contribute an additional
$4,000 in 2005, increasing to $5,000 in 2006. Thereafter, the amount is indexed
for inflation. Further, you may roll over TDA amounts to another TDA or an IRA.
You may also roll over TDA amounts to a qualified retirement plan, a SEP and a
457 government plan. A contract may only qualify as a TDA if distributions
(other than "grandfathered" amounts held as of December 31, 1988) may be made
only on account of:
- - Your attainment of age 59 1/2;
- - Your severance of employment;
- - Your death;
- - Your total and permanent disability; or
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Tax Considerations continued
- - Hardship (under limited circumstances, and only related to salary
deferrals and any earnings attributable to these amounts).
In any event, you must begin receiving distributions from your TDA by
April 1st of the calendar year after the calendar year you turn age 70 1/2 or
retire, whichever is later.
These distribution limits do not apply either to transfers or exchanges of
investments under the contract, or to any "direct transfer" of your interest in
the contract to another TDA or to a mutual fund "custodial account" described
under Code Section 403(b)(7).
Employer contributions to TDAs are subject to the same general
contribution, nondiscrimination, and minimum participation rules applicable to
"qualified" retirement plans.
MINIMUM DISTRIBUTION REQUIREMENTS AND PAYMENT OPTION
If you hold the contract under an IRA (or other tax-favored plan), IRS minimum
distribution requirements must be satisfied. This means that generally payments
must start by April 1 of the year after the year you reach age 70 1/2 and must
be made for each year thereafter. The amount of the payment must at least equal
the minimum required under the IRS rules. Several choices are available for
calculating the minimum amount. More information on the mechanics of this
calculation is available on request. Please contact us at a reasonable time
before the IRS deadline so that a timely distribution is made. Please note that
there is a 50% tax penalty on the amount of any minimum distribution not made in
a timely manner.
Effective in 2006, in accordance with recent changes in laws and
regulations, required minimum distributions will be calculated based on the sum
of the contract value and the actuarial value of any additional death benefits
and benefits from optional riders that you have purchased under the contract. As
a result, the required minimum distributions may be larger than if the
calculation were based on the contract value only, which may in turn result in
an earlier (but not before the required beginning date) distribution under the
Contract and an increased amount of taxable income distributed to the contract
owner, and a reduction of death benefits and the benefits of any optional
riders.
You can use the Minimum Distribution option to satisfy the IRS minimum
distribution requirements for this contract without either beginning annuity
payments or surrendering the contract. We will distribute to you this minimum
distribution amount, less any other partial withdrawals that you made during the
year.
Although the IRS rules determine the required amount to be distributed
from your IRA each year, certain payment alternatives are still available to
you. If you own more than one IRA, you can choose to satisfy your minimum
distribution requirement for each of your IRAs by withdrawing that amount from
any of your IRAs.
PENALTY FOR EARLY WITHDRAWALS
You may owe a 10% tax penalty on the taxable part of distributions received from
an IRA, SEP, Roth IRA, TDA or qualified retirement plan before you attain age
59 1/2. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled; or
- - generally the amount paid or received is in the form of substantially
equal payments not less frequently than annually. (Please note that
substantially equal payments must continue until the later of reaching age
59 1/2 or 5 years.) Modification of payments during that time period will
result in retroactive application of the 10% tax penalty.) Other
exceptions to this tax may apply. You should consult your tax advisor for
further details.
WITHHOLDING
Unless a distribution is an eligible rollover distribution that is "directly"
rolled over into another qualified plan, IRA (including the IRA variations
described above), SEP, 457 government plan or TDA, we will withhold federal
income tax at the rate of 20%. This 20% withholding does not apply to
distributions from IRAs and Roth IRAs. For all other distributions, unless you
elect otherwise, we will withhold federal income tax from the taxable portion
of such distribution at an appropriate percentage. The rate of withholding on
annuity payments where no mandatory withholding is required is determined on
the basis of the withholding certificate that you file with us. If you do not
file a certificate, we will automatically withhold federal taxes on the
following basis:
- - For any annuity payments not subject to mandatory withholding, you will
have taxes withheld by us as if you are a married individual, with 3
exemptions; and
- - For all other distributions, we will withhold at a 10% rate.
We will provide you with forms and instructions concerning the right to
elect that no amount be withheld from payments in the ordinary course. However,
you should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should consult
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
with your tax advisor to find out more information on your potential liability
if you fail to pay such taxes. There may be additional state income tax
withholding requirements.
ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevents a fiduciary and other "parties in interest" with respect to a plan
(and, for these purposes, an IRA would also constitute a "plan") from receiving
any benefit from any party dealing with the plan, as a result of the sale of the
contract. Administrative exemptions under ERISA generally permit the sale of
insurance/annuity products to plans, provided that certain information is
disclosed to the person purchasing the contract. This information has to do
primarily with the fees, charges, discounts and other costs related to the
contract, as well as any commissions paid to any agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found in the applicable sections of this Prospectus.
Information about sales representatives and commissions may be found in
the sections of this Prospectus addressing distribution of the Annuity.
S Please consult your tax advisor if you have any additional questions.
SPOUSAL CONSENT RULES FOR RETIREMENT PLANS -- QUALIFIED CONTRACTS
If you are married at the time your payments commence, you may be required by
federal law to choose an income option that provides survivor annuity income to
your spouse, unless your spouse waives that right. Similarly, if you are married
at the time of your death, federal law may require all or a portion of the death
benefit to be paid to your spouse, even if you designated someone else as your
beneficiary. A brief explanation of the applicable rules follows. For more
information, consult the terms of your retirement arrangement.
Defined Benefit Plans and Money Purchase Pension Plans. If you are married
at the time your payments commence, federal law requires that benefits be paid
to you in the form of a "qualified joint and survivor annuity" (QJSA), unless
you and your spouse waive that right, in writing. Generally, this means that you
will receive a reduced payment during your life and, upon your death, your
spouse will receive at least one-half of what you were receiving for life. You
may elect to receive another income option if your spouse consents to the
election and waives his or her right to receive the QJSA. If your spouse
consents to the alternative form of payment, your spouse may not receive any
benefits from the plan upon your death. Federal law also requires that the plan
pay a death benefit to your spouse if you are married and die before you begin
receiving your benefit. This benefit must be available in the form of an annuity
for your spouse's lifetime and is called a "qualified pre-retirement survivor
annuity" (QPSA). If the plan pays death benefits to other beneficiaries, you may
elect to have a beneficiary other than your spouse receive the death benefit,
but only if your spouse consents to the election and waives his or her right to
receive the QPSA. If your spouse consents to the alternate beneficiary, your
spouse will receive no benefits from the plan upon your death. Any QPSA waiver
prior to your attaining age 35 will become null and void on the first day of the
calendar year in which you attain age 35, if still employed.
Defined Contribution Plans (including 401(k) Plans and ERISA 403(b)
Annuities). Spousal consent to a distribution is generally not required. Upon
your death, your spouse will receive the entire death benefit, even if you
designated someone else as your beneficiary, unless your spouse consents in
writing to waive this right. Also, if you are married and elect an annuity as a
periodic income option, federal law requires that you receive a QJSA (as
described above), unless you and your spouse consent to waive this right.
IRAs, non-ERISA 403(b) Annuities, and 457 Plans. Spousal consent to a
distribution is not required. Upon your death, any death benefit will be paid to
your designated beneficiary.
ADDITIONAL INFORMATION
For additional information about federal tax law requirements applicable to tax
favored plans, see the IRA Disclosure Statement.
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
General Information
HOW WILL I RECEIVE STATEMENTS AND REPORTS?
We send any statements and reports required by applicable law or regulation to
you at your last known address of record. You should therefore give us prompt
notice of any address change. We reserve the right, to the extent permitted by
law and subject to your prior consent, to provide any prospectus, prospectus
supplements, confirmations, statements and reports required by applicable law or
regulation to you through our Internet Website at
http://www.americanskandia.prudential.com or any other electronic means,
including diskettes or CD ROMs. We send a confirmation statement to you each
time a transaction is made affecting Account Value, such as making additional
Purchase Payments, transfers, exchanges or withdrawals. We also send quarterly
statements detailing the activity affecting your Annuity during the calendar
quarter. We may confirm regularly scheduled transactions, such as the Annual
Maintenance Fee, systematic withdrawals (including 72(t) payments and required
minimum distributions), bank drafting, dollar cost averaging, and static
rebalancing, in quarterly statements instead of confirming them immediately. You
should review the information in these statements carefully. You may request
additional reports. We reserve the right to charge up to $50 for each such
additional report. We may also send an annual report and a semi-annual report
containing applicable financial statements for the Separate Account and the
Portfolios, as of December 31 and June 30, respectively, to Owners or, with your
prior consent, make such documents available electronically through our Internet
Website or other electronic means.
WHO IS AMERICAN SKANDIA?
American Skandia Life Assurance Corporation, a Prudential Financial Company
("American Skandia") is a stock life insurance company domiciled in Connecticut
with licenses in all 50 states, the District of Columbia and Puerto Rico.
American Skandia is a wholly-owned subsidiary of American Skandia, Inc. ("ASI"),
whose ultimate parent is Prudential Financial, Inc. American Skandia markets its
products to broker-dealers and financial planners through an internal field
marketing staff. In addition, American Skandia markets through and in
conjunction with financial institutions such as banks that are permitted
directly, or through affiliates, to sell annuities.
American Skandia is in the business of issuing annuity and life insurance
products. American Skandia currently offers the following products: (a) flexible
premium deferred annuities and single premium fixed deferred annuities that are
registered with the SEC; (b) certain other fixed deferred annuities that are not
registered with the SEC; and (c) both fixed and variable immediate adjustable
annuities.
Effective May 1, 2003, Skandia U.S. Inc., the sole shareholder of ASI,
which is the parent of American Skandia, was purchased by Prudential Financial,
Inc. Prudential Financial, Inc. is a New Jersey insurance holding company whose
subsidiary companies serve individual and institutional customers worldwide and
include The Prudential Insurance Company of America, one of the largest life
insurance companies in the U.S. These companies offer a variety of products and
services, including life insurance, property and casualty insurance, mutual
funds, annuities, pension and retirement related services and administration,
asset management, securities brokerage, banking and trust services, real estate
brokerage franchises, and relocation services.
No company other than American Skandia has any legal responsibility to pay
amounts that it owes under its annuity and variable life insurance contracts.
However, Prudential Financial exercises significant influence over the
operations and capital structure of American Skandia.
WHAT ARE SEPARATE ACCOUNTS?
The separate accounts are where American Skandia sets aside and invests the
assets of some of our annuities. In the accumulation period, assets supporting
Account Values of the Annuities are held in a separate account established under
the laws of the State of Connecticut. We are the legal owner of assets in the
separate accounts. In the payout period, assets supporting fixed annuity
payments and any adjustable annuity payments we make available are held in our
general account. Assets supporting variable annuity payment options may be
invested in our separate accounts. Income, gains and losses from assets
allocated to these separate accounts are credited to or charged against each
such separate account without regard to other income, gains or losses of
American Skandia or of any other of our separate accounts. These assets may only
be charged with liabilities which arise from the Annuities issued by American
Skandia. The amount of our obligation in relation to allocations to the
Sub-accounts is based on the investment performance of such Sub-accounts.
However, the obligations themselves are our general corporate obligations.
SEPARATE ACCOUNT B
During the accumulation period, the assets supporting obligations based on
allocations to the variable investment options
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
are held in Sub-accounts of American Skandia Life Assurance Corporation Variable
Account B, also referred to as "Separate Account B". Separate Account B was
established by us pursuant to Connecticut law on November 25, 1987. 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.
Separate Account B consists of multiple Sub-accounts. Each Sub-account
invests only in a single mutual fund or mutual fund portfolio. The name of each
Sub-account generally corresponds to the name of the underlying Portfolio. Each
Sub-account in Separate Account B may have several different Unit Prices to
reflect the Insurance Charge, Distribution Charge (when applicable) and the
charges for any optional benefits that are offered under this Annuity and other
annuities issued by us through Separate Account B. Separate Account B is
registered with the SEC under the Investment Company Act of 1940 ("Investment
Company Act") as a unit investment trust, which is a type of investment company.
The SEC does not supervise investment policies, management or practices of
Separate Account B.
Prior to November 18, 2002, Separate Account B was organized as a single
separate account with six different Sub-account classes, each of which was
registered as a distinct unit investment trust under the Investment Company Act.
Effective November 18, 2002, each Sub-account class of Separate Account B was
consolidated into the unit investment trust formerly named American Skandia Life
Assurance Corporation Variable Account B (Class 1 Sub-accounts), which was
subsequently renamed American Skandia Life Assurance Corporation Variable
Account B. Each Sub-account of Separate Account B has multiple Unit Prices to
reflect the daily charge deducted for each combination of the applicable
Insurance Charge, Distribution Charge (when applicable) and the charge for each
optional benefit offered under Annuity contracts funded through Separate Account
B. The consolidation of Separate Account B had no impact on Annuity Owners.
We reserve the right to make changes to the Sub-accounts available under
the Annuity as we determine appropriate. We may offer new Sub-accounts,
eliminate Sub-accounts, or combine Sub-accounts at our sole discretion. We may
also close Sub-accounts to additional Purchase Payments on existing Annuity
contracts or close Sub-accounts for Annuities purchased on or after specified
dates. We may also substitute an underlying mutual fund or portfolio of an
underlying mutual fund for another underlying mutual fund or portfolio of an
underlying mutual fund, subject to our receipt of any exemptive relief that we
are required to obtain under the Investment Company Act. We will notify Owners
of changes we make to the Sub-accounts available under the Annuity.
VALUES AND BENEFITS BASED ON ALLOCATIONS TO THE SUB-ACCOUNTS WILL VARY
WITH THE INVESTMENT PERFORMANCE OF THE UNDERLYING MUTUAL FUNDS OR FUND
PORTFOLIOS, AS APPLICABLE. WE DO NOT GUARANTEE THE INVESTMENT RESULTS OF ANY
SUB-ACCOUNT. YOUR ACCOUNT VALUE ALLOCATED TO THE SUB-ACCOUNTS MAY INCREASE OR
DECREASE. YOU BEAR THE ENTIRE INVESTMENT RISK. THERE IS NO ASSURANCE THAT THE
ACCOUNT VALUE OF YOUR ANNUITY WILL EQUAL OR BE GREATER THAN THE TOTAL OF THE
PURCHASE PAYMENTS YOU MAKE TO US.
SEPARATE ACCOUNT D
During the accumulation period, assets supporting our obligations based on Fixed
Allocations are held in American Skandia Life Assurance Corporation Separate
Account D, also referred to as "Separate Account D". Such obligations are based
on the fixed interest rates we credit to Fixed Allocations and the terms of the
Annuities. These obligations do not depend on the investment performance of the
assets in Separate Account D. Separate Account D was established by us pursuant
to Connecticut law.
There are no units in Separate Account D. The Fixed Allocations are
guaranteed by our general account. An Annuity Owner who allocates a portion of
their Account Value to Separate Account D does not participate in the investment
gain or loss on assets maintained in Separate Account D. Such gain or loss
accrues solely to us. We retain the risk that the value of the assets in
Separate Account D may drop below the reserves and other liabilities we must
maintain. Should the value of the assets in Separate Account D drop below the
reserve and other liabilities we must maintain in relation to the annuities
supported by such assets, we will transfer assets from our general account to
Separate Account D to make up the difference. We have the right to transfer to
our general account any assets of Separate Account D in excess of such reserves
and other liabilities. We maintain assets in Separate Account D supporting a
number of annuities we offer.
We currently employ investment managers to manage the assets maintained in
Separate Account D. Each manager we employ is responsible for investment
management of a different portion of Separate Account D. From time to time addi-
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
General Information continued
tional 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) and have sole discretion over the investment managers we
retain.
We are not obligated to invest according to specific guidelines or
strategies except as may be required by Connecticut and other state insurance
laws.
WHAT IS THE LEGAL STRUCTURE OF THE UNDERLYING FUNDS?
Each underlying mutual fund is registered as an open-end management investment
company under the Investment Company Act. Shares of the underlying mutual fund
portfolios are sold to separate accounts of life insurance companies offering
variable annuity and variable life insurance products. The shares may also be
sold directly to qualified pension and retirement plans.
VOTING RIGHTS
We are the legal owner of the shares of the underlying mutual funds in which the
Sub-accounts invest. However, under SEC rules, you have voting rights in
relation to Account Value maintained in the Sub-accounts. If an underlying
mutual fund portfolio requests a vote of shareholders, we will vote our shares
based on instructions received from Owners with Account Value allocated to that
Sub-account. Owners have the right to vote an amount equal to the number of
shares attributable to their contracts. If we do not receive voting instructions
in relation to certain shares, we will vote those shares in the same manner and
proportion as the shares for which we have received instructions. We will
furnish those Owners who have Account Value allocated to a Sub-account whose
underlying mutual fund portfolio has requested a "proxy" vote with proxy
materials and the necessary forms to provide us with their voting instructions.
Generally, you will be asked to provide instructions for us to vote on matters
such as changes in a fundamental investment strategy, adoption of a new
investment advisory agreement, or matters relating to the structure of the
underlying mutual fund that require a vote of shareholders.
American Skandia Trust (the "Trust") has obtained an exemption from the
Securities and Exchange Commission that permits its co- investment advisers,
American Skandia Investment Services, Incorporated ("ASISI") and Prudential
Investments LLC, subject to approval by the Board of Trustees of the Trust, to
change sub-advisors for a Portfolio and to enter into new sub-advisory
agreements, without obtaining shareholder approval of the changes. This
exemption (which is similar to exemptions granted to other investment companies
that are organized in a similar manner as the Trust) is intended to facilitate
the efficient supervision and management of the sub-advisors by ASISI,
Prudential Investments LLC and the Trustees. The Trust is required, under the
terms of the exemption, to provide certain information to shareholders following
these types of changes. We may add new Sub-accounts that invest in a series of
underlying funds other than the Trust that is managed by an affiliate. Such
series of funds may have a similar order from the SEC. You also should review
the prospectuses for the other underlying funds in which various Sub-accounts
invest as to whether they have obtained similar orders from the SEC.
MATERIAL CONFLICTS
It is possible that differences may occur between companies that offer shares of
an underlying mutual fund portfolio to their respective separate accounts
issuing variable annuities and/or variable life insurance products. Differences
may also occur surrounding the offering of an underlying mutual fund portfolio
to variable life insurance policies and variable annuity contracts that we
offer. Under certain circumstances, these differences could be considered
"material conflicts," in which case we would take necessary action to protect
persons with voting rights under our variable annuity contracts and variable
life insurance policies against persons with voting rights under other insurance
companies' variable insurance products. If a "material conflict" were to arise
between owners of variable annuity contracts and variable life insurance
policies issued by us we would take necessary action to treat such persons
equitably in resolving the conflict. "Material conflicts" could arise due to
differences in voting instructions between owners of variable life insurance and
variable annuity contracts of the same or different companies. We monitor any
potential conflicts that may exist.
SERVICE FEES PAYABLE TO AMERICAN SKANDIA
American Skandia or our affiliates have entered into agreements with the
investment adviser or distributor of many of the underlying Portfolios. Under
the terms of these agreements, American Skandia may provide administrative and
support services to the Portfolios for which it receives a fee of up to 0.75%
(currently) of the average assets allocated to the Portfolios under the Annuity
from the investment adviser, distributor and/or the fund. These agreements may
be different
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AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
for each underlying mutual fund whose portfolios are offered as Sub-accounts.
In addition, the investment adviser, sub-advisor or distributor of the
underlying Portfolios may also compensate us by providing reimbursement or
paying directly for, among other things, marketing and/or administrative
services and/or other services they provide in connection with the Annuity.
These services may include, but are not limited to: co-sponsoring various
meetings and seminars attended by broker-dealer firms' registered
representatives and creating marketing material discussing the Annuity and the
available options.
WHO DISTRIBUTES ANNUITIES OFFERED BY AMERICAN SKANDIA?
American Skandia Marketing, Incorporated ("ASM"), a wholly-owned subsidiary of
American Skandia, Inc., is the distributor and principal underwriter of the
securities offered through this prospectus. ASM acts as the distributor of a
number of annuity and life insurance products we offer and co-distributor of
American Skandia Trust and American Skandia Advisor Funds, Inc., a family of
retail mutual funds. ASM also acts as an introducing broker-dealer through
which it receives a portion of brokerage commissions in connection with
purchases and sales of securities held by portfolios of American Skandia Trust
which are offered as underlying investment options under the Annuity.
ASM's principal business address is One Corporate Drive, Shelton,
Connecticut 06484. ASM is registered as broker-dealer under the Securities
Exchange Act of 1934 ("Exchange Act") and is a member of the National
Association of Securities Dealers, Inc. ("NASD").
The Annuity is offered on a continuous basis. ASM enters into distribution
agreements with broker-dealers who are registered under the Exchange Act and
with entities that may offer the Annuity but are exempt from registration
("firms"). Applications for the Annuity are solicited by registered
representatives of those firms. Such representatives will also be our appointed
insurance agents under state insurance law. In addition, ASM may offer the
Annuity directly to potential purchasers.
Commissions are paid to firms on sales of the Annuity according to one or
more schedules. The individual representative will receive a portion of the
compensation, depending on the practice of his or her firm. Commissions are
generally based on a percentage of Purchase Payments made, up to a maximum of
6.0%. Alternative compensation schedules are available that provide a lower
initial commission plus ongoing annual compensation based on all or a portion of
Account Value. We may also provide compensation to the distributing firm for
providing ongoing service to you in relation to the Annuity. Commissions and
other compensation paid in relation to the Annuity do not result in any
additional charge to you or to the Separate Account.
In addition, in an effort to promote the sale of our products (which may
include the placement of American Skandia and/or the Annuity on a preferred or
recommended company or product list and/or access to the firm's registered
representatives), we or ASM may enter into compensation arrangements with
certain broker-dealer firms with respect to certain or all registered
representatives of such firms under which such firms may receive separate
compensation or reimbursement for, among other things, training of sales
personnel and/or marketing and/or administrative services and/or other services
they provide. These services may include, but are not limited to: educating
customers of the firm on the Annuity's features; conducting due diligence and
analysis, providing office access, operations and systems support; holding
seminars intended to educate firm's registered representatives and make them
more knowledgeable about the Annuity; providing a dedicated marketing
coordinator; providing priority sales desk support; and providing expedited
marketing compliance approval. To the extent permitted by NASD rules and other
applicable laws and regulations, ASM may pay or allow other promotional
incentives or payments in the form of cash or non-cash compensation. These
arrangements may not be offered to all firms and the terms of such arrangements
may differ between firms. A list of the firms to whom American Skandia pays an
amount of greater than $10,000 for these arrangements is provided in the
Statement of Additional Information, which is available upon request. You should
note that firms and individual registered representatives and branch managers
within some firms participating in one of these compensation arrangements might
receive greater compensation for selling the Annuity than for selling a
different annuity that is not eligible for these compensation arrangements.
While compensation is generally taken into account as an expense in considering
the charges applicable to an annuity product, any such compensation will be paid
by us or ASM and will not result in any additional charge to you. Overall
compensation paid to the distributing firm does not exceed, based on actuarial
assumptions, 8.5% of the total Purchase Payments made. Your registered
representative can provide you with more information about the compensation
arrangements that apply upon the sale of the Annuity.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
American Skandia publishes annual and quarterly reports that are filed with the
SEC. These reports contain financial information about American Skandia that is
annually audited by an independent registered public accounting firm. American
Skandia's annual report for the year ended December 31, 2004, together with
subsequent periodic reports that American Skandia files with the SEC, are
incorporated by reference
95
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
General Information continued
into this prospectus. You can obtain copies, at no cost, of any and all of this
information, including the American Skandia annual report that is not ordinarily
mailed to contract owners, the more current reports and any subsequently filed
documents at no cost by contacting us at American Skandia -- Variable Annuities;
P.O. Box 7960, Philadelphia, PA 19176 (Telephone : 203-926-1888). The SEC file
number for American Skandia is 33-44202. You may read and copy any filings made
by American Skandia with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, Washington, D.C. 20549-0102. You can obtain information on the operation
of the Public Reference Room by calling (202) 942-8090. The SEC maintains an
Internet site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC at
http://www.sec.gov.
FINANCIAL STATEMENTS
The financial statements of the separate account and American Skandia Life
Assurance Corporation are included in the Statement of Additional Information.
HOW TO CONTACT US
You can contact us by:
- - calling our Customer Service Team at 1-800-752-6342 during our normal
business hours, 8:30 a.m., EST to 8:00 p.m. EST, Monday through Friday, or
Skandia's telephone automated response system at 1-800-766-4530.
- - writing to us via regular mail at American Skandia -- Variable Annuities,
P.O. Box 7960, Philadelphia, PA 19176 OR for express mail American Skandia
-- Variable Annuities, 2101 Welsh Road, Dresher, PA 19025. NOTE: Failure
to send mail to the proper address may result in a delay in our receiving
and processing your request.
- - sending an email to service@prudential.com or visiting our Internet
Website at www.americanskandia.prudential.com
- - accessing information about your Annuity through our Internet Website at
www.americanskandia.prudential.com
You can obtain account information by calling our automated response
system and at www.americanskandia.prudential.com, our Internet Website. Our
Customer Service representatives are also available during business hours to
provide you with information about your account. You can request certain
transactions through our telephone voice response system, our Internet Website
or through a customer service representative. You can provide authorization for
a third party, including your attorney-in-fact acting pursuant to a power of
attorney, to access your account information and perform certain transactions on
your account. You will need to complete a form provided by us which identifies
those transactions that you wish to authorize via telephonic and electronic
means and whether you wish to authorize a third party to perform any such
transactions. Please note that unless you tell us otherwise, we deem that all
transactions that are directed by your investment professional with respect to
your Annuity have been authorized by you. We require that you or your
representative provide proper identification before performing transactions over
the telephone or through our Internet Website. This may include a Personal
Identification Number (PIN) that will be provided to you upon issue of your
Annuity or you may establish or change your PIN by calling our automated
response system and at www.americanskandia.prudential.com, our Internet Website.
Any third party that you authorize to perform financial transactions on your
account will be assigned a PIN for your account.
Transactions requested via telephone are recorded. To the extent permitted
by law, we will not be responsible for any claims, loss, liability or expense in
connection with a transaction requested by telephone or other electronic means
if we acted on such transaction instructions after following reasonable
procedures to identify those persons authorized to perform transactions on your
Annuity using verification methods which may include a request for your Social
Security number, PIN or other form of electronic identification. We may be
liable for losses due to unauthorized or fraudulent instructions if we did not
follow such procedures.
American Skandia does not guarantee access to telephonic, facsimile,
Internet or any other electronic information or that we will be able to accept
transaction instructions via such means at all times. Regular and/or express
mail will be the only means by which we will accept transaction instructions
when telephonic, facsimile, Internet or any other electronic means are
unavailable or delayed. American Skandia reserves the right to limit, restrict
or terminate telephonic, facsimile, Internet or any other electronic transaction
privileges at any time.
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Securities Act") may be permitted to directors, officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
96
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
LEGAL PROCEEDINGS
As of the date of this Prospectus, American Skandia and its affiliates are not
involved in any legal proceedings outside of the ordinary course of business.
American Skandia and its affiliates are involved in pending and threatened legal
proceedings in the normal course of its business, however, we do not anticipate
that the outcome of any such legal proceedings will have a material adverse
affect on the Separate Account, or American Skandia's ability to meet its
obligations under the Annuity, or on the distribution of the Annuity.
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The following are the contents of the Statement of Additional Information:
General Information about American Skandia
- - American Skandia Life Assurance Corporation
- - American Skandia Life Assurance Corporation Variable Account B
- - American Skandia Life Assurance Corporation Separate Account D
Principal Underwriter/Distributor -- American Skandia Marketing, Incorporated
Payments Made to Promote Sale of Our Products
How the Unit Price is Determined
Additional Information on Fixed Allocations
- - How We Calculate the Market Value Adjustment
General Information
- - Voting Rights
- - Modification
- - Deferral of Transactions
- - Misstatement of Age or Sex
- - Ending the Offer
Annuitization
Experts
Legal Experts
Financial Statements
97
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APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B
Separate Account B consists of multiple Sub-accounts. Each Sub-account invests
only in a single mutual fund or mutual fund portfolio. All or some of these
Sub-accounts are available as investment options for other variable annuities
we offer pursuant to different prospectuses.
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 Sub-accounts of Separate
Account B that are being offered pursuant to this Prospectus; and (b) the
number of Units outstanding for each such Sub-account as of the dates shown.
Since November 18, 2002, we have been determining, on a daily basis, multiple
Unit Prices for each Sub-account of Separate Account B. We compute multiple
Unit Prices because several of our variable annuities invest in the same
Sub-accounts, and these annuities deduct varying charges that correspond to
each combination of the applicable Insurance Charge, Distribution Charge (when
applicable) and the charges for each optional benefit. Where an asset-based
charge corresponding to a particular Sub-account within a new annuity product
is identical to that in the same Sub-account within an existing annuity, the
Unit Price for the new annuity will be identical to that of the existing
annuity. In such cases, we will for reference purposes depict, in the condensed
financial information for the new annuity, Unit Prices of the existing annuity.
The year in which operations commenced in each such Sub-account is noted in
parentheses. To the extent a Sub-account commenced operations during a
particular calendar year, the Unit Price as of the end of the period reflects
only the partial year results from the commencement of operations until
December 31st of the applicable year. When a Unit Price was first calculated
for a particular Sub-account, we set the price of that Unit at $10.00 per Unit.
Thereafter, Unit Prices vary based on market performance. Unit Prices and Units
are provided for Sub-accounts that commenced operations prior to January 1,
2005.
A-1
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ---------------------------------------------- --------------- --------------- ---------------
AST JP MORGAN INTERNATIONAL EQUITY PORTFOLIO
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.67 $ 11.00 8.56
Number of Units 3,227,381 2,415,394 2,569,506
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.65 $ 12.75 9.95
Number of Units 2,064,681 936,678 90,759
With GMWB
Unit Value $ 14.62 $ 12.74 --
Number of Units 217,166 17,098 --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.57 $ 12.72 9.95
Number of Units 284,319 141,470 6,047
With any one of EBP or HAV and GMWB
Unit Value $ 7.86 $ 6.87 --
Number of Units 428,765 400,112 --
With HAV, EBP and GRO Plus
Unit Price $ 14.49 $ 12.68 --
Number of Units 38,292 13,590 --
With HAV, EBP and GMWB
Unit Price $ 12.32 -- --
Number of Units 20,718 -- --
AST WILLIAM BLAIR INTERNATIONAL GROWTH (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 15.30 $ 13.39 9.72
Number of Units 11,265,469 5,547,558 835,523
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.21 $ 13.35 9.72
Number of Units 15,481,627 6,498,151 78,368
With GMWB
Unit Value $ 15.18 $ 13.34 --
Number of Units 1,821,923 103,740 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.13 $ 13.32 9.71
Number of Units 2,722,552 1,009,679 5,178
With any one of EBP or HAV and GMWB
Unit Value $ 15.74 $ 13.86 --
Number of Units 545,075 29,434 --
With HAV, EBP and GRO Plus
Unit Price $ 15.05 $ 13.28 --
Number of Units 325,809 32,626 --
With HAV, EBP and GMWB
Unit Price $ 11.94 -- --
Number of Units 135,829 -- --
A-2
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
-------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ----------------------------------- --------------- --------------- -------------
AST LSV INTERNATIONAL VALUE (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.84 $ 10.79 8.19
Number of Units 1,897,469 1,201,268 269,995
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.27 $ 12.86 9.79
Number of Units 810,108 368,945 22,770
With GMWB
Unit Value $ 15.24 $ 12.85 --
Number of Units 69,494 5,504 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.19 $ 12.82 --
Number of Units 119,845 24,374 --
With any one of EBP or HAV and GMWB
Unit Value $ 6.69 $ 5.65 --
Number of Units 122,795 72,406 --
With HAV, EBP and GRO Plus
Unit Price $ 15.11 $ 12.79 --
Number of Units 16,366 1,767 --
With HAV, EBP and GMWB
Unit Value $ 12.70 -- --
Number of Units 5,736 -- --
AST MFS GLOBAL EQUITY (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.16 $ 11.30 9.04
Number of Units 2,276,801 1,393,001 969,509
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.29 $ 12.31 9.87
Number of Units 1,897,254 916,888 32,306
With GMWB
Unit Value $ 14.26 $ 12.29 --
Number of Units 98,046 4,306 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.22 $ 12.27 --
Number of Units 219,580 62,490 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.48 $ 9.06 --
Number of Units 273,401 308,725 --
With HAV, EBP and GRO Plus
Unit Price $ 14.14 $ 12.24 --
Number of Units 26,943 6,069 --
With HAV, EBP and GMWB
Unit Value $ 12.40 -- --
Number of Units 5,188 -- --
A-3
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------------- --------------- --------------- ---------------
AST STATE STREET RESEARCH SMALL-CAP GROWTH (1)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.05 $ 9.89 6.92
Number of Units 2,242,129 3,292,593 1,970,250
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.33 $ 13.50 9.48
Number of Units 1,200,247 1,059,046 47,261
With GMWB
Unit Value $ 12.30 $ 13.49 --
Number of Units 113,913 9,676 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.26 $ 13.46 9.47
Number of Units 136,313 138,936 6,595
With any one of EBP or HAV and GMWB
Unit Value $ 15.30 $ 16.82 --
Number of Units 67,370 64,850 --
With HAV, EBP and GRO Plus
Unit Price $ 12.19 $ 13.43 --
Number of Units 23,253 4,691 --
With HAV, EBP and GMWB
Unit Value $ 9.32 -- --
Number of Units 1,043 -- --
AST DEAM SMALL-CAP GROWTH (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.98 $ 11.13 7.67
Number of Units 1,618,719 1,682,193 639,695
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.10 $ 14.06 9.71
Number of Units 779,045 480,221 12,122
With GMWB
Unit Value $ 15.07 $ 14.05 --
Number of Units 56,414 1,850 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.02 $ 14.02 9.71
Number of Units 192,105 89,708 1,728
With any one of EBP or HAV and GMWB
Unit Value $ 7.07 $ 6.61 --
Number of Units 129,475 131,605 --
With HAV, EBP and GRO Plus
Unit Price $ 14.94 $ 13.98 --
Number of Units 18,825 3,753 --
With HAV, EBP and GMWB
Unit Value $ 11.03 -- --
Number of Units 3,398 -- --
A-4
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ----------------------------------------- --------------- --------------- ---------------
AST FEDERATED AGGRESSIVE GROWTH (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 15.42 $ 12.74 7.64
Number of Units 4,808,453 3,085,373 1,255,415
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.79 $ 16.40 9.86
Number of Units 5,192,694 2,615,505 63,097
With GMWB
Unit Value $ 19.75 $ 16.38 --
Number of Units 562,771 37,078 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 19.69 $ 16.35 9.86
Number of Units 808,007 362,906 4,107
With any one of EBP or HAV and GMWB
Unit Value $ 9.70 $ 8.06 --
Number of Units 324,340 79,226 --
With HAV, EBP and GRO Plus
Unit Price $ 19.58 $ 16.30 --
Number of Units 95,514 20,181 --
With HAV, EBP and GMWB
Unit Value $ 12.64 -- --
Number of Units 53,866 -- --
AST GOLDMAN SACHS SMALL-CAP VALUE (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 15.19 $ 12.85 9.26
Number of Units 1,541,896 1,504,296 1,492,775
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.47 $ 13.97 10.09
Number of Units 222,905 102,500 624
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value $ 19.58 $ 16.67 --
Number of Units 61,521 73,852 --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-5
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- -------------------------------- ---------------- --------------- ---------------
AST SMALL-CAP VALUE (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 14.22 $ 12.42 9.3
Number of Units 10,785,030 10,183,346 6,141,523
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.34 $ 13.43 10.08
Number of Units 10,169,483 5,824,200 209,790
With GMWB
Unit Value $ 15.31 $ 13.41 --
Number of Units 1,007,926 100,155 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.26 $ 13.39 10.08
Number of Units 1,690,870 767,455 17,411
With any one of EBP or HAV and GMWB
Unit Value $ 15.87 $ 13.95 --
Number of Units 465,784 275,971 --
With HAV, EBP and GRO Plus
Unit Price $ 15.17 $ 13.35 --
Number of Units 166,852 34,978 --
With HAV, EBP and GMWB
Unit Value $ 12.11 -- --
Number of Units 91,011 -- --
AST DEAM SMALL-CAP VALUE (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.99 $ 10.81 7.66
Number of Units 2,143,020 1,134,865 423,387
With any one of GRO Plus, EBP or HAV
Unit Price $ 17.00 $ 14.19 10.08
Number of Units 1,054,696 434,509 11,686
With GMWB
Unit Value $ 16.96 $ 14.17 --
Number of Units 236,402 10,756 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 16.90 $ 14.15 10.08
Number of Units 213,632 70,597 5,211
With any one of EBP or HAV and GMWB
Unit Value $ 12.78 $ 10.70 --
Number of Units 63,057 22,847 --
With HAV, EBP and GRO Plus
Unit Price $ 16.81 $ 14.11 --
Number of Units 14,277 879 --
With HAV, EBP and GMWB
Unit Value $ 12.71 -- --
Number of Units 634 -- --
A-6
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------------- --------------- --------------- ---------------
AST GOLDMAN SACHS MID-CAP GROWTH (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.80 $ 10.31 7.97
Number of Units 4,375,813 3,027,057 1,273,118
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.55 $ 12.75 9.87
Number of Units 5,139,643 2,379,820 66,279
With GMWB
Unit Value $ 14.52 $ 12.73 --
Number of Units 516,261 37,400 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.47 $ 12.71 9.87
Number of Units 994,493 365,115 2,488
With any one of EBP or HAV and GMWB
Unit Value $ 4.24 $ 3.73 --
Number of Units 457,010 175,708 --
With HAV, EBP and GRO Plus
Unit Price $ 14.39 $ 12.68 --
Number of Units 124,672 12,201 --
With HAV, EBP and GMWB
Unit Value $ 11.91 -- --
Number of Units 33,665 -- --
AST NEUBERGER BERMAN MID-CAP GROWTH (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.86 $ 9.51 7.41
Number of Units 4,715,301 3,415,318 2,175,250
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.87 $ 12.18 9.51
Number of Units 2,211,800 1,089,649 44,760
With GMWB
Unit Value $ 13.84 $ 12.17 --
Number of Units 153,923 16,702 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.80 $ 12.15 9.51
Number of Units 377,548 96,879 1,311
With any one of EBP or HAV and GMWB
Unit Value $ 6.81 $ 6.01 --
Number of Units 369,234 294,816 --
With HAV, EBP and GRO Plus
Unit Price $ 13.72 $ 12.11 --
Number of Units 38,051 5,407 --
With HAV, EBP and GMWB
Unit Value $ 11.70 -- --
Number of Units 18,225 -- --
A-7
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------------ ---------------- --------------- ---------------
AST NEUBERGER BERMAN MID-CAP VALUE (1993)
WITH NO OPTIONAL BENEFITS
Unit Price $ 14.51 $ 12.01 8.96
Number of Units 11,461,684 8,530,129 5,118,558
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.08 $ 13.34 9.98
Number of Units 9,335,291 4,786,623 163,415
With GMWB
Unit Value $ 16.04 $ 13.33 --
Number of Units 937,314 87,253 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.99 $ 13.31 9.97
Number of Units 1,457,788 610,598 10,745
With any one of EBP or HAV and GMWB
Unit Value $ 15.99 $ 13.32 --
Number of Units 537,445 370,965 --
With HAV, EBP and GRO Plus
Unit Price $ 15.91 $ 13.27 --
Number of Units 154,749 21,843 --
With HAV, EBP and GMWB
Unit Value $ 12.97 -- --
Number of Units 95,076 -- --
AST ALGER ALL-CAP GROWTH (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.67 $ 9.07 6.8
Number of Units 1,798,457 2,002,166 658,419
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.25 $ 12.45 9.36
Number of Units 715,598 636,548 6,409
With GMWB
Unit Value $ 13.22 $ 12.43 --
Number of Units 119,566 10,356 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.17 $ 12.41 9.36
Number of Units 141,575 106,376 3,466
With any one of EBP or HAV and GMWB
Unit Value $ 6.19 $ 5.84 --
Number of Units 107,188 87,326 --
With HAV, EBP and GRO Plus
Unit Price $ 13.10 $ 12.38 --
Number of Units 22,732 4,810 --
With HAV, EBP and GMWB
Unit Value $ 10.73 -- --
Number of Units 6,346 -- --
A-8
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------------- --------------- --------------- ---------------
AST GABELLI ALL-CAP VALUE (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.38 $ 10.91 8.17
Number of Units 2,587,064 2,513,413 1,200,225
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.14 $ 13.38 10.04
Number of Units 1,071,978 727,500 28,449
With GMWB
Unit Value $ 15.11 $ 13.37 --
Number of Units 116,474 12,627 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.06 $ 13.35 10.04
Number of Units 256,671 127,279 88
With any one of EBP or HAV and GMWB
Unit Value $ 11.15 $ 9.89 --
Number of Units 194,765 166,080 --
With HAV, EBP and GRO Plus
Unit Price $ 14.98 $ 13.31 --
Number of Units 8,849 1,455 --
With HAV, EBP and GMWB
Unit Value $ 12.11 -- --
Number of Units 7,555 -- --
AST T. ROWE PRICE NATURAL RESOURCES (1995)
WITH NO OPTIONAL BENEFITS
Unit Price $ 16.25 $ 12.59 9.59
Number of Units 2,040,188 2,011,627 724,670
With any one of GRO Plus, EBP or HAV
Unit Price $ 17.60 $ 13.67 10.44
Number of Units 1,025,462 433,891 7,378
With GMWB
Unit Value $ 17.56 $ 13.66 --
Number of Units 172,186 24,634 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 17.50 $ 13.63 10.44
Number of Units 158,672 77,245 5,472
With any one of EBP or HAV and GMWB
Unit Value $ 14.40 $ 11.23 --
Number of Units 41,428 6,747 --
With HAV, EBP and GRO Plus
Unit Price $ 17.41 $ 13.60
Number of Units 37,779 1,035
With HAV, EBP and GMWB
Unit Value $ 14.36 -- --
Number of Units 13,775 -- --
A-9
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ----------------------------- --------------- --------------- ---------------
AST ALLIANCE GROWTH (2) (1996)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.44 $ 9.08 7.46
Number of Units 2,378,881 2,098,873 1,869,353
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.76 $ 11.34 9.34
Number of Units 1,189,655 717,430 31,105
With GMWB
Unit Value $ 11.73 $ 11.32 --
Number of Units 84,417 2,206 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.70 $ 11.30 9.34
Number of Units 297,369 114,477 3,975
With any one of EBP or HAV and GMWB
Unit Value $ 5.91 $ 5.72 --
Number of Units 307,367 267,109 --
With HAV, EBP and GRO Plus
Unit Price $ 11.63 $ 11.27 --
Number of Units 15,562 8,067 --
With HAV, EBP and GMWB
Unit Value $ 10.57 -- --
Number of Units 4,945 -- --
AST MFS GROWTH (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.97 $ 9.16 7.58
Number of Units 4,529,834 4,784,269 2,930,432
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.39 $ 11.41 9.47
Number of Units 2,897,175 2,222,614 134,574
With GMWB
Unit Value $ 12.37 $ 11.40 --
Number of Units 304,760 18,900 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.33 $ 11.38 9.46
Number of Units 442,758 207,063 2,437
With any one of EBP or HAV and GMWB
Unit Value $ 6.72 $ 6.21 --
Number of Units 387,463 262,995 --
With HAV, EBP and GRO Plus
Unit Price $ 12.26 $ 11.35 --
Number of Units 52,718 10,550 --
With HAV, EBP and GMWB
Unit Value $ 11.00 -- --
Number of Units 33,939 -- --
A-10
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------------- ---------------- --------------- ---------------
AST MARSICO CAPITAL GROWTH (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.26 $ 10.78 8.32
Number of Units 28,117,310 20,138,164 10,144,317
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.95 $ 12.30 9.51
Number of Units 30,793,077 14,975,841 457,013
With GMWB
Unit Value $ 13.92 $ 12.28 --
Number of Units 3,136,818 215,988 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.88 $ 12.26 9.51
Number of Units 4,692,895 2,031,583 30,465
With any one of EBP or HAV and GMWB
Unit Value $ 9.22 $ 8.16 --
Number of Units 2,016,277 925,591 --
With HAV, EBP and GRO Plus
Unit Price $ 13.80 $ 12.23 --
Number of Units 578,919 70,776 --
With HAV, EBP and GMWB
Unit Value $ 11.61 -- --
Number of Units 263,104 -- --
AST GOLDMAN SACHS CONCENTRATED GROWTH (1992)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.64 $ 9.45 7.67
Number of Units 2,785,100 2,053,023 1,349,939
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.83 $ 11.63 9.46
Number of Units 1,641,544 715,845 41,632
With GMWB
Unit Value $ 11.80 $ 11.61 --
Number of Units 122,739 17,452 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.76 $ 11.59 --
Number of Units 277,607 49,620 --
With any one of EBP or HAV and GMWB
Unit Value $ 4.46 $ 4.40 --
Number of Units 541,661 395,905 --
With HAV, EBP and GRO Plus
Unit Price $ 11.70 $ 11.56 --
Number of Units 10,426 242 --
With HAV, EBP and GMWB
Unit Value $ 10.54 -- --
Number of Units 12,303 -- --
A-11
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ----------------------------------------------- --------------- --------------- -------------
AST DEAM LARGE-CAP VALUE (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.53 $ 10.78 8.66
Number of Units 2,351,197 1,072,256 664,649
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.36 $ 12.39 9.98
Number of Units 1,347,344 583,969 18,250
With GMWB
Unit Value $ 14.33 $ 12.38 --
Number of Units 175,087 9,674 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.29 $ 12.36 9.97
Number of Units 234,446 58,333 4,906
With any one of EBP or HAV and GMWB
Unit Value $ 10.72 $ 9.28 --
Number of Units 199,601 137,247 --
With HAV, EBP and GRO Plus
Unit Price $ 14.21 $ 12.32 --
Number of Units 16,355 4,412 --
With HAV, EBP and GMWB
Unit Value $ 12.25 -- --
Number of Units 6,163 -- --
AST ALLIANCE/BERNSTEIN GROWTH + VALUE (3) (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.72 $ 9.91 7.99
Number of Units 1,620,391 1,387,072 965,912
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.07 $ 12.11 9.79
Number of Units 1,011,796 667,395 11,345
With GMWB
Unit Value $ 13.05 $ 12.09 --
Number of Units 72,365 5,118 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.00 $ 12.07 9.79
Number of Units 256,194 115,455 704
With any one of EBP or HAV and GMWB
Unit Value $ 9.31 $ 8.65 --
Number of Units 215,645 154,955 --
With HAV, EBP and GRO Plus
Unit Price $ 12.93 $ 12.04 --
Number of Units 7,165 1,041 --
With HAV, EBP and GMWB
Unit Value $ 11.15 -- --
Number of Units 1,191 -- --
A-12
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------------ --------------- --------------- ---------------
AST SANFORD BERNSTEIN CORE VALUE (4) (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.39 $ 11.06 8.76
Number of Units 4,643,022 3,621,862 6,005,922
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.18 $ 12.69 10.08
Number of Units 3,959,115 2,277,726 386,259
With GMWB
Unit Value $ 14.15 $ 12.67 --
Number of Units 220,419 11,518 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.10 $ 12.65 10.08
Number of Units 534,389 328,567 30,510
With any one of EBP or HAV and GMWB
Unit Value $ 11.83 $ 10.62 --
Number of Units 303,689 216,416 --
With HAV, EBP and GRO Plus
Unit Price $ 14.03 $ 12.62 --
Number of Units 49,912 10,893 --
With HAV, EBP and GMWB
Unit Value $ 11.86 -- --
Number of Units 57,669 -- --
AST COHEN & STEERS REALTY (1998)
WITH NO OPTIONAL BENEFITS
Unit Price $ 18.49 $ 13.63 10.08
Number of Units 4,080,179 3,097,315 1,563,489
With any one of GRO Plus, EBP or HAV
Unit Price $ 18.84 $ 13.92 10.33
Number of Units 2,863,749 1,376,696 41,098
With GMWB
Unit Value $ 18.80 $ 13.91 --
Number of Units 184,027 13,615 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 18.74 $ 13.88 10.32
Number of Units 538,151 270,852 6,429
With any one of EBP or HAV and GMWB
Unit Value $ 14.12 $ 10.47 --
Number of Units 68,406 8,884 --
With HAV, EBP and GRO Plus
Unit Price $ 18.64 $ 13.84
Number of Units 17,014 8,189
With HAV, EBP and GMWB
Unit Value $ 14.07 -- --
Number of Units 5,246 -- --
A-13
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------------------- --------------- --------------- ---------------
AST SANFORD BERNSTEIN MANAGED INDEX 500 (5) (1998)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.07 $ 10.23 8.17
Number of Units 6,845,369 5,442,511 3,662,406
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.22 $ 12.25 9.81
Number of Units 3,486,237 2,209,334 79,915
With GMWB
Unit Value $ 13.19 $ 12.24 --
Number of Units 389,368 16,957 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.15 $ 12.22 9.81
Number of Units 352,176 203,573 383
With any one of EBP or HAV and GMWB
Unit Value $ 8.58 $ 7.98 --
Number of Units 343,296 293,662 --
With HAV, EBP and GRO Plus
Unit Price $ 13.08 $ 12.18 --
Number of Units 9,296 4,899 --
With HAV, EBP and GMWB
Unit Value $ 11.31 -- --
Number of Units 43,627 -- --
AST AMERICAN CENTURY INCOME & GROWTH (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.57 $ 10.45 8.25
Number of Units 4,670,846 2,115,438 1,751,136
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.80 $ 12.50 9.89
Number of Units 2,219,323 846,118 36,829
With GMWB
Unit Value $ 13.77 $ 12.48 --
Number of Units 198,789 2,386 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.73 $ 12.46 9.89
Number of Units 368,328 124,008 8,874
With any one of EBP or HAV and GMWB
Unit Value $ 9.04 $ 8.22 --
Number of Units 372,540 195,232 --
With HAV, EBP and GRO Plus
Unit Price $ 13.65 $ 12.43 --
Number of Units 25,550 4,612 --
With HAV, EBP and GMWB
Unit Value $ 11.72 -- --
Number of Units 7,406 -- --
A-14
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ---------------------------------------- ---------------- --------------- ---------------
AST ALLIANCE GROWTH AND INCOME (6) (1992)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.46 $ 10.50 8.06
Number of Units 25,850,506 21,264,670 6,667,373
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.91 $ 12.77 9.83
Number of Units 27,268,222 13,386,166 165,588
With GMWB
Unit Value $ 13.88 $ 12.76 --
Number of Units 2,899,917 187,011 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.83 $ 12.74 9.83
Number of Units 4,694,207 2,029,598 6,100
With any one of EBP or HAV and GMWB
Unit Value $ 10.72 $ 9.88 --
Number of Units 1,731,512 976,756 --
With HAV, EBP and GRO Plus
Unit Price $ 13.76 $ 12.70 --
Number of Units 564,502 69,435 --
With HAV, EBP and GMWB
Unit Value $ 11.50 -- --
Number of Units 228,955 -- --
AST HOTCHKIS & WILEY LARGE-CAP VALUE
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.17 $ 9.83 8.34
Number of Units 3,717,848 2,647,064 2,110,071
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.19 $ 11.65 9.9
Number of Units 1,916,775 651,074 30,714
With GMWB
Unit Value $ 13.16 $ 11.63 --
Number of Units 173,888 21,961 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.12 $ 11.61 9.9
Number of Units 198,898 90,092 5,934
With any one of EBP or HAV and GMWB
Unit Value $ 9.78 $ 8.66 --
Number of Units 419,818 347,275 --
With HAV, EBP and GRO Plus
Unit Price $ 13.05 $ 11.58 --
Number of Units 37,159 332 --
With HAV, EBP and GMWB
Unit Value $ 11.75 -- --
Number of Units 23,032 -- --
A-15
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ----------------------------------------------- --------------- --------------- ---------------
AST DEAM GLOBAL ALLOCATION (7) (1993)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.19 $ 10.24 8.71
Number of Units 1,061,887 898,161 847,517
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.70 $ 11.65 9.94
Number of Units 278,657 155,865 3,088
With GMWB
Unit Value $ 12.67 $ 11.64 --
Number of Units 35,622 483 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.63 $ 11.62 9.93
Number of Units 52,110 34,914 94
With any one of EBP or HAV and GMWB
Unit Value $ 9.12 $ 8.40 --
Number of Units 290,887 303,295 --
With HAV, EBP and GRO Plus
Unit Price $ 12.56 $ 11.58 --
Number of Units 2,849 1,169 --
With HAV, EBP and GMWB
Unit Value $ 11.23 -- --
Number of Units 2,193 -- --
AST AMERICAN CENTURY STRATEGIC BALANCED (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.46 $ 10.69 9.14
Number of Units 2,335,598 2,045,205 1,126,058
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.43 $ 11.62 9.97
Number of Units 1,308,462 930,516 15,835
With GMWB
Unit Value $ 12.40 $ 11.61 --
Number of Units 175,763 18,977 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.36 $ 11.59 9.97
Number of Units 186,307 58,741 2,760
With any one of EBP or HAV and GMWB
Unit Value $ 10.08 $ 9.46 --
Number of Units 218,686 196,909 --
With HAV, EBP and GRO Plus
Unit Price $ 12.29 $ 11.56 --
Number of Units 18,231 11,783 --
With HAV, EBP and GMWB
Unit Value $ 10.98 -- --
Number of Units 125 -- --
A-16
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------------ --------------- --------------- ---------------
AST T. ROWE PRICE ASSET ALLOCATION (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.13 $ 11.09 9.09
Number of Units 3,551,315 2,243,566 921,329
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.22 $ 12.12 9.96
Number of Units 2,109,855 955,716 21,928
With GMWB
Unit Value $ 13.19 $ 12.11 --
Number of Units 349,177 27,414 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.15 $ 12.09 9.96
Number of Units 464,055 160,339 150
With any one of EBP or HAV and GMWB
Unit Value $ 11.38 $ 10.48 --
Number of Units 39,231 2,741 --
With HAV, EBP and GRO Plus
Unit Price $ 13.08 $ 12.05
Number of Units 46,336 31,706
With HAV, EBP and GMWB
Unit Value $ 11.35 -- --
Number of Units 9,372 -- --
AST T. ROWE PRICE GLOBAL BOND (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.45 $ 12.59 11.34
Number of Units 4,717,822 2,962,471 1,739,313
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.17 $ 11.42 10.31
Number of Units 6,387,666 1,827,606 36,822
With GMWB
Unit Value $ 12.14 $ 11.40 --
Number of Units 712,411 24,361 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.10 $ 11.38 10.31
Number of Units 1,195,848 279,110 3,700
With any one of EBP or HAV and GMWB
Unit Value $ 14.05 $ 13.23 --
Number of Units 191,816 148,319 --
With HAV, EBP and GRO Plus
Unit Price $ 12.04 $ 11.35 --
Number of Units 137,089 12,591 --
With HAV, EBP and GMWB
Unit Value $ 10.94 -- --
Number of Units 43,652 -- --
A-17
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- ---------------- --------------- ---------------
AST GOLDMAN SACHS HIGH YIELD PORTFOLIO
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.69 $ 11.61 9.71
Number of Units 13,717,128 12,201,163 5,592,940
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.34 $ 12.24 10.26
Number of Units 4,901,936 3,684,174 74,022
With GMWB
Unit Value $ 13.31 $ 12.23 --
Number of Units 426,333 27,535 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.27 $ 12.21 10.26
Number of Units 707,876 379,114 6,524
With any one of EBP or HAV and GMWB
Unit Value $ 11.51 $ 10.60 --
Number of Units 545,726 346,126 --
With HAV, EBP and GRO Plus
Unit Price $ 13.20 $ 12.17 --
Number of Units 54,058 28,237 --
With HAV, EBP and GMWB
Unit Value $ 11.24 -- --
Number of Units 65,084 -- --
AST LORD ABBETT BOND-DEBENTURE (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.26 $ 11.61 9.94
Number of Units 8,369,008 7,751,236 4,146,530
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.56 $ 11.92 10.23
Number of Units 7,337,467 4,628,945 162,571
With GMWB
Unit Value $ 12.53 $ 11.90 --
Number of Units 904,128 42,593 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.49 $ 11.88 10.23
Number of Units 1,314,641 624,019 7,474
With any one of EBP or HAV and GMWB
Unit Value $ 12.18 $ 11.60 --
Number of Units 732,155 423,485 --
With HAV, EBP and GRO Plus
Unit Price $ 12.42 $ 11.85 --
Number of Units 155,764 28,346 --
With HAV, EBP and GMWB
Unit Value $ 10.88 -- --
Number of Units 85,669 -- --
A-18
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- ---------------- --------------- ---------------
AST PIMCO TOTAL RETURN BOND (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.31 $ 10.95 10.57
Number of Units 33,208,757 26,287,388 20,544,075
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.82 $ 10.51 10.17
Number of Units 30,067,867 16,012,778 604,147
With GMWB
Unit Value $ 10.79 $ 10.49 --
Number of Units 3,495,678 378,676 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.76 $ 10.48 10.17
Number of Units 4,319,279 2,192,336 36,236
With any one of EBP or HAV and GMWB
Unit Value $ 13.09 $ 12.76 --
Number of Units 2,344,332 1,558,557 --
With HAV, EBP and GRO Plus
Unit Price $ 10.70 $ 10.45 --
Number of Units 476,033 119,982 --
With HAV, EBP and GMWB
Unit Value $ 10.32 -- --
Number of Units 323,335 -- --
AST PIMCO LIMITED MATURITY BOND (1995)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.55 $ 10.51 10.34
Number of Units 21,299,789 15,242,856 11,274,642
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.23 $ 10.22 10.08
Number of Units 19,103,280 5,152,783 215,314
With GMWB
Unit Value $ 10.21 $ 10.21 --
Number of Units 2,764,809 36,640 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.17 $ 10.19 10.08
Number of Units 2,785,690 636,860 80,547
With any one of EBP or HAV and GMWB
Unit Value $ 11.62 $ 11.65 --
Number of Units 1,143,298 329,629 --
With HAV, EBP and GRO Plus
Unit Price $ 10.12 $ 10.16 --
Number of Units 301,108 35,430 --
With HAV, EBP and GMWB
Unit Value $ 9.96 -- --
Number of Units 240,337 -- --
A-19
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------ ---------------- --------------- ---------------
AST MONEY MARKET (1992)
WITH NO OPTIONAL B ENEFITS
Unit Price $ 9.78 $ 9.86 9.96
Number of Units 29,870,585 32,730,501 36,255,772
With any one of GRO Plus, EBP or HAV
Unit Price $ 9.75 $ 9.86 9.99
Number of Units 8,152,893 7,176,983 999,737
With GMWB
Unit Value $ 9.73 $ 9.85 --
Number of Units 1,312,018 81,304 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 9.70 $ 9.83 9.99
Number of Units 1,742,703 1,118,618 70,899
With any one of EBP or HAV and GMWB
Unit Value $ 9.98 $ 10.13 --
Number of Units 234,402 35,505 --
With HAV, EBP and GRO Plus
Unit Price $ 9.65 $ 9.80 --
Number of Units 432,144 149,705 --
With HAV, EBP and GMWB
Unit Value $ 9.79 -- --
Number of Units 61,321 -- --
Gartmore Variable Investment Trust --
GVIT DEVELOPING MARKETS (1996)
WITH NO OPTIONAL BENEFITS
Unit Price $ 16.02 $ 13.60 8.66
Number of Units 2,103,950 1,763,660 283,466
With any one of GRO Plus, EBP or HAV
Unit Price $ 18.29 $ 15.56 9.93
Number of Units 934,258 415,864 21,816
With GMWB
Unit Value $ 18.25 $ 15.54 --
Number of Units 161,653 12,503 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 18.19 $ 15.52 9.93
Number of Units 141,365 44,993 442
With any one of EBP or HAV and GMWB
Unit Value $ 12.74 $ 10.88 --
Number of Units 25,630 843 --
With HAV, EBP and GRO Plus
Unit Price $ 18.09 $ 15.47 --
Number of Units 17,121 1,871 --
With HAV, EBP and GMWB
Unit Value $ 12.70 -- --
Number of Units 11,161 -- --
A-20
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ----------------------------------------------------- ------------- ------------- -------------
Wells Fargo Variable Trust -- EQUITY INCOME (8) (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.18 $ 10.23 8.25
Number of Units 590,808 314,757 196,720
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.36 $ 12.26 9.9
Number of Units 285,526 251,071 10,707
With GMWB
Unit Value $ 13.33 $ 12.25 --
Number of Units 39,530 5,900 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.29 $ 12.23 9.9
Number of Units 63,454 15,983 91
With any one of EBP or HAV and GMWB
Unit Value $ 16.60 $ 15.29 --
Number of Units 14,303 15,958 --
With HAV, EBP and GRO Plus
Unit Price $ 13.22 -- --
Number of Units 480 -- --
With HAV, EBP and GMWB
Unit Value $ 11.61 -- --
Number of Units 13 -- --
AIM V.I. -- DYNAMICS (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.72 $ 9.61 7.09
Number of Units 668,032 889,464 543,762
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.59 $ 13.12 9.7
Number of Units 590,157 634,308 32,635
With GMWB
Unit Value $ 14.56 $ 13.11 --
Number of Units 61,543 4,848 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.51 $ 13.08 9.7
Number of Units 55,199 38,518 576
With any one of EBP or HAV and GMWB
Unit Value $ 11.67 -- --
Number of Units 1,825 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.43 $ 13.05 --
Number of Units 4,253 3,083 --
With HAV, EBP and GMWB
Unit Value $ 11.63 -- --
Number of Units 13 -- --
A-21
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ----------------------------------- ------------ ------------ -------------
AIM V.I. -- TECHNOLOGY (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 8.09 $ 7.87 5.5
Number of Units 512,424 578,651 293,307
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.71 $ 13.35 --
Number of Units 5,184 3,695 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
AIM V.I. -- HEALTH SCIENCES (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.64 $ 10.05 8
Number of Units 937,586 698,364 475,873
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.58 $ 11.93 9.51
Number of Units 578,826 381,478 5,444
With GMWB
Unit Value $ 12.56 $ 11.91 --
Number of Units 87,037 2,077 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.52 $ 11.89 9.51
Number of Units 181,513 55,867 140
With any one of EBP or HAV and GMWB
Unit Value $ 11.41 $ 10.85 --
Number of Units 5,057 1,330 --
With HAV, EBP and GRO Plus
Unit Price $ 12.45 -- --
Number of Units 5,438 -- --
With HAV, EBP and GMWB
Unit Value $ 11.38 -- --
Number of Units 2,157 -- --
A-22
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- -------------------------------------------- ------------- ------------- -------------
AIM V.I. -- FINANCIAL SERVICES (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.94 $ 11.17 8.76
Number of Units 585,185 607,265 366,258
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.44 $ 12.61 9.92
Number of Units 387,921 200,360 1,897
With GMWB
Unit Value $ 13.42 $ 12.60 --
Number of Units 67,581 20,268 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.37 $ 12.58 9.92
Number of Units 84,188 50,250 141
With any one of EBP or HAV and GMWB
Unit Value $ 11.11 $ 10.46 --
Number of Units 15,566 1,378 --
With HAV, EBP and GRO Plus
Unit Price $ 13.30 $ 12.54 --
Number of Units 8,806 751 --
With HAV, EBP and GMWB
Unit Value $ 11.08 -- --
Number of Units 468 -- --
Evergreen VA -- INTERNATIONAL EQUITY (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.66 $ 11.65 8.15
Number of Units 414,631 189,143 113,389
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.94 $ 12.78 9.67
Number of Units 195,986 76,749 3,669
With GMWB
Unit Value $ 12.21 $ 10.45 --
Number of Units 32,858 827 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.86 $ 12.74 --
Number of Units 67,201 6,492 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.40 $ 10.64 --
Number of Units 83,727 81,555 --
With HAV, EBP and GRO Plus
Unit Price $ 14.78 $ 12.71 --
Number of Units 7,362 1,395 --
With HAV, EBP and GMWB
Unit Value $ 12.36 -- --
Number of Units 2,878 -- --
A-23
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ---------------------------------------- ------------- ------------- -------------
Evergreen VA -- SPECIAL EQUITY (9) (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.58 $ 11.12 7.44
Number of Units 702,642 815,621 127,728
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.25 $ 14.69 9.85
Number of Units 509,734 293,794 12,520
With GMWB
Unit Value $ 15.22 $ 14.67 --
Number of Units 46,748 3,620 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.17 $ 14.65 9.85
Number of Units 177,731 58,548 533
With any one of EBP or HAV and GMWB
Unit Value $ 9.13 $ 8.83 --
Number of Units 114,259 23,503 --
With HAV, EBP and GRO Plus
Unit Price $ 15.09 -- --
Number of Units 3,411 -- --
With HAV, EBP and GMWB
Unit Value $ 10.53 -- --
Number of Units 26,034 -- --
Evergreen VA -- OMEGA (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.29 $ 10.71 7.78
Number of Units 570,123 404,789 39,943
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.89 $ 13.21 --
Number of Units 387,492 56,002 --
With GMWB
Unit Value $ 13.86 $ 13.19 --
Number of Units 31,153 283 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.81 $ 13.17 --
Number of Units 108,796 25,003 --
With any one of EBP or HAV and GMWB
Unit Value $ 9.40 $ 8.97 --
Number of Units 84,876 19,658 --
With HAV, EBP and GRO Plus
Unit Price $ 13.74 $ 13.13 --
Number of Units 3,028 1,855 --
With HAV, EBP and GMWB
Unit Value $ 10.92 -- --
Number of Units 30,383 -- --
A-24
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
-------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------- --------------- --------------- -------------
ProFund VP -- EUROPE 30 (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.17 $ 10.83 7.93
Number of Units 1,812,435 2,116,400 292,396
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.80 $ 13.20 9.7
Number of Units 313,111 158,208 2,625
With GMWB
Unit Value $ 14.77 $ 13.18 --
Number of Units 99,557 13,365 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.72 $ 13.16 --
Number of Units 162,300 40,636 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.39 $ 11.09 --
Number of Units 17,205 3,060 --
With HAV, EBP and GRO Plus
Unit Price $ 14.64 -- --
Number of Units 7,739 -- --
With HAV, EBP and GMWB
Unit Value $ 12.35 -- --
Number of Units 7,758 -- --
ProFund VP -- ASIA 30 (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.30 $ 12.57 7.75
Number of Units 896,010 942,605 281,993
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.57 $ 15.96 9.86
Number of Units 253,337 131,276 6,995
With GMWB
Unit Value $ 15.54 $ 15.94 --
Number of Units 74,988 10,432 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.49 $ 15.91 --
Number of Units 67,805 33,050 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.14 $ 10.43 --
Number of Units 28,325 1,873 --
With HAV, EBP and GRO Plus
Unit Price $ 15.40 -- --
Number of Units 5,612 -- --
With HAV, EBP and GMWB
Unit Value $ 10.10 -- --
Number of Units 6,082 -- --
A-25
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------- ------------ ------------ -------------
ProFund VP -- JAPAN (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.55 $ 9.03 7.24
Number of Units 710,879 426,718 65,845
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.40 $ 12.70 10.21
Number of Units 137,584 76,553 351
With GMWB
Unit Value $ 13.38 $ 12.69 --
Number of Units 35,968 1,883 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.33 $ 12.67 --
Number of Units 62,668 10,769 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.35 -- --
Number of Units 8,278 -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.26 -- --
Number of Units 7,559 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- BANKS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.98 $ 10.90 8.56
Number of Units 229,711 93,067 101,136
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.10 $ 12.86 10.13
Number of Units 171,696 34,962 3,422
With GMWB
Unit Value $ 14.07 -- --
Number of Units 8,847 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.03 $ 12.83 --
Number of Units 29,071 6,833 --
With any one of EBP or HAV and GMWB
Unit Value $ 11.58 -- --
Number of Units 20,936 -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.95 $ 12.79 --
Number of Units 788 1,039 --
With HAV, EBP and GMWB
Unit Value $ 11.54 -- --
Number of Units 582 -- --
A-26
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
-----------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------- ------------- --------------- -------------
ProFund VP -- BASIC MATERIALS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.87 $ 10.95 8.46
Number of Units 529,237 1,512,864 76,331
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.43 $ 13.35 10.34
Number of Units 170,212 100,189 12
With GMWB
Unit Value $ 14.40 $ 13.33 --
Number of Units 23,555 8,054 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.35 $ 13.31 --
Number of Units 35,537 15,986 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.43 -- --
Number of Units 15,658 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.28 -- --
Number of Units 3,155 -- --
With HAV, EBP and GMWB
Unit Value $ 12.40 -- --
Number of Units 1,246 -- --
ProFund VP -- BIOTECHNOLOGY (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.52 $ 9.75 7.09
Number of Units 757,678 208,971 130,082
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.56 $ 13.53 --
Number of Units 5,878 847 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-27
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- ------------ ------------ -------------
ProFund VP -- CONSUMER SERVICES (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.56 $ 9.04 7.25
Number of Units 430,620 136,269 128,022
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.31 $ 11.66 9.37
Number of Units 87,433 30,700 2,426
With GMWB
Unit Value $ 12.28 -- --
Number of Units 17,197 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.24 $ 11.62 --
Number of Units 8,198 5,655 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.69 -- --
Number of Units 2,087 -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.17 $ 11.59 --
Number of Units 1,211 3,817 --
With HAV, EBP and GMWB
Unit Value $ 10.66 -- --
Number of Units 14 -- --
ProFund VP -- CONSUMER GOODS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.36 $ 9.64 8.28
Number of Units 369,007 58,425 148,446
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.33 $ 11.51 9.9
Number of Units 102,706 12,720 2,303
With GMWB
Unit Value $ 12.31 $ 11.49 --
Number of Units 8,437 954 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.27 -- --
Number of Units 54,297 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 11.40 $ 10.67 --
Number of Units 9,175 4,737 --
With HAV, EBP and GRO Plus
Unit Price $ 12.20 -- --
Number of Units 1,731 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-28
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
-------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- -------------------------------- --------------- --------------- -------------
ProFund VP -- OIL & GAS (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.33 $ 10.48 8.71
Number of Units 1,856,882 1,225,844 299,833
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.40 $ 12.14 10.12
Number of Units 888,111 114,553 1,660
With GMWB
Unit Value $ 15.37 $ 12.12 --
Number of Units 58,804 4,007 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.32 $ 12.10 --
Number of Units 174,913 25,623 --
With any one of EBP or HAV and GMWB
Unit Value $ 13.80 -- --
Number of Units 29,672 -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.23 $ 12.07 --
Number of Units 14,353 2,434 --
With HAV, EBP and GMWB
Unit Value $ 13.76 -- --
Number of Units 6,676 -- --
ProFund VP -- FINANCIALS (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.19 $ 11.23 8.85
Number of Units 553,342 398,159 221,377
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.48 $ 12.45 9.84
Number of Units 323,190 134,420 2,066
With GMWB
Unit Value $ 13.45 $ 12.44 --
Number of Units 17,749 1,060 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.41 $ 12.42 --
Number of Units 35,528 27,402 --
With any one of EBP or HAV and GMWB
Unit Value $ 11.26 -- --
Number of Units 15,974 -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.33 -- --
Number of Units 1,103 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-29
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------- --------------- ------------ -------------
ProFund VP -- HEALTH CARE (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.23 $ 9.17 7.94
Number of Units 1,318,525 707,449 388,508
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.10 $ 11.05 9.59
Number of Units 518,389 244,228 6,831
With GMWB
Unit Value $ 11.07 $ 11.04 --
Number of Units 8,570 1,969 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.04 $ 11.02 --
Number of Units 139,890 56,392 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.65 -- --
Number of Units 5,322 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.98 $ 10.99 --
Number of Units 4,035 2,123 --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- INDUSTRIALS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.15 $ 10.01 7.93
Number of Units 253,411 318,339 12,642
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.27 $ 12.85 --
Number of Units 88,729 20,601 --
With GMWB
Unit Value $ 14.24 -- --
Number of Units 4,426 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.20 $ 12.81 --
Number of Units 14,026 4,507 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.08 -- --
Number of Units 4,381 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.12 -- --
Number of Units 945 -- --
With HAV, EBP and GMWB
Unit Value $ 12.04 -- --
Number of Units 807 -- --
A-30
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------- ------------- ------------- -------------
ProFund VP -- INTERNET (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 17.89 $ 15.00 8.57
Number of Units 992,879 206,876 306,572
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.83 $ 16.67 --
Number of Units 3,806 1,210 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- PHARMACEUTICALS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.93 $ 8.89 8.56
Number of Units 527,336 266,978 136,559
With any one of GRO Plus, EBP or HAV
Unit Price $ 8.88 $ 9.97 9.63
Number of Units 246,789 77,105 2,545
With GMWB
Unit Value $ 8.86 $ 9.96 --
Number of Units 23,137 2,871 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 8.83 $ 9.94 --
Number of Units 70,946 6,346 --
With any one of EBP or HAV and GMWB
Unit Value $ 9.44 -- --
Number of Units 5,382 -- --
With HAV, EBP and GRO Plus
Unit Price $ 8.78 $ 9.91 --
Number of Units 3,939 1,646 --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-31
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------- --------------- --------------- ---------------
ProFund VP -- PRECIOUS METALS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.77 $ 13.29 9.7
Number of Units 1,479,384 1,329,806 1,175,651
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.64 $ 15.44 11.3
Number of Units 457,761 390,896 19,964
With GMWB
Unit Value $ 13.61 -- --
Number of Units 42,627 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.57 $ 15.39 --
Number of Units 111,588 44,664 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.17 -- --
Number of Units 93,541 -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.49 $ 15.35 --
Number of Units 7,072 1,458 --
With HAV, EBP and GMWB
Unit Value $ 10.14 $ 11.55 --
Number of Units 11,671 23,284 --
ProFund VP -- REAL ESTATE (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 16.15 $ 12.91 9.86
Number of Units 1,816,706 462,906 441,318
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.63 $ 13.33 10.2
Number of Units 509,763 136,941 12,789
With GMWB
Unit Value $ 16.60 $ 13.31 --
Number of Units 58,062 3,835 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 16.54 $ 13.29 --
Number of Units 128,625 32,970 --
With any one of EBP or HAV and GMWB
Unit Value $ 13.06 -- --
Number of Units 22,857 -- --
With HAV, EBP and GRO Plus
Unit Price $ 16.45 -- --
Number of Units 629 -- --
With HAV, EBP and GMWB
Unit Value $ 13.02 -- --
Number of Units 1,198 -- --
A-32
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
-------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ----------------------------------- ------------ ------------ -------------
ProFund VP -- SEMICONDUCTOR (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.15 $ 9.51 5.14
Number of Units 694,352 423,958 93,241
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.95 $ 15.93 --
Number of Units 3,639 3,475 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- TECHNOLOGY (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 8.48 $ 8.66 6.03
Number of Units 727,580 497,972 254,131
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.99 $ 13.30 --
Number of Units 9,239 6,845 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-33
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ---------------------------------------- --------------- ------------ -------------
ProFund VP -- TELECOMMUNICATIONS (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 8.19 $ 7.21 7.15
Number of Units 460,848 398,350 272,408
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.43 $ 10.08 10.03
Number of Units 212,127 47,283 3,642
With GMWB
Unit Value $ 11.40 -- --
Number of Units 6,379 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.37 $ 10.05 --
Number of Units 34,691 13,783 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.54 -- --
Number of Units 4,099 -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.31 -- --
Number of Units 11,741 -- --
With HAV, EBP and GMWB
Unit Value $ 12.50 -- --
Number of Units 2,691 -- --
ProFund VP -- UTILITIES (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.13 $ 9.34 7.83
Number of Units 1,060,939 618,427 521,419
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.00 $ 12.63 10.61
Number of Units 332,768 93,690 8,871
With GMWB
Unit Value $ 14.97 $ 12.62 --
Number of Units 57,208 8,137 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.92 $ 12.60 --
Number of Units 87,691 10,588 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.51 -- --
Number of Units 21,365 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.84 -- --
Number of Units 7,490 -- --
With HAV, EBP and GMWB
Unit Value $ 12.47 -- --
Number of Units 573 -- --
A-34
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- -------------------------- --------------- --------------- ---------------
ProFund VP -- BULL (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.53 $ 9.84 7.97
Number of Units 8,215,357 3,563,562 954,792
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.82 $ 12.01 9.75
Number of Units 2,052,501 708,248 10,297
With GMWB
Unit Value $ 12.79 $ 12.00 --
Number of Units 171,187 1,179 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.75 $ 11.98 9.75
Number of Units 570,114 58,349 400
With any one of EBP or HAV and GMWB
Unit Value $ 11.25 $ 10.58 --
Number of Units 31,600 427 --
With HAV, EBP and GRO Plus
Unit Price $ 12.68 $ 11.94 --
Number of Units 88,697 10,714 --
With HAV, EBP and GMWB
Unit Value $ 11.21 -- --
Number of Units 12,971 -- --
ProFund VP -- BEAR (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.45 $ 8.44 11.38
Number of Units 1,202,243 1,886,515 1,532,543
With any one of GRO Plus, EBP or HAV
Unit Price $ 6.60 $ 7.49 10.13
Number of Units 289,105 716,467 28,618
With GMWB
Unit Value $ 6.58 -- --
Number of Units 41,480 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 6.56 $ 7.47 10.13
Number of Units 60,475 36,686 1,514
With any one of EBP or HAV and GMWB
Unit Value $ 8.15 $ 9.29 --
Number of Units 10,709 7,927 --
With HAV, EBP and GRO Plus
Unit Price $ 6.52 $ 7.45 --
Number of Units 14,578 13,622 --
With HAV, EBP and GMWB
Unit Value $ 8.12 $ 9.29 --
Number of Units 1,620 7,293 --
A-35
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------- --------------- --------------- ---------------
ProFund VP -- ULTRABULL (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.76 $ 10.20 6.78
Number of Units 2,817,803 1,431,345 297,435
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.58 $ 14.42 9.61
Number of Units 9,518 1,432 245
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- OTC (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.94 $ 9.32 6.45
Number of Units 4,885,351 4,445,234 1,346,852
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.34 $ 13.47 9.36
Number of Units 1,807,904 810,005 13,113
With GMWB
Unit Value $ 14.31 $ 13.46 --
Number of Units 128,923 5,378 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.27 $ 13.44 --
Number of Units 225,055 34,480 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.92 -- --
Number of Units 28,507 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.19 -- --
Number of Units 32,376 -- --
With HAV, EBP and GMWB
Unit Value $ 10.88 -- --
Number of Units 14,308 -- --
A-36
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
--------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------- --------------- --------------- --------------
ProFund VP -- SHORT OTC (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 5.93 $ 6.78 11
Number of Units 908,064 1,535,439 433,181
With any one of GRO Plus, EBP or HAV
Unit Price $ 5.60 $ 6.42 10.43
Number of Units 181,352 196,526 15,308
With GMWB
Unit Value $ 5.58 -- --
Number of Units 7,191 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 5.57 $ 6.40 --
Number of Units 65,148 20,167 --
With any one of EBP or HAV and GMWB
Unit Value -- $ 9.49 --
Number of Units -- 7,708 --
With HAV, EBP and GRO Plus
Unit Price $ 5.54 $ 6.38 --
Number of Units 16,306 16,907 --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- ULTRAOTC (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.89 $ 7.03 3.53
Number of Units 6,592,447 3,410,589 1,003,123
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.36 $ 17.30 8.7
Number of Units 22,282 5,905 233
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-37
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------ --------------- --------------- -------------
ProFund VP -- MID-CAP VALUE (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.67 $ 10.23 7.66
Number of Units 2,632,869 1,455,513 438,387
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.24 $ 13.40 10.06
Number of Units 626,618 462,172 4,777
With GMWB
Unit Value $ 15.21 $ 13.39 --
Number of Units 110,312 4,164 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.16 $ 13.36 10.06
Number of Units 304,648 99,189 4,799
With any one of EBP or HAV and GMWB
Unit Value $ 12.20 $ 10.77 --
Number of Units 39,454 3,516 --
With HAV, EBP and GRO Plus
Unit Price $ 15.08 $ 13.33 --
Number of Units 12,473 916 --
With HAV, EBP and GMWB
Unit Value $ 12.17 -- --
Number of Units 3,507 -- --
ProFund VP -- MID-CAP GROWTH (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.58 $ 9.69 7.7
Number of Units 2,220,901 1,009,867 439,054
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.42 $ 12.32 9.82
Number of Units 579,666 295,528 1,587
With GMWB
Unit Value $ 13.39 $ 12.31 --
Number of Units 53,472 2,028 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.35 $ 12.28 9.81
Number of Units 163,302 47,141 1,583
With any one of EBP or HAV and GMWB
Unit Value $ 11.12 $ 10.24 --
Number of Units 21,341 3,933 --
With HAV, EBP and GRO Plus
Unit Price $ 13.28 $ 12.25 --
Number of Units 6,489 1,274 --
With HAV, EBP and GMWB
Unit Value $ 11.09 -- --
Number of Units 9,859 -- --
A-38
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
-------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------- --------------- --------------- -------------
ProFund VP -- ULTRAMID-CAP (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.99 $ 9.55 5.71
Number of Units 3,106,849 1,112,311 477,953
With any one of GRO Plus, EBP or HAV
Unit Price $ 20.62 $ 16.46 9.86
Number of Units 338,303 136,523 1,673
With GMWB
Unit Value $ 20.57 $ 16.44 --
Number of Units 101,493 3,746 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 20.51 $ 16.41 --
Number of Units 150,540 88,028 --
With any one of EBP or HAV and GMWB
Unit Value $ 13.86 -- --
Number of Units 27,449 -- --
With HAV, EBP and GRO Plus
Unit Price $ 20.40 $ 16.37 --
Number of Units 2,161 557 --
With HAV, EBP and GMWB
Unit Value $ 13.81 -- --
Number of Units 14,660 -- --
ProFund VP -- SMALL-CAP VALUE (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.10 $ 9.39 7.09
Number of Units 4,088,760 5,144,632 994,778
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.80 $ 13.41 10.15
Number of Units 2,597,154 1,218,990 19,019
With GMWB
Unit Value $ 15.76 $ 13.39 --
Number of Units 163,443 24,769 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.71 $ 13.37 --
Number of Units 596,413 207,523 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.53 $ 10.67 --
Number of Units 31,732 4,223 --
With HAV, EBP and GRO Plus
Unit Price $ 15.63 $ 13.33 --
Number of Units 29,856 28,687 --
With HAV, EBP and GMWB
Unit Value $ 12.49 -- --
Number of Units 6,158 -- --
A-39
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- -------------------------------------- --------------- --------------- -------------
ProFund VP -- SMALL-CAP GROWTH (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.98 $ 10.16 7.69
Number of Units 4,677,820 3,868,951 772,260
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.34 $ 13.05 9.91
Number of Units 1,611,060 1,289,398 10,572
With GMWB
Unit Value $ 15.31 $ 13.04 --
Number of Units 170,800 21,997 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.26 $ 13.01 --
Number of Units 285,725 210,595 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.23 $ 10.44 --
Number of Units 42,134 2,529 --
With HAV, EBP and GRO Plus
Unit Price $ 15.17 $ 12.98 --
Number of Units 9,388 30,164 --
With HAV, EBP and GMWB
Unit Value $ 12.19 -- --
Number of Units 13,290 -- --
ProFund VP -- ULTRA SMALL-CAP (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 15.52 $ 12.04 6.14
Number of Units 5,098,565 1,702,558 212,085
With any one of GRO Plus, EBP or HAV
Unit Price $ 24.98 $ 19.43 --
Number of Units 32,780 13,082 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-40
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ---------------------------------------------- --------------- --------------- ---------------
ProFund VP -- U.S. GOVERNMENT PLUS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.79 $ 11.08 11.56
Number of Units 1,051,158 731,470 2,486,854
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.34 $ 9.75 10.19
Number of Units 372,142 291,892 22,148
With GMWB
Unit Value $ 10.32 $ 9.73 --
Number of Units 120,311 14,956 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.29 $ 9.72 10.19
Number of Units 111,072 32,854 609
With any one of EBP or HAV and GMWB
Unit Value $ 10.80 -- --
Number of Units 4,588 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.23 -- --
Number of Units 13,114 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- RISING RATES OPPORTUNITY (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 6.63 $ 7.56 8.02
Number of Units 5,314,528 1,817,924 165,792
With any one of GRO Plus, EBP or HAV
Unit Price $ 7.97 $ 9.12 9.69
Number of Units 2,060,525 445,486 9,028
With GMWB
Unit Value $ 7.95 $ 9.11 --
Number of Units 333,355 4,991 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 7.93 $ 9.09 --
Number of Units 588,490 82,598 --
With any one of EBP or HAV and GMWB
Unit Value $ 8.31 -- --
Number of Units 219,942 -- --
With HAV, EBP and GRO Plus
Unit Price $ 7.89 $ 9.07 --
Number of Units 52,002 10,876 --
With HAV, EBP and GMWB
Unit Value $ 8.28 -- --
Number of Units 14,108 -- --
A-41
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------- ------- ------ ------
ProFund VP -- LARGE-CAP GROWTH
WITH NO OPTIONAL BENEFITS
Unit Price -- -- --
Number of Units -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- LARGE-CAP VALUE
WITH NO OPTIONAL BENEFITS
Unit Price -- -- --
Number of Units -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-42
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
-------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------ ------- ------ ------
ProFund VP -- SHORT MID-CAP
WITH NO OPTIONAL BENEFITS
Unit Price -- -- --
Number of Units -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- SHORT SMALL-CAP
WITH NO OPTIONAL BENEFITS
Unit Price -- -- --
Number of Units -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-43
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ---------------------------------------- ---------- --------- ------
FIRST TRUST(R) 10 UNCOMMON VALUES (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.03 $ 9.16 6.8
Number of Units 91,924 66,435 19,826
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.39 $ 13.17 --
Number of Units 28 467 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
FIRST TRUST GLOBAL TARGET 15 (10)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.85 -- --
Number of Units 311,233 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.83 -- --
Number of Units 303,452 -- --
With GMWB
Unit Value $ 11.82 -- --
Number of Units 108,014 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.81 -- --
Number of Units 65,909 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 11.80 -- --
Number of Units 6,777 -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.79 -- --
Number of Units 4,718 -- --
With HAV, EBP and GMWB
Unit Value $ 11.78 -- --
Number of Units 3,816 -- --
A-44
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
-------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- ------------ ---- ----
FIRST TRUST TARGET MANAGED VIP
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.32 -- --
Number of Units 1,777,316 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.30 -- --
Number of Units 1,562,079 -- --
With GMWB
Unit Value $ 11.30 -- --
Number of Units 1,057,901 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.28 -- --
Number of Units 429,320 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 11.28 -- --
Number of Units 40,194 -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.27 -- --
Number of Units 217,324 -- --
With HAV, EBP and GMWB
Unit Value $ 11.26 -- --
Number of Units 23,730 -- --
FIRST TRUST NASDAQ TARGET 15
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.66 -- --
Number of Units 82,809 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.64 -- --
Number of Units 1,635 -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-45
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- ------------ ---- ----
FIRST TRUST S&P TARGET 24
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.75 -- --
Number of Units 173,851 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.73 -- --
Number of Units 152,355 -- --
With GMWB
Unit Value $ 10.72 -- --
Number of Units 38,677 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.71 -- --
Number of Units 72,575 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.70 -- --
Number of Units 11,933 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.69 -- --
Number of Units 3,409 -- --
With HAV, EBP and GMWB
Unit Value $ 10.68 -- --
Number of Units 2,359 -- --
FIRST TRUST THE DOW(SM) DART 10
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.48 -- --
Number of Units 155,695 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.46 -- --
Number of Units 160,820 -- --
With GMWB
Unit Value $ 10.46 -- --
Number of Units 78,082 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.45 -- --
Number of Units 82,728 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.44 -- --
Number of Units 3,913 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.43 -- --
Number of Units 10,531 -- --
With HAV, EBP and GMWB
Unit Value $ 10.42 -- --
Number of Units 105 -- --
A-46
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
-----------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- ---------- ---- ----
FIRST TRUST VALUE LINE(R) TARGET 25
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.59 -- --
Number of Units 389,792 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.57 -- --
Number of Units 4,909 -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
SP WILLIAM BLAIR INTERNATIONAL GROWTH
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.53 -- --
Number of Units 269,671 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.53 -- --
Number of Units 172,859 -- --
With GMWB
Unit Value $ 10.53 -- --
Number of Units 73,031 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.52 -- --
Number of Units 23,863 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.52 -- --
Number of Units 6,604 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.52 -- --
Number of Units 4,127 -- --
With HAV, EBP and GMWB
Unit Value $ 10.52 -- --
Number of Units 806 -- --
A-47
APPENDIX A
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
1. Effective May 2, 2005 the name of the AST State Street Research Small-Cap
Growth Portfolio has changed to AST Small-Cap Growth Portfolio.
2. Effective May 2, 2005 the name of the AST Alliance Growth Portfolio has
changed to AST AllianceBernstein Large-Cap Growth Portfolio.
3. Effective May 2, 2005 the name of the AST Alliance/Bernstein Growth + Value
Portfolio has changed to AST AllianceBernstein Growth + Value Portfolio.
4. Effective May 2, 2005 the name of the AST Sanford Bernstein Core Value
Portfolio has changed to AST AllianceBernstein Core Value Portfolio.
5. Effective May 2, 2005 the name of the AST Sanford Bernstein Managed Index
500 Portfolio has changed to AST AllianceBernstein Managed Index 500 Portfolio.
6. Effective May 2, 2005 the name of the AST Alliance Growth and Income
Portfolio has changed to AST AllianceBernstein Growth & Income Portfolio.
7. Effective May 2, 2005 the name of the AST DeAM Global Allocation Portfolio
has changed to AST Global Allocation Portfolio.
8. Effective May 2, 2005 the name of the Wells Fargo Variable Trust Equity
Income Portfolio has changed to Wells Fargo Variable Trust Advantage Equity
Income Portfolio.
9. Effective April 15, 2005 the name of the Evergreen VA - Special Equity
Portfolio has changed to Evergreen VA Growth Portfolio.
10. Effective May 2, 2005 the name of the First Trust Global Target 15
Portfolio has changed to First Trust Global Dividend Target 15 Portfolio.
A-48
APPENDIX B
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits
EXAMPLES OF ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT CALCULATION
The following are examples of how the Enhanced Beneficiary Protection Optional
Death Benefit is calculated. Each example assumes that a $50,000 initial
Purchase Payment is made. Each example assumes that there is one Owner who is
age 50 on the Issue Date and that all Account Value is maintained in the
variable investment options. The formula for determining the Enhanced
Beneficiary Protection Optional Death Benefit is as follows:
Account Value of variable
investment options plus Interim Purchase Payments -
Growth = Value of Fixed Allocations minus proportional withdrawals
(no MVA applies)
NOTE: The examples below do not include Credits which may be recovered by
American Skandia under certain circumstances.
Example with market increase
Assume that the Owner has made no withdrawals and that the Account Value has
been increasing due to positive market performance. On the date we receive due
proof of death, the Account Value is $75,000. The basic Death Benefit is
calculated as Purchase Payments minus proportional withdrawals, or Account
Value, less the amount of any Credits applied within 12 months prior to the
date of death, which ever is greater. Therefore, the basic Death Benefit is
equal to $75,000. The Enhanced Beneficiary Protection Optional Death Benefit is
equal to the amount payable under the basic Death Benefit ($75,000) PLUS 40% of
the "Growth" under the Annuity.
Growth = $75,000 - [$50,000 - $0]
= $ 25,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death
Benefit = 40% of Growth
= $25,000 x 0.40
= $ 10,000
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $ 85,000
Examples with market decline
Assume that the Owner has made no withdrawals and that the Account Value has
been decreasing due to declines in market performance. On the date we receive
due proof of death, the Account Value is $45,000. The basic Death Benefit is
calculated as Purchase Payments minus proportional withdrawals, or Account
Value, less the amount of any Credits applied within 12 months prior to the
date of death, which ever is greater. Therefore, the basic Death Benefit is
equal to $50,000. The Enhanced Beneficiary Protection Optional Death Benefit is
equal to the amount payable under the basic Death Benefit ($50,000) PLUS the
"Growth" under the Annuity.
Growth = $45,000 - [$50,000 - $0]
= $ -5,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death
Benefit = 40% of Growth
NO BENEFIT IS PAYABLE
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $ 50,000
B-1
APPENDIX B
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits continued
IN THIS EXAMPLE YOU WOULD RECEIVE NO ADDITIONAL BENEFIT FROM PURCHASING THE
ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT.
Example with market increase and withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 5 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $90,000. The basic Death Benefit is calculated as Purchase
Payments minus proportional withdrawals, or Account Value, less the amount of
any Credits applied within 12 months prior to the date of death, which ever is
greater. Therefore, the basic Death Benefit is equal to $90,000. The Enhanced
Beneficiary Protection Optional Death Benefit is equal to the amount payable
under the basic Death Benefit ($90,000) PLUS 40% of the "Growth" under the
Annuity.
Growth = $90,000 - [$50,000 - ($50,000 x $15,000/$75,000)]
= $90,000 - [$50,000 - $10,000]
= $90,000 - $40,000
= $ 50,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death
Benefit = 40% of Growth
= $50,000 x 0.40
= $ 20,000
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $ 110,000
EXAMPLES OF HIGHEST ANNIVERSARY VALUE DEATH BENEFIT CALCULATION
The following are examples of how the Highest Anniversary Value Death Benefit is
calculated. Each example assumes an initial Purchase Payment of $50,000. Each
example assumes that there is one Owner who is age 70 on the Issue Date and that
all Account Value is maintained in the variable investment options.
NOTE: The examples below do not include Credits which may be recovered by
American Skandia under certain circumstances.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the date
we receive due proof of death, the Account Value is $75,000; however, the
Anniversary Value on the 5th anniversary of the Issue Date was $90,000. Assume
as well that the Owner has died before the Death Benefit Target Date. The Death
Benefit is equal to the greater of the Highest Anniversary Value or the basic
Death Benefit. The Death Benefit would be the Highest Anniversary Value
($90,000) because it is greater than the amount that would have been payable
under the basic Death Benefit ($75,000).
Example with withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $80,000; however, the Anniversary Value on the 5th anniversary
of the Issue Date was $90,000. Assume as well that the Owner has died before the
Death Benefit Target Date. The Death Benefit is equal to the greater of the
Highest Anniversary Value or the basic Death Benefit.
Highest Anniversary Value = $90,000 - [$90,000 x $15,000/$75,000]
= $90,000 - $18,000
= $ 72,000
Basic Death Benefit = max [$80,000, $50,000
- ($50,000 x $15,000/$75,000)]
= max [$80,000, $40,000]
= $ 80,000
B-2
APPENDIX B
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Example with death after Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals had been made prior to the
Death Benefit Target Date. Further assume that the Owner dies after the Death
Benefit Target Date, when the Account Value is $75,000. The Highest Anniversary
Value on the Death Benefit Target Date was $80,000; however, following the Death
Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had
taken a withdrawal of $5,000 when the Account Value was $70,000. The Death
Benefit is equal to the greater of the Highest Anniversary Value plus Purchase
Payments minus proportional withdrawals after the Death Benefit Target Date or
the basic Death Benefit.
Highest Anniversary Value = $80,000 + $15,000 - [($80,000 + $15,000)
x $5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $ 88,214
Basic Death Benefit = max [$75,000, ($50,000 + $15,000)
- {($50,000 + $15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $ 75,000
EXAMPLES OF COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
CALCULATION
The following are examples of how the Combination 5% Roll-Up and Highest
Anniversary Value Death Benefit are calculated. Each example assumes an initial
Purchase Payment of $50,000. Each example assumes that there is one Owner who is
age 70 on the Issue Date and that all Account Value is maintained in the
variable investment options.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the 7th
anniversary of the Issue Date we receive due proof of death, at which time the
Account Value is $75,000; however, the Anniversary Value on the 5th anniversary
of the Issue Date was $90,000. Assume as well that the Owner has died before the
Death Benefit Target Date. The Roll-Up Value is equal to initial Purchase
Payment accumulated at 5% for 6 years, or $67,005. The Death Benefit is equal to
the greatest of the Roll-Up Value, Highest Anniversary Value or the basic Death
Benefit. The Death Benefit would be the Highest Anniversary Value ($90,000)
because it is greater than both the Roll-Up Value ($67,005) and the amount that
would have been payable under the basic Death Benefit ($75,000).
Example with withdrawals
Assume that the Owner made a withdrawal of $5,000 on the 6th anniversary of the
Issue Date when the Account Value was $45,000. The Roll-Up Value on the 6th
anniversary of the Issue Date is equal to initial Purchase Payment accumulated
at 5% for 6 years, or $67,005. The 5% Dollar-for-Dollar Withdrawal Limit for the
7th annuity year is equal to 5% of the Roll-Up Value as of the 6th anniversary
of the Issue Date, or $3,350. Therefore, the remaining $1,650 of the withdrawal
results in a proportional reduction to the Roll-Up Value. On the 7th anniversary
of the Issue Date we receive due proof of death, at which time the Account Value
is $43,000; however, the Anniversary Value on the 2nd anniversary of the Issue
Date was $70,000. Assume as well that the Owner has died before the Death
Benefit Target Date. The Death Benefit is equal to the greatest of the Roll-Up
Value, Highest Anniversary Value or the basic Death Benefit.
B-3
APPENDIX B
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits continued
Roll-Up Value = {($67,005 - $3,350) - [($67,005 - $3,350)
x $1,650/($45,000 - $3,350)]} x 1.05
= ($63,655 - $2,522) x 1.05
= $ 64,190
Highest Anniversary Value = $70,000 - [$70,000 x $5,000/$45,000]
= $70,000 - $7,778
= $ 62,222
Basic Death Benefit = max [$43,000, $50,000
- ($50,000 x $5,000/$45,000)]
= max [$43,000, $44,444]
= $ 44,444
The Death Benefit therefore is $64,190.
Example with death after Death Benefit Target Date
Assume that the Owner has not made any withdrawals prior to the Death Benefit
Target Date. Further assume that the Owner dies after the Death Benefit Target
Date, when the Account Value is $75,000. The Roll-Up Value on the Death Benefit
Target Date (the contract anniversary on or following the Owner's 80th
birthday) is equal to initial Purchase Payment accumulated at 5% for 10 years,
or $81,445. The Highest Anniversary Value on the Death Benefit Target Date was
$85,000; however, following the Death Benefit Target Date, the Owner made a
Purchase Payment of $15,000 and later had taken a withdrawal of $5,000 when the
Account Value was $70,000. The Death Benefit is equal to the greatest of the
Roll-Up Value, Highest Anniversary Value or the basic Death Benefit as of the
Death Benefit Target Date; each increased by subsequent purchase payments and
reduced proportionally for subsequent withdrawals.
Roll-Up Value = $81,445 + $15,000 - [($81,445 + $15,000)
x $5,000/$70,000]
= $81,445 + $15,000 - $6,889
= $ 89,556
Highest Anniversary Value = $85,000 + $15,000 - [($85,000 + $15,000)
x $5,000/$70,000]
= $85,000 + $15,000 - $7,143
= $ 92,857
Basic Death Benefit = max [$75,000, $50,000 + $15,000
- {($50,000 + $15,0000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $ 75,000
The Death Benefit therefore is $92,857.
EXAMPLES OF HIGHEST DAILY VALUE DEATH BENEFIT CALCULATION
The following are examples of how the HDV Death Benefit is calculated. Each
example assumes an initial Purchase Payment of $50,000 (includes any Credits).
Each example assumes that there is one Owner who is age 70 on the Issue Date.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the date
we receive due proof of death, the Account Value is $75,000; however, the
Highest Daily Value was $90,000. Assume, as well, that the Owner has died
before the Death Benefit Target Date. The Death Benefit is equal to the greater
of the Highest Daily Value or the basic Death Benefit. The Death Benefit would
be the HDV ($90,000) because it is greater than the amount that would have been
payable under the basic Death Benefit ($75,000).
B-4
APPENDIX B
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Example with withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $80,000; however, the Highest Daily Value ($90,000) was
attained during the fifth Annuity Year. Assume, as well, that the Owner has
died before the Death Benefit Target Date. The Death Benefit is equal to the
greater of the Highest Daily Value (proportionally reduced by the subsequent
withdrawal) or the basic Death Benefit.
Highest Daily Value = $90,000 - [$90,000 x $15,000/$75,000]
= $90,000 - $18,000
= $ 72,000
Basic Death Benefit = max [$80,000, $50,000 - ($50,000 x $15,000/$75,000)]
= max [$80,000, $40,000]
= $ 80,000
The Death Benefit therefore is $80,000.
Example with death after Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals had been made prior to the
Death Benefit Target Date. Further assume that the Owner dies after the Death
Benefit Target Date, when the Account Value is $75,000. The Highest Daily Value
on the Death Benefit Target Date was $80,000; however, following the Death
Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had
taken a withdrawal of $5,000 when the Account Value was $70,000. The Death
Benefit is equal to the greater of the Highest Daily Value on the Death Benefit
Target Date plus Purchase Payments minus proportional withdrawals after the
Death Benefit Target Date or the basic Death Benefit.
Highest Daily Value = $80,000 + $15,000 - [($80,000 + $15,000)
x $5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $ 88,214
Basic Death Benefit = max [$75,000, ($50,000 + $15,000)
- {($50,000 + $15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $ 75,000
The Death Benefit therefore is $88,214.
B-5
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APPENDIX C
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix C -- Plus40(TM) Optional Life Insurance Rider
AMERICAN SKANDIA'S PLUS40(TM) OPTIONAL LIFE INSURANCE RIDER WAS OFFERED, IN
THOSE STATES WHERE APPROVED, BETWEEN JANUARY 23, 2002 AND MAY 1, 2003. THE
DESCRIPTION BELOW OF THE PLUS40(TM) BENEFIT APPLIES TO THOSE CONTRACT OWNERS WHO
PURCHASED AN ANNUITY DURING THAT TIME PERIOD AND ELECTED THE PLUS40(TM) BENEFIT.
THE LIFE INSURANCE COVERAGE PROVIDED UNDER THE PLUS40(TM) OPTIONAL LIFE
INSURANCE RIDER ("PLUS40(TM) RIDER" OR THE "RIDER") IS SUPPORTED BY AMERICAN
SKANDIA'S GENERAL ACCOUNT AND IS NOT SUBJECT TO, OR REGISTERED AS A SECURITY
UNDER, EITHER THE SECURITIES ACT OF 1933 OR THE INVESTMENT COMPANY ACT OF 1940.
INFORMATION ABOUT THE PLUS40(TM) RIDER IS INCLUDED AS AN APPENDIX TO THIS
PROSPECTUS TO HELP YOU UNDERSTAND THE RIDER AND THE RELATIONSHIP BETWEEN THE
RIDER AND THE VALUE OF YOUR ANNUITY. IT IS ALSO INCLUDED BECAUSE YOU CAN ELECT
TO PAY FOR THE RIDER WITH TAXABLE WITHDRAWALS FROM YOUR ANNUITY. THE STAFF OF
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT REVIEWED THIS INFORMATION.
HOWEVER, THE INFORMATION MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE
PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING ACCURACY AND COMPLETENESS.
THE INCOME TAX-FREE LIFE INSURANCE PAYABLE TO YOUR BENEFICIARY(IES) UNDER
THE PLUS40(TM) RIDER IS EQUAL TO 40% OF THE ACCOUNT VALUE OF YOUR ANNUITY AS OF
THE DATE WE RECEIVE DUE PROOF OF DEATH, SUBJECT TO CERTAIN ADJUSTMENTS,
RESTRICTIONS AND LIMITATIONS DESCRIBED BELOW.
ELIGIBILITY
The Plus40(TM) rider may be purchased as a rider on your Annuity. The Rider must
cover those persons upon whose death the Annuity's death benefit becomes payable
- -- the Annuity's owner or owners, or the Annuitant (in the case of an entity
owned Annuity). If the Annuity has two Owners, the Rider's death benefit is
payable upon the first death of such persons. If the Annuity is owned by an
entity, the Rider's death benefit is payable upon the death of the Annuitant,
even if a Contingent Annuitant is named.
The minimum allowable age to purchase the Plus40(TM) rider is 40; the
maximum allowable age is 75. If the Rider is purchased on two lives, both
persons must meet the age eligibility requirements. The Plus40(TM) rider is not
available to purchasers who use their Annuity as a funding vehicle for a Tax
Sheltered Annuity (or 403(b)) or as a funding vehicle for a qualified plan under
Section 401 of the Internal Revenue Code ("Code").
ADJUSTMENTS, RESTRICTIONS & LIMITATIONS
- If you die during the first 24 months following the effective date
of the Plus40(TM) rider (generally, the Issue Date of your Annuity),
the death benefit will be limited to the amount of any charges paid
for the Rider while it was in effect. While we will return the
charges you have paid during the applicable period as the death
benefit, your Beneficiary(ies) will receive no additional life
insurance benefit from the Plus40(TM) rider if you die within 24
months of its effective date.
- If you make a Purchase Payment within 24 months prior to the date of
death, the Account Value used to determine the amount of the death
benefit will be reduced by the amount of such Purchase Payment(s).
If we reduce the death benefit payable under the Plus40(TM) rider
based on this provision, we will return 50% of any charges paid for
the Rider based on those Purchase Payments as an additional amount
included in the death benefit under the Rider.
- If we apply Credits to your Annuity based on Purchase Payments, such
Credits are treated as Account Value for purposes of determining the
death benefit payable under the Plus40(TM) rider. However, if
Credits were applied to Purchase Payments made within 24 months
prior to the date of death, the Account Value used to determine the
amount of the death benefit will be reduced by the amount of such
Credits. If we reduce the death benefit payable under the Plus40(TM)
rider based on this provision, we will return 50% of any charges
paid for the Rider based on such Credits as an additional amount
included in the death benefit under the Rider.
- If you become terminally ill (as defined in the Rider) and elect to
receive a portion of the Plus40(TM) rider's death benefit under the
Accelerated Death Benefit provision, the amount that will be payable
under the Rider upon your death will be reduced. Please refer to the
Accelerated Death Benefit provision described below.
- If charges for the Plus40(TM) rider are due and are unpaid as of the
date the death benefit is being determined, such charges will be
deducted from the amount paid to your Beneficiary(ies).
C-1
APPENDIX C
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix C -- Plus40(TM) Optional Life Insurance Rider continued
- If the age of any person covered under the Plus40(TM) rider is
misstated, we will adjust any coverage under the Rider to con- form
to the facts. For example, if, due to the misstatement, we
overcharged you for coverage under the Rider, we will add any
additional charges paid to the amount payable to your
Beneficiary(ies). If, due to the misstatement, we undercharged you
for coverage under the Rider, we will reduce the death benefit in
proportion to the charges not paid as compared to the charges that
would have been paid had there been no misstatement.
- On or after an Owner reaches the expiry date of the Rider (the
anniversary of the Annuity's Issue Date on or immediately after the
95th birthday), coverage will terminate. No charge will be made for
an Owner following the expiry date. If there are two Owners, the
expiry date applies separately to each Owner; therefore, coverage
may continue for one Owner and terminate as to the other Owner.
MAXIMUM BENEFIT
The Plus40(TM) rider is subject to a Maximum Death Benefit Amount based on the
Purchase Payments applied to your Annuity. The Plus40(TM) rider may also be
subject to a Per Life Maximum Benefit that is based on all amounts paid under
any annuity contract we issue to you under which you have elected the Plus40(TM)
rider or similar life insurance coverage.
- The Maximum Death Benefit Amount is 100% of the Purchase Payments
increasing at 5% per year following the date each Purchase Payment
is applied to the Annuity until the date of death. If Purchase
Payments are applied to the Annuity within 24 months prior to the
date of death, the Maximum Death Benefit Amount is decreased by the
amount of such Purchase Payments.
- The Per Life Maximum Benefit applies to Purchase Payments applied to
any such annuity contracts more than 24 months from the date of
death that exceed $1,000,000. If you make Purchase Payments in
excess of $1,000,000, we will reduce the aggregate death benefit
payable under all Plus40(TM) riders, or similar riders issued by us,
based on the combined amount of Purchase Payments in excess of
$1,000,000 multiplied by 40%. If the Per Life Maximum Benefit
applies, we will reduce the amount payable under each applicable
Plus40(TM) rider on a pro-rata basis. If the Per Life Maximum
Benefit applies upon your death, we will return any excess charges
that you paid on the portion of your Account Value on which no
benefit is payable. The Per Life Maximum Benefit does not limit the
amount of Purchase Payments that you may apply to your Annuity.
ACCELERATED DEATH BENEFIT PROVISION
If you become terminally ill, you may request that a portion of the death
benefit payable under the Plus40(TM) rider be prepaid instead of being paid to
your Beneficiary(ies) upon your death. Subject to our requirements and where
allowed by law, we will make a one time, lump sum payment. Our requirements
include proof satisfactory to us, in writing, of terminal illness after the
Rider's Effective Date.
The maximum we will pay, before any reduction, is the lesser of 50% of the
Rider's death benefit or $100,000. If you elect to accelerate payment of a
portion of the death benefit under the Plus40(TM) rider, the amount of the
remaining death benefit is reduced by the prepaid amount accumulating at an
annualized interest rate of 6.0%. Eligibility for an accelerated payout of a
portion of your Plus40(TM) rider death benefit may be more restrictive than any
medically-related surrender provision that may be applicable to you under the
Annuity.
CHARGES FOR THE PLUS40(TM) RIDER
The Plus40(TM) rider has a current charge and a guaranteed maximum charge. The
current charge for the Plus40(TM) rider is based on a percentage of your Account
Value as of the anniversary of the Issue Date of your Annuity. The applicable
percentages differ based on the attained age, last birthday of the Owner(s) or
Annuitant (in the case of an entity owned Annuity) as of the date the charge is
due. We reserve the right to change the current charge, at any time, subject to
regulatory approval where required. If there are two Owners, we calculate the
current charge that applies to each Owner individually and deduct the combined
amount as the charge for the Rider. There is no charge based on a person's life
after coverage expires as to that person. However, a charge will still apply to
the second of two Owners (and coverage will continue for such Owner) if such
Owner has not reached the expiry date.
C-2
APPENDIX C
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
PERCENTAGE OF
ATTAINED AGE ACCOUNT VALUE
Age 40-75 .80%
Age 76-80 1.60%
Age 81-85 3.20%
Age 86-90 4.80%
Age 91 6.50%
Age 92 7.50%
Age 93 8.50%
Age 94 9.50%
Age 95 10.50%
The charge for the Plus40(TM) rider may also be subject to a guaranteed
maximum charge that will apply if the current charge, when applied to the
Account Value, exceeds the guaranteed maximum charge. The guaranteed maximum
charge is based on a charge per $1,000 of insurance.
We determine the charge for the Rider annually, in arrears. We deduct the
charge: (1) upon your death; (2) on each anniversary of the Issue Date; (3) on
the date that you begin receiving annuity payments; (4) if you surrender your
Annuity other than a medically-related surrender; or (5) if you choose to
terminate the Rider. If the Rider terminates for any of the preceding reasons on
a date other than the anniversary of the Annuity's Issue Date, the charge will
be prorated. During the first year after the Annuity's Issue Date, the charge
will be prorated from the Issue Date. In all subsequent years, the charge will
be prorated from the last anniversary of the Issue Date.
You can elect to pay the annual charge through a redemption from your
Annuity's Account Value or through funds other than those within the Annuity. If
you do not elect a method of payment, we will automatically deduct the annual
charge from your Annuity's Account Value. The manner in which you elect to pay
for the Rider may have tax implications.
- If you elect to pay the charge through a redemption of your
Annuity's Account Value, the withdrawal will be treated as a taxable
distribution, and will generally be subject to ordinary income tax
on the amount of any investment gain withdrawn. If you are under age
59 1/2, the distribution may also be subject to a 10% penalty on any
gain withdrawn, in addition to ordinary income taxes. We first
deduct the amount of the charge pro-rata from the Account Value in
the variable investment options. We only deduct the charge pro-rata
from the Fixed Allocations to the extent there is insufficient
Account Value in the variable investment options to pay the charge.
- If you elect to pay the charge through funds other than those from
your Annuity, we require that payment be made electronically in U.S.
currency through a U.S. financial institution. If you elect to pay
the charge through electronic transfer of funds and payment has not
been received within 31 days from the due date, we will deduct the
charge as a redemption from your Annuity, as described above.
TERMINATION
You can terminate the Plus40(TM) rider at any time. Upon termination, you will
be required to pay a pro-rata portion of the annual charge for the Rider. The
Plus40(TM) rider will terminate automatically on the date your Account Value is
applied to begin receiving annuity payments, on the date you surrender the
Annuity or, on the expiry date with respect to such person who reaches the
expiry date. We may also terminate the Plus40(TM) rider, if necessary, to comply
with our interpretation of the Code and applicable regulations. Once terminated,
you may not reinstate your coverage under the Plus40(TM) rider.
CHANGES IN ANNUITY DESIGNATIONS
Changes in ownership and annuitant designations under the Annuity may result in
changes in eligibility and charges under the Plus40(TM) rider. These changes may
include termination of the Rider. Please refer to the Rider for specific
details.
C-3
APPENDIX C
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix C -- Plus40(TM) Optional Life Insurance Rider continued
SPOUSAL ASSUMPTION
A spousal beneficiary may elect to assume ownership of the Annuity instead of
taking the Annuity's Death Benefit. However, regardless of whether a spousal
beneficiary assumes ownership of the Annuity, THE DEATH BENEFIT UNDER THE
PLUS40(TM) RIDER WILL BE PAID DESPITE THE FACT THAT THE ANNUITY WILL CONTINUE.
The spousal beneficiary can apply the death benefit proceeds under the
Plus40(TM) rider to the Annuity as a new Purchase Payment, can purchase a new
annuity contract or use the death benefit proceeds for any other purpose.
Certain restrictions may apply to an Annuity that is used as a qualified
investment. Spousal beneficiaries may also be eligible to purchase the
Plus40(TM) rider, in which case the Annuity's Account Value, as of the date the
assumption is effective, will be treated as the initial Purchase Payment under
applicable provisions of the Rider.
TAX CONSIDERATION
The Plus40(TM) rider was designed to qualify as a life insurance contract under
the Code. As life insurance, under most circumstances, the Beneficiary(ies) does
not pay any Federal income tax on the death benefit payable under the Rider.
If your Annuity is being used as an Individual Retirement Annuity (IRA),
we consider the Plus40(TM) rider to be outside of your IRA, since premium for
the Rider is paid for either with funds outside of your Annuity or with
withdrawals previously subject to tax and any applicable tax penalty.
We believe payments under the accelerated payout provision of the Rider
will meet the requirements of the Code and the regulations in order to qualify
as tax-free payments. To the extent permitted by law, we will change our
procedures in relation to the Rider, or the definition of terminally ill, or any
other applicable term in order to maintain the tax-free status of any amounts
paid out under the accelerated payout provision.
C-4
APPENDIX D
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix D -- Description and Calculation of Previously Offered Optional Death
Benefits
IF YOU PURCHASED YOUR ANNUITY BEFORE NOVEMBER 18, 2002 AND WERE NOT A RESIDENT
OF THE STATE OF NEW YORK, THE FOLLOWING OPTIONAL DEATH BENEFITS WERE OFFERED:
ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT
The Enhanced Beneficiary Protection Optional Death Benefit can provide
additional amounts to your Beneficiary that may be used to offset federal and
state taxes payable on any taxable gains in your Annuity at the time of your
death. Whether this benefit is appropriate for you may depend on your particular
circumstances, including other financial resources that may be available to your
Beneficiary to pay taxes on your Annuity should you die during the accumulation
period. No benefit is payable if death occurs on or after the Annuity Date.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT PROVIDES A
BENEFIT THAT IS PAYABLE IN ADDITION TO THE BASIC DEATH BENEFIT. If the Annuity
has one Owner, the Owner must be age 75 or less at the time the benefit is
purchased. If the Annuity has joint Owners, the oldest Owner must be age 75 or
less. If the Annuity is owned by an entity, the Annuitant must be age 75 or
less.
CALCULATION OF ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT
If you purchase the Enhanced Beneficiary Protection Optional Death Benefit, the
Death Benefit is calculated as follows:
1. the basic Death Benefit described above
PLUS
2. 50% of the "Death Benefit Amount" less Purchase Payments reduced by
proportional withdrawals.
"DEATH BENEFIT AMOUNT" includes your Account Value and any amounts added
to your Account Value under the Annuity's basic Death Benefit when the Death
Benefit is calculated. Under the basic Death Benefit, amounts are added to your
Account Value when the Account Value is less than Purchase Payments minus
proportional withdrawals.
"PROPORTIONAL WITHDRAWALS" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
The amount calculated in Items 1 & 2 above may be reduced by any Credits
under certain circumstances.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT IS SUBJECT TO A
MAXIMUM OF 50% OF ALL PURCHASE PAYMENTS APPLIED TO THE ANNUITY AT LEAST 12
MONTHS PRIOR TO THE DEATH OF THE DECEDENT THAT TRIGGERS THE PAYMENT OF THE
DEATH BENEFIT.
PLEASE REFER TO THE SECTION ENTITLED "TAX CONSIDERATIONS" FOR A DISCUSSION OF
SPECIAL TAX CONSIDERATIONS FOR PURCHASERS OF THIS BENEFIT.
NOTE: YOU MAY NOT ELECT THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH
BENEFIT IF YOU HAVE ELECTED ANY OTHER OPTIONAL DEATH BENEFIT.
GUARANTEED MINIMUM DEATH BENEFIT
If the Annuity has one Owner, the Owner must be age 80 or less at the time the
optional Death Benefit is purchased. If the Annuity has joint Owners, the oldest
Owner must be age 80 or less. If the Annuity is owned by an entity, the
Annuitant must be age 80 or less.
D-1
APPENDIX D
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix D -- Description and Calculation of Previously Offered Optional Death
Benefits continued
KEY TERMS USED WITH THE GUARANTEED MINIMUM DEATH BENEFIT
- - The Death Benefit Target Date is the contract anniversary on or after the
80th birthday of the current Owner, the oldest of either joint Owner or
the Annuitant, if entity owned.
- - The Highest Anniversary Value equals the highest of all previous
"Anniversary Values" on or before the earlier of the Owner's date of death
and the "Death Benefit Target Date".
- - The Anniversary Value is the Account Value as of each anniversary of the
Issue Date plus the sum of all Purchase Payments on or after such
anniversary less the sum of all "Proportional Reductions" since such
anniversary.
- - A Proportional Reduction is a reduction to the value being measured caused
by a withdrawal, equaling the percentage of the withdrawal as compared to
the Account Value as of the date of the withdrawal. For example, if your
Account Value is $10,000 and you withdraw $2,000 (a 20% reduction), we
will reduce both your Anniversary Value and the amount determined by
Purchase Payments increasing at the appropriate interest rate by 20%.
CALCULATION OF GUARANTEED MINIMUM DEATH BENEFIT
The Guaranteed Minimum Death Benefit depends on whether death occurs before or
after the Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit equals
the greatest of:
1. the Account Value in the Sub-accounts plus the Interim Value of any Fixed
Allocations (no MVA) as of the date we receive in writing "due proof of
death"; and
2. the sum of all Purchase Payments minus the sum of all Proportional
Reductions, each increasing daily until the Owner's date of death at a
rate of 5.0%, subject to a limit of 200% of the difference between the sum
of all Purchase Payments and the sum of all withdrawals as of the Owner's
date of death; and
3. the "Highest Anniversary Value" on or immediately preceding the Owner's
date of death.
The amount determined by this calculation is increased by any Purchase Payments
received after the Owner's date of death and decreased by any Proportional
Reductions since such date. The amount calculated in Items 1 & 3 above may be
reduced by any Credits under certain circumstances.
If the Owner dies on or after the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the Account Value as of the date we receive in writing "due proof of
death" (an MVA may be applicable to amounts in any Fixed Allocations); and
2. the greater of Item 2 & 3 above on the Death Benefit Target Date plus the
sum of all Purchase Payments less the sum of all Proportional Reductions
since the Death Benefit Target Date.
The amount calculated in Item 1 above may be reduced by any Credits under
certain circumstances.
ANNUITIES WITH JOINT OWNERS
For Annuities with Joint Owners, the Death Benefit is calculated as shown above
except that the age of the oldest of the Joint Owners is used to determine the
Death Benefit Target Date. NOTE: If you and your spouse own the Annuity jointly,
we will pay the Death Benefit to the Beneficiary. If the sole primary
Beneficiary is the surviving spouse, then the surviving spouse can elect to
assume ownership of the Annuity and continue the contract instead of receiving
the Death Benefit.
ANNUITIES OWNED BY ENTITIES
For Annuities owned by an entity, the Death Benefit is calculated as shown above
except that the age of the Annuitant is used to determine the Death Benefit
Target Date. Payment of the Death Benefit is based on the death of the Annuitant
(or Contingent Annuitant, if applicable).
CAN I TERMINATE THE OPTIONAL DEATH BENEFITS? DO THE OPTIONAL DEATH BENEFITS
TERMINATE UNDER OTHER CIRCUMSTANCES?
You can terminate the Enhanced Beneficiary Protection Optional Death Benefit and
the Guaranteed Minimum Death Benefit at any time. Upon termination, you will be
required to pay a pro-rata portion of the annual charge for the benefit. Both
optional Death Benefits will terminate automatically on the Annuity Date. We may
also terminate any optional Death Benefit if necessary to comply with our
interpretation of the Code and applicable regulations.
D-2
APPENDIX D
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
WHAT ARE THE CHARGES FOR THE OPTIONAL DEATH BENEFITS?
We deduct a charge from your Account Value if you elect to purchase either
optional Death Benefit. The Enhanced Beneficiary Protection Death Benefit costs
0.25% of Account Value. The Guaranteed Minimum Death Benefit costs 0.30% of the
current Death Benefit. The charges for these death benefits are deducted in
arrears each Annuity Year. No charge applies after the Annuity Date. We deduct
the charge:
1. on each anniversary of the Issue Date;
2. when Account Value is transferred to our general account prior to
the Annuity Date;
3. if you surrender your Annuity; and
4. if you choose to terminate the benefit (Enhanced Beneficiary
Protection Optional Death Benefit only)
If you surrender the Annuity, elect to begin receiving annuity payments or
terminate the benefit on a date other than an anniversary of the Issue Date, the
charge will be prorated. During the first year after the Issue Date, the charge
will be prorated from the Issue Date. In all subsequent years, it would be
prorated from the last anniversary of the Issue Date.
We first deduct the amount of the charge pro-rata from the Account Value
in the variable investment options. We only deduct the charge pro-rata from the
Fixed Allocations to the extent there is insufficient Account Value in the
variable investment options to pay the charge. If your Annuity's Account Value
is insufficient to pay the charge, we may deduct your remaining Account Value
and terminate your Annuity. We will notify you if your Account Value is
insufficient to pay the charge and allow you to submit an additional Purchase
Payment to continue your Annuity.
Please refer to the section entitled "Tax Considerations" for additional
considerations in relation to the optional Death Benefit.
ADDITIONAL CALCULATIONS
EXAMPLES OF ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT CALCULATION
The following are examples of how the Enhanced Beneficiary Protection Optional
Death Benefit is calculated. Each example assumes that a $50,000 initial
Purchase Payment is made and that no withdrawals are made prior to the Owner's
death. Each example assumes that there is one Owner who is age 50 on the Issue
Date and that all Account Value is maintained in the variable investment
options.
NOTE: The examples below do not include Credits which may be recovered by
American Skandia under certain circumstances.
Example with market increase
Assume that the Owner's Account Value has been increasing due to positive market
performance. On the date we receive due proof of death, the Account Value is
$75,000. The basic Death Benefit is calculated as Purchase Payments minus
proportional withdrawals, or Account Value less the amount of any Credits
applied within 12-months prior to the date of death, whichever is greater.
Therefore, the basic Death Benefit is equal to $75,000. The Enhanced Beneficiary
Protection Optional Death Benefit is equal to the amount payable under the basic
Death Benefit ($75,000) PLUS 50% of the "Death Benefit Amount" less Purchase
Payments reduced by proportional withdrawals.
Purchase Payments = $50,000
Account Value = $75,000
Basic Death Benefit = $75,000
Death Benefit Amount = $75,000 - $50,000 = $25,000
Amount Payable Under Enhanced Beneficiary Protection Optional Death
Benefit = $75,000 + $12,500 = $87,500
Examples with market decline
Assume that the Owner's Account Value has been decreasing due to declines in
market performance. On the date we receive due proof of death, the Account Value
is $45,000. The basic Death Benefit is calculated as Purchase Payments minus
proportional withdrawals, or Account Value less the amount of any Credits
applied within 12-months prior to the date of death, whichever is greater.
Therefore, the basic Death Benefit is equal to $50,000. The Enhanced Beneficiary
Protection Optional Death Benefit is equal to the amount payable under the basic
Death Benefit ($50,000) PLUS 50% of the "Death Benefit Amount" less Purchase
Payments reduced by proportional withdrawals.
D-3
AMERICAN SKADIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix D -- Description and Calculation of Previously Offered Optional
Death Benefits continued
Purchase Payments = $50,000
Account Value = $40,000
Basic Death Benefit = $50,000
Death Benefit Amount = $50,000 - $50,000 = $0
Amount Payable Under Enhanced Beneficiary Protection Optional Death
Benefit = $50,000 + $0 = $50,000
IN THIS EXAMPLE YOU WOULD RECEIVE NO ADDITIONAL BENEFIT FROM PURCHASING
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT.
EXAMPLES OF GUARANTEED MINIMUM DEATH BENEFIT CALCULATION
The following are examples of how the Guaranteed Minimum Death Benefit is
calculated. Each example assumes that a $50,000 initial Purchase Payment is
made and that no withdrawals are made prior to the Owner's death. Each example
assumes that there is one Owner who is age 50 on the Issue Date and that all
Account Value is maintained in the variable investment options.
NOTE: The examples below do not include Credits which may be recovered by
American Skandia under certain circumstances.
Example of market increase
Assume that the Owner's Account Value has generally been increasing due to
positive market performance. On the date we receive due proof of death, the
Account Value is $90,000. The Highest Anniversary Value at the end of any
previous period is $72,000. The Death Benefit would be the Account Value
($90,000) because it is greater than the Highest Anniversary Value ($72,000) or
the sum of prior Purchase Payments increased by 5.0% annually ($73,872.77).
Example of market decrease
Assume that the Owner's Account Value generally increased until the fifth
anniversary but generally has been decreasing since the fifth contract
anniversary. On the date we receive due proof of death, the Account Value is
$48,000. The Highest Anniversary Value at the end of any previous period is
$54,000. The Death Benefit would be the sum of prior Purchase Payments increased
by 5.0% annually ($73,872.77) because it is greater than the Highest Anniversary
Value ($54,000) or the Account Value ($48,000).
Example of market increase followed by decrease
Assume that the Owner's Account Value increased significantly during the first
six years following the Issue Date. On the sixth anniversary date the Account
Value is $90,000. During the seventh Annuity Year, the Account Value increases
to as high as $100,000 but then subsequently falls to $80,000 on the date we
receive due proof of death. The Death Benefit would be the Highest Anniversary
Value at the end of any previous period ($90,000), which occurred on the sixth
anniversary, although the Account Value was higher during the subsequent period.
The Account Value on the date we receive due proof of death ($80,000) is lower,
as is the sum of all prior Purchase Payments increased by 5.0% annually
($73,872.77).
APPENDIX E
AMERICAN SKANDIA XTRA CREDIT(SM) SIX PROSPECTUS
Appendix E -- Additional Information on Asset Allocation Programs
PROGRAM RULES
- - You can elect an asset allocator program where the Sub-accounts for each
asset class in each model portfolio are designated based on an evaluation
of available Sub-accounts. If you elect the Lifetime Five Benefit ("LT5")
or the Highest Daily Value Death Benefit ("HDV"), you must enroll in one
of the eligible model portfolios. Asset allocation is a sophisticated
method of diversification that allocates assets among asset classes in
order to manage investment risk and potentially enhance returns over the
long term. However, asset allocation does not guarantee a profit or
protect against a loss.
HOW THE ASSET ALLOCATION PROGRAM WORKS
- - Amounts will automatically be allocated in accordance with the percentages
and to Sub-accounts indicated for the model portfolio that you choose. If
you allocate your Account Value or transfer your Account Value among any
Sub-accounts that are outside of your model portfolio, we will allocate
these amounts according to the allocation percentages of the applicable
model portfolio upon the next rebalancing. You may only choose one model
portfolio at a time. When you enroll in the asset allocation program and
upon each rebalance thereafter, 100% of your Account Value allocated to
the variable Sub-accounts will be allocated to the asset allocation
program. Any Account Value not invested in the Sub-accounts will not be
part of the program.
- - ADDITIONAL PURCHASE PAYMENTS: Unless otherwise requested, any additional
Purchase Payments applied to the variable Sub-accounts in the Annuity will
be allocated to the Sub-accounts according to the allocation percentages
for the model portfolio you choose. Allocation of additional Purchase
Payments outside of your model portfolio but into a Sub-account, will be
reallocated according to the allocation percentages of the applicable
model portfolio upon the next rebalancing.
- - REBALANCING YOUR MODEL PORTFOLIO: Changes in the value of the Sub-account
will cause your Account Value allocated to the Sub-accounts to vary from
the percentage allocations of the model portfolio you select. By selecting
the asset allocation program, you have directed us to periodically (e.g.,
quarterly) rebalance your Account Value allocated to the Sub-accounts in
accordance with the percentage allocations assigned to each Sub-account
within your model portfolio at the time you elected the program or as
later modified with your consent. Some asset allocation programs will only
require that a rebalancing occur when the percent of your Account Value
allocated to the Sub-accounts are outside of the acceptable range
permitted under such asset allocation program. Note -- Any Account Value
not invested in the Sub-accounts will not be affected by any rebalance.
- - SUB-ACCOUNT CHANGES WITHIN THE MODEL PORTFOLIOS: From time to time you may
be notified of a suggested change in a Sub-account or percentage allocated
to a Sub-account within your model portfolio. If you consent (in the
manner that is then permitted or required) to the suggested change, then
it will be implemented upon the next rebalance. If you do not consent then
rebalancing will continue in accordance with your unchanged model
portfolio, unless the Sub-account is no longer available under your
Annuity, in which case your lack of consent will be deemed a request to
terminate the asset allocation program and the provisions under
"Termination or Modification of the Asset Allocation Program" will apply.
- - OWNER CHANGES IN CHOICE OF MODEL PORTFOLIO: You may change from the model
portfolio that you have elected to any other currently available model
portfolio at any time. The change will be implemented on the date we
receive all required information in the manner that is then permitted or
required.
TERMINATION OR MODIFICATION OF THE ASSET ALLOCATION PROGRAM:
- - You may request to terminate your asset allocation program at any time.
Any termination will be effective on the date that American Skandia
receives your termination request in good order. If you are enrolled in
HDV or LT5, termination of your asset allocation program must coincide
with enrollment in a then currently available and approved asset
allocation program or other approved option. However, if you are enrolled
in LT5 you may terminate the LT5 benefit in order to then terminate your
asset allocation program. American Skandia reserves the right to terminate
or modify the asset allocation program at any time with respect to any
programs.
RESTRICTIONS ON ELECTING THE ASSET ALLOCATION:
- - You cannot participate in auto-rebalancing or a DCA program while enrolled
in an asset allocation program. Upon election of an asset allocation
program, American Skandia will automatically terminate your enrollment in
any auto-rebalancing or DCA program. Finally, Systematic Withdrawals can
only be made as flat dollar amounts.
E-1
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PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS FURTHER
DETAILS ABOUT THE AMERICAN SKANDIA ANNUITY DESCRIBED IN PROSPECTUS ASXT
II-SIX--PROS (05/2005).
_______________________________________
(print your name)
________________________________________
(address)
________________________________________
(city/state/zip code)
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Variable Annuity Issued by: Variable Annuity Distributed by:
AMERICAN SKANDIA LIFE AMERICAN SKANDIA
ASSURANCE CORPORATION MARKETING, INCORPORATED
A Prudential Financial Company A Prudential Financial Company
One Corporate Drive One Corporate Drive
Shelton, Connecticut 06484 Shelton, Connecticut 06484
Telephone: 1-800-752-6342 Telephone: 203-926-1888
http://www.americanskandia.prudential.com http://www.americanskandia.prudential.com
MAILING ADDRESSES:
AMERICAN SKANDIA -- VARIABLE ANNUITIES
P.O. Box 7960
Philadelphia, PA 19176
EXPRESS MAIL:
AMERICAN SKANDIA -- VARIABLE ANNUITIES
2101 Welsh Road
Dresher, PA 19025
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
A Prudential Financial Company
One Corporate Drive, Shelton, Connecticut 06484
AMERICAN SKANDIA
STAGECOACH(TM) XTRA CREDIT(SM) SIX
Flexible Premium Deferred Annuity
PROSPECTUS: MAY 2, 2005
This Prospectus describes Stagecoach(TM) XTra Credit(SM) SIX, a flexible premium
deferred annuity (the "Annuity") offered by American Skandia Life Assurance
Corporation ("American Skandia", "we", "our" or "us") exclusively through Wells
Fargo Bank, N.A. The Annuity may be offered as an individual annuity contract or
as an interest in a group annuity. This Prospectus describes the important
features of the Annuity and what you should consider before purchasing the
Annuity. THE ANNUITY OR CERTAIN OF ITS INVESTMENT OPTIONS AND/OR FEATURES MAY
NOT BE AVAILABLE IN ALL STATES. VARIOUS RIGHTS AND BENEFITS MAY DIFFER BETWEEN
STATES TO MEET APPLICABLE LAWS AND/OR REGULATIONS. FOR MORE INFORMATION ABOUT
VARIATIONS APPLICABLE TO YOUR STATE, PLEASE REFER TO YOUR ANNUITY CONTRACT OR
CONSULT YOUR INVESTMENT PROFESSIONAL. CERTAIN TERMS ARE CAPITALIZED IN THIS
PROSPECTUS. THOSE TERMS ARE EITHER DEFINED IN THE GLOSSARY OF TERMS OR IN THE
CONTEXT OF THE PARTICULAR SECTION.
American Skandia offers several different annuities which your investment
professional may be authorized to offer to you. Each annuity has different
features and benefits that may be appropriate for you based on your financial
situation, your age and how you intend to use the annuity. The different
features and benefits include variations in death benefit protection and the
ability to access your annuity's account value. The fees and charges you pay and
compensation paid to your investment professional may also be different between
each annuity.
THE VARIABLE INVESTMENT OPTIONS
The variable investment options, each a Sub-account of American Skandia Life
Assurance Corporation Variable Account B, invest in an underlying mutual fund
portfolio. Currently, portfolios of the following underlying mutual funds are
being offered: Wells Fargo Variable Trust, American Skandia Trust, Gartmore
Variable Investment Trust, A I M Advisors, Inc., Evergreen Variable Annuity
Trust, ProFunds VP, First Defined Portfolio Fund LLC and The Prudential Series
Fund, Inc.
PLEASE READ THIS PROSPECTUS
PLEASE READ THIS PROSPECTUS AND THE CURRENT PROSPECTUS FOR THE UNDERLYING
MUTUAL FUNDS. KEEP THEM FOR FUTURE REFERENCE. If you are purchasing the Annuity
as a replacement for existing variable annuity or variable life coverage, you
should consider any surrender or penalty charges you may incur when replacing
your existing coverage and that this Annuity may be subject to a contingent
deferred sales charge if you elect to surrender the Annuity or take a partial
withdrawal. You should consider your need to access the Annuity's Account Value
and whether the annuity's liquidity features will satisfy that need.
AVAILABLE INFORMATION
We have also filed a Statement of Additional Information that is available from
us, without charge, upon your request. The contents of the Statement of
Additional Information are described on page 101. This Prospectus is part of the
registration statement we filed with the SEC regarding this offering. Additional
information on us and this offering is available in the registration statement
and the exhibits thereto. You may review and 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. These documents, as well as documents
incorporated by reference, may also be obtained through the SEC's Internet
Website (http:// www.sec.gov) for this registration statement as well as for
other registrants that file electronically with the SEC.
FOR FURTHER INFORMATION CALL:
1-800-680-8920
THESE ANNUITIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ISSUED, GUARANTEED OR
ENDORSED BY, ANY BANK, OR BANK SUBSIDIARY OF WELLS FARGO BANK, N.A., ARE NOT
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC), THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. AN INVESTMENT
IN THIS ANNUITY INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF VALUE,
EVEN WITH RESPECT TO AMOUNTS ALLOCATED TO THE AST MONEY MARKET SUB-ACCOUNT.
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.
AMERICAN SKANDIA XTRA CREDIT(SM) IS A SERVICE MARK OF THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA. AMERICAN SKANDIA STAGECOACH(TM) XTRA CREDIT(SM) SIX ARE
REGISTERED TRADEMARKS/SERVICE MARKS OF A WELLS FARGO BANK, N.A. AND THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA, RESPECTIVELY.
Prospectus Dated: May 2, 2005 Statement of Additional Information Dated: May 2, 2005
WFXT6505 WFVXT-SIXPROS
PLEASE SEE OUR PRIVACY POLICY AND IRA DISCLOSURE STATEMENT ATTACHED TO THE BACK
COVER OF THIS PROSPECTUS.
CONTENTS
Introduction ............................................................................. 1
Why Would I Choose to Purchase This Annuity? ........................................... 1
What Are Some of the Key Features of This Annuity? ..................................... 2
How Do I Purchase This Annuity? ........................................................ 2
Glossary of Terms ........................................................................ 3
Summary of Contract Fees and Charges ..................................................... 4
Expense Examples ......................................................................... 13
Investment Options ....................................................................... 14
What Are the Investment Objectives and Policies of the Portfolios? ..................... 14
What Are the Fixed Allocations? ........................................................ 30
Fees and Charges ......................................................................... 31
What Are the Contract Fees and Charges? ................................................ 31
What Charges Apply Solely to the Variable Investment Options? .......................... 32
What Fees and Expenses Are Assessed by the Portfolios? ................................. 33
What Charges Apply to the Fixed Allocations? ........................................... 33
What Charges Apply If I Choose an Annuity Payment Option? .............................. 33
Exceptions/Reductions to Fees and Charges .............................................. 33
Purchasing Your Annuity .................................................................. 34
What Are Our Requirements for Purchasing the Annuity? .................................. 34
Managing Your Annuity .................................................................... 36
May I Change the Owner, Annuitant and Beneficiary Designations? ........................ 36
May I Return the Annuity iIf I Change My Mind? ......................................... 36
May I Make Additional Purchase Payments? ............................................... 36
May I Make Scheduled Payments Directly from My Bank Account? ........................... 37
May I Make Purchase Payments Through a Salary Reduction Program? ....................... 37
Managing Your Account Value .............................................................. 38
How and When Are Purchase Payments Invested? ........................................... 38
How Do I Receive Credits? .............................................................. 38
How Are Credits Applied to My Account Value? ........................................... 38
Are There Restrictions or Charges on Transfers Between Investment Options? ............. 40
Do You Offer Dollar Cost Averaging? .................................................... 41
Do You Offer Any Automatic Rebalancing Programs? ....................................... 42
Are Any Asset Allocation Programs Available? ........................................... 42
Do You Offer Programs Designed to Guarantee a "Return of Premium" at a Future Date? .... 43
May I Give My Investment Professional Permission to Manage My Account Value? ........... 44
May I Authorize My Third Party Investment Advisor to Manage My Account? ................ 44
How Do the Fixed Allocations Work? ..................................................... 45
How Do You Determine Rates for Fixed Allocations? ...................................... 46
How Does the Market Value Adjustment Work? ............................................. 46
What Happens When My Guarantee Period Matures? ......................................... 47
Access To Account Value .................................................................. 48
What Types of Distributions are Available to Me? ....................................... 48
Are There Tax Implications for Distributions? .......................................... 48
Can I Withdraw a Portion of My Annuity? ................................................ 48
How Much Can I Withdraw as a Free Withdrawal? .......................................... 49
Is There a Charge for a Partial Withdrawal? ............................................ 49
Can I Make Periodic Withdrawals From the Annuity During the Accumulation Period? ....... 49
Do You Offer a Program for Withdrawals Under Section 72(t) of the Internal Revenue
Code? .................................................................................. 50
What Are Minimum Distributions and When Would I Need to Make Them? ..................... 50
Can I Surrender My Annuity for its Value? .............................................. 50
What is a Medically-Related Surrender and How Do I Qualify? ............................ 50
(i)
CONTENTS
What Types of Annuity Options Are Available? ........................................... 51
How and When Do I Choose the Annuity Payment Option? ................................... 52
How Are Annuity Payments Calculated? ................................................... 52
Living Benefit Programs .................................................................. 55
Do You Offer Programs Designed to Provide Investment Protection for Owners While They
Are Alive? ........................................................................... 55
Guaranteed Return Option Plus(sm) (GRO Plus(sm)) ....................................... 56
Guaranteed Return Option (GRO) ......................................................... 61
Guaranteed Minimum Withdrawal Benefit (GMWB) ........................................... 63
Guaranteed Minimum Income Benefit (GMIB) ............................................... 67
Lifetime Five Income Benefit (Lifetime Five) ........................................... 72
Death Benefit ............................................................................ 78
What Triggers the Payment of a Death Benefit? .......................................... 78
Basic Death Benefit .................................................................... 78
Optional Death Benefits ................................................................ 78
American Skandia's Annuity Rewards ..................................................... 83
Payment of Death Benefits .............................................................. 83
Valuing Your Investment .................................................................. 86
How is My Account Value Determined? .................................................... 86
What is the Surrender Value of My Annuity? ............................................. 86
How and When Do You Value the Sub-Accounts? ............................................ 86
How Do You Value Fixed Allocations? .................................................... 86
When Do You Process and Value Transactions? ............................................ 86
What Happens to My Units When There is a Change in Daily Asset-Based Charges? .......... 88
Tax Considerations ....................................................................... 89
General Information ...................................................................... 96
How Will I Receive Statements and Reports? ............................................. 96
Who is American Skandia? ............................................................... 96
What are Separate Accounts? ............................................................ 96
What is the Legal Structure of the Underlying Funds? ................................... 98
Who Distributes Annuities Offered by American Skandia? ................................. 99
Incorporation of Certain Documents by Reference ........................................ 99
Financial Statements ................................................................... 100
How to Contact Us ...................................................................... 100
Indemnification ........................................................................ 100
Legal Proceedings ...................................................................... 100
Contents of the Statement of Additional Information .................................... 101
Appendix A -- Condensed Financial Information About Separate Account B ................... A-1
Appendix B -- Calculation of Optional Death Benefits ..................................... B-1
Appendix C -- Additional Information on Asset Allocation Programs ........................ C-1
(ii)
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
INTRODUCTION
WHY WOULD I CHOOSE TO PURCHASE THIS ANNUITY?
This Annuity is frequently used for retirement planning because it allows you to
accumulate retirement savings and also offers annuity payment options when you
are ready to begin receiving income. The Annuity also offers a choice of
different optional benefits, for an additional charge, that can provide
principal protection or guaranteed minimum income protection for Owners while
they are alive and one or more death benefits that can protect your retirement
savings if you die during a period of declining markets. It may be used as an
investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Roth
IRA, Section 401(a) plans (defined benefit plans and defined contribution plans
such as 401(k), profit sharing and money purchase plans) or Tax Sheltered
Annuity (or 403(b)). It may also be used as an investment vehicle for
"non-qualified" investments. The Annuity allows you to invest your money in a
number of variable investment options as well as in one or more fixed
allocations.
When an Annuity is purchased as a "NON-QUALIFIED" investment, you generally are
not taxed on any investment gains the Annuity earns until you make a withdrawal
or begin to receive annuity payments. This feature, referred to as
"tax-deferral", can be beneficial to the growth of your Account Value because
money that would otherwise be needed to pay taxes on investment gains each year
remains invested and can earn additional money. However, because the Annuity is
designed for long-term retirement savings, a 10% penalty tax may be applied on
withdrawals you make before you reach age 59 1/2. Annuities purchased as a
non-qualified investment are not subject to the maximum contribution limits that
may apply to a qualified investment, and are not subject to required minimum
distributions after age 70 1/2.
When an Annuity is purchased as a "QUALIFIED" investment, you should consider
that the Annuity does not provide any tax advantages in addition to the
preferential treatment already available through your retirement plan under the
Internal Revenue Code. An Annuity may offer features and benefits in addition to
providing tax deferral that other investment vehicles may not offer, including
death benefit protection for your beneficiaries, lifetime income options, and
the ability to make transfers between numerous variable investment options
offered under the Annuity. You should consult with your investment professional
as to whether the overall benefits and costs of the Annuity are appropriate
considering your overall financial plan.
If you purchase this Annuity, we apply an additional amount (an XTra Credit(SM))
to your account value with each purchase payment you make, including your
initial purchase payment and any additional purchase payments during the first
six annuity years.
- - This Annuity features an annual Insurance Charge of 0.65% and an annual
Distribution Charge of 1.00%. We only deduct the Distribution Charge
during the first 10 years following the effective date of your Annuity.
During the first 10 years, the total asset-based charges on this Annuity
are higher than many of our other annuities.
- - Unlike many other annuities, the contingent deferred sales charge (CDSC)
that may apply to a withdrawal or surrender of your Annuity is based on
the number of years since the effective date of your Annuity. We do not
assess a separate CDSC based on the date that each purchase payment is
applied. The CDSC on this Annuity is higher and is deducted for a longer
period of time as compared to our other annuities. As with any investment
product that features a CDSC, you should consider your need to access your
account value during the CDSC period and whether the liquidity provision
under the Annuity will satisfy that need. The CDSC is only deducted if you
make a withdrawal that exceeds the free withdrawal amount or choose to
surrender your Annuity. If you make a withdrawal or surrender your Annuity
which is subject to a CDSC, we do not recover the XTra Credit(SM) amount.
- - The XTra Credit(SM) amount is included in your account value. However,
American Skandia may take back the original XTra Credit(SM) amount applied
to your purchase payment if you "free-look" your Annuity or within twelve
(12) months of having received an XTra Credit amount, you die or elect to
withdraw your account value under the medically-related surrender
provision. In these situations, your Account Value could be substantially
reduced. However, any investment gain on the XTra Credit(SM) amount will
not be recovered. Additional conditions and restrictions apply. We do not
deduct a CDSC in any situation where we recover the XTra Credit(SM)
amount.
1
INTRODUCTION CONTINUED
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
WHAT ARE SOME OF THE KEY FEATURES OF THIS ANNUITY?
- - This Annuity is a "flexible premium deferred annuity." It is called
"flexible premium" because you have considerable flexibility in the timing
and amount of premium payments. Generally, investors "defer" receiving
annuity payments until after an accumulation period.
- - This Annuity offers both variable investment options and Fixed
Allocations. If you allocate your Account Value to variable investment
options, the value of your Annuity will vary daily to reflect the
investment performance of the underlying investment options. Fixed
Allocations of different durations are offered that are guaranteed by us,
but may have a Market Value Adjustment if you withdraw or transfer your
Account Value before the Maturity Date.
- - The Annuity features two distinct phases -- the accumulation period and
the payout period. During the accumulation period your Account Value is
allocated to one or more investment options.
- - During the payout period, commonly called "annuitization," you can elect
to receive annuity payments (1) for life; (2) for life with a guaranteed
minimum number of payments; (3) based on joint lives; or (4) for a
guaranteed number of payments. We currently make annuity payments
available on a fixed or variable basis.
- - This Annuity offers a Credit which we add to your Annuity with each
Purchase Payment we receive in Annuity Years one (1) through six (6).
- - This Annuity offers optional benefits, for an additional charge, that can
provide principal protection or guaranteed minimum income protection for
Owners while they are alive.
- - This Annuity offers a basic Death Benefit. It also offers optional Death
Benefits that provide an enhanced level of protection for your
beneficiary(ies) for an additional charge.
- - You are allowed to withdraw a limited amount of money from your Annuity on
an annual basis without any charges, although any optional guaranteed
benefit you elect may be reduced. Other product features allow you to
access your Account Value as necessary, although a charge may apply.
- - Transfers between investment options are tax-free. Currently, you may make
twenty transfers each year free of charge. We also offer several programs
that enable you to manage your Account Value as your financial needs and
investment performance change.
HOW DO I PURCHASE THIS ANNUITY?
We sell the Annuity through licensed, registered investment professionals. You
must complete an application and submit a minimum initial purchase payment of
$10,000. We may allow you to make a lower initial purchase payment provided you
establish a bank drafting program under which purchase payments received in the
first Annuity Year total at least $10,000. If the Annuity is owned by an
individual or individuals, the oldest of those Owners must be age 75 or under,
as of the Issue Date of the Annuity. If the Annuity is owned by an entity, the
annuitant must be age 75 or under, as of the Issue Date of the Annuity. The
availability and level of protection of certain optional benefits may vary based
on the age of the Owner on the Issue Date of the Annuity or the Owner's date of
death.
2
GLOSSARY OF TERMS
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Many terms used within this Prospectus are described within the text where they
appear. The description of those terms are not repeated in this Glossary of
Terms.
ACCOUNT VALUE
The value of each allocation to a Sub-account (also referred to as "variable
investment option") or a Fixed Allocation prior to the Annuity Date, plus any
earnings, and/or less any losses, distributions and charges. The Account Value
is calculated before we assess any applicable Contingent Deferred Sales Charge
("CDSC" or "surrender charge") and/or other than on a contract anniversary, any
fee that is deducted from the contract annually in arrears. The Account Value
includes any Credits we applied to your Purchase Payments that we are entitled
to recover under certain circumstances. The Account Value is determined
separately for each Sub-account and for each Fixed Allocation, and then totaled
to determine the Account Value for your entire Annuity. The Account Value of
each Fixed Allocation on other than its Maturity Date may be calculated using a
market value adjustment.
ANNUITIZATION
The application of Account Value (or Protected Income Value for the Guaranteed
Minimum Income Benefit, if applicable) to one of the available annuity options
for the Annuitant to begin receiving periodic payments for life, for a
guaranteed minimum number of payments or for life with a guaranteed minimum
number of payments.
ANNUITY DATE
The date you choose for annuity payments to commence. A maximum Annuity Date
may apply.
ANNUITY YEAR
A 12-month period commencing on the Issue Date of the Annuity and each
successive 12-month period thereafter.
CODE
The Internal Revenue Code of 1986, as amended from time to time.
FIXED ALLOCATION
An allocation of Account Value that is to be credited a fixed rate of interest
for a specified Guarantee Period during the accumulation period.
GUARANTEE PERIOD
A period of time during the accumulation period where we credit a fixed rate of
interest on a Fixed Allocation.
INTERIM VALUE
The value of a Fixed Allocation on any date other than the Maturity Date. The
Interim Value is equal to the initial value allocated to the Fixed Allocation
plus all interest credited to the Fixed Allocation as of the date calculated,
less any transfers or withdrawals from the Fixed Allocation.
ISSUE DATE
The effective date of your Annuity.
MVA
A market value adjustment used in the determination of Account Value of each
Fixed Allocation on any day more than 30 days prior to the Maturity Date of such
Fixed Allocation.
OWNER
With an Annuity issued as an individual annuity contract, the Owner is either an
eligible entity or person named as having ownership rights in relation to the
Annuity. With an Annuity issued as a certificate under a group annuity contract,
the "Owner" refers to the person or entity who has the rights and benefits
designated as to the "Participant" in the certificate.
SURRENDER VALUE
The value of your Annuity available upon surrender prior to the Annuity Date. It
equals the Account Value as of the date we price the surrender minus any
applicable CDSC, Annual Maintenance Fee, Tax Charge, the charge for any optional
benefits, and any additional amounts we applied to your Purchase Payments that
we may be entitled to recover under certain circumstances. The surrender value
may be calculated using a Market Value Adjustment with respect to amounts in any
Fixed Allocation.
UNIT
A measure used to calculate your Account Value in a Sub-account during the
accumulation period.
VALUATION DAY
Every day the New York Stock Exchange is open for trading or any other day the
Securities and Exchange Commission requires mutual funds or unit investment
trusts to be valued.
3
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
SUMMARY OF CONTRACT FEES AND CHARGES
Below is a summary of the fees and charges for the Annuity. Some fees and
charges are assessed against your Annuity while others are assessed against
assets allocated to the variable investment options. The fees and charges that
are assessed against the Annuity include the Contingent Deferred Sales Charge,
Transfer Fee, Tax Charge and Annual Maintenance Fee. The charges that are
assessed against the variable investment options are the mortality and expense
risk charge, the charge for administration of the Annuity, the Distribution
Charge and the charge for certain optional benefits you elect, other than the
Guaranteed Minimum Income Benefit, which is assessed against the Protected
Income Value. Each underlying mutual fund portfolio assesses a charge for
investment management, other expenses and with some mutual funds, a 12b-1
charge. The prospectus for each underlying mutual fund provides more detailed
information about the expenses for the underlying mutual funds.
The following table provides a summary of the fees and charges you will pay if
you surrender the Annuity or transfer Account Value among investment options.
These fees and charges are described in more detail within this Prospectus.
YOUR TRANSACTION FEES AND CHARGES
(ASSESSED AGAINST THE ANNUITY)
FEE/CHARGE AMOUNT DEDUCTED
- ---------------------------------- -----------------------------------------------------------------------------
Contingent Deferred Sales Charge* 9.0%
The charge is a percentage of each applicable Purchase Payment deducted
upon surrender or withdrawal. The period during which a particular percentage
applies is measured from the Issue Date of the Annuity.
Transfer Fee $10 (currently, $15 maximum)
(Currently, we deduct the fee after the 20th transfer each Annuity Year.
We guarantee that the number of charge free transfers per Annuity Year
will never be less than 8.)
Tax Charge Up to 3.5% of the value that is annuitized, depending on the
requirements of the applicable jurisdiction. This charge is deducted
generally at the time you annuitize your contract.
* The following are the Contingent Deferred Sales Charges (as a percentage
of each applicable Purchase Payment) upon surrender or withdrawal. For
purposes of calculating this charge we consider the year following the
Issue Date of your Annuity as Year 1.
Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10 Yr. 11+
9.0% 9.0% 8.5% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 0.0%
4
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
The following table provides a summary of the periodic fees and charges you will
pay while you own the Annuity, excluding the underlying mutual fund Portfolio
annual expenses. These fees and charges are described in more detail within this
Prospectus.
YOUR PERIODIC FEES AND CHARGES
ANNUAL FEES/CHARGES ASSESSED AGAINST THE ANNUITY
FEE/CHARGE AMOUNT DEDUCTED
- --------------------------------------------------- -------------------------------------------------------
Annual Maintenance Fee Smaller of $35 or 2% of Account Value
(Assessed annually on the Annuity's anniversary date or
upon surrender)
ANNUAL FEES/CHARGES OF THE SUB-ACCOUNT(1)
(AS A PERCENTAGE OF THE AVERAGE DAILY NET ASSETS OF THE SUB-ACCOUNTS)
FEE/CHARGE AMOUNT DEDUCTED
- -------------------------------------------------- -----------------------------------------------------------------
Mortality & Expense Risk Charge(2) 0.50%
Administration Charge(2) 0.15%
Distribution Charge(3) 1.00% in Annuity Years 1-10
1.40% per year of the value of each Sub-account if the Owner's
beneficiary elects the Qualified Beneficiary Continuation
Settlement Service Charge(4) Option 5 ("Qualified BCO")
1.65% per year of the value of each Sub-account in Annuity Years
1-10; 0.65% in Annuity Years 11 and later (1.40% per year if you
Total Annual Charges of the Sub-accounts are a beneficiary electing the Qualified BCO)
1: These charges are deducted daily and apply to Variable Investment Options
only.
2: The combination of the Mortality and Expense Risk Charge and Administration
Charge is referred to as the "Insurance Charge" elsewhere in this Prospectus.
3: The Distribution Charge in Annuity Years 11+ is 0.00%.
4: The Mortality & Expense Risk Charge, the Administration Charge and the
Distribution Charge do not apply if you are a beneficiary under the Qualified
Beneficiary Continuation Option. The Settlement Service Charge applies only if
your beneficiary elects the Qualified Beneficiary Continuation Option.
5: When an Annuity is used as an IRA, 403(b) or other "qualified investment",
upon the Owner's death a beneficiary may generally elect to continue the Annuity
and receive Minimum Distributions under the Annuity instead of receiving the
death benefit in a single payment. If a beneficiary elects this option, the
beneficiary will incur the Settlement Service Charge. Please refer to the
section of this Prospectus that describes the Qualified Beneficiary Continuation
Option for more detailed information about this option, including certain
restrictions and limitations that may apply.
5
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
SUMMARY OF CONTRACT FEES AND CHARGES CONTINUED
The following table provides a summary of the fees and charges you will pay if
you elect any of the following optional benefits. Not all optional benefits may
be purchased in combination with one another. You may only elect one optional
living benefit. The optional living benefits are the Guaranteed Return Option
Plus program (and where not available, Guaranteed Return Option), the Guaranteed
Minimum Withdrawal Benefit, the Guaranteed Minimum Income Benefit and the
Lifetime Five(SM) Income Benefit. For the optional death benefits, you may elect
the Highest Anniversary Value Death Benefit or the Highest Daily Value Death
Benefit together with the Enhanced Beneficiary Protection Death Benefit or any
of these three benefits, individually, but the Combination 5% Roll-up and the
HAV Death Benefit may only be purchased individually. The fees and charges and
each of the optional benefits are described in more detail within this
Prospectus.
YOUR OPTIONAL BENEFIT FEES AND CHARGES
OPTIONAL
BENEFIT FEE/ TOTAL ANNUAL
OPTIONAL BENEFIT CHARGE CHARGE*
- ----------------------------------------------------------------------------- ------------------------ -------------------------
GUARANTEED RETURN OPTION Plus(SM)(GRO Plus(SM))/GUARANTEED RETURN OPTION
We offer a program that guarantees a "return of premium" at a future date, 0.25% of average daily 1.90% in Annuity Years
while allowing you to allocate all or a portion of your Account Value to net assets of the 1-10; 0.90% in Annuity
certain Sub-accounts. Sub-accounts Years 11 and later; 1.65%
for Qualified BCO
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
We offer a program that guarantees your ability to withdraw amounts equal 0.35% of average daily 2.00% in Annuity Years
to an initial principal value, regardless of the impact of market performance net assets of the 1-10; 1.00% in Annuity
on your Account Value. Sub-accounts Years 11 and later; 1.75%
for Qualified BCO
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)**
We offer a program that, after a seven-year waiting period, guarantees your 0.50% per year of the 1.65% in Annuity Years
ability to begin receiving income from your Annuity in the form of annuity average Protected 1-10; 0.65% in Annuity
payments based on your total Purchase Payments (and any Credits applied to Income Value during Years 11 and later
such Purchase Payments) and an annual increase of 5% on such Purchase each year; deducted PLUS
Payments adjusted for withdrawals (called the "Protected Income Value"), annually in arrears each 0.50% per year of average
regardless of the impact of market performance on your Account Value. Annuity Year Protected Income Value
LIFETIME FIVE INCOME BENEFIT**
We offer a program that guarantees your ability to withdraw amounts equal 0.60% of average daily 2.25% in Annuity Years
to a percentage of an initial principal value, regardless of the impact of net assets of the 1- 10; 1.25% in Annuity
market performance on your Account Value, subject to our program rules Sub-accounts Years 11 and later
regarding the timing and amount of withdrawals.
ENHANCED BENEFICIARY PROTECTION DEATH BENEFIT**
We offer an Optional Death Benefit that provides an enhanced level of 0.25% of average daily 1.90% in Annuity Years
protection for your beneficiary(ies) by providing amounts in addition to the net assets of the 1-10; 0.90% in Annuity
basic Death Benefit that can be used to offset federal and state taxes Sub-accounts Years 11 and later
payable on any taxable gains in your Annuity at the time of your death.
6
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
OPTIONAL
BENEFIT FEE/ TOTAL ANNUAL
OPTIONAL BENEFIT CHARGE CHARGE*
- ------------------------------------------------------------------------------ ---------------------- ----------------------
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT ("HAV")**
We offer an Optional Death Benefit that provides an enhanced level of 0.25% of average daily 1.90% in Annuity Years
protection for your beneficiary(ies) by providing a death benefit equal to the net assets of the 1-10; 0.90% in Annuity
greater of the basic Death Benefit and the Highest Anniversary Value, less Sub-accounts Years 11 and later
proportional withdrawals.
COMBINATION 5% ROLL-UP AND HAV DEATH BENEFIT **
We offer an Optional Death Benefit that provides an enhanced level of 0.50% of average daily 2.15% in Annuity Years
protection for your beneficiary(ies) by providing the greater of the Highest net assets of the 1-10; 1.15% in Annuity
Anniversary Value Death Benefit and a 5% annual increase on Purchase Sub-accounts Years 11 and later
Payments (and any Credits applied to such Purchase Payments) adjusted for
withdrawals..
HIGHEST DAILY VALUE DEATH BENEFIT ("HDV")**
We offer an Optional Death Benefit that provides an enhanced level of 0.50% of average daily 2.15% in Annuity Years
protection for your beneficiary(ies) by providing a death benefit equal to net assets of the 1-10; 1.15% in Annuity
the greater of the basic Death Benefit and the Highest Daily Value, less Sub-accounts Years 11 and later
proportional withdrawals.
PLEASE REFER TO THE SECTION OF THIS PROSPECTUS THAT DESCRIBES EACH OPTIONAL
BENEFIT FOR A COMPLETE DESCRIPTION OF THE BENEFIT, INCLUDING ANY RESTRICTIONS OR
LIMITATIONS THAT MAY APPLY.
* The Total Annual Charge includes the Insurance Charge and Distribution Charge
assessed against the average daily net assets allocated to the Sub-accounts. If
you elect more than one optional benefit, the Total Annual Charge would be
increased to include the charge for each optional benefit.
** These optional benefits are not available under the Qualified BCO.
The following table provides the range (minimum and maximum) of the total
annual expenses for the underlying mutual funds ("Portfolios") as of December
31, 2004. Each figure is stated as a percentage of the underlying Portfolio's
average daily net assets.
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES
MINIMUM MAXIMUM
- --------------------------------- ------- -------
TOTAL PORTFOLIO OPERATING EXPENSE 0.63% 3.06%
The following are the investment management fees, other expenses, 12b-1 fees (if
applicable) and the total annual expenses for each underlying mutual fund
("Portfolio") as of December 31, 2004, except as noted. Each figure is stated as
a percentage of the underlying Portfolio's average daily net assets. For certain
of the underlying Portfolios, a portion of the management fee has been waived
and/or other expenses have been partially reimbursed. Any such fee waivers
and/or reimbursements have been reflected in the footnotes. The "Total Annual
Portfolio Operating Expenses" reflect the combination of the underlying
Portfolio's investment management fee, other expenses and any 12b-1 fees. The
following expenses are deducted by the underlying Portfolio before it provides
American Skandia with the daily net asset value. Any footnotes about expenses
appear after the list of all the Portfolios. The underlying Portfolio
information was provided by the underlying mutual funds and has not been
independently verified by us. See the prospectuses or statements of additional
information of the underlying Portfolios for further details. The current
prospectus and statement of additional information for the underlying Portfolios
can be obtained by calling 1-800-680-8920.
7
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
SUMMARY OF CONTRACT FEES AND CHARGES CONTINUED
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS)
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
- ----------------------------------------------- ---------- ----------- ------ ---------
AMERICAN SKANDIA TRUST: (2, 3)
AST JPMorgan International Equity 1.00% 0.13% None 1.13%
AST William Blair International Growth 1.00% 0.22% None 1.22%
AST LSV International Value(4) 1.00% 0.37% None 1.37%
AST MFS Global Equity 1.00% 0.35% None 1.35%
AST Small-Cap Growth(5) 0.90% 0.24% None 1.14%
AST DeAM Small-Cap Growth 0.95% 0.22% None 1.17%
AST Federated Aggressive Growth 0.95% 0.24% None 1.19%
AST Small-Cap Value(6) 0.90% 0.18% None 1.08%
AST DeAM Small-Cap Value 0.95% 0.33% None 1.28%
AST Goldman Sachs Mid-Cap Growth 1.00% 0.25% None 1.25%
AST Neuberger Berman Mid-Cap Growth 0.90% 0.22% None 1.12%
AST Neuberger Berman Mid-Cap Value 0.90% 0.15% None 1.05%
AST Alger All-Cap Growth 0.95% 0.22% None 1.17%
AST Gabelli All-Cap Value 0.95% 0.26% None 1.21%
AST T. Rowe Price Natural Resources 0.90% 0.26% None 1.16%
AST AllianceBernstein Large-Cap Growth(7) 0.90% 0.23% None 1.13%
AST MFS Growth 0.90% 0.20% None 1.10%
AST Marsico Capital Growth 0.90% 0.14% None 1.04%
AST Goldman Sachs Concentrated Growth 0.90% 0.17% None 1.07%
AST DeAM Large-Cap Value 0.85% 0.26% None 1.11%
AST AllianceBernstein Growth + Value 0.90% 0.32% None 1.22%
AST AllianceBernstein Core Value(8) 0.75% 0.24% None 0.99%
AST Cohen & Steers Realty 1.00% 0.22% None 1.22%
AST AllianceBernstein Managed Index 500(9) 0.60% 0.17% None 0.77%
AST American Century Income & Growth 0.75% 0.24% None 0.99%
AST AllianceBernstein Growth & Income(10) 0.75% 0.15% None 0.90%
AST Hotchkis & Wiley Large-Cap Value 0.75% 0.19% None 0.94%
AST Global Allocation11 0.89% 0.26% None 1.15%
AST American Century Strategic Balanced 0.85% 0.27% None 1.12%
AST T. Rowe Price Asset Allocation 0.85% 0.27% None 1.12%
AST T. Rowe Price Global Bond 0.80% 0.27% None 1.07%
AST Goldman Sachs High Yield 0.75% 0.18% None 0.93%
AST Lord Abbett Bond-Debenture 0.80% 0.22% None 1.02%
AST PIMCO Total Return Bond 0.65% 0.16% None 0.81%
AST PIMCO Limited Maturity Bond 0.65% 0.17% None 0.82%
AST Money Market 0.50% 0.13% None 0.63%
GARTMORE VARIABLE INVESTMENT TRUST:
GVIT Developing Markets 1.15% 0.38% 0.25% 1.78%
8
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
- --------------------------------------------------------- ---------- ----------- --------- ----------
WELLS FARGO VARIABLE TRUST ADVANTAGE:(12)
Advantage C&B Large Cap Value 0.55% 0.39% 0.25% 1.19%
Advantage Equity Income 0.55% 0.23% 0.25% 1.03%
Advantage International Core 0.75% 0.42% 0.25% 1.42%
Advantage Small Cap Growth 0.75% 0.24% 0.25% 1.24%
Advantage Large Company Core 0.55% 0.33% 0.25% 1.13%
Advantage Large Company Growth 0.55% 0.25% 0.25% 1.05%
Advantage Asset Allocation 0.55% 0.22% 0.25% 1.02%
Advantage Total Return Bond 0.45% 0.26% 0.25% 0.96%
AIM VARIABLE INSURANCE FUNDS: (13)
AIM V.I. Dynamics Fund -- Series I shares 0.75% 0.39% None 1.14%
AIM V.I. Technology Fund -- Series I shares 0.75% 0.40% None 1.15%
AIM V.I. Health Sciences Fund -- Series I shares(14) 0.75% 0.36% None 1.11%
AIM V.I. Financial Services Fund -- Series I shares 0.75% 0.37% None 1.12%
EVERGREEN VARIABLE ANNUITY TRUST:
International Equity 0.42% 0.30% None 0.72%
Growth 0.70% 0.26% None 0.96%
Omega 0.52% 0.16% None 0.68%
PROFUND VP: (15)
Access High Yield 0.75% 1.02% 0.25% 1.98%
Bull 0.75% 0.78% 0.25% 1.78%
OTC 0.75% 0.87% 0.25% 1.87%
Large-Cap Value 0.75% 1.04% 0.25% 2.04%
Large-Cap Growth 0.75% 2.06% 0.25% 3.06%
Mid-Cap Value 0.75% 0.92% 0.25% 1.92%
Mid-Cap Growth 0.75% 0.94% 0.25% 1.94%
Small-Cap Value 0.75% 0.95% 0.25% 1.95%
Small-Cap Growth 0.75% 0.90% 0.25% 1.90%
Asia 30 0.75% 0.86% 0.25% 1.86%
Europe 30 0.75% 0.78% 0.25% 1.78%
Japan 0.75% 0.85% 0.25% 1.85%
UltraBull 0.75% 0.89% 0.25% 1.89%
UltraMid-Cap 0.75% 0.94% 0.25% 1.94%
UltraSmall-Cap 0.75% 0.94% 0.25% 1.94%
UltraOTC 0.75% 0.88% 0.25% 1.88%
Bear 0.75% 0.90% 0.25% 1.90%
Short Mid-Cap 0.75% 0.90% 0.25% 1.90%
Short Small-Cap 0.75% 1.28% 0.25% 2.28%
Short OTC 0.75% 0.86% 0.25% 1.86%
Banks 0.75% 0.98% 0.25% 1.98%
Basic Materials 0.75% 0.96% 0.25% 1.96%
Biotechnology 0.75% 0.98% 0.25% 1.98%
9
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
SUMMARY OF CONTRACT FEES AND CHARGES CONTINUED
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
- ------------------------------------------------- ---------- ----------- ------- ---------
profund vp: (15) continued
Consumer Goods 0.75% 0.99% 0.25% 1.99%
Consumer Services 0.75% 1.20% 0.25% 2.20%
Financials 0.75% 0.92% 0.25% 1.92%
Health Care 0.75% 0.91% 0.25% 1.91%
Industrials 0.75% 0.99% 0.25% 1.99%
Internet 0.75% 0.94% 0.25% 1.94%
Oil & Gas 0.75% 0.92% 0.25% 1.92%
Pharmaceuticals 0.75% 0.97% 0.25% 1.97%
Precious Metals 0.75% 0.87% 0.25% 1.87%
Real Estate 0.75% 0.93% 0.25% 1.93%
Semiconductor 0.75% 0.99% 0.25% 1.99%
Technology 0.75% 0.87% 0.25% 1.87%
Telecommunications 0.75% 0.95% 0.25% 1.95%
Utilities 0.75% 0.95% 0.25% 1.95%
U.S. Government Plus 0.50% 0.86% 0.25% 1.61%
Rising Rates Opportunity 0.75% 0.75% 0.25% 1.75%
FIRST DEFINED PORTFOLIO FUND, LLC: (16, 17)
First Trust(R) (10) Uncommon Values 0.60% 0.76% 0.25% 1.61%
Target Managed VIP 0.60% 1.25% 0.25% 2.10%
The Dow(sm) DART (10) 0.60% 1.53% 0.25% 2.38%
Global Dividend Target (15) 0.60% 1.85% 0.25% 2.70%
S&P(R) Target (24) 0.60% 1.58% 0.25% 2.43%
NASDAQ(R) Target (15) 0.60% 1.75% 0.25% 2.60%
Value Line(R) Target (25) 0.60% 1.48% 0.25% 2.33%
The Dow Target Dividend (18) 0.60% 0.62% 0.25% 1.47%
THE PRUDENTIAL SERIES FUND, INC.:
SP William Blair International Growth 0.85% 0.45% 0.25% 1.55%
10
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
(1) As noted above, shares of the Portfolios generally are purchased through
variable insurance products. Many of the Portfolios and/or their investment
advisers and/or distributors have entered into arrangements with us as the
issuer of the Annuity under which they compensate us for providing ongoing
services in lieu of the Trust providing such services. Amounts paid by a
Portfolio under those arrangements are included under "Other Expenses." For more
information see the prospectus for each underlying portfolio and, "Service Fees
payable to American Skandia," later in this prospectus.
(2) The Portfolios' total actual annual operating expenses for the year ended
December 31, 2004 were less than the amount shown in the table due to fee
waivers, reimbursement of expenses and expense offset arrangements. These
waivers, reimbursements, and offset arrangements are voluntary and may be
terminated by American Skandia Investment Services, Inc. and Prudential
Investments LLC at any time. After accounting for the waivers, reimbursements
and offset arrangements, the Portfolios' actual annual operating expenses were:
TOTAL ACTUAL ANNUAL PORTFO-
LIO OPERATING EXPENSES AFTER
PORTFOLIO NAME EXPENSE REIMBURSEMENT
- -------------------------------------------------------------------------------------
AST William Blair International Growth 1.11%
AST LSV International Value 1.22%
AST DeAM Small-Cap Growth 1.02%
AST DeAM Small-Cap Value 1.13%
AST Goldman Sachs Mid-Cap Growth 1.13%
AST Neuberger Berman Mid-Cap Growth 1.11%
AST Neuberger Berman Mid-Cap Value 1.04%
AST AllianceBernstein Large-Cap Growth 1.10%
AST MFS Growth 1.07%
AST Marsico Capital Growth 1.02%
AST Goldman Sachs Concentrated Growth 1.00%
AST DeAM Large-Cap Value 0.99%
AST Cohen & Steers Realty 1.11%
AST AllianceBernstein Growth & Income 0.87%
AST Hotchkis & Wiley Large-Cap Value 0.90%
AST American Century Strategic Balanced 1.09%
AST T. Rowe Price Asset Allocation 1.07%
AST Lord Abbett Bond-Debenture Portfolio 0.97%
AST PIMCO Total Return Bond 0.78%
AST PIMCO Limited Maturity Bond 0.79%
AST Money Market 0.58%
(3) Until November 18, 2004, the Trust had a Distribution Plan under Rule 12b-1
to permit an affiliate of the Trust's Investment Managers to receive brokerage
commissions in connection with purchases and sales of securities held by the
Portfolios, and to use these commissions to promote the sale of shares of the
Portfolio. The Distribution Plan was terminated effective November 18, 2004. The
total annual portfolio operating expenses do not reflect any brokerage
commissions paid pursuant to the Distribution Plan prior to the Plan's
termination.
(4) Effective November 18, 2004, LSV Asset Management became the Sub-advisor of
the Portfolio. Prior to November 18, 2004, Deutsche Asset Management, Inc.
served as Sub-advisor of the Portfolio, then named "AST DeAM International
Equity Portfolio."
(5) Effective May 1, 2005, Eagle Asset Management and Neuberger Berman
Management, Inc. became Co-Sub-advisors of the Portfolio. Prior to May 1, 2005,
State Street Research and Management Company served as Sub-advisor of the
Portfolio, then named "AST State Street Research Small-Cap Growth Portfolio."
(6) Effective November 18, 2004, Integrity Asset Management, Lee Munder Capital
Group, J.P. Morgan Fleming Asset Management became Co-Sub-advisors of the
Portfolio. Prior to November 18, 2004, GAMCO Advisors Inc. served as Sub-advisor
of the Portfolio, then named "AST Gabelli Small-Cap Value Portfolio."
(7) Effective May 1, 2005, the name of the Portfolio was changed from "AST
Alliance Growth Portfolio" to "AST AllianceBernstein Large-Cap Growth
Portfolio."
(8) Effective May 1, 2005, the name of the Portfolio was changed from "AST
Sanford Bernstein Core Value Portfolio" to "AST AllianceBernstein Core Value
Portfolio."
(9) Effective May 1, 2005, the name of the Portfolio was changed from "AST
Sanford Bernstein Managed Index 500 Portfolio" to "AST AllianceBernstein Managed
Index 500 Portfolio."
(10) Effective May 1, 2005, the name of the Portfolio was changed from "AST
Alliance Growth and Income Portfolio" to "AST AllianceBernstein Growth & Income
Portfolio."
(11) The AST Global Allocation Portfolio invests primarily in shares of other
AST Portfolios (the "Underlying Portfolios").
(a) The only management fee directly paid by the Portfolio is a 0.10% fee
paid to American Skandia Investment Services, Inc. and Prudential
Investments LLC. The management fee shown in the chart for the Portfolio
is (i) that 0.10% management fee paid by the Portfolio plus (ii) an
estimate of the management fees paid by the Underlying Portfolios, which
are borne indirectly by investors in the Portfolio. The estimate was
calculated based on the percentage of the Portfolio invested in each
Underlying Portfolio as of December 31, 2004 using the management fee
rates shown in the chart above.
(b) The expense information shown in the chart for the Portfolio reflects
(i) the expenses of the Portfolio itself plus (ii) an estimate of the
expenses paid by the Underlying Portfolios, which are borne indirectly by
investors in the Portfolio. The estimate was calculated based on the
percentage of the Portfolio invested in each Underlying Portfolio as of
December 31, 2004 using the expense rates for the Underlying Portfolios
shown in the above chart.
(c) Effective May 1, 2005, Prudential Investment LLC provides day to day
management of the Portfolio. Prior to May 1, 2005, Deutsche Asset
Management, Inc. served as Sub-advisor of the Portfolio, then named "AST
DeAM Global Allocation Portfolio."
11
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
SUMMARY OF CONTRACT FEES AND CHARGES CONTINUED
(12) (a) The Adviser of Wells Fargo Variable Trust has committed through April
30, 2006 to waive fees and/or reimburse expenses to the extent necessary to
maintain the Fund's net operating expenses as shown.
TOTAL ACTUAL ANNUAL PORTFO-
LIO OPERATING EXPENSES AFTER
PORTFOLIO NAME EXPENSE REIMBURSEMENT
- ---------------------------------------------------------------------------
Advantage C&B Large Cap Value 1.00%
Advantage Equity Income 1.00%
Advantage International Core 1.00%
Advantage Small Cap Growth 1.20%
Advantage Large Company Core 1.00%
Advantage Large Company Growth 1.00%
Advantage Asset Allocation 1.00%
Advantage Total Return Bond 0.90%
(b) In addition, the following name changes were made effective May 1,
2005:
OLD PORTFOLIO NAME NEW PORTFOLIO NAME
- ------------------------------------------------------------------
Equity Value Advantage C&B Large Cap Value
Equity Income Advantage Equity Income
International Equity Advantage International Core
Small Cap Growth Advantage Small Cap Growth
Growth Advantage Large Company Core
Large Company Growth Advantage Large Company Growth
Asset Allocation Advantage Asset Allocation
Total Return Bond Advantage Total Return Bond
(13) The Fund's adviser is entitled to receive reimbursement from the Fund for
fees and expenses paid for by the Fund's adviser pursuant to expense limitation
commitments between the Fund's adviser and the Fund if such reimbursement does
not cause the Fund to exceed its then-current expense limitations and the
reimbursement is made within three years after the Fund's adviser incurred the
expense.
(14) Effective July 1, 2005, the "AIM V.I. Health Sciences Fund" will be renamed
"AIM V.I. Global Health Care Fund."
(15) ProFund Advisors LLC has contractually agreed to waive Investment Advisory
and Management Services Fees and to reimburse other expenses to the extent Total
Annual Portfolio Operating Expenses, as a percentage of average daily net
assets, exceed 1.98% (1.73% for ProFund VP U.S. Government Plus and 1.78% for
ProFund VP Rising Rates Opportunity) through December 31, 2005. After such date,
any of the expense limitations may be terminated or revised. Amounts waived or
reimbursed in a particular fiscal year may be repaid to ProFund Advisors LLC
within three years of the waiver or reimbursement to the extent that recoupment
will not cause the Portfolio's expenses to exceed any expense limitation in
place at that time. A waiver or reimbursement lowers the expense ratio and
increases overall returns to investors.
(16) The Funds' Board of Trustees reserves the right to suspend payments under
the 12b-1 Plan at any time. On May 1, 2003, 12b-1 payments were suspended for
all Funds except the First Trust 10 Uncommon Values Portfolio. Payments under
the 12b-1 Plan resumed effective May 1, 2004 for the Target Managed VIP
Portfolio, the Dow Dart 10 Portfolio, the Global Dividend Target 15 Portfolio,
the S&P Target 24 Portfolio, the Nasdaq Target 15 Portfolio and the Value Line
Target 25 Portfolio.
(17) For the period September 30, 2004 through December 31, 2007, First Trust
has contractually agreed to waive fees and reimburse expenses of the Portfolios
to limit the total annual fund operating expenses (excluding brokerage expense
and extraordinary expense) to 1.37% for the First Trust 10 Uncommon Values
Portfolio and 1.47% for each of the other Portfolios' average daily net assets.
First Trust has entered into an agreement with First Defined Portfolio Fund, LLC
that will allow First Trust to recover from the Portfolios any fees waived or
reimbursed during the three year period of January 1, 2005 through December 31,
2007. However, First Trust's ability to recover such amounts is limited to the
extent that it would not exceed the amount reimbursed or waived during such
period.
TOTAL ACTUAL ANNUAL PORTFO-
LIO OPERATING EXPENSES AFTER
PORTFOLIO NAME EXPENSE REIMBURSEMENT
- --------------------------------- -----------------------------
First Trust(R) 10 Uncommon Values 1.37%
Target Managed VIP 1.47%
S&P Target 24 1.47%
The Dow(sm) DART 10 1.47%
Value Line(R) Target 25 1.47%
Global Dividend Target 15 1.47%
Nasdaq Target 15 1.47%
Dow Target Dividend 1.47%
(18) The Dow (SM) Target Dividend Portfolio is newly organized. Accordingly,
Other Expenses and Total Annual Portfolio Operating Expenses are based on
estimated expenses for the current fiscal year.
12
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
EXPENSE EXAMPLES
These examples are designed to assist you in understanding the various expenses
you may incur with the Annuity over certain periods of time based on specific
assumptions. The examples reflect the Contingent Deferred Sales Charges, Annual
Maintenance Fee, Insurance Charge, Distribution Charge, and the highest total
annual portfolio operating expenses for any underlying Portfolio offered under
the product, as well as the maximum charges for the optional benefits that are
offered under the Annuity that can be elected in combination with one another.
Below are examples showing what you would pay in expenses at the end of the
stated time periods had you invested $10,000 in the Annuity and received a 5%
annual return on assets, and elected all optional benefits available.
The examples shown assume that: (a) you only allocate Account Value to the
Sub-account with the maximum total annual portfolio operating expenses for the
underlying Portfolio (shown above), not to a Fixed Allocation; (b) the
Insurance Charge is assessed as 0.65% per year; (c) the Distribution Charge is
assessed as 1.00% per year in Annuity Years 1-10; (d) the Annual Maintenance
Fee is reflected as an asset-based charge based on an assumed average contract
size; (e) you make no withdrawals of Account Value during the period shown; (f)
you make no transfers, or other transactions for which we charge a fee during
the period shown; (g) no tax charge applies; (h) the highest total annual
portfolio operating expenses for any underlying Portfolio offered under the
product applies; (i) the charge for each optional benefit is reflected as an
additional charge equal to 0.60% per year of the average daily net assets of
the Sub-accounts for the Lifetime Five Income Benefit, 0.50% per year of the
average daily net assets of the Sub-accounts for the Highest Daily Value Death
Benefit, and 0.25% of the average daily net asset of the Sub-accounts for the
Enhanced Beneficiary Protection Death Benefit; and (j) the Credit applicable to
your Annuity is 6% of Purchase Payments. Amounts shown in the examples are
rounded to the nearest dollar. The Credit we apply to Purchase Payments
received after the first Annuity Year are less than 6% (see "How do I Receive
Credits?").
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 WILL BE LESS THAN THOSE SHOWN IF YOU ELECT A
DIFFERENT COMBINATION OF OPTIONAL BENEFITS THAN INDICATED IN THE EXAMPLES
AVAILABLE OR IF YOU ALLOCATE ACCOUNT VALUE TO ANY OTHER AVAILABLE SUB-ACCOUNTS.
Expense Examples are provided as follows: 1.) if you surrender the Annuity at
the end of the stated time period; 2.) if you annuitize at the end of the stated
time period; and 3.) if you do not surrender your Annuity. A table of
Accumulation Values appears in Appendix A to this Prospectus.
IF YOU ANNUITIZE AT THE END OF
THE APPLICABLE TIME PERIOD:
(you may not annuitize in the
IF YOU SURRENDER YOUR ANNUITY AT first IF YOU DO NOT SURRENDER
THE END OF THE APPLICABLE TIME PERIOD: three (3) Annuity Years): YOUR ANNUITY:
- ----------------------------------------------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,678 $3,191 $4,522 $7,384 N/A N/A $3,850 $7,192 $814 $2,375 $3,850 $7,192
13
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
INVESTMENT OPTIONS
WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE PORTFOLIOS?
Each variable investment option is a Sub-account of American Skandia Life
Assurance Corporation Variable Account B (see "What are Separate Accounts" for
more detailed information). Each Sub-account invests exclusively in one
Portfolio. You should carefully read the prospectus for any Portfolio in which
you are interested. The following chart classifies each of the Portfolios based
on our assessment of their investment style (as of the date of this Prospectus).
The chart also provides a description of each Portfolio's investment objective
(in italics) and a short, summary description of their key policies to assist
you in determining which Portfolios may be of interest to you. There is no
guarantee that any underlying Portfolio will meet its investment objective.
The name of the advisor/sub-advisor for each Portfolio appears next to the
description. Those Portfolios whose name includes the prefix "AST" are
Portfolios of American Skandia Trust. The investment managers for AST are
American Skandia Investment Services, Incorporated, a Prudential Financial
Company, and Prudential Investments LLC, affiliated companies of American
Skandia. However, a sub-advisor, as noted below, is engaged to conduct
day-to-day investment decisions.
The Portfolios are not publicly traded mutual funds. They are only
available as investment options in variable annuity contracts and variable life
insurance policies issued by insurance companies, or in some cases, to
participants in certain qualified retirement plans. However, some of the
Portfolios available as Sub-accounts under the Annuity are managed by the same
portfolio advisor or sub-advisor as a retail mutual fund of the same or similar
name that the Portfolio may have been modeled after at its inception. Certain
retail mutual funds may also have been modeled after a Portfolio. While the
investment objective and policies of the retail mutual funds and the Portfolios
may be substantially similar, the actual investments will differ to varying
degrees. Differences in the performance of the funds can be expected, and in
some cases could be substantial. You should not compare the performance of a
publicly traded mutual fund with the performance of any similarly named
Portfolio offered as a Sub-account. Details about the investment objectives,
policies, risks, costs and management of the Portfolios are found in the
prospectuses for the underlying mutual funds. The current prospectus and
statement of additional information for the underlying Portfolios can be
obtained by calling 1-800-680-6920.
Effective MAY 1, 2004, THE SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO
(FORMERLY THE SP JENNISON INTERNATIONAL GROWTH PORTFOLIO) is no longer offered
as a Sub-account under the Annuity, except as follows: if at any time prior to
May 1, 2004 you had any portion of your Account Value allocated to the SP
William Blair International Growth Sub-account, you may continue to allocate
Account Value and make transfers into and/or out of the SP William Blair
International Growth Sub-account, including any bank drafting, dollar cost
averaging, asset allocation and rebalancing programs. If you never had a portion
of your Account Value allocated to the SP William Blair International Growth
Sub-account prior to May 1, 2004 or if you purchase your Annuity on or after May
1, 2004, you cannot allocate Account Value to the SP William Blair International
Growth Sub-account.
This Sub-account may be offered to new Owners at some future date;
however, at the present time, there is no intention to do so. We also reserve
the right to offer or close this Sub-account to all Owners that owned the
Annuity prior to the close date.
14
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------------
INTERNATIONAL AST JPMORGAN INTERNATIONAL EQUITY: seeks long-term capital growth by J.P. Morgan
EQUITY investing in a diversified portfolio of international equity securities. The Fleming Asset
Portfolio seeks to meet its objective by investing, under normal market Management
conditions, at least 80% of its assets in a diversified portfolio of equity
securities of companies located or operating in developed non-U.S.
countries and emerging markets of the world.
INTERNATIONAL AST WILLIAM BLAIR INTERNATIONAL GROWTH: Seeks long-term capital William Blair &
EQUITY appreciation. The Portfolio invests primarily in stocks of large and Company, L.L.C.
medium-sized companies located in countries included in the Morgan
Stanley Capital International All Country World Ex-U.S. Index.
INTERNATIONAL AST LSV INTERNATIONAL VALUE (formerly AST DeAM International Equity): Deutsche Asset
EQUITY seeks capital growth. The Portfolio pursues its objective by primarily Management, Inc.
investing at least 80% of the value of its assets in the equity securities of
companies in developed non-U.S. countries that are represented in the
MSCI EAFE Index.
INTERNATIONAL AST MFS GLOBAL EQUITY: seeks capital growth. Under normal Massachusetts
EQUITY circumstances the Portfolio invests at least 80% of its assets in equity Financial Services
securities of U.S. and foreign issuers (including issuers in developing Company
countries). The Portfolio generally seeks to purchase securities of
companies with relatively large market capitalizations relative to the
market in which they are traded.
SMALL CAP AST SMALL-CAP GROWTH (formerly AST State Street Research Small- Eagle Asset
GROWTH Cap Growth): seeks long-term capital growth. The Portfolio pursues Management,
its objective by primarily investing in the common stocks of small- Neuberger Berman
capitalization companies. Management, Inc.
SMALL CAP AST DEAM SMALL-CAP GROWTH: seeks maximum growth of investors' Deutsche Asset
GROWTH capital from a portfolio of growth stocks of smaller companies. The Management, Inc.
Portfolio pursues its objective, under normal circumstances, by primarily
investing at least 80% of its total assets in the equity securities of small-
sized companies included in the Russell 2000 Growth(R) Index.
SMALL CAP AST FEDERATED AGGRESSIVE GROWTH: seeks capital growth. The Portfolio Federated Equity
GROWTH pursues its investment objective by investing primarily in the stocks of Management
small companies that are traded on national security exchanges, the Company of
NASDAQ stock exchange and the over-the-counter market. Pennsylvania/
Federated Global
Investment
Management Corp.
SMALL CAP AST SMALL-CAP VALUE (formerly AST Gabelli Small-Cap Value): seeks to Integrity Asset
VALUE provide long-term capital growth by investing primarily in small- Management, Lee
capitalization stocks that appear to be undervalued. The Portfolio will Munder Capital
have a non-fundamental policy to invest, under normal circumstances, at Group, J.P. Morgan
least 80% of the value of its assets in small capitalization companies. Fleming Asset
Management
15
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
INVESTMENT OPTIONS CONTINUED
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- --------------------------------------------------------------------------------------------------------------------
SMALL CAP AST DEAM SMALL-CAP VALUE: seeks maximum growth of investors' capital. Deutsche Asset
VALUE The Portfolio pursues its objective under normal market conditions, by Management, Inc.
primarily investing at least 80% of its total assets in the equity securities
of small-sized companies included in the Russell 2000(R) Value Index.
MID CAP AST GOLDMAN SACHS MID-CAP GROWTH: seeks long-term capital growth. Goldman Sachs
GROWTH The Portfolio pursues its investment objective by investing primarily in Asset Management,
equity securities selected for their growth potential, and normally invests L.P.
at least 80% of the value of its assets in medium capitalization
companies.
MID CAP AST NEUBERGER BERMAN MID-CAP GROWTH: seeks capital growth. Under Neuberger Berman
GROWTH normal market conditions, the Portfolio primarily invests at least 80% of Management Inc.
its net assets in the common stocks of mid-cap companies. Under the
Portfolio's value-oriented investment approach, the Sub-advisor looks for
well-managed companies whose stock prices are undervalued and that
may rise before other investors realize their worth.
MID CAP VALUE AST NEUBERGER BERMAN MID-CAP VALUE: seeks capital growth. Under Neuberger Berman
normal market conditions, the Portfolio primarily invests at least 80% of Management Inc.
its net assets in the common stocks of mid-cap companies. Under the
Portfolio's value-oriented investment approach, the Sub-advisor looks for
well-managed companies whose stock prices are undervalued and that
may rise before other investors realize their worth.
SPECIALTY AST ALGER ALL-CAP GROWTH: seeks long-term capital growth. The Portfolio Fred Alger
invests primarily in equity securities, such as common or preferred stocks Management, Inc.
that are listed on U.S. exchanges or in the over-the-counter market. The
Portfolio may invest in the equity securities of companies of all sizes, and
may emphasize either larger or smaller companies at a given time based
on the Sub-advisor's assessment of particular companies and market
conditions.
SPECIALTY AST GABELLI ALL-CAP VALUE: seeks capital growth. The Portfolio pursues GAMCO Investors,
its objective by investing primarily in readily marketable equity securities Inc.
including common stocks, preferred stocks and securities that may be
converted at a later time into common stock. The Portfolio may invest in
the securities of companies of all sizes, and may emphasize either larger
or smaller companies at a given time based on the Sub-advisor's
assessment of particular companies and market conditions.
SPECIALTY AST T. ROWE PRICE NATURAL RESOURCES: seeks long-term capital growth T. Rowe Price
primarily through the common stocks of companies that own or develop Associates, Inc.
natural resources (such as energy products, precious metals and forest
products) and other basic commodities. The Portfolio normally invests
primarily (at least 80% of its total assets) in the common stocks of natural
resource companies whose earnings and tangible assets could benefit
from accelerating inflation.
16
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- --------------------------------------------------------------------------------------------------------------------
LARGE CAP AST ALLIANCEBERNSTEIN LARGE-CAP GROWTH (formerly AST Alliance Growth): Alliance Capital
GROWTH seeks long-term capital growth. The Portfolio invests at least 80% of its Management, L.P.
total assets in the equity securities of a limited number of large, carefully
selected, high-quality U.S. companies that are judged likely to achieve
superior earnings growth.
LARGE CAP AST MFS GROWTH: seeks long-term capital growth and future income. Massachusetts
GROWTH Under normal market conditions, the Portfolio invests at least 80% of its Financial Services
total assets in common stocks and related securities, such as preferred Company
stocks, convertible securities and depositary receipts, of companies that
the Sub-advisor believes offer better than average prospects for long-
term growth.
LARGE CAP AST MARSICO CAPITAL GROWTH: seeks capital growth. Income realization is Marsico Capital
GROWTH not an investment objective and any income realized on the Portfolio's Management, LLC
investments, therefore, will be incidental to the Portfolio's objective. The
Portfolio will pursue its objective by investing primarily in common stocks
of larger, more established companies.
LARGE CAP AST GOLDMAN SACHS CONCENTRATED GROWTH: seeks growth of capital in a Goldman Sachs
GROWTH manner consistent with the preservation of capital. Realization of income Asset Management,
is not a significant investment consideration and any income realized on L.P.
the Portfolio's investments, therefore, will be incidental to the Portfolio's
objective. The Portfolio will pursue its objective by investing primarily in
equity securities of companies that the Sub-advisor believes have
potential to achieve capital appreciation over the long-term.
LARGE CAP AST DEAM LARGE-CAP VALUE: seeks maximum growth of capital by Deutsche Asset
VALUE investing primarily in the value stocks of larger companies. The Portfolio Management, Inc.
pursues its objective, under normal market conditions, by primarily
investing at least 80% of the value of its assets in the equity securities of
large-sized companies included in the Russell 1000(R) Value Index.
LARGE CAP AST ALLIANCEBERNSTEIN GROWTH + VALUE: seeks capital growth by investing Alliance Capital
BLEND approximately 50% of its assets in growth stocks of large companies and Management, L.P.
approximately 50% of its assets in value stocks of large companies. The
Portfolio will invest primarily in common stocks of large U.S. companies
included in the Russell 1000(R) Index.
LARGE CAP AST ALLIANCEBERNSTEIN CORE VALUE (FORMERLY AST SANFORD BERNSTEIN CORE Alliance Capital
VALUE VALUE): seeks long-term capital growth by investing primarily in common Management, L.P.
stocks. The Sub-advisor expects that the majority of the Portfolio's assets will
be invested in the common stocks of large companies that appear to be
undervalued.
SPECIALTY AST COHEN & Steers Realty: seeks to maximize total return through Cohen & Steers
investment in real estate securities. The Portfolio pursues its investment Capital
objective by investing, under normal circumstances, at least 80% of its Management, Inc.
net assets in securities of real estate issuers.
17
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
INVESTMENT OPTIONS CONTINUED
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- -----------------------------------------------------------------------------------------------------------------
LARGE CAP AST ALLIANCEBERNSTEIN MANAGED INDEX 500 (formerly AST Sanford Alliance Capital
BLEND Bernstein Managed Index 500): seeks to outperform the S&P 500 through Management, L.P.
stock selection resulting in different weightings of common stocks
relative to the index. The Portfolio will invest, under normal
circumstances, at least 80% of its net assets in securities included
in the Standard & Poor's 500 Composite Stock Price Index.
LARGE CAP AST AMERICAN CENTURY INCOME & GROWTH: seeks capital growth with American Century
VALUE current income as a secondary objective. The Portfolio invests primarily Investment
in common stocks that offer potential for capital growth, and may, Management, Inc.
consistent with its investment objective, invest in stocks that offer
potential for current income.
LARGE CAP AST ALLIANCEBERNSTEIN GROWTH & INCOME: seeks long-term growth of Alliance Capital
VALUE capital and income while attempting to avoid excessive fluctuations in Management, L.P.
market value. The Portfolio normally will invest in common stocks (and
securities convertible into common stocks).
LARGE CAP AST HOTCHKIS & WILEY LARGE-CAP VALUE: seeks current income and Hotchkis and Wiley
VALUE long-term growth of income, as well as capital appreciation. The Portfolio Capital
invests, under normal circumstances, at least 80% of its net assets plus Management, LLC
borrowings for investment purposes in common stocks of large cap U.S.
companies that have a high cash dividend or payout yield relative to
the market.
ASSET AST GLOBAL ALLOCATION (formerly AST DeAM Global Allocation): seeks to Prudential
ALLOCATION/ obtain the highest potential total return consistent with a specified level Investments LLC
BALANCED of risk tolerance. The Portfolio seeks to achieve its investment objective
by investing in several other AST Portfolios ("Underlying Portfolios"). The
Portfolio intends its strategy of investing in combinations of Underlying
Portfolios to result in investment diversification that an investor could
otherwise achieve only by holding numerous investments.
ASSET AST AMERICAN CENTURY STRATEGIC BALANCED: seeks capital growth and American Century
ALLOCATION/ current income. The Sub-advisor intends to maintain approximately 60% Investment
BALANCED of the Portfolio's assets in equity securities and the remainder in bonds Management, Inc.
and other fixed income securities.
ASSET AST T. ROWE PRICE ASSET ALLOCATION: seeks a high level of total return by T. Rowe Price
ALLOCATION/ investing primarily in a diversified portfolio of fixed income and equity Associates, Inc.
BALANCED securities. The Portfolio normally invests approximately 60% of its total
assets in equity securities and 40% in fixed income securities. This mix
may vary depending on the Sub-advisor's outlook for the markets.
18
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST T. ROWE PRICE GLOBAL BOND: seeks to provide high current income T. Rowe Price
and capital growth by investing in high quality foreign and U.S. dollar- International, Inc.
denominated bonds. The Portfolio will invest at least 80% of its total
assets in fixed income securities, including high quality bonds issued or
guaranteed by U.S. or foreign governments or their agencies and by
foreign authorities, provinces and municipalities as well as investment
grade corporate bonds and mortgage and asset-backed securities of U.S.
and foreign issuers.
FIXED INCOME AST GOLDMAN SACHS HIGH YIELD: seeks a high level of current income Goldman Sachs
and may also consider the potential for capital appreciation. The Portfolio Asset Management,
invests, under normal circumstances, at least 80% of its net assets plus L.P.
any borrowings for investment purposes (measured at time of purchase)
("Net Assets") in high-yield, fixed-income securities that, at the time of
purchase, are non-investment grade securities.
FIXED INCOME AST LORD ABBETT BOND-DEBENTURE: seeks high current income and the Lord, Abbett & Co.
opportunity for capital appreciation to produce a high total return. To LLC
pursue its objective, the Portfolio will invest, under normal circumstances,
at least 80% of the value of its assets in fixed income securities and
normally invests primarily in high yield and investment grade debt
securities, securities convertible into common stock and preferred stocks.
FIXED INCOME AST PIMCO TOTAL RETURN BOND: seeks to maximize total return consistent Pacific Investment
with preservation of capital and prudent investment management. The Management
Portfolio will invest in a diversified portfolio of fixed-income securities Company LLC
of varying maturities. The average portfolio duration of the Portfolio (PIMCO)
generally will vary within a three- to six-year time frame based on the
Sub-advisor's forecast for interest rates.
FIXED INCOME AST PIMCO LIMITED MATURITY BOND: seeks to maximize total return Pacific Investment
consistent with preservation of capital and prudent investment Management
management. The Portfolio will invest in a diversified portfolio of fixed- Company LLC
income securities of varying maturities. The average portfolio duration of (PIMCO)
the Portfolio generally will vary within a one- to three-year time frame
based on the Sub-advisor's forecast for interest rates.
FIXED INCOME AST MONEY MARKET: seeks high current income while maintaining high Wells Capital
levels of liquidity. The Portfolio attempts to accomplish its objective by Management, Inc.
maintaining a dollar-weighted average maturity of not more than 90 days
and by investing in securities which have effective maturities of not more
than 397 days.
INTERNATIONAL GVIT DEVELOPING MARKETS: seeks long-term capital appreciation, under Gartmore Global
EQUITY normal conditions by investing at least 80% of its total assets in stocks of Asset Management
companies of any size based in the world's developing economies. Under Trust/Gartmore
normal market conditions, investments are maintained in at least six Global Partners
countries at all times and no more than 35% of total assets in any single
one of them.
19
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
INVESTMENT OPTIONS CONTINUED
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------------
LARGE CAP ADVANTAGE C&B LARGE CAP VALUE FUND (Formerly Equity Value): Seeks Wells Fargo Funds
VALUE maximum long-term total return, consistent with minimizing risk to Management, LLC
principal. The Portfolio will principally invest in large-capitalization
securities, which the Sub-advisor defines as securities of companies
with market capitalizations of $1 billion or more.
LARGE CAP ADVANTAGE EQUITY INCOME FUND (Formerly Equity Income): Seeks long-term Wells Fargo Funds
VALUE capital appreciation and above-average dividend income. The Portfolio Management, LLC
invests in the common stocks of large U.S. companies with strong return
potential and above-average dividend income. The Portfolio invests
principally in securities of companies with market capitalizations of
$3 billion or more.
INTERNATIONAL ADVANTAGE INTERNATIONAL CORE FUND (Formerly International Equity): Seeks Wells Fargo Funds
EQUITY long-term capital appreciation. The Portfolio will principally invest in Management, LLC
non-U.S. securities. The Portfolio will focus on companies with strong
growth potential that offer good relative values.
SMALL CAP ADVANTAGE SMALL CAP GROWTH FUND (Formerly Small Cap Growth): Seeks Wells Fargo Funds
GROWTH long-term capital appreciation. The Portfolio focuses on companies that Management, LLC
the Sub-advisor believes have above-average growth potential, or that
may be involved in new or innovative products, services and processes.
LARGE CAP ADVANTAGE LARGE COMPANY CORE FUND (Formerly Growth): Seeks total Wells Fargo Funds
BLEND return comprised of long-term capital appreciation and current income. Management, LLC
The Portfolio will invest at least 80% of the Fund's assets in securities of
large-capitalization companies, which are defined as those with market
capitalizations of $3 billion or more.
LARGE CAP ADVANTAGE LARGE COMPANY GROWTH FUND (Formerly Large Company Wells Fargo Funds
GROWTH Growth): Seeks long-term capital appreciation. The Portfolio invests in the Management, LLC
common stocks of large U.S. companies that the Sub-advisor believes
have superior growth potential. The Portfolio invests principally in
securities of companies with market capitalizations of $3 billion or more.
ASSET ADVANTAGE ASSET ALLOCATION FUND (formerly Asset Allocation): Seeks Wells Fargo Funds
ALLOCATION/ long-term total return, consistent with reasonable risk. The Portfolio Management, LLC
BALANCED invests in equity and fixed-income securities in varying proportions, with
an emphasis on equity securities. The Portfolio does not select individual
securities for investment, rather, it buys substantially all of the securities
of various indexes to replicate such indexes.
FIXED INCOME ADVANTAGE TOTAL RETURN BOND FUND (Formerly Total Return Bond): Seeks Wells Fargo Funds
total return consisting of income and capital appreciation. The Portfolio Management, LLC
invests principally in investment-grade debt securities, which include U.S.
Government obligations, corporate bonds, mortgage- and other asset-
backed securities and money market instruments. Under normal
circumstances, the Portfolio is expected to maintain an overall effective
duration between 4 and 5.5 years.
20
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- --------------------------------------------------------------------------------------------------------------------
MID CAP AIM VARIABLE INSURANCE FUNDS -- AIM V.I. DYNAMICS FUND -- SERIES I A I M Advisors,
GROWTH SHARES (Formerly an Invesco Fund): seeks long-term capital growth. The Inc.
Portfolio pursues its objective by normally investing at least 65% of its
assets in common stocks of mid-sized companies that are included in the
Russell Midcap Growth(R) Index at the time of purchase.
SPECIALTY AIM VARIABLE INSURANCE FUNDS -- AIM V.I. TECHNOLOGY FUND -- SERIES I A I M Advisors,
SHARES (formerly an INVESCO fund): seeks capital growth. The Portfolio Inc.
normally invests at least 80% of its net assets in the equity securities and
equity-related instruments of companies engaged in technology-related
industries. These include, but are not limited to, various applied
technologies, hardware, software, semiconductors, telecommunications
equipment and services and service-related companies in information
technology.
SPECIALTY AIM VARIABLE INSURANCE FUNDS -- AIM V.I. HEALTH SCIENCES FUND -- A I M Advisors,
SERIES I SHARES (formerly an INVESCO fund) (Effective July 1, 2005, AIM Inc.
V.I. Health Sciences Fund will be renamed AIM V.I. Global Health Care
Fund): seeks capital growth. The Portfolio normally invests at least 80% of
its net assets in the equity securities and equity-related instruments of
companies related to health care.
SPECIALTY AIM VARIABLE INSURANCE FUNDS -- AIM V.I. FINANCIAL SERVICES FUND -- A I M Advisors,
SERIES I SHARES (Formerly an Invesco Fund): seeks capital growth. The Inc.
Portfolio normally invests at least 80% of its net assets in the equity
securities and equity-related instruments of companies involved in the
financial services sector. These companies include, but are not limited to,
banks, insurance companies, investment and miscellaneous industries,
and suppliers to financial services companies.
INTERNATIONAL EVERGREEN VA INTERNATIONAL EQUITY (formerly Evergreen Va International Evergreen
EQUITY Growth): seeks long-term capital growth and secondarily, modest income. Investment
The Portfolio normally invests 80% of its assets in equity securities issued Management
by established, quality, non-U.S. companies located in countries with Company, LLC
developed markets and may purchase across all market capitalizations.
The Portfolio normally invests at least 65% of its assets in securities of
companies in at least three different countries (other than the U.S.).
SMALL CAP EVERGREEN VA GROWTH (formerly Evergreen Va Special Equity): seeks Evergreen
Growth long-term capital growth. The Portfolio invests at least 75% of its assets Investment
in common stocks of small- and medium-sized companies (i.e., companies Management
whose market capitalizations fall within the range of the Russell 2000(R) Company, LLC
Growth Index, at the time of purchase).
SPECIALTY EVERGREEN VA OMEGA: seeks long-term capital growth. The Portfolio Evergreen
invests primarily, and under normal conditions, substantially all of its Investment
assets in common stocks and securities convertible into common stocks Management
of U.S. companies across all market capitalizations. Company, LLC
21
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
INVESTMENT OPTIONS CONTINUED
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------
INTERNATIONAL PROFUND VP EUROPE 30: seeks daily investment results, before fees and ProFund Advisors
EQUITY expenses, that correspond to the daily performance of the ProFunds LLC
Europe 30 Index. The ProFunds Europe 30 Index, created by ProFund
Advisors, is composed of 30 companies whose principal offices are
located in Europe and whose securities are traded on U.S. exchanges or
on the NASDAQ as depositary receipts or ordinary shares.
SPECIALTY PROFUND VP ASIA 30: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the ProFunds Asia LLC
30 Index. The ProFunds Asia 30 Index, created by ProFund Advisors, is
composed of 30 companies whose principal offices are located in the
Asia/Pacific region, excluding Japan, and whose securities are traded
on U.S. exchanges or on the NASDAQ as depository receipts or ordinary
shares.
SPECIALTY PROFUND VP JAPAN: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Nikkei 225 LLC
Stock Average. Since the Japanese markets are not open when ProFund
VP Japan values its shares, ProFund VP Japan determines its success in
meeting this investment objective by comparing its daily return on a given
day with the daily performance of related futures contracts traded in the
United States related to the Nikkei 225 Stock Average.
SPECIALTY PROFUND VP BANKS: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones LLC
U.S. Banks Index. The Dow Jones U.S. Banks Index measures the
performance of the banking industry portion of the U.S. equity market.
SPECIALTY PROFUND VP BASIC MATERIALS: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the Dow LLC
Jones U.S. Basic Materials Sector Index. The Dow Jones U.S. Basic
Materials Sector Index measures the performance of the basic materials
economic sector of the U.S. equity market.
SPECIALTY PROFUND VP BIOTECHNOLOGY: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the Dow LLC
Jones U.S. Biotechnology Index. The Dow Jones U.S. Biotechnology
Index measures the performance of the biotechnology industry portion of
the U.S. equity market.
SPECIALTY PROFUND VP CONSUMER SERVICES (formerly ProFund VP Consumer Cyclical): ProFund Advisors
seeks daily investment results, before fees and expenses, that correspond LLC
to the daily performance of the Dow Jones U.S. Consumer Services
Index. The Dow Jones U.S. Consumer Services Index measures the
performance of consumer spending in the services industry of the U.S.
equity market.
22
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- -------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP CONSUMER GOODS (Formerly ProFund Vp Consumer Non- ProFund Advisors
Cyclical): seeks daily investment results, before fees and expenses, that LLC
correspond to the daily performance of the Dow Jones U.S. Consumer
Goods Index. The Dow Jones U.S. Consumer Goods Index measures the
performance of consumer spending in the goods industry of the U.S.
equity market.
SPECIALTY PROFUND VP OIL & Gas (formerly ProFund VP Energy): seeks daily ProFund Advisors
investment results, before fees and expenses, that correspond to the LLC
daily performance of the Dow Jones U.S. Oil & Gas Index. The Dow
Jones U.S. Oil & Gas Sector Index measures the performance of the
energy sector of the U.S. equity market.
SPECIALTY PROFUND VP FINANCIALS (Formerly ProFund Vp Financial): seeks daily ProFund Advisors
investment results, before fees and expenses, that correspond to the LLC
daily performance of the Dow Jones U.S. Financials Sector Index. The
Dow Jones U.S. Financials Sector Index measures the performance of
the financial services economic sector of the U.S. equity market.
SPECIALTY PROFUND VP HEALTH CARE (Formerly ProFund Vp Healthcare): seeks daily ProFund Advisors
investment results, before fees and expenses, that correspond to the LLC
daily performance of the Dow Jones U.S. Health Care Index. The Dow
Jones U.S. Health Care Index measures the performance of the
healthcare economic sector of the U.S. equity market.
SPECIALTY PROFUND VP INDUSTRIALS (Formerly ProFund Vp Industrial): seeks daily ProFund Advisors
investment results, before fees and expenses, that correspond to the daily LLC
performance of the Dow Jones U.S. Industrials Index. The Dow Jones U.S.
Industrials Index measures the performance of the industrial economic
sector of the U.S. equity market.
SPECIALTY PROFUND VP INTERNET: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones LLC
Composite Internet Index. The Dow Jones Composite Internet Index
measures the performance of stocks in the U.S. equity markets that
generate the majority of their revenues from the Internet.
SPECIALTY PROFUND VP PHARMACEUTICALS: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the Dow LLC
Jones U.S. Pharmaceuticals Index. The Dow Jones U.S. Pharmaceuticals
Index measures the performance of the pharmaceuticals industry portion
of the U.S. equity market.
SPECIALTY PROFUND VP PRECIOUS METALS: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the Dow LLC
Jones Precious Metals Index. The Dow Jones Precious Metals Index
measures the performance of the precious metals mining industry.
23
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
INVESTMENT OPTIONS CONTINUED
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- --------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP REAL ESTATE: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the Dow LLC
Jones U.S. Real Estate Index. The Dow Jones U.S. Real Estate Index
measures the performance of the real estate industry portion of the U.S.
equity market.
SPECIALTY PROFUND VP SEMICONDUCTOR: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the Dow LLC
Jones U.S. Semiconductor Index. The Dow Jones U.S. Semiconductor
Index measures the performance of the semiconductor industry portion
of the U.S. equity market.
SPECIALTY PROFUND VP TECHNOLOGY: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones LLC
U.S. Technology Sector Index. The Dow Jones U.S. Technology Sector
Index measures the performance of the technology sector of the U.S.
equity market.
SPECIALTY PROFUND VP TELECOMMUNICATIONS: seeks daily investment results, before ProFund Advisors
fees and expenses, that correspond to the daily performance of the Dow LLC
Jones U.S. Telecommunications Sector Index. The Dow Jones U.S.
Telecommunications Sector Index measures the performance of the
telecommunications economic sector of the U.S. equity market.
SPECIALTY PROFUND VP UTILITIES: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones LLC
U.S. Utilities Sector Index. The Dow Jones U.S. Utilities Sector Index
measures the performance of the utilities economic sector of the U.S.
equity market.
SPECIALTY PROFUND VP BULL: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the S&P 500(R) Index. LLC
SPECIALTY PROFUND VP BEAR: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the inverse (opposite) of the daily LLC
performance of the S&P 500(R) Index. If ProFund VP Bear is successful in
meeting its objective, its net asset value should gain approximately the
same, on a percentage basis, as any decrease in the S&P 500(R) Index
when the Index declines on a given day. Conversely, its net asset value
should lose approximately the same, on a percentage basis, as any
increase in the Index when the Index rises on a given day.
24
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP ULTRABULL: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to twice (200%) the daily performance of the LLC
S&P 500(R) Index. Prior to May 1, 2003, ProFund VP UltraBull was named
"ProFund VP Bull Plus" and sought daily investment results that
corresponded to one and one-half times (150%) the daily performance of
the S&P 500(R) Index. If ProFund VP UltraBull is successful in meeting its
objective, its net asset value should gain approximately twice as much,
on a percentage basis, as the S&P 500(R) Index when the Index rises on a
given day. Conversely, its net asset value should lose approximately twice
as much, on a percentage basis, as the Index when the Index declines
on a given day.
SPECIALTY PROFUND VP OTC: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the NASDAQ-100 LLC
Index(R). "OTC" in the name of ProFund VP OTC refers to securities that do
not trade on a U.S. securities exchange registered under the Securities
Exchange Act of 1934.
SPECIALTY PROFUND VP SHORT OTC: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the inverse (opposite) of the daily LLC
performance of the NASDAQ-100 Index(R). If ProFund VP Short OTC is
successful in meeting its objective, its net asset value should gain
approximately the same, on a percentage basis, as any decrease in the
NASDAQ-100 Index(R) when the Index declines on a given day. Conversely,
its net asset value should lose approximately the same, on a percentage
basis, as any increase in the Index when the Index rises on a given day.
"OTC" in the name of ProFund VP Short OTC refers to securities that do
not trade on a U.S. securities exchange registered under the Securities
Exchange Act of 1934.
SPECIALTY PROFUND VP ULTRAOTC: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to twice (200%) the daily performance of the LLC
NASDAQ-100 Index(R). If ProFund VP UltraOTC is successful in meeting its
objective, its net asset value should gain approximately twice as much,
on a percentage basis, as the NASDAQ-100 Index(R) when the Index rises
on a given day. Conversely, its net asset value should lose approximately
twice as much, on a percentage basis, as the Index when the Index
declines on a given day. "OTC" in the name of ProFund VP UltraOTC
refers to securities that do not trade on a U.S. securities exchange
registered under the Securities Exchange Act of 1934.
MID CAP VALUE PROFUND VP MID-CAP VALUE: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the S&P LLC
MidCap 400/Barra Value Index(R). The S&P MidCap400/Barra Value Index(R)
is a float adjusted market capitalization weighted index comprised of the
stocks in the S&P MidCap 400 Index that have comparatively low price-
to-book ratios as determined before each semiannual rebalance date.
25
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
INVESTMENT OPTIONS CONTINUED
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- -----------------------------------------------------------------------------------------------------------------
MID CAP PROFUND VP MID-CAP GROWTH: seeks daily investment results, before fees ProFund Advisors
GROWTH and expenses, that correspond to the daily performance of the S&P LLC
MidCap 400/Barra Growth Index(R). The S&P MidCap 400/Barra Growth
Index(R) is a float adjusted market capitalization weighted index comprised
of the stocks in the S&P MidCap 400 Index(R) that have comparatively
high price-to-book ratios as determined before each semiannual
rebalance date.
SPECIALTY PROFUND VP ULTRAMID-CAP: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to twice (200%) the daily performance of the LLC
S&P MidCap 400 Index(R). If ProFund VP UltraMid-Cap is successful in
meeting its objective, its net asset value should gain approximately twice
as much, on a percentage basis, as the S&P MidCap 400 Index(R) when
the Index rises on a given day. Conversely, its net asset value should lose
approximately twice as much, on a percentage basis, as the Index when
the Index declines on a given day.
SMALL CAP PROFUND VP SMALL-CAP VALUE: seeks daily investment results, before fees ProFund Advisors
VALUE and expenses, that correspond to the daily performance of the S&P LLC
SmallCap 600/Barra Value Index(R). The S&P SmallCap 600/Barra Value
Index(R) is a float adjusted market capitalization weighted index comprised
of the stocks in the S&P SmallCap 600/Barra Value Index(R) that have
comparatively low price-to-book ratios as determined before each
semiannual rebalance date.
SMALL CAP PROFUND VP SMALL-CAP GROWTH: seeks daily investment results, before ProFund Advisors
GROWTH fees and expenses, that correspond to the daily performance of the S&P LLC
SmallCap 600/Barra Growth Index(R). The S&P SmallCap 600/Barra Growth
Index(R) is a float adjusted market capitalization weighted index comprised
of the stocks in the S&P SmallCap 600/Barra Growth Index(R) that have
comparatively high price-to-book ratios as determined before each
semiannual rebalance date.
SPECIALTY PROFUND VP ULTRASMALL-CAP: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to twice (200%) the daily performance of LLC
the Russell 2000(R) Index. If ProFund VP UltraSmall-Cap is successful in
meeting its objective, its net asset value should gain approximately twice
as much, on a percentage basis, as the Russell 2000 Index(R) when the
Index rises on a given day. Conversely, its net asset value should lose
approximately twice as much, on a percentage basis, as the Index when
the Index declines on a given day.
26
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- --------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP U.S. GOVERNMENT PLUS: seeks daily investment results, before ProFund Advisors
fees and expenses, that correspond to one and one-quarter times (125%) LLC
the daily price movement of the most recently issued 30-year U.S.
Treasury bond ("Long Bond"). In accordance with its stated objective,
the net asset value of ProFund VP U.S. Government Plus generally should
decrease as interest rates rise. If ProFund VP U.S. Government Plus is
successful in meeting its objective, its net asset value should gain
approximately one and one-quarter times (125%) as much, on a
percentage basis, as any daily increase in the price of the Long Bond on
a given day. Conversely, its net asset value should lose approximately
one and one-quarter as much, on a percentage basis, as any daily
decrease in the price of the Long Bond on a given day.
SPECIALTY PROFUND VP RISING RATES OPPORTUNITY: seeks daily investment results, ProFund Advisors
before fees and expenses, that correspond to one and one-quarter times LLC
(125%) the inverse (opposite) of the daily price movement of the most
recently issued 30-year U.S. Treasury bond ("Long Bond"). In accordance
with its stated objective, the net asset value of ProFund VP Rising Rates
Opportunity generally should decrease as interest rates fall. If ProFund
VP Rising Rates Opportunity is successful in meeting its objective, its net
asset value should gain approximately one and one-quarter times as
much, on a percentage basis, as any daily decrease in the Long Bond on
a given day. Conversely, its net asset value should lose approximately
one and one-quarter times as much, on a percentage basis, as any daily
increase in the Long Bond on a given day.
LARGE CAP PROFUND VP LARGE-CAP GROWTH: seeks daily investment results, before ProFund Advisors
GROWTH fees and expenses, that correspond to the daily performance of the S&P LLC
500/Barra Growth Index(R). The S&P 500/Barra Growth Index is a float
adjusted market capitalization weighted index comprised of the stocks in
the S&P 500 Index that have comparatively high price-to-book ratios as
determined before each semiannual rebalance date.
LARGE CAP PROFUND VP LARGE-CAP VALUE: seeks daily investment results, before fees ProFund Advisors
VALUE and expenses, that correspond to the daily performance of the S&P LLC
500/Barra Value Index(R). The S&P 500/Barra Value Index is a float
adjusted market capitalization weighted index comprised of the stocks in
the S&P 500 Index that have comparatively low price-to-book ratios as
determined before each semiannual rebalance date.
SPECIALTY PROFUND VP SHORT SMALL-CAP: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the inverse (opposite) of the daily LLC
performance of the Russell 2000(R) Index. If ProFund VP Short Small-Cap
is successful in meeting its objective, its net asset value should gain
approximately the same amount, on a percentage basis, as any decrease
in the Russell 2000 Index when the Index declines on a given day.
Conversely, its net asset value should lose approximately the same
amount, on a percentage basis, as any increase in the Index when the
Index rises on a given day.
27
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
INVESTMENT OPTIONS CONTINUED
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP SHORT MID-CAP: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the inverse (opposite) of the daily LLC
performance of the S&P MidCap 400 Index(R). If ProFund VP Short Mid-Cap
is successful in meeting its objective, its net asset value should gain
approximately the same amount, on a percentage basis, as any decrease
in the S&P MidCap 400 Index when the Index declines on a given day.
Conversely, its net asset value should lose approximately the same
amount, on a percentage basis, as any increase in the Index when the
Index rises on a given day.
SPECIALTY ACCESS VP HIGH YIELD: seeks to provide investment results that ProFund Advisors
correspond generally to the total return of the high yield market LLC
consistent with maintaining reasonable liquidity. The Access VP High
Yield, created by ProFund Advisors, will achieve its high yield exposure
primarily through CDSs but may invest in high yield debt instruments
("junk bonds"), Interest rate swap agreements and futures contracts, and
other debt and money market instruments without limitation, consistent
with applicable regulations. Under normal market conditions, the fund will
invest at least 80% of its net assets in credit default swaps and other
financial instruments that in combination have economic characteristics
similar to the high yield debt market and/or in high yield debt securities.
The fund seeks to maintain exposure to the high yield bond markets
regardless of market conditions and without taking defensive positions.
SPECIALTY FIRST TRUST(R) 10 UNCOMMON VALUES: seeks to provide above-average capital First Trust Advisors
appreciation. The Portfolio seeks to achieve its objective by investing L.P.
primarily in the ten common stocks selected by the Investment Policy
Committee of Lehman Brothers Inc. ("Lehman Brothers") with the
assistance of the Research Department of Lehman Brothers which, in
their opinion have the greatest potential for capital appreciation during
the next year. The stocks included in the Portfolio are adjusted annually
on or about July 1st in accordance with the selections of Lehman
Brothers.
SPECIALTY TARGET MANAGED VIP: seeks to provide above-average total return. The First Trust Advisors
Portfolio seeks to achieve its objective by investing in common stocks of L.P.
the most attractive companies that are identified by a model based on six
uniquely specialized strategies -- The Dowsm DART 5, the European
Target 20, the Nasdaq(R) Target 15, the S&P Target 24, the Target Small
Cap and the Value Line(R) Target 25.
SPECIALTY THE DOW(SM) DART 10: seeks to provide above-average total return. The First Trust Advisors
Portfolio seeks to achieve its objective by investing in common stocks L.P.
issued by companies that are expected to provide income and to have
the potential for capital appreciation. The Portfolio invests primarily in the
common stocks of the ten companies in the DJIA that have the highest
combined dividend yields and buyback ratios on or about the applicable
stock selection date.
28
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------------
SPECIALTY GLOBAL DIVIDEND TARGET 15 (formerly Global Target 15): seeks to provide First Trust Advisors
above-average total return. The Portfolio seeks to achieve its objective by L.P.
investing in common stocks issued by companies that are expected to
provide income and to have the potential for capital appreciation. The
Portfolio invests primarily in the common stocks of the companies which
are components of the DJIA, the Financial Times Industrial Ordinary
Share Index ("FT Index") and the Hang Seng Index. The Portfolio
primarily consists of common stocks of the five companies with the
lowest per share stock prices of the ten companies in each of the DJIA,
FT Index and Hang Seng Index, respectively, that have the highest
dividend yield in the respective index on or about the applicable stock
selection date.
SPECIALTY S&P(R) TARGET 24: seeks to provide above-average total return. The First Trust Advisors
Portfolio seeks to achieve its objective by investing in common stocks L.P.
issued by companies that have the potential for capital appreciation. The
Portfolio invests primarily in the common stocks of twenty-four companies
selected from a subset of the stocks included in the Standard & Poor's
500 Composite Stock Price Index(R). The subset of stocks will be taken
from each of the eight largest economic sectors of the S&P 500 Index(R)
based on the sector's market capitalization.
SPECIALTY THE DOW (SM) TARGET DIVIDEND seeks to provide above-average total return. First Trust Advisors
The Portfolio seeks to achieve its objective by investing in common L.P.
stocks issued by companies that are expected to provide income and to
have the potential for capital appreciation. The Portfolio invests primarily
in the 20 common stocks from the Dow Jones Select Dividend Index (SM)
with the best overall ranking on both the change in return on assets over
the last 12 months and price-to-book ratio as of the close of business on
or about the applicable stock selection date.
SPECIALTY VALUE LINE(R) TARGET 25: seeks to provide above-average capital First Trust Advisors
appreciation. The Portfolio seeks to achieve its objective by investing in L.P.
25 of the 100 common stocks that Value Line(R) gives a #1 ranking for
Timeliness[(TM)] which have recently exhibited certain positive financial
attributes as of the close of business on the applicable stock selection
date through a multi-step process.
SPECIALTY NASDAQ(R) TARGET 15: seeks to provide above-average total return. The First Trust Advisors
Portfolio seeks to achieve its objective by investing in common stocks L.P.
issued by companies that are expected to have the potential for capital
appreciation. The Portfolio invests primarily in the common stocks of
fifteen companies selected from a pre-screened subset of the stocks
included in the Nasdaq-100 Index(R) on or about the applicable stock
selection date through a multi-step process.
29
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
INVESTMENT OPTIONS CONTINUED
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- -------------------------------------------------------------------------------------------------------------------
INTERNATIONAL THE PRUDENTIAL SERIES FUND, INC. -- SP WILLIAM BLAIR INTERNATIONAL Prudential
EQUITY GROWTH: Seeks long-term capital appreciation. The Portfolio invests Investments LLC/
primarily in stocks of large and medium-sized companies located in William Blair &
countries included in the Morgan Stanley Capital International All Country Company, LLC
World Ex-U.S. Index. Under normal market conditions, the portfolio invests
at least 80% of its net assets in equity securities. The Portfolio's assets
normally will be allocated among not fewer than six different countries
and will not concentrate investments in any particular industry.
"Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard & Poor's 500," and
"500" are trademarks of the McGraw-Hill Companies, Inc. and have been licensed
for use by American Skandia Investment Services, Incorporated. The Portfolio is
not sponsored, endorsed, sold or promoted by Standard & Poor's and Standard &
Poor's makes no representation regarding the advisability of investing in the
Portfolio.
"Dow Jones Industrial Average(SM)", "DJIA(SM)", "Dow Industrials(SM)", "The
Dow(SM)", and "The Dow 10(SM)", are service marks of Dow Jones & Company, Inc.
("Dow Jones") and have been licensed for use for certain purposes by First Trust
Advisors L.P. ("First Trust"). The portfolios, including, and in particular the
Target Managed VIP portfolio and The Dow(SM) DART 10 portfolio, are not
endorsed, sold or promoted by Dow Jones, and Dow Jones makes no representation
regarding the advisability of investing in such products.
"Standard & Poor's," "S&P," "S&P 500," "Standard & Poor's 500," and "500" are
trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by
First Trust on behalf of the S&P Target 24 Portfolio and the Target Managed VIP
Portfolio. The Portfolios are not sponsored, endorsed, managed, sold or promoted
by Standard & Poor's and Standard & Poor's makes no representation regarding the
advisability of investing in the Portfolio.
"The Nasdaq 100(R)", "Nasdaq-100 Index(R)", "Nasdaq Stock Market(R)", and
"Nasdaq(R)" are trade or service marks of The Nasdaq Stock Market, Inc. (which
with its affiliates are the "Corporations") and have been licensed for use by
First Trust. The Nasdaq Target 15 Portfolio and Target Managed VIP Portfolio
have not been passed on by the Corporations as to its legality or suitability.
The Nasdaq Target 15 Portfolio and Target Managed VIP Portfolio are not issued,
endorsed, sponsored, managed, sold or promoted by the Corporations. The
Corporations make no warranties and bear no liability with respect to the Nasdaq
Target 15 Portfolio or the Target Managed VIP Portfolio.
"Value Line(R)," "The Value Line Investment Survey," and "Value Line
Timeliness(TM) Ranking System" are registered trademarks of Value Line
Securities, Inc. or Value Line Publishing, Inc. The Target Managed VIP(R)
Portfolio is not sponsored, recommended, sold or promoted by Value Line
Publishing, Inc., Value Line, Inc. or Value Line Securities, Inc. ("Value
Line"). Value Line makes no representation regarding the advisability of
investing in the Portfolio.
The First Trust(R) 10 Uncommon Values portfolio is not sponsored or created by
Lehman Brothers, Inc. ("Lehman Brothers"). Lehman Brothers' only relationship to
First Trust is the licensing of certain trademarks and trade names of Lehman
Brothers and of the "10 Uncommon Values" which is determined, composed and
calculated by Lehman Brothers without regard to First Trust or the First
Trust(R) 10 Uncommon Values portfolio.
Dow Jones has no relationship to the ProFunds VP, other than the licensing of
the Dow Jones sector indices and its service marks for use in connection with
the ProFunds VP. The ProFunds VP are not sponsored, endorsed, sold, or promoted
by Standard & Poor's or NASDAQ, and neither Standard & Poor's nor NASDAQ makes
any representations regarding the advisability of investing in the ProFunds VP.
WHAT ARE THE FIXED ALLOCATIONS?
We offer fixed Allocations of different durations during the accumulation
period. These "Fixed Allocations" earn a guaranteed fixed rate of interest for a
specified period of time, called the "Guarantee Period." In most states, we
offer Fixed Allocations with Guarantee Periods from 1 to 10 years. We may also
offer special purpose Fixed Allocations for use with certain optional investment
programs. We guarantee the fixed rate for the entire Guarantee Period. However,
if you withdraw or transfer Account Value before the end of the Guarantee
Period, we will adjust the value of your withdrawal or transfer based on a
formula, called a "Market Value Adjustment." The Market Value Adjustment can
either be positive or negative, depending on the rates that are currently being
credited on Fixed Allocations. Please refer to the section entitled "How does
the Market Value Adjustment Work?" for a description of the formula along with
examples of how it is calculated. You may allocate Account Value to more than
one Fixed Allocation at a time.
Fixed Allocations may not be available in all states. Availability of
Fixed Allocations is subject to change and may differ by state and by the
annuity product you purchase. Please call American Skandia at 1-800-680-8920 to
determine availability of Fixed Allocations in your state and for your annuity
product.
30
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
FEES AND CHARGES
The charges under the contracts are designed to cover, in the aggregate, our
direct and indirect costs of selling, administering and providing benefits under
the contracts. They are also designed, in the aggregate, to compensate us for
the risks of loss we assume pursuant to the contracts. If, as we expect, the
charges that we collect from the contracts exceed our total costs in connection
with the contracts, we will earn a profit. Otherwise we will incur a loss. For
example, American Skandia may make a profit on the Insurance Charge if, over
time, the actual costs of providing the guaranteed insurance obligations under
the Annuity are less than the amount we deduct for the Insurance Charge. To the
extent we make a profit on the Insurance Charge, such profit may be used for any
other corporate purpose, including payment of other expenses that American
Skandia incurs in promoting, distributing, issuing and administering the Annuity
and to offset a portion of the costs associated with offering Credits which are
funded through American Skandia's general account. The Insurance Charge is
deducted against your Annuity's Account Value, which includes the amount of any
Credits we apply to your Purchase Payments and any increases or decreases in
your Account Value based on market fluctuations of the Sub-accounts.
The rates of certain of our charges have been set with reference to
estimates of the amount of specific types of expenses or risks that we will
incur. In most cases, this prospectus identifies such expenses or risks in the
name of the charge; however, the fact that any charge bears the name of, or is
designed primarily to defray a particular expense or risk does not mean that the
amount we collect from that charge will never be more than the amount of such
expense or risk, nor does it mean that we may not also be compensated for such
expense or risk out of any other charges we are permitted to deduct by the terms
of the contract.
A portion of the proceeds that American Skandia receives from charges that
apply solely to the variable investment options may include amounts based on
market appreciation of the variable investment option values, including
appreciation on amounts that represent Credits.
WHAT ARE THE CONTRACT FEES AND CHARGES?
CONTINGENT DEFERRED SALES CHARGE: We do not deduct a sales charge from Purchase
Payments you make to your Annuity. However, we may deduct a CDSC if you
surrender your Annuity or when you make a partial withdrawal. The CDSC
reimburses us for expenses related to sales and distribution of the Annuity,
including commissions, marketing materials and other promotional expenses. The
CDSC is calculated as a percentage of your Purchase Payment being surrendered or
withdrawn during the applicable Annuity Year. For purposes of calculating the
CDSC, we consider the year following the Issue Date of your Annuity as Year 1.
The amount of the CDSC decreases over time, measured from the Issue Date of the
Annuity. The CDSC percentages are shown below.
YEARS 1 2 3 4 5 6 7 8 9 10 11+
- -----------------------------------------------------------------------------------------------------------
CHARGE (%) 9.0 9.0 8.5 8.0 7.0 6.0 5.0 4.0 3.0 2.0 0.0
THE CDSC PERIOD IS BASED ON THE ISSUE DATE OF THE ANNUITY, NOT ON THE DATE
EACH PURCHASE PAYMENT IS APPLIED TO THE ANNUITY. Purchase Payments applied to
the Annuity after the Issue Date do not have their own CDSC period. Under
certain circumstances, during the first ten (10) Annuity Years, you can withdraw
a limited amount from your Annuity without paying a CDSC. This is referred to as
a "Free Withdrawal." Free Withdrawals are not treated as a withdrawal of
Purchase Payments for purposes of calculating the CDSC on a subsequent
withdrawal or surrender. Withdrawals of amounts greater than the maximum Free
Withdrawal amount are treated as a withdrawal of Purchase Payments and will be
assessed a CDSC during Annuity Years 1 through 10. For purposes of calculating
the CDSC on a surrender, the Purchase Payments being withdrawn may be greater
than your remaining Account Value or the amount of your withdrawal request. This
is most likely to occur if you have made prior withdrawals under the Free
Withdrawal provision or if your Account Value has declined in value due to
negative market performance.
We may waive the CDSC under certain medically-related circumstances or
when taking a Minimum Distribution from an Annuity purchased as a "qualified"
investment. Free Withdrawals, Medically-Related Surrenders and Minimum
Distributions are each explained more fully in the section entitled "Access to
Your Account Value".
TRANSFER FEE: Currently, you may make twenty (20) free transfers between
investment options each Annuity Year. We will charge $10.00 for each transfer
after the twentieth in each Annuity Year. We do not consider transfers made as
part of a dollar cost averaging, automatic rebalancing or asset allocation
program when we count the twenty free transfers. All transfers made on the same
day will be treated as one (1) transfer. Renewals or transfers of Account Value
from a Fixed Allocation at the end of its Guarantee Period are not subject to
the Transfer Fee and are not counted toward the twenty free transfers. We may
reduce the number of free transfers allowable each Annuity Year (subject to a
minimum of eight) without charging
31
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
FEES AND CHARGES CONTINUED
a Transfer Fee unless you make use of electronic means to transmit your transfer
requests. We may eliminate the Transfer Fee for transfer requests transmitted
electronically or through other means that reduce our processing costs. If
enrolled in any program that does not permit transfer requests to be transmitted
electronically, the Transfer Fee will not be waived.
ANNUAL MAINTENANCE FEE: During the accumulation period we deduct an Annual
Maintenance Fee. The Annual Maintenance Fee is $35.00 or 2% of your Account
Value invested in the variable investment options, whichever is less. This fee
will be deducted annually on the anniversary of the Issue Date of your Annuity
or, if you surrender your Annuity during the Annuity Year, the fee is deducted
at the time of surrender. We may increase the Annual Maintenance Fee. However,
any increase will only apply to Annuities issued after the date of the increase.
TAX CHARGE: Several states and some municipalities charge premium taxes or
similar taxes on annuities that we are required to pay. The amount of tax will
vary from jurisdiction to jurisdiction and is subject to change. The tax charge
currently ranges up to 3 1/2% of your premium and is designed to approximate the
taxes that we are required to pay. We generally will deduct the charge at the
time the tax is imposed, but may also decide to deduct the charge from each
Purchase Payment at the time of a withdrawal or surrender of your Annuity or at
the time you elect to begin receiving annuity payments. We may assess a charge
against the Sub-accounts and the Fixed Allocations equal to any taxes which may
be imposed upon the separate accounts.
We will pay company income taxes on the taxable corporate earnings created
by this separate account product. While we may consider company income taxes
when pricing our products, we do not currently include such income taxes in the
tax charges you pay under the contract. We will periodically review the issue of
charging for these taxes and may impose a charge in the future.
In calculating our corporate income tax liability, we derive certain
corporate income tax benefits associated with the investment of company assets,
including separate account assets, which are treated as company assets under
applicable income tax law. These benefits reduce our overall corporate income
tax liability. Under current law, such benefits may include foreign tax credits
and corporate dividends received deductions. We do not pass these tax benefits
through to holders of the separate account annuity contracts because (i) the
contract owners are not the owners of the assets generating these benefits under
applicable income tax law and (ii) we do not currently include company income
taxes in the tax charges you pay under the contract.
WHAT CHARGES APPLY SOLELY TO THE VARIABLE INVESTMENT OPTIONS?
INSURANCE CHARGE: We deduct an Insurance Charge daily. The charge is assessed
against the average daily assets allocated to the Sub-accounts and is equal to
0.65% on an annual basis. The Insurance Charge is the combination of the
Mortality & Expense Risk Charge (0.50%) and the Administration Charge (0.15%).
The Insurance Charge is intended to compensate American Skandia for providing
the insurance benefits under the Annuity, including the Annuity's basic death
benefit that provides guaranteed benefits to your beneficiaries even if the
market declines and the risk that persons we guarantee annuity payments to will
live longer than our assumptions. The charge also covers administrative costs
associated with providing the Annuity benefits, including preparation of the
contract, confirmation statements, annual account statements and annual reports,
legal and accounting fees as well as various related expenses. Finally, the
charge covers the risk that our assumptions about the mortality risks and
expenses under this Annuity are incorrect and that we have agreed not to
increase these charges over time despite our actual costs. We may increase the
portion of the total Insurance Charge that is deducted for administrative costs;
however, any increase will only apply to Annuities issued after the date of the
increase.
The Insurance Charge is not deducted against assets allocated to a Fixed
Allocation. However, the amount we credit to Fixed Allocations may also reflect
similar assumptions about the insurance guarantees provided under the Annuity.
DISTRIBUTION CHARGE: We deduct a Distribution Charge daily. The charge is
assessed against the average assets allocated to the Sub-accounts and is equal
to 1.00% on an annual basis in Annuity Years 1 through 10. After the end of the
first ten Annuity Years, the 1.00% charge for distribution will no longer be
assessed. The Distribution Charge is intended to compensate us for a portion of
our acquisition expenses under the Annuity, including promotion and distribution
of the Annuity and costs associated with offering Credits which are funded
through American Skandia's general account. The Distribution Charge is deducted
against your Annuity's Account Value, which includes the amount of any Credits
we apply to your Purchase Payments and any increases or decreases in your
32
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Account Value based on market fluctuations of the Sub-accounts will affect the
charge.
OPTIONAL BENEFITS FOR WHICH WE ASSESS A CHARGE SOLELY AGAINST THE VARIABLE
INVESTMENT OPTIONS: If you elect to purchase certain optional benefits, we will
deduct an additional charge on a daily basis solely from your Account Value
allocated to the Sub-accounts. The additional charge is included in the daily
calculation of the Unit Price for each Sub-account. We may assess charges for
other optional benefits on a different basis as described elsewhere in the
prospectus. Please refer to the sections entitled "Living Benefit Programs" and
"Death Benefit" for a description of the charge for each Optional Benefit.
WHAT FEES AND EXPENSES ARE INCURRED BY THE PORTFOLIOS?
Each Portfolio incurs total annual operating expenses comprised of an investment
management fee, other expenses and any distribution and service (12b-1) fees
that may apply. These fees and expenses are reflected daily by each Portfolio
before it provides American Skandia with the net asset value as of the close of
business each day. More detailed information about fees and expenses can be
found in the prospectuses for the Portfolios.
WHAT CHARGES APPLY TO THE FIXED ALLOCATIONS?
No specific fee or expenses are deducted when determining the rate we credit to
a Fixed Allocation. However, for some of the same reasons that we deduct the
Insurance Charge against Account Value allocated to the Sub-accounts, we also
take into consideration mortality, expense, administration, profit and other
factors in determining the interest rates we credit to Fixed Allocations. Any
CDSC or Tax Charge applies to amounts that are taken from the variable
investment options or the Fixed Allocations. A Market Value Adjustment may also
apply to transfers, certain withdrawals, surrender or annuitization from a Fixed
Allocation.
WHAT CHARGES APPLY IF I CHOOSE AN ANNUITY PAYMENT OPTION?
If you select a fixed payment option, the amount of each fixed payment will
depend on the Account Value of your Annuity when you elected to annuitize. There
is no specific charge deducted from these payments; however, the amount of each
annuity payment reflects assumptions about our insurance expenses. If you select
a variable payment option that we may offer, then the amount of your benefits
will reflect changes in the value of your Annuity and will be subject to charges
that apply under the variable immediate annuity option. Also, a tax charge may
apply (see "Tax Charge" above).
EXCEPTIONS/REDUCTIONS TO FEES AND CHARGES
We may reduce or eliminate certain fees and charges or alter the manner in which
the particular fee or charge is deducted. For example, we may reduce the amount
of the CDSC or the length of time it applies, reduce or eliminate the amount of
the Annual Maintenance Fee or reduce the portion of the total Insurance Charge
that is deducted as an Administration Charge. Generally, these types of changes
will be based on a reduction to our sales, maintenance or administrative
expenses due to the nature of the individual or group purchasing the Annuity.
Some of the factors we might consider in making such a decision are: (a) the
size and type of group; (b) the number of Annuities purchased by an Owner; (c)
the amount of Purchase Payments or likelihood of additional Purchase Payments;
and/or (d) other transactions where sales, maintenance or administrative
expenses are likely to be reduced. We will not discriminate unfairly between
Annuity purchasers if and when we reduce any fees and charges.
33
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
PURCHASING YOUR ANNUITY
WHAT ARE OUR REQUIREMENTS FOR PURCHASING THE ANNUITY?
INITIAL PURCHASE PAYMENT: You must make a minimum initial Purchase Payment of
$10,000. However, if you decide to make payments under a systematic investment
or "bank drafting" program, we will accept a lower initial Purchase Payment
provided that, within the first Annuity Year, you make at least $10,000 in total
Purchase Payments.
Where allowed by law, we must approve any initial and additional Purchase
Payments of $1,000,000 or more. We may apply certain limitations and/or
restrictions on the Annuity as a condition of our acceptance, including limiting
the liquidity features or the Death Benefit protection provided under the
Annuity, limiting the right to make additional Purchase Payments, changing the
number of transfers allowable under the Annuity or restricting the Sub-accounts
or Fixed Allocations that are available. Other limitations and/or restrictions
may apply.
Except as noted below, Purchase Payments must be submitted by check drawn
on a U.S. bank, in U.S. dollars, and made payable to American Skandia. Purchase
Payments may also be submitted via 1035 exchange or direct transfer of funds.
Under certain circumstances, Purchase Payments may be transmitted to American
Skandia via wiring funds through your investment professional's broker-dealer
firm. Additional Purchase Payments may also be applied to your Annuity under an
arrangement called "bank drafting" where you authorize us to deduct money
directly from your bank account. We call our bank drafting program "Auto Saver".
We may reject any payment if it is received in an unacceptable form. Our
acceptance of a check is subject to our ability to collect funds.
AGE RESTRICTIONS: The Owner must be age 75 or under as of the Issue Date
of the Annuity. If the Annuity is owned jointly, the oldest of the Owners must
be age 75 or under on the Issue Date. If the Annuity is owned by an entity, the
Annuitant must be age 75 or under as of the Issue Date. You should consider your
need to access your Account Value and whether the Annuity's liquidity features
will satisfy that need. If you take a distribution prior to age 59 1/2, you may
be subject to a 10% penalty in addition to ordinary income taxes on any gain.
The availability and level of protection of certain optional benefits may vary
based on the age of the Owner on the Issue Date of the Annuity or the date of
the Owner's death.
SPECIAL CONSIDERATIONS FOR PURCHASERS OF BONUS OR CREDIT PRODUCTS
- - This Annuity features an annual Insurance Charge of 0.65% and an annual
Distribution Charge of 1.00%. We only deduct the Distribution Charge
during the first 10 years following the effective date of your Annuity.
During the first 10 years, the total asset-based charges on this Annuity
are higher than many of our other annuities.
- - The CDSC on this Annuity is higher and is deducted for a longer period of
time as compared to our other annuities. As with any investment product
that features a CDSC, you should consider your need to access your account
value during the CDSC period and whether the liquidity provision under the
Annuity will satisfy that need. The CDSC is only deducted if you make a
withdrawal that exceeds the free withdrawal amount or choose to surrender
your Annuity. If you make a withdrawal or surrender your Annuity and are
subject to a CDSC, we do not recover the XTra Credit(SM) amount.
- - The XTra Credit(SM) amount is included in your Account Value. However,
American Skandia may take back any credits applied to your Purchase
Payment if you "free-look" your Annuity or within twelve (12) months of
having received an XTra Credit amount, you die or elect to withdraw your
Account Value under the medically-related surrender provision. In these
situations, your Account Value could be substantially reduced. However,
any investment gain on the XTra Credit(SM) amount will not be recovered.
Additional conditions and restrictions apply. We do not deduct a CDSC in
any situation where we recover the XTra Credit(SM) amount.
OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS: We will ask you to name the
Owner(s), Annuitant and one or more Beneficiaries for your Annuity.
- - Owner: The Owner(s) holds all rights under the Annuity. You may name up to
two Owners in which case all ownership rights are held jointly. Generally,
joint owners are required to act jointly; however, if each owner provides
us with an instruction that we find acceptable, we will permit each owner
to act separately. All information and documents that we are required to
send you will be sent to the first named owner. This Annuity does not
provide a right of
34
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
survivorship. Refer to the Glossary of Terms for a complete description of
the term "Owner."
- - Annuitant: The Annuitant is the person we agree to make annuity payments
to and upon whose life we continue to make such payments. You must name an
Annuitant who is a natural person. We do not accept a designation of joint
Annuitants during the accumulation period. Where allowed by law, you may
name one or more Contingent Annuitants. A Contingent Annuitant will become
the Annuitant if the Annuitant dies before the Annuity Date. Please refer
to the discussion of "Considerations for Contingent Annuitants" in the Tax
Considerations section of the Prospectus.
- - Beneficiary: The Beneficiary is the person(s) or entity you name to
receive the death benefit. Your beneficiary designation must be the exact
name of your beneficiary, not only a reference to the beneficiary's
relationship to you. For example, a designation of "surviving spouse"
would not be acceptable. If no beneficiary is named the death benefit will
be paid to you or your estate.
Your right to make certain designations may be limited if your Annuity is
to be used as an IRA or other "qualified" investment that is given beneficial
tax treatment under the Code. You should seek competent tax advice on the
income, estate and gift tax implications of your designations.
35
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
MANAGING YOUR ANNUITY
MAY I CHANGE THE OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS?
You may change the Owner, Annuitant and Beneficiary designations by sending us
a request in writing. Upon an ownership change, any automated investment or
withdrawal programs will be canceled. The new owner must submit the applicable
program enrollment if they wish to participate in such a program. Where allowed
by law, such changes will be subject to our acceptance. Some of the changes we
will not accept include, but are not limited to:
- - a new Owner subsequent to the death of the Owner or the first of any joint
Owners to die, except where a spouse-Beneficiary has become the Owner as a
result of an Owner's death;
- - a new Annuitant subsequent to the Annuity Date;
- - for "non-qualified" investments, a new Annuitant prior to the Annuity Date
if the Annuity is owned by an entity; and
- - a change in Beneficiary if the Owner had previously made the designation
irrevocable.
SPOUSAL OWNERS/SPOUSAL BENEFICIARIES
If an Annuity is co-owned by spouses, we will assume that the sole primary
Beneficiary is the surviving spouse that was named as the co-owner unless you
elect an alternative Beneficiary designation. Unless you elect an alternative
Beneficiary designation, upon the death of either spousal Owner, the surviving
spouse may elect to assume ownership of the Annuity instead of taking the Death
Benefit payment. The Death Benefit that would have been payable will be the new
Account Value of the Annuity as of the date of due proof of death and any
required proof of a spousal relationship. As of the date the assumption is
effective, the surviving spouse will have all the rights and benefits that would
be available under the Annuity to a new purchaser of the same attained age. For
purposes of determining any future Death Benefit for the beneficiary of the
surviving spouse, the new Account Value will be considered as the initial
Purchase Payment. No CDSC will apply to the new Account Value. However, any
additional Purchase Payments applied after the date the assumption is effective
will be subject to all provisions of the Annuity, including the CDSC when
applicable.
SPOUSAL CONTINGENT ANNUITANT
If the Annuity is owned by an entity and the surviving spouse is named as a
Contingent Annuitant, upon the death of the Annuitant, the surviving spouse that
was named as the Contingent Annuitant will become the Annuitant. NO DEATH
BENEFIT IS PAYABLE UPON THE DEATH OF THE ANNUITANT. However, the Account Value
of the Annuity as of the date of due proof of death of the Annuitant (and any
required proof of the spousal relationship) will reflect the amount that would
have been payable had a Death Benefit been paid.
MAY I RETURN THE ANNUITY IF I CHANGE MY MIND?
If after purchasing your Annuity you change your mind and decide that you do not
want it, you may return it to us within a certain period of time known as a
right to cancel period. This is often referred to as a "free-look." Depending on
the state in which you purchased your Annuity, and, in some states, if you
purchased the Annuity as a replacement for a prior contract, the right to cancel
period may be ten (10) days, twenty-one (21) days or longer, measured from the
time that you received your Annuity. If you return your Annuity, during the
applicable period, we will refund your current Account Value plus any tax charge
deducted, and depending on your state's requirements, any applicable insurance
charges deducted. The amount returned to you may be higher or lower than the
Purchase Payment(s) applied during the right to cancel period. Where required by
law, we will return your Purchase Payment(s), or the greater of your current
Account Value and the amount of your Purchase Payment(s) applied during the
right to cancel period. If you return your Annuity, we will not return any
Credits we applied to your Annuity based on your Purchase Payments.
MAY I MAKE ADDITIONAL PURCHASE PAYMENTS?
The minimum amount that we accept as an additional Purchase Payment is $100
unless you participate in "Auto Saver" or a periodic purchase payment program.
Unless you participate in an asset allocation program, or unless you have
provided us with other specific allocation instructions for one, more than one,
or all subsequent Purchase Payments, we will allocate any additional Purchase
Payments you make according to your initial purchase payment allocation
instructions. If you so instruct us, we will allocate subsequent purchase
payments according to any new allocation instructions. Purchase Payments made
while you participate in an asset allocation program will be allocated in
accordance with such program. Additional Purchase Payments may be paid at any
time before the Annuity Date.
36
MAY I MAKE SCHEDULED PAYMENTS DIRECTLY FROM MY BANK ACCOUNT?
You can make additional Purchase Payments to your Annuity by authorizing us to
deduct money directly from your bank account and applying it to your Annuity.
This type of program is often called "bank drafting". We call our bank drafting
program "Auto Saver". Purchase Payments made through Auto Saver may only be
allocated to the variable investment options when applied. Bank drafting allows
you to invest in your Annuity with a lower initial Purchase Payment, as long as
you authorize payments that will equal at least $10,000 during the first 12
months of your Annuity. We may suspend or cancel bank drafting privileges if
sufficient funds are not available from the applicable financial institution on
any date that a transaction is scheduled to occur.
MAY I MAKE PURCHASE PAYMENTS THROUGH A SALARY REDUCTION PROGRAM?
These types of programs are only available with certain types of qualified
investments. If your employer sponsors such a program, we may agree to accept
periodic Purchase Payments through a salary reduction program as long as the
allocations are made only to variable investment options and the periodic
Purchase Payments received in the first year total at least $10,000.
37
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
MANAGING YOUR ACCOUNT VALUE
HOW AND WHEN ARE PURCHASE PAYMENTS INVESTED?
(See "Valuing Your Investment" for a description of our procedure for pricing
initial and subsequent Purchase Payments.)
INITIAL PURCHASE PAYMENT: Once we accept your application, we invest your
net Purchase Payment in the Annuity. The net Purchase Payment is your initial
Purchase Payment minus any tax charges that may apply. On your application we
ask you to provide us with instructions for allocating your Account Value. You
can allocate Account Value to one or more variable investment options or Fixed
Allocations.
SUBSEQUENT PURCHASE PAYMENTS: Unless you participate in an asset
allocation program, or unless you have provided us with other specific
allocation instructions for one, more than one, or all subsequent Purchase
Payments, we will allocate any additional Purchase Payments you make according
to your initial Purchase Payment allocation instructions. If you so instruct us,
we will allocate subsequent Purchase Payments according to any new allocation
instructions. Purchase Payments made while you participate in an asset
allocation program will be allocated in accordance with such program.
HOW DO I RECEIVE CREDITS?
We apply a "Credit" to your Annuity's Account Value each time you make a
Purchase Payment during the first six (6) Annuity Years. The amount of the
Credit is payable from our general account. The amount of the Credit depends on
the Annuity Year in which the Purchase Payment(s) is made, according to the
table below:
ANNUITY YEAR CREDIT
- -------------- ------
1 6.00%
2 5.00%
3 4.00%
4 3.00%
5 2.00%
6 1.00%
7+ 0.00%
CREDITS APPLIED TO PURCHASE PAYMENTS FOR DESIGNATED CLASS OF ANNUITY OWNER
Prior to May 1, 2004, where allowed by state law, Annuities could be purchased
by a member of the class defined below, with a different table of Credits. The
Credit applied to all Purchase Payments on such Annuities is as follows based on
the Annuity Year in which the Purchase Payment was made: Year 1 - 9.0%; Year 2 -
9.0%; Year 3 - 8.5%; Year 4 - 8.0%; Year 5 - 7.0%; Year 6 - 6.0%; Year 7 - 5.0%;
Year 8 - 4.0%; Year 9 - 3.0%; Year 10 - 2.0%; Year 11+ - 0.0%.
The designated class of Annuity Owners included: (a) any parent company,
affiliate or subsidiary of ours; (b) an officer, director, employee, retiree,
sales representative, or in the case of an affiliated broker-dealer, registered
representative of such company; (c) a director, officer or trustee of any
underlying mutual fund; (d) a director, officer or employee of any investment
manager, sub-advisor, transfer agent, custodian, auditing, legal or
administrative services provider that is providing investment management,
advisory, transfer agency, custodianship, auditing, legal and/or administrative
services to an underlying mutual fund or any affiliate of such firm; (e) a
director, officer, employee or registered representative of a broker-dealer or
insurance agency that has a then current selling agreement with us and/or with
American Skandia Marketing, Incorporated, a Prudential Financial Company; (f) a
director, officer, employee or authorized representative of any firm providing
us or our affiliates with regular legal, actuarial, auditing, underwriting,
claims, administrative, computer support, marketing, office or other services;
(g) the then current spouse of any such person noted in (b) through (f), above;
(h) the parents of any such person noted in (b) through (g), above; (i) the
child(ren) or other legal dependent under the age of 21 of any such person noted
in (b) through (h); and (j) the siblings of any such persons noted in (b)
through (h) above.
All other terms and conditions of the Annuity apply to Owners in the
designated class.
HOW ARE CREDITS APPLIED TO MY ACCOUNT VALUE?
Each Credit is allocated to your Account Value at the time the Purchase Payment
is applied to your Account Value. The amount of the Credit is allocated to the
investment options in the same ratio as the applicable Purchase Payment is
applied.
EXAMPLES OF APPLYING CREDITS INITIAL PURCHASE PAYMENT
Assume you make an initial Purchase Payment of $10,000. We would apply a
6.0% Credit to your Purchase Payment and allocate the amount of the Credit ($600
= $10,000 x .06) to your Account Value in the proportion that your Account Value
is allocated.
ADDITIONAL PURCHASE PAYMENT IN ANNUITY YEAR 2
Assume that you make an additional Purchase Payment of $5,000. We would
apply a 5.0% Credit to your Purchase Payment and allocate the amount of the
Credit ($250 = $5,000 x .05) to your Account Value.
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ADDITIONAL PURCHASE PAYMENT IN ANNUITY YEAR 6
Assume that you make an additional Purchase Payment of $15,000. We would
apply a 1.0% Credit to your Purchase Payment and allocate the amount of the
Credit ($150 = $15,000 x .01) to your Account Value.
The amount of any Credits applied to your Account Value can be recovered by
American Skandia under certain circumstances:
- - any Credits applied to your Account Value on Purchase Payments made within
the 12 months before the date of death will be recovered.
- - The amount available under the medically-related surrender portion of the
Annuity will not include the amount of any Credits payable on Purchase
Payments made within 12 months of the date the Annuitant first became
eligible for the medically-related surrender.
- - if you elect to "free-look" your Annuity, the amount returned to you will
not include the amount of any Credits.
The Account Value may be substantially reduced if American Skandia
recovers the XTra Credit(SM) amount under these circumstances. However, any
investment gain on the XTra Credit(SM) amount will not be taken back. We do not
deduct a CDSC in any situation where we recover the XTra Credit(SM) amount.
During the first 10 Annuity Years, the total asset-based charges on this Annuity
(including the Insurance Charge and the Distribution Charge) are higher than
many of our other annuities, including other annuities we offer that apply
credits to purchase payments.
EXAMPLES OF RECOVERING CREDITS
The following are hypothetical examples of how Credits could be recovered by
American Skandia. These examples do not cover every potential situation.
RECOVERY FROM PAYMENT OF DEATH BENEFITS
1. Assume you purchase your Annuity with an initial Purchase Payment of
$50,000. You make an additional Purchase of $10,000 in the 6th month after
the Issue Date. Both of the Purchase Payments received a 6.0% Credit, for
a total of $3,600. If the Death Benefit becomes payable in the 9th month
after the Issue Date, the amount of the Death Benefit would be reduced by
the entire amount of the prior Credits ($3,600).
2. Assume you purchase your Annuity with an initial Purchase Payment of
$50,000. You make an additional Purchase of $10,000 in the 6th month after
the Issue Date. Both of the Purchase Payments received a 6.0% Credit, for
a total of $3,600. If death occurs in the 16th month after the Issue Date,
the amount of the Death Benefit would be reduced but only in the amount of
those Credits applied within the previous 12-months. Since the initial
Purchase Payment (and the Credits that were applied) occurred more than
12-months before the date of death, the Death Benefit would not be reduced
by the amount of the Credits applied to the initial Purchase Payment.
However, the $10,000 additional Purchase Payment was made within 12-months
of the date of death. Therefore, the amount of the Death Benefit would be
reduced by the amount of the Credits payable on the additional Purchase
Payment ($600).
3. NOTE: If the Death Benefit would otherwise have been equal to the Purchase
Payments minus any proportional withdrawals due to poor investment
performance, we will not reduce the amount of the Death Benefit by the
amount of the Credits as shown in Example 2 above.
RECOVERY FROM MEDICALLY-RELATED SURRENDERS
1. Assume you purchase your Annuity with an initial Purchase Payment of
$50,000. You receive a Credit of $3,000 ($50,000 x .06). The Annuitant is
diagnosed as terminally ill in the 6th month after the Issue Date and we
grant your request to surrender your Annuity under the medically-related
surrender provision. Assuming the Credits were applied within 12-months of
the date of diagnosis of the terminal illness, the amount that would be
payable under the medically-related surrender provision would be reduced
by the entire amount of the Credits ($3,000).
2. Assume you purchase your Annuity with an initial Purchase Payment of
$50,000. You make an additional Purchase of $10,000 in the 6th month after
the Issue Date. Both of the Purchase Payments received a 6.0% Credit, for
a total of $3,600. The Annuitant is diagnosed as terminally ill in the
16th month after the Issue Date and we grant your request to surrender
your Annuity under the medically-related surrender provision. Since the
initial Purchase Payment (and the Credits that were applied) occurred more
than 12-months before the diagnosis, the amount that would be payable upon
the medically-related surrender provision would not be reduced by the
amount of the Credits applied to the initial Purchase Payment. However,
the $10,000 additional Purchase Payment was made within 12-months of the
date of diagnosis. Therefore, the amount that would be
39
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
MANAGING YOUR ACCOUNT VALUE CONTINUED
payable under the medically-related surrender provision would be reduced
by the amount of the Credits payable on the additional Purchase Payment
($600).
GENERAL INFORMATION ABOUT CREDITS
- - We do not consider Credits to be "investment in the contract" for income
tax purposes.
- - You may not withdraw the amount of any Credits under the Free Withdrawal
provision. The Free Withdrawal provision only applies to withdrawals of
Purchase Payments.
ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?
During the accumulation period you may transfer Account Value between
investment options. Transfers are not subject to taxation on any gain. We may
require a minimum of $500 in each Sub-account you allocate Account Value to at
the time of any allocation or transfer. If you request a transfer and, as a
result of the transfer, there would be less than $500 in the Sub-account, we
may transfer the remaining Account Value in the Sub-account pro-rata to the
other investment options to which you transferred.
We may impose specific restrictions on financial transactions (including
transfer requests) for certain Portfolios based on the Portfolio's investment
and/or transfer restrictions. We may do so to conform to any present or future
restriction that is imposed by any portfolio available under this Annuity.
Currently, any purchase, redemption or transfer involving the ProFunds VP
Sub-accounts must be received by us no later than one hour prior to any
announced closing of the applicable securities exchange (generally, 3:00 p.m.
Eastern time) to be processed on the current Valuation Day. The "cut-off" time
for such financial transactions involving a ProFunds VP Sub-account will be
extended to 1/2 hour prior to any announced closing (generally, 3:30 p.m.
Eastern time) for transactions submitted electronically through American
Skandia's Internet website (www.americanskandia.prudential.com).
Currently, we charge $10.00 for each transfer after the twentieth (20th)
in each Annuity Year. Transfers made as part of a dollar cost averaging,
automatic rebalancing or asset allocation program do not count toward the twenty
free transfer limit. Renewals or transfers of Account Value from a Fixed
Allocation at the end of its Guarantee Period are not subject to the transfer
charge. We may reduce the number of free transfers allowable each Annuity Year
(subject to a minimum of eight) without charging a Transfer Fee unless you make
use of electronic means to transmit your transfer requests. We may also increase
the Transfer Fee that we charge to $15.00 for each transfer after the number of
free transfers has been used up. We may eliminate the Transfer Fee for transfer
requests transmitted electronically or through other means that reduce our
processing costs. If enrolled in any program that does not permit transfer
requests to be transmitted electronically, the Transfer Fee will not be waived.
Once you have made 20 transfers among the Sub-accounts during an Annuity
Year, we will accept any additional transfer request during that year only if
the request is submitted to us in writing with an original signature and
otherwise is in good order. For purposes of this 20 transfer limit, we (i) do
not view a facsimile transmission as a "writing", (ii) will treat multiple
transfer requests submitted on the same business day as a single transfer, and
(iii) do not count any transfer that solely involves Sub-accounts corresponding
to any ProFund Portfolio and/or the AST Money Market Portfolio, or any transfer
that involves one of our systematic programs, such as asset allocation and
automated withdrawals.
Frequent transfers among Sub-accounts in response to short-term
fluctuations in markets, sometimes called "market timing," can make it very
difficult for a Portfolio manager to manage a Portfolio's investments. Frequent
transfers may cause the Portfolio to hold more cash than otherwise necessary,
disrupt management strategies, increase transaction costs, or affect
performance. The Annuity offers Sub-accounts designed for Owners who wish to
engage in frequent transfers (i.e., one or more of the Sub-accounts
corresponding to the ProFund Portfolios and the AST Money Market Portfolio), and
we encourage Owners seeking frequent transfers to utilize those Sub-accounts.
In light of the risks posed to Owners and other investors by frequent
transfers, we reserve the right to limit the number of transfers in any Annuity
Year for all existing or new Owners and to take the other actions discussed
below. We also reserve the right to limit the number of transfers in any Annuity
Year or to refuse any transfer request for an Owner or certain Owners if: (a) we
believe that excessive transfer activity (as we define it) or a specific
transfer request or group of transfer requests may have a detrimental effect on
Unit Values or the share prices of the Portfolios; or (b) we are informed by a
Portfolio (e.g., by the Portfolio's portfolio manager) that the purchase or
redemption of shares in the Portfolio must be restricted because the Portfolio
believes the transfer activity to
40
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
which such purchase and redemption relates would have a detrimental effect on
the share prices of the affected Portfolio. Without limiting the above, the most
likely scenario where either of the above could occur would be if the aggregate
amount of a trade or trades represented a relatively large proportion of the
total assets of a particular Portfolio. In furtherance of our general authority
to restrict transfers as described above, and without limiting other actions we
may take in the future, we have adopted the following specific restrictions:
- - With respect to each Sub-account (other than the AST Money Market
Sub-account, or a Sub-account corresponding to a ProFund Portfolio), we
track amounts exceeding a certain dollar threshold that were transferred
into the Sub-account. If you transfer such amount into a particular
Sub-account, and within 30 calendar days thereafter transfer (the
"Transfer Out") all or a portion of that amount into another Sub-account,
then upon the Transfer Out, the former Sub-account becomes restricted (the
"Restricted Sub-account"). Specifically, we will not permit subsequent
transfers into the Restricted Sub-account for 90 calendar days after the
Transfer Out if the Restricted Sub-account invests in a non-international
Portfolio, or 180 calendar days after the Transfer Out if the Restricted
Sub-account invests in an international Portfolio. For purposes of this
rule, we (i) do not count transfers made in connection with one of our
systematic programs, such as asset allocation and automated withdrawals;
(ii) do not count any transfer that solely involves Sub-accounts
corresponding to any ProFund Portfolio and/or the AST Money Market
Portfolio; and (iii) do not categorize as a transfer the first transfer
that you make after the Issue Date, if you make that transfer within 30
calendar days after the Issue Date. Even if an amount becomes restricted
under the foregoing rules, you are still free to redeem the amount from
your Annuity at any time.
- - We reserve the right to effect exchanges on a delayed basis for all
contracts. That is, we may price an exchange involving the Sub-accounts on
the Valuation Day subsequent to the business day on which the exchange
request was received. Before implementing such a practice, we would issue
a separate written notice to Owners that explains the practice in detail.
- - If we deny one or more transfer requests under the foregoing rules, we
will inform you or your investment professional promptly of the
circumstances concerning the denial.
- - Contract owners in New York who purchased their contracts prior to March
15, 2004 are not subject to the specific restrictions outlined in bulleted
paragraphs immediately above. In addition, there are contract owners of
different variable annuity contracts that are funded through the same
Separate Account that are not subject to the above-referenced transfer
restrictions and, therefore, might make more numerous and frequent
transfers than contract owners who are subject to such limitations.
Finally, there are contract owners of other variable annuity contracts or
variable life contracts that are issued by American Skandia as well as
other insurance companies that have the same underlying mutual fund
portfolios available to them. Since some contract owners are not subject
to the same transfer restrictions, unfavorable consequences associated
with such frequent trading within the underlying mutual fund (e.g.,
greater portfolio turnover, higher transaction costs, or performance or
tax issues) may affect all contract owners. Similarly, while contracts
managed by an investment professional or third party investment advisor
are subject to the restrictions on transfers between investment options
that are discussed above, if the advisor manages a number of contracts in
the same fashion unfavorable consequences may be associated with
management activity since it may involve the movement of a substantial
portion of an underlying mutual fund's assets which may affect all
contract owners invested in the affected options. Apart from
jurisdiction-specific and contract differences in transfer restrictions,
we will apply these rules uniformly (including contracts managed by an
investment professional or third party investment advisor), and will not
waive a transfer restriction for any contract owner.
ALTHOUGH OUR TRANSFER RESTRICTIONS ARE DESIGNED TO PREVENT EXCESSIVE
TRANSFERS, THEY ARE NOT CAPABLE OF PREVENTING EVERY POTENTIAL OCCURRENCE OF
EXCESSIVE TRANSFER ACTIVITY.
DO YOU OFFER DOLLAR COST AVERAGING?
Yes. We offer Dollar Cost Averaging during the accumulation period. Dollar Cost
Averaging allows you to systematically transfer an amount periodically from one
investment option to one or more other investment options. You can choose to
transfer earnings only, principal plus earnings or a flat dollar amount. You may
elect a Dollar Cost Averaging program that transfers amounts monthly, quarterly,
semi-annually, or annually from variable investment options, or a program that
transfers
41
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
MANAGING YOUR ACCOUNT VALUE CONTINUED
amounts monthly from Fixed Allocations. By investing amounts on a regular basis
instead of investing the total amount at one time, Dollar Cost Averaging may
decrease the effect of market fluctuation on the investment of your Purchase
Payment. This may result in a lower average cost of units over time. However,
there is no guarantee that Dollar Cost Averaging will result in a profit or
protect against a loss in a declining market. There is no minimum Account Value
required to enroll in a Dollar Cost Averaging program and we do not deduct a
charge for participating in a Dollar Cost Averaging program.
You can Dollar Cost Average from variable investment options or Fixed
Allocations. Dollar Cost Averaging from Fixed Allocations is subject to a number
of rules that include, but are not limited to the following:
- - You may only use Fixed Allocations with Guarantee Periods of 1, 2 or 3
years.
- - You may only Dollar Cost Average earnings or principal plus earnings. If
transferring principal plus earnings, the program must be designed to last
the entire Guarantee Period for the Fixed Allocation.
- - Dollar Cost Averaging transfers from Fixed Allocations are not subject to
a Market Value Adjustment.
NOTE: When a Dollar Cost Averaging program is established from a Fixed
Allocation, the fixed rate of interest we credit to your Account Value is
applied to a declining balance due to the transfers of Account Value to the
Sub-accounts during the Guarantee Period. This will reduce the effective rate of
return on the Fixed Allocation over the Guarantee Period.
The Dollar Cost Averaging program is not available if you elect the
Guaranteed Return Option Plus(SM), the Guaranteed Return Option programs or the
automatic rebalancing programs when it involves transfers out of the Fixed
Allocations and is also not available when you have elected an asset allocation
program.
DO YOU OFFER ANY AUTOMATIC REBALANCING PROGRAMS?
Yes. During the accumulation period, we offer automatic rebalancing among the
variable investment options you choose. You can choose to have your Account
Value rebalanced monthly, quarterly, semi-annually, or annually. On the
appropriate date, the variable investment options you chose are rebalanced to
the allocation percentages you requested. With automatic rebalancing, we
transfer the appropriate amount from the "overweighted" Sub-accounts to the
"underweighted" Sub-accounts to return your allocations to the percentages you
request. For example, over time the performance of the variable investment
options will differ, causing your percentage allocations to shift. Any transfer
to or from any variable investment option that is not part of your automatic
rebalancing program, will be made, however that variable investment option will
not become part of your rebalancing program unless we receive instructions from
you indicating that you would like such option to become part of the program.
There is no minimum Account Value required to enroll in automatic
rebalancing. All rebalancing transfers as part of an automatic rebalancing
program are not included when counting the number of transfers each year toward
the maximum number of free transfers. We do not deduct a charge for
participating in an automatic rebalancing program. Participation in the
Automatic Rebalancing program may be restricted if you are enrolled in certain
other optional programs.
ARE ANY ASSET ALLOCATION PROGRAMS AVAILABLE?
Yes. Certain "static asset allocation programs" are available for use with the
Annuity. These programs are considered static because once you have selected a
model portfolio, the Sub-accounts and the percentage of contract value allocated
to each Sub-account cannot be changed without your consent. The programs are
available at no additional charge. Under these programs, the Sub-account for
each asset class in each model portfolio is designated for you. Under the
programs, the values in the Sub-accounts will be rebalanced periodically back to
the indicated percentages for the applicable asset class within the model
portfolio that you have selected. For more information on the asset allocation
programs, see Appendix entitled "Additional Information on the Asset Allocation
Programs."
Asset allocation is a sophisticated method of diversification, which
allocates assets among asset classes in order to manage investment risk and
enhance returns over the long term. However, asset allocation does not guarantee
a profit or protect against a loss. No personalized investment advice is
provided in connection with the asset allocation programs and you should not
rely on these programs as providing individualized investment recommendations to
you. The asset allocation programs do not guarantee better investment results.
We reserve the right to terminate or change the asset allocation programs at any
time. You should consult with your Investment Professional before electing any
asset allocation program.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
DO YOU OFFER PROGRAMS DESIGNED TO GUARANTEE A "RETURN OF PREMIUM" AT A FUTURE
DATE?
Yes. We offer two different programs for investors who wish to invest in the
variable investment options but also wish to protect their principal, as of a
specific date in the future. They are the Balanced Investment Program and the
Guaranteed Return Option Plus(SM). (The Guaranteed Return Option Plus (GRO
Plus(SM)) is not available in all states. In some states where GRO Plus is not
available we offer the Guaranteed Return Option (GRO).) Both the Balanced
Investment Program and GRO Plus allow you to allocate a portion of your Account
Value to the available variable investment options while ensuring that your
Account Value will at least equal your contributions adjusted for withdrawals
and transfers on a specified date. Under GRO Plus, Account Value is allocated to
and maintained in Fixed Allocations to the extent we, in our sole discretion,
deem it is necessary to support our guarantee under the program. This differs
from the Balanced Investment Program where a set amount is allocated to a Fixed
Allocation regardless of the performance of the underlying Sub-accounts or the
interest rate environment after the amount is allocated to a Fixed Allocation.
Generally, more of your Account Value will be allocated to the variable
investment options under the GRO Plus program than under the Balanced Investment
Program (although in periods of poor market performance, low interest rates
and/or as the option progresses to its maturity date, this may not be the case).
You may not want to use either of these programs if you expect to begin taking
annuity payments before the program would be completed. In addition, as with
most return of premium programs, amounts that are available to allocate to the
variable investment options may be substantially less than they would be if you
did not elect a return of premium program. This means that, if investment
experience in the variable investment options were positive, your Account Value
would grow at a slower rate than if you did not elect a return of premium
program and allocated all of your Account Value to the variable investment
options.
BALANCED INVESTMENT PROGRAM
We offer a balanced investment program where a portion of your Account Value is
allocated to a Fixed Allocation and the remaining Account Value is allocated to
the variable investment options that you select. When you enroll in the Balanced
Investment Program, you choose the duration that you wish the Period for the
Fixed Allocation. Based on the fixed rate for the Guarantee Period chosen, we
calculate the portion of your Account Value that must be allocated to the Fixed
Allocation to grow to a specific "principal amount" (such as your initial
Purchase Payment). We determine the amount based on the rates then in effect for
the Guarantee Period you choose. If you continue the program until the end of
the Guarantee Period and make no withdrawals or transfers, at the end of the
Guarantee Period, the Fixed Allocation will have grown to equal the "principal
amount". Withdrawals or transfers from the Fixed Allocation before the end of
the Guarantee Period will terminate the program and may be subject to a Market
Value Adjustment. You can transfer the Account Value that is not allocated to
the Fixed Allocation between any of the Sub-accounts available under the
Annuity. Account Value you allocate to the variable investment options is
subject to market fluctuations and may increase or decrease in value. We do not
deduct a charge for participating in the Balanced Investment Program.
EXAMPLE
Assume you invest $100,000. You choose a 10-year program and allocate a
portion of your Account Value to a Fixed Allocation with a 10-year
Guarantee Period. The rate for the 10-year Guarantee Period is 2.50%*.
Based on the fixed interest rate for the Guarantee Period chosen, the
factor is 0.781198 for determining how much of your Account Value will be
allocated to the Fixed Allocation. That means that $78,120 will be
allocated to the Fixed Allocation and the remaining Account Value
($21,880) will be allocated to the variable investment options. Assuming
that you do not make any withdrawals or transfers from the Fixed
Allocation, it will grow to $100,000 at the end of the Guarantee Period.
Of course we cannot predict the value of the remaining Account Value that
was allocated to the variable investment options.
The GUARANTEED RETURN OPTION PLUS (GRO Plus) guarantees that, after a
seven-year period following commencement of the program ("maturity date") and on
each anniversary of the maturity date thereafter, your Account Value will not be
less than the Account Value on the effective date of the program. The program
also offers you the option to elect a second, enhanced guarantee amount at a
higher Account Value subject to a separate maturity period (and its
anniversaries). The GRO Plus program may be appropriate if you wish to protect a
principal
* The rate in this example is hypothetical and may not reflect the current rate
for program to last. This determines the duration of the Guarantee Guarantee
Periods of this duration.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
MANAGING YOUR ACCOUNT VALUE CONTINUED
amount (called the "Protected Principal Value") against market downturns as of a
specific date in the future, but also wish to exercise control of your available
Account Value among the variable investment options to participate in market
experience. Under the GRO Plus program, you give us the right to allocate
amounts to Fixed Allocations as needed to support the guarantees provided. The
available Account Value is the amount not allocated to the Fixed Allocations to
support the guarantees provided. There is a fee associated with this program.
See "Living Benefit Programs," later in this Prospectus, for more information
about this program.
MAY I GIVE MY INVESTMENT PROFESSIONAL PERMISSION TO MANAGE MY ACCOUNT VALUE?
Yes. Your Investment Professional may direct the allocation of your Account
Value and request financial transactions between investment options while you
are living, subject to our rules, and unless you tell us otherwise. If your
Investment Professional has this authority, we deem that all transactions that
are directed by your Investment Professional with respect to your Annuity have
been authorized by you. You must contact us immediately if and when you revoke
such authority. We will not be responsible for acting on instructions from your
Investment Professional until we receive notification of the revocation of such
person's authority. We may also suspend, cancel or limit these privileges at any
time. We will notify you if we do.
MAY I AUTHORIZE MY THIRD PARTY INVESTMENT ADVISOR TO MANAGE MY ACCOUNT?
Yes. You may engage your own investment advisor to manage your account. These
investment advisors may be firms or persons who also are appointed by us, or
whose affiliated broker-dealers are appointed by us, as authorized sellers of
the Annuity. EVEN IF THIS IS THE CASE, HOWEVER, PLEASE NOTE THAT THE INVESTMENT
ADVISOR YOU ENGAGE TO PROVIDE ADVICE AND/OR MAKE TRANSFERS FOR YOU, IS NOT
ACTING ON OUR BEHALF, BUT RATHER IS ACTING ON YOUR BEHALF. We do not offer
advice about how to allocate your Account Value under any circumstance. As such,
we are not responsible for any recommendations such investment advisors make,
any investment models or asset allocation programs they choose to follow or any
specific transfers they make on your behalf.
Any fee that is charged by your investment advisor is in addition to the
fees and expenses that apply under your Annuity. If you authorize your
investment advisor to withdraw amounts from your Annuity (to the extent
permitted) to pay for the investment advisor's fee, as with any other withdrawal
from your Annuity, you may incur adverse tax consequences, a CDSC and/or a
Market Value Adjustment. Withdrawals to pay your investment advisor generally
will also reduce the level of various living and death benefit guarantees
provided (e.g. the withdrawals will reduce proportionately the Annuity's
guaranteed minimum death benefit.) WE ARE NOT A PARTY TO THE AGREEMENT YOU HAVE
WITH YOUR INVESTMENT ADVISOR AND DO NOT VERIFY THAT AMOUNTS WITHDRAWN FROM YOUR
ANNUITY, INCLUDING AMOUNTS WITHDRAWN TO PAY FOR THE INVESTMENT ADVISOR'S FEE,
ARE WITHIN THE TERMS OF YOUR AGREEMENT WITH YOUR INVESTMENT ADVISOR. You will,
however, receive confirmations of transactions that affect your Annuity. If your
investment advisor has also acted as your investment professional with respect
to the sale of your Annuity, he or she may be receiving compensation for
services provided both as an Investment Professional and investment advisor.
Alternatively, the investment advisor may compensate the Investment Professional
from whom you purchased your Annuity for the referral that led you to enter into
your investment advisory relationship with the investment advisor. If you are
interested in the details about the compensation that your investment advisor
and/or your Investment Professional receive in connection with your Annuity, you
should ask them for more details.
We or an affiliate of ours may provide administrative support to licensed,
registered Investment Professionals or investment advisors who you authorize to
make financial transactions on your behalf. We may require Investment
Professionals or investment advisors, who are authorized by multiple contract
owners to make financial transactions, to enter into an administrative agreement
with American Skandia as a condition of our accepting transactions on your
behalf. The administrative agreement may impose limitations on the Investment
Professional's or investment advisor's ability to request financial transactions
on your behalf. These limitations are intended to minimize the detrimental
impact of an Investment Professional who is in a position to transfer large
amounts of money for multiple clients in a particular Portfolio or type of
portfolio or
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
to comply with specific restrictions or limitations imposed by a Portfolio(s) of
American Skandia. Contracts managed by your investment professional also are
subject to the restrictions on transfers between investment options that are
discussed in the section entitled "ARE THERE RESTRICTIONS OR CHARGES ON
TRANSFERS BETWEEN INVESTMENT OPTIONS?". Since transfer activity under contracts
managed by an investment professional or third party investment advisor may
result in unfavorable consequences to all contract owners invested in the
affected options we reserve the right to limit the investment options available
to a particular Owner whose contract is managed by the advisor or impose other
transfer restrictions we deem necessary. The administrative agreement may limit
the available investment options, require advance notice of large transactions,
or impose other trading limitations on your investment professional. Your
investment professional will be informed of all such restrictions on an ongoing
basis. We may also require that your investment professional transmit all
financial transactions using the electronic trading functionality available
through our Internet website (www.americanskandia.prudential.com). LIMITATIONS
THAT WE MAY IMPOSE ON YOUR INVESTMENT PROFESSIONAL OR INVESTMENT ADVISOR UNDER
THE TERMS OF THE ADMINISTRATIVE AGREEMENT DO NOT APPLY TO FINANCIAL TRANSACTIONS
REQUESTED BY AN OWNER ON THEIR OWN BEHALF, EXCEPT AS OTHERWISE DESCRIBED IN THIS
PROSPECTUS.
HOW DO THE FIXED ALLOCATIONS WORK?
We credit the fixed interest rate to the Fixed Allocation throughout a set
period of time called a "Guarantee Period." Fixed Allocations currently are
offered with Guarantee Periods from 1 to 10 years. We may make Fixed Allocations
of different durations available in the future including Fixed Allocations
offered exclusively for use with certain optional investment programs. Fixed
Allocations may not be available in all states and may not always be available
for all Guarantee Periods depending on market factors and other considerations.
The interest rate credited to a Fixed Allocation is the rate in effect
when the Guarantee Period begins and does not change during the Guarantee
Period. The rates are an effective annual rate of interest. We determine the
interest rates for the various Guarantee Periods. At the time that we confirm
your Fixed Allocation, we will advise you of the interest rate in effect and the
date your Fixed Allocation matures. We may change the rates we credit new Fixed
Allocations at any time. Any change in interest rate does not affect Fixed
Allocations that were in effect before the date of the change. To inquire as to
the current rates for Fixed Allocations, please call 1-800-752-6342.
A Guarantee Period for a Fixed Allocation begins:
- - when all or part of a net Purchase Payment is allocated to that particular
Guarantee Period;
- - upon transfer of any of your Account Value to a Fixed Allocation for that
particular Guarantee Period; or
- - when you "renew" a Fixed Allocation by electing a new Guarantee Period.
To the extent permitted by law, we may establish different interest rates
for Fixed Allocations offered to a class of Owners who choose to participate in
various optional investment programs we make available. This may include, but is
not limited to, Owners who elect to use Fixed Allocations under a dollar cost
averaging program (see "Do You Offer Dollar Cost Averaging?") or a balanced
investment program (see "Do you offer programs designed to guarantee a "Return
of Premium" at a future date?"). The interest rate credited to Fixed Allocations
offered to this class of purchasers may be different than those offered to other
purchasers who choose the same Guarantee Period but who do not participate in an
optional investment program. Any such program is at our sole discretion.
AMERICAN SKANDIA MAY OFFER FIXED ALLOCATIONS WITH GUARANTEE PERIODS OF 3 MONTHS
OR 6 MONTHS EXCLUSIVELY FOR USE AS A SHORT-TERM FIXED ALLOCATION ("SHORT-TERM
FIXED ALLOCATIONS"). SHORT-TERM FIXED ALLOCATIONS MAY ONLY BE ESTABLISHED WITH
YOUR INITIAL PURCHASE PAYMENT OR ADDITIONAL PURCHASE PAYMENTS. YOU MAY NOT
TRANSFER EXISTING ACCOUNT VALUE TO A SHORT-TERM FIXED ALLOCATION. WE RESERVE THE
RIGHT TO TERMINATE OFFERING THESE SPECIAL PURPOSE FIXED ALLOCATIONS AT ANY TIME.
On the Maturity Date of the Short-term Fixed Allocation, the Account Value
will be transferred to the Sub-account(s) you choose at the inception of the
program. If no instructions are provided, such Account Value will be transferred
to the AST Money Market Sub-account. Short-term Fixed Allocations may not be
renewed on the Maturity Date. If you surrender the Annuity or transfer any
Account Value from the Short-term Fixed Allocation to any other investment
option before the end of the Guarantee Period, a Market Value Adjustment will
apply.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
MANAGING YOUR ACCOUNT VALUE CONTINUED
HOW DO YOU DETERMINE RATES FOR FIXED ALLOCATIONS?
We do not have a specific formula for determining the fixed interest rates for
Fixed Allocations. Generally the interest rates we offer for Fixed Allocations
will reflect the investment returns available on the types of investments we
make to support our fixed rate guarantees. These investment types may include
cash, debt securities guaranteed by the United States government and its
agencies and instrumentalities, money market instruments, corporate debt
obligations of different durations, private placements, asset-backed obligations
and municipal bonds. In determining rates we also consider factors such as the
length of the Guarantee Period for the Fixed Allocation, regulatory and tax
requirements, liquidity of the markets for the type of investments we make,
commissions, administrative and investment expenses, our insurance risks in
relation to the Fixed Allocations, general economic trends and competition. Some
of these considerations are similar to those we consider in determining the
Insurance Charge that we deduct from Account Value allocated to the
Sub-accounts.
We will credit interest on a new Fixed Allocation in an existing Annuity
at a rate not less than the rate we are then crediting to Fixed Allocations for
the same Guarantee Period selected by new Annuity purchasers in the same class.
The interest rate we credit for a Fixed Allocation is subject to a
minimum. Please refer to the Statement of Additional Information. In certain
states the interest rate may be subject to a minimum under state law or
regulation.
HOW DOES THE MARKET VALUE ADJUSTMENT WORK?
If you transfer or withdraw Account Value from a Fixed Allocation more than 30
days before the end of its Guarantee Period, we will adjust the value of your
investment based on a formula, called a "Market Value Adjustment" or "MVA". The
amount of any Market Value Adjustment can be either positive or negative,
depending on the movement of a combination of Strip Yields on Strips and an
Option-adjusted Spread (each as defined below) between the time that you
purchase the Fixed Allocation and the time you make a transfer or withdrawal.
The Market Value Adjustment formula compares the combination of Strip Yields for
Strips and the Option-adjusted Spreads as of the date the Guarantee Period began
with the combination of Strip Yields for Strips and the Option-adjusted Spreads
as of the date the MVA is being calculated. In certain states the amount of any
Market Value Adjustment may be limited under state law or regulation. If your
Annuity is governed by the laws of that state, any Market Value Adjustment that
applies will be subject to our rules for complying with such law or regulation.
- - "Strips" are a form of security where ownership of the interest portion of
United States Treasury securities are separated from ownership of the
underlying principal amount or corpus.
- - "Strip Yields" are the yields payable on coupon Strips of United States
Treasury securities.
- - "Option-adjusted Spread" is the difference between the yields on corporate
debt securities (adjusted to disregard options on such securities) and
government debt securities of comparable duration. We currently use the
Merrill Lynch 1 to 10 year Investment Grade Corporate Bond Index of
Option-adjusted Spreads.
MVA FORMULA
The MVA formula is applied separately to each Fixed Allocation to determine the
Account Value of the Fixed Allocation on a particular date. The formula is as
follows:
[(1+I) / (1+J+0.0010)](N/365)
where:
I is the Strip Yield as of the start date of the Guarantee Period for
coupon Strips maturing at the end of the applicable Guarantee Period plus
the Option-adjusted Spread. If there are no Strips maturing at that time,
we will 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 being applied for
coupon Strips maturing at the end of the applicable Guarantee Period plus
the Option-adjusted Spread. If there are no Strips maturing at that time,
we will 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 the original Guarantee Period.
If you surrender your Annuity under the right to cancel provision, the MVA
formula is
[(1 + I)/(1 + J)](N/365).
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
MVA EXAMPLES
The following hypothetical examples show the effect of the MVA in determining
Account Value. Assume the following:
- - You allocate $50,000 into a Fixed Allocation (we refer to this as the
"Allocation Date" in these examples) with a Guarantee Period of 5 years
(we refer to this as the "Maturity Date" in these examples).
- - The Strip Yields for coupon Strips beginning on the Allocation Date and
maturing on the Maturity Date plus the Option-adjusted Spread is 5.50% (I
= 5.50%).
- - You make no withdrawals or transfers until you decide to withdraw the
entire Fixed Allocation after exactly three (3) years, at which point 730
days remain before the Maturity Date (N = 730).
EXAMPLE OF POSITIVE MVA
Assume that at the time you request the withdrawal, the Strip Yields for Strips
maturing on the Maturity Date plus the Option-adjusted Spread is 4.00% (J =
4.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0010)](N/365) =
[1.055/1.041](2) = 1.027078
Interim Value = $57,881.25
Account Value after MVA = Interim Value x MVA
Factor = $59,448.56
EXAMPLE OF NEGATIVE MVA
Assume that at the time you request the withdrawal, the Strip Yields for Strips
maturing on the Maturity Date plus the Option-adjusted Spread is 7.00% (J =
7.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0010)](N/365) =
[1.055/1.071)](2) = 0.970345
Interim Value = $57,881.25
Account Value after MVA = Interim Value x MVA
Factor = $56,164.78.
WHAT HAPPENS WHEN MY GUARANTEE PERIOD MATURES?
The "Maturity Date" for a Fixed Allocation is the last day of the Guarantee
Period. Before the Maturity Date, you may choose to renew the Fixed Allocation
for a new Guarantee Period of the same or different length or you may transfer
all or part of that Fixed Allocation's Account Value to another Fixed
Allocation or to one or more Sub-accounts. We will notify you before the end of
the Guarantee Period about the fixed interest rates that we are currently
crediting to all Fixed Allocations that are being offered. The rates being
credited to Fixed Allocations may change before the Maturity Date. We will not
charge a MVA if you choose to renew a Fixed Allocation on its Maturity Date or
transfer the Account Value to one or more variable investment options.
IF YOU DO NOT SPECIFY HOW YOU WANT A FIXED ALLOCATION TO BE ALLOCATED ON
ITS MATURITY DATE, WE WILL THEN TRANSFER THE ACCOUNT VALUE OF THE FIXED
ALLOCATION TO THE AST MONEY MARKET SUB-ACCOUNT. You can then elect to allocate
the Account Value to any of the Sub-accounts or to a new Fixed Allocation.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
ACCESS TO ACCOUNT VALUE
WHAT TYPES OF DISTRIBUTIONS ARE AVAILABLE TO ME?
During the accumulation period you can access your Account Value through partial
withdrawals, Systematic Withdrawals, and where required for tax purposes,
Minimum Distributions. You can also surrender your Annuity at any time. We may
deduct a portion of the Account Value being withdrawn or surrendered as a CDSC.
The CDSC will be assessed on the amount of Purchase Payments, not on the Account
Value at the time of the withdrawal or surrender. If you surrender your Annuity,
in addition to any CDSC, we may deduct the Annual Maintenance Fee, any Tax
Charge that applies and the charge for any optional benefits. We may also apply
a Market Value Adjustment to any Fixed Allocations being withdrawn or
surrendered. Certain amounts may be available to you each Annuity Year that are
not subject to a CDSC. These are called "Free Withdrawals." In addition, under
certain circumstances, we may waive the CDSC for surrenders made for qualified
medical reasons or for withdrawals made to satisfy Minimum Distribution
requirements. Unless you notify us differently, withdrawals are taken pro-rata
based on the Account Value in the investment options at the time we receive your
withdrawal request. Each of these types of distributions is described more fully
below.
ARE THERE TAX IMPLICATIONS FOR DISTRIBUTIONS?
(For more information, see "Tax Considerations".)
DURING THE ACCUMULATION PERIOD
A distribution during the accumulation period is deemed to come first from any
"gain" in your Annuity and second as a return of your "tax basis", if any.
Distributions from your Annuity are generally subject to ordinary income
taxation on the amount of any investment gain unless the distribution qualifies
as a non-taxable exchange or transfer. If you take a distribution prior to the
taxpayer's age 59 1/2, you may be subject to a 10% penalty in addition to
ordinary income taxes on any gain. You may wish to consult a professional tax
advisor for advice before requesting a distribution.
DURING THE ANNUITIZATION PERIOD
During the annuitization period, a portion of each annuity payment is taxed as
ordinary income at the tax rate you are subject to at the time of the payment.
The Code and regulations have "exclusionary rules" that we use to determine what
portion of each annuity payment should be treated as a return of any tax basis
you have in the Annuity. Once the tax basis in the Annuity has been distributed,
the remaining annuity payments are taxable as ordinary income. The tax basis in
the Annuity may be based on the tax-basis from a prior contract in the case of a
1035 exchange or other qualifying transfer.
CAN I WITHDRAW A PORTION OF MY ANNUITY?
Yes, you can make a withdrawal during the accumulation period.
- - To meet liquidity needs, you can withdraw a limited amount from your
Annuity during each of Annuity Years 1-10 without a CDSC being applied. We
call this the "Free Withdrawal" amount. The Free Withdrawal amount is not
available if you choose to surrender your Annuity. Amounts withdrawn as a
Free Withdrawal do not reduce the amount of CDSC that may apply upon a
subsequent withdrawal or surrender of the Annuity. The minimum Free
Withdrawal you may request is $100.
- - You can also make withdrawals in excess of the Free Withdrawal amount. The
maximum amount that you may withdraw will depend on the Annuity's
Surrender Value as of the date we process the withdrawal request. After
any partial withdrawal, your Annuity must have a Surrender Value of at
least $1,000, or we may treat the partial withdrawal request as a request
to fully surrender your Annuity. The minimum partial withdrawal you may
request is $100.
When we determine if a CDSC applies to partial withdrawals and Systematic
Withdrawals, we will first determine what, if any, amounts qualify as a Free
Withdrawal. Those amounts are not subject to the CDSC. Partial withdrawals or
Systematic Withdrawals of amounts greater than the maximum Free Withdrawal
amount will be subject to a CDSC.
You may request a withdrawal for an exact dollar amount after deduction of
any CDSC that applies (called a "net withdrawal") or request a gross withdrawal
from which we will deduct any CDSC that applies, resulting in less money being
payable to you than the amount you requested. If you request a net withdrawal,
the amount deducted from your Account Value to pay the CDSC may also be subject
to a CDSC.
Partial withdrawals may also be available following annuitization but only
if you choose certain annuity payment options.
To request the forms necessary to make a withdrawal from your Annuity,
contact our Customer Service Team at 1-800-680-8920 or visit our Internet
Website at www.americanskandia.prudential.com.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
HOW MUCH CAN I WITHDRAW AS A FREE WITHDRAWAL?
ANNUITY YEARS 1-10
The maximum Free Withdrawal amount during each of Annuity Years 1 through 10
(when a CDSC would otherwise apply to a partial withdrawal or surrender of your
initial Purchase Payment) is 10% of all Purchase Payments. We may apply a Market
Value Adjustment to any Fixed Allocations. If you do not make a Free Withdrawal
during an Annuity Year, you are not allowed to carry over the Free Withdrawal
amount to the next Annuity Year. Withdrawals of amounts greater than the maximum
Free Withdrawal amount are treated as a withdrawal of Purchase Payments and will
be assessed a CDSC during Annuity Years 1 through 10.
NOTE: Amounts that you have withdrawn as a Free Withdrawal will not reduce
the amount of any CDSC that we deduct if, during the first ten (10) Annuity
Years, you make a partial withdrawal or choose to surrender the Annuity. If,
during Annuity Years 1 through 10, all Purchase Payments withdrawn are subject
to a CDSC, then any subsequent withdrawals will be withdrawn from any gain in
the Annuity, which may include Credits.
ANNUITY YEARS 11+
After Annuity Year 10, you can surrender your Annuity or make a partial
withdrawal without a CDSC being deducted from the amount being withdrawn.
EXAMPLES
1. Assume you make an initial Purchase Payment of $10,000 and make no
additional Purchase Payments. The maximum Free Withdrawal amount during
each of the first ten Annuity Years would be 10% of $10,000, or $1,000.
2. Assume you make an initial Purchase Payment of $10,000 and make an
additional Purchase Payment of $5,000 in Annuity Year 2. The maximum Free
Withdrawal amount during Annuity Year 3 through 10 would be 10% of
$15,000, or $1,500. From Annuity Year 11 and thereafter, you can surrender
your Annuity or make a partial withdrawal without a CDSC being deducted
from the amount being withdrawn.
3. Assume you make an initial Purchase Payment of $10,000 and take a Free
Withdrawal of $500 in Annuity Year 2 and $1,000 in Annuity Year 3. If you
surrender your Annuity in Annuity Year 5, the CDSC will be assessed
against the initial Purchase Payment amount ($10,000), not the amount of
Purchase Payments reduced by the amounts that were withdrawn under the
Free Withdrawal provision.
IS THERE A CHARGE FOR A PARTIAL WITHDRAWAL?
A CDSC may be assessed against a partial withdrawal during the first ten (10)
Annuity Years. Whether a CDSC applies and the amount to be charged depends on
whether the partial withdrawal exceeds any Free Withdrawal amount and, if so,
the number of years that have elapsed since the Issue Date of the Annuity.
1. If you request a partial withdrawal, we determine if the amount you
requested is available as a Free Withdrawal (in which case it would not be
subject to a CDSC);
2. If the amount requested exceeds the available Free Withdrawal amount, we
determine if a CDSC will apply to the partial withdrawal based on the
number of years that have elapsed since the Annuity was issued. Any CDSC
will only apply to the amount withdrawn that exceeds the Free Withdrawal
amount. The maximum Free Withdrawal amount during each of Annuity Years 1
through 10 is 10% of all Purchase Payments. Withdrawals of amounts greater
than the maximum Free Withdrawal amount are treated as a withdrawal of
Purchase Payments and will be assessed a CDSC. If, during Annuity Years 1
through 10, all Purchase Payments are withdrawn subject to a CDSC, then
any subsequent withdrawals will be withdrawn from any gain in the Annuity,
which may include Credits.
CAN I MAKE PERIODIC WITHDRAWALS FROM THE ANNUITY DURING THE ACCUMULATION PERIOD?
Yes. We call these "Systematic Withdrawals." You can receive Systematic
Withdrawals of earnings only, principal plus earnings or a flat dollar amount.
Systematic Withdrawals may be subject to a CDSC. We will determine whether a
CDSC applies and the amount in the same way as we would for a partial
withdrawal.
Systematic Withdrawals can be made from Account Value allocated to the
variable investment options or Fixed Allocations. Generally, Systematic
Withdrawals from Fixed Allocations are limited to earnings accrued after the
program of Systematic Withdrawals begins, or payments of fixed dollar amounts
that do not exceed such earnings. Systematic Withdrawals are available on a
monthly, quarterly, semi-annual or annual basis. The Surrender Value of your
Annuity must be at least $20,000 before we will allow you to begin a program of
Systematic Withdrawals.
The minimum amount for each Systematic Withdrawal is $100. If any
scheduled Systematic Withdrawal is for less than
49
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
ACCESS TO ACCOUNT VALUE CONTINUED
$100 (which may occur under a program that provides payment of an amount equal
to the earnings in the annuity for the period requested), we may postpone the
withdrawal and add the expected amount to the amount that is to be withdrawn on
the next scheduled Systematic Withdrawal.
DO YOU OFFER A PROGRAM FOR WITHDRAWALS UNDER SECTION 72(t) OF THE INTERNAL
REVENUE CODE?
Yes. If your Annuity is used as a funding vehicle for certain retirement plans
that receive special tax treatment under Sections 401, 403(b) or 408 of the
Code, Section 72(t) of the Code may provide an exception to the 10% penalty tax
on distributions made prior to age 59 1/2 if you elect to receive distributions
as a series of "substantially equal periodic payments". Distributions received
under this provision in any Annuity Year that exceed the maximum amount
available as a free withdrawal will be subject to a CDSC. We may apply a Market
Value Adjustment to any Fixed Allocations. To request a program that complies
with Section 72(t), you must provide us with certain required information in
writing on a form acceptable to us. We may require advance notice to allow us to
calculate the amount of 72(t) withdrawals. The Surrender Value of your Annuity
must be at least $20,000 before we will allow you to begin a program for
withdrawals under Section 72(t). The minimum amount for any such withdrawal is
$100.
You may also annuitize your contract and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments before age 59 1/2 that are not subject to the 10% penalty.
WHAT ARE MINIMUM DISTRIBUTIONS AND WHEN WOULD I NEED TO MAKE THEM?
(See "Tax Considerations" for a further discussion of Minimum Distributions.)
Minimum Distributions are a type of Systematic Withdrawal we allow to meet
distribution requirements under Sections 401, 403(b) or 408 of the Code. Under
the Code, you may be required to begin receiving periodic amounts from your
Annuity. In such case, we will allow you to make Systematic Withdrawals in
amounts that satisfy the minimum distribution rules under the Code. We do not
assess a CDSC on Minimum Distributions from your Annuity if you are required by
law to take such Minimum Distributions from your Annuity at the time it is
taken. However, a CDSC may be assessed on that portion of a Systematic
Withdrawal that is taken to satisfy the minimum distribution requirements in
relation to other savings or investment plans under other qualified retirement
plans not maintained with American Skandia.
The amount of the required Minimum Distribution for your particular
situation may depend on other annuities, savings or investments. We will only
calculate the amount of your required Minimum Distribution based on the value of
your Annuity. We require three (3) days advance written notice to calculate and
process the amount of your payments. You may elect to have Minimum Distributions
paid out monthly, quarterly, semi-annually or annually. The $100 minimum amount
that applies to Systematic Withdrawals applies to monthly minimum distributions
but does not apply to minimum distributions taken out on a quarterly,
semi-annual or annual basis.
You may also annuitize your contract and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments and satisfying the Minimum Distribution requirements under the Code.
CAN I SURRENDER MY ANNUITY FOR ITS VALUE?
Yes. During the accumulation period you can surrender your Annuity at any time.
Upon surrender, you will receive the Surrender Value. Upon surrender of your
Annuity, you will no longer have any rights under the Annuity.
For purposes of calculating the CDSC on surrender, the Purchase Payments
being withdrawn may be greater than your remaining Account Value or the amount
of your withdrawal request. This is most likely to occur if you have made prior
withdrawals under the Free Withdrawal provision or if your Account Value has
declined in value due to negative market performance. We may apply a Market
Value Adjustment to any Fixed Allocations.
Under certain annuity payment options, you may be allowed to surrender
your Annuity for its then current value.
To request the forms necessary to surrender your Annuity, contact our
Customer Service Team at 1-800-680-8920 or visit our Internet Website at
www.americanskandia.prudential.com.
WHAT IS A MEDICALLY-RELATED SURRENDER AND HOW DO I QUALIFY?
Where permitted by law, you may request to surrender your Annuity prior to the
Annuity Date without application of any CDSC upon occurrence of a
medically-related "Contingency Event". We may apply a Market Value Adjustment to
any Fixed Allocations. The amount payable will be your Account Value minus: (a)
the amount of any Credits applied within 12 months
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
of the applicable "Contingency Event" as defined below; and (b) the amount of
any Credits added in conjunction with any Purchase Payments received after our
receipt of your request for a medically-related surrender (i.e. Purchase
Payments received at such time pursuant to a salary reduction program).
This waiver of any applicable CDSC is subject to our rules, including but
not limited to the following:
- - the Annuitant must have been named or any change of Annuitant must have
been accepted by us, prior to the "Contingency Event" described below in
order to qualify for a medically-related surrender;
- - the Annuitant must be alive as of the date we pay the proceeds of such
surrender request;
- - if the Owner is one or more natural persons, all such Owners must also be
alive at such time;
- - we must receive satisfactory proof of the Annuitant's confinement in a
Medical Care Facility or Fatal Illness in writing on a form satisfactory
to us; and
- - this benefit is not available if the total Purchase Payments received
exceed $500,000 for all annuities issued by us with this benefit where the
same person is named as Annuitant. A "Contingency Event" occurs if the
Annuitant is:
- - first confined in a "Medical Care Facility" while your Annuity is in force
and remains confined for at least 90 days in a row; or
- - first diagnosed as having a "Fatal Illness" while your Annuity is in
force.
The definitions of "Medical Care Facility" and "Fatal Illness," as well as
additional terms and conditions, are provided in your Annuity. Specific details
and definitions in relation to this benefit may differ in certain jurisdictions.
WHAT TYPES OF ANNUITY OPTIONS ARE AVAILABLE?
We currently make annuity options available that provide fixed annuity
payments, variable payments or adjustable payments. Fixed options provide the
same amount with each payment. Variable options generally provide a payment
which may increase or decrease depending on the investment performance of the
Sub-accounts. However, currently, we also make a variable payment option that
has a guarantee feature. Adjustable options provide a fixed payment that is
periodically adjusted based on current interest rates. WE DO NOT GUARANTEE TO
MAKE ANY ANNUITY PAYMENT OPTIONS AVAILABLE IN THE FUTURE OTHER THAN THOSE FIXED
ANNUITIZATION OPTIONS GUARANTEED IN YOUR ANNUITY. Please refer to the
"Guaranteed Minimum Income Benefit" and the "Lifetime Five Income Benefit"
under "Living Benefits" below for a description of annuity options that are
available when you elect these benefits. For additional information on annuity
payment options you may request a Statement of Additional Information.
When you purchase an Annuity, or at a later date, you may choose an
Annuity Date, an annuity option and the frequency of annuity payments. You may
not choose an Annuity Date that occurs in the first three Annuity Years. You may
change your choices before the Annuity Date under the terms of your contract. A
maximum Annuity Date may be required by law. The Annuity Date may depend on the
annuity option you choose. Certain annuity options may not be available
depending on the age of the Annuitant. You may not annuitize and receive annuity
payments within the first three Annuity Years.
Certain of these annuity options may be available to Beneficiaries who
choose to receive the Death Benefit proceeds as a series of payments instead of
a lump sum payment.
OPTION 1
PAYMENTS FOR LIFE: Under this option, income is payable periodically until the
death of the "key life". The "key life" (as used in this section) is the person
or persons upon whose life annuity payments are based. No additional annuity
payments are made after the death of the key life. Since no minimum number of
payments is guaranteed, this option offers the largest amount of periodic
payments of the life contingent annuity options. It is possible that only one
payment will be payable if the death of the key life occurs before the date the
second payment was due, and no other payments nor death benefits would be
payable. THIS OPTION IS CURRENTLY AVAILABLE ON A FIXED OR VARIABLE BASIS. Under
this option, you cannot make a partial or full surrender of the annuity.
OPTION 2
PAYMENTS BASED ON JOINT LIVES: Under this option, income is payable
periodically during the joint lifetime of two key lives, and thereafter during
the remaining lifetime of the survivor, ceasing with the last payment prior to
the survivor's death. No minimum number of payments is guaranteed under this
option. It is possible that only one payment will be payable if the death of
all the key lives occurs before the date the second payment was due, and no
other payments or death benefits would be payable. THIS OPTION IS CURRENTLY
AVAILABLE ON A FIXED OR VARIABLE BASIS. Under this option, you cannot make a
partial or full surrender of the annuity.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
ACCESS TO ACCOUNT VALUE CONTINUED
OPTION 3
PAYMENTS FOR LIFE WITH A CERTAIN PERIOD: Under this option, income is payable
until the death of the key life. However, if the key life dies before the end
of the period selected (5, 10 or 15 years), the remaining payments are paid to
the Beneficiary until the end of such period. THIS OPTION IS CURRENTLY
AVAILABLE ON A FIXED OR VARIABLE BASIS. If you elect to receive payments on a
variable basis under this option, you can request partial or full surrender of
the annuity and receive its then current cash value (if any) subject to our
rules.
OPTION 4
FIXED PAYMENTS FOR A CERTAIN PERIOD: Under this option, income is payable
periodically for a specified number of years. If the payee dies before the end
of the specified number of years, the remaining payments are paid to the
Beneficiary until the end of such period. Note that under this option, payments
are not based on any assumptions of life expectancy. Therefore, that portion of
the Insurance Charge assessed to cover the risk that key lives outlive our
expectations provides no benefit to an Owner selecting this option. Under this
option, you cannot make a partial or full surrender of the annuity.
OPTION 5
VARIABLE PAYMENTS FOR LIFE WITH A CASH VALUE: Under this option, benefits are
payable periodically until the death of the key life. Benefits may increase or
decrease depending on the investment performance of the Sub-accounts. This
option has a cash value that also varies with the investment performance of the
Sub-account. The cash value provides a "cushion" from volatile investment
performance so that negative investment performance does not automatically
result in a decrease in the annuity payment each month, and positive investment
performance does not automatically result in an increase in the annuity payment
each month. The cushion generally "stabilizes" monthly annuity payments. Any
cash value remaining on the death of the key life is paid to the Beneficiary in
a lump sum or as periodic payments. Under this option, you can request partial
or full surrender of the annuity and receive its then current cash value (if
any) subject to our rules.
OPTION 6
VARIABLE PAYMENTS FOR LIFE WITH A CASH VALUE AND GUARANTEE: Under this option,
benefits are payable as described in Option 5; except that, while the key life
is alive, the annuity payment will not be less than a guaranteed amount, which
generally is equal to the first annuity payment. WE CHARGE AN ADDITIONAL AMOUNT
FOR THIS GUARANTEE. Under this option, any cash value remaining on the death of
the key life is paid to the Beneficiary in a lump sum or as periodic payments.
Under this option, you can request partial or full surrender of the annuity and
receive its then current cash value (if any) subject to our rules.
We may make additional annuity payment options available in the future.
HOW AND WHEN DO I CHOOSE THE ANNUITY PAYMENT OPTION?
Unless prohibited by law, we require that you elect either a life annuity or an
annuity with a certain period of at least 5 years if any CDSC would apply were
you to surrender your Annuity on the Annuity Date. Therefore, choosing an
Annuity Date within ten (10) years of the Issue Date of the Annuity may limit
the available annuity payment options. Certain annuity payment options may not
be available if your Annuity Date occurs during the period that a CDSC would
apply.
You have a right to choose your annuity start date. If you have not
provided us with your Annuity Date or annuity payment option in writing, then:
- - a default date for the Annuity Date will be the first day of the calendar
month following the later of the Annuitant's 85th birthday or the fifth
anniversary of our receipt of your request to purchase an Annuity; and
- - the annuity payments, where allowed by law, will be calculated on a fixed
basis under Option 3, Payments for Life with 10 years certain.
If you choose to defer the Annuity Date beyond the default date, the IRS
may not consider your contract to be an annuity under the tax law. If that
should occur, all gain in your contract at that time will become immediately
taxable to you. Further, each subsequent year's increase in Account Value would
be taxable in that year. By choosing to continue to defer after the default
date, you will assume the risk that your Annuity will not be considered an
annuity for federal income tax purposes.
HOW ARE ANNUITY PAYMENTS CALCULATED?
FIXED ANNUITY PAYMENTS (OPTIONS 1-4)
If you choose to receive fixed annuity payments, you will receive equal
fixed-dollar payments throughout the period you select. The amount of the fixed
payment will vary depending on the annuity payment option and payment frequency
you select. Generally, the first annuity payment is determined by multiplying
the Account Value, minus any state premium taxes that
52
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
may apply, by the factor determined from our table of annuity rates. The table
of annuity rates differs based on the type of annuity chosen and the frequency
of payment selected. Our rates will not be less than our guaranteed minimum
rates. These guaranteed minimum rates are derived from the a2000 Individual
Annuity Mortality Table 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.
VARIABLE ANNUITY PAYMENTS
Generally, we offer three different types of variable annuity payment options.
The first annuity payment will be calculated based upon the assumed investment
return ("AIR"). You select the AIR before we start to make annuity payments. You
will not receive annuity payments until you choose an AIR. The remaining annuity
payments will fluctuate based on the performance of the Sub-accounts relative to
the AIR, as well as, other factors described below. The greater the AIR, the
greater the first annuity payment. A higher AIR may result in smaller potential
growth in the annuity payments. A lower AIR results in a lower initial annuity
payment. Within payment options 1-3, if the Sub-accounts you choose perform
exactly the same as the AIR, then subsequent annuity payments will be the same
as the first annuity payment. If the Sub-accounts you choose perform better than
the AIR, then subsequent annuity payments will be higher than the first annuity
payment. If the Sub-accounts you choose perform worse than the AIR, then
subsequent annuity payments will be lower than the first. Within payment options
5 and 6, the cash value for the Annuitant (while alive) and a variable period of
time during which annuity payments will be made whether or not the Annuitant is
still alive are adjusted based on the performance of the Sub-accounts relative
to the AIR; however, subsequent annuity payments do not always increase or
decrease based on the performance of the Sub-accounts relative to the AIR.
- VARIABLE PAYMENTS (OPTIONS 1-3)
We calculate each annuity payment amount by multiplying the number
of units scheduled to be redeemed under a schedule of units for each
Sub-account by the Unit Value of each Sub-account on the annuity
payment date. We determine the schedule of units based on your
Account Value (minus any premium tax that applies) at the time you
elect to begin receiving annuity payments. The schedule of units
will vary based on the annuity payment option selected, the length
of any certain period (if applicable), the Annuitant's age and
gender (if annuity payments are due for the life of the Annuitant)
and the Unit Value of the Sub-accounts you initially selected on the
Issue Date. The calculation is performed for each Sub-account, and
the sum of the Sub-account calculations equals the amount of your
annuity payment. Other than to fund annuity payments, the number of
units allocated to each Sub-account will not change unless you
transfer among the Sub-accounts or make a withdrawal (if allowed).
You can select one of three AIRs for these options: 3%, 5% or 7%.
- STABILIZED VARIABLE PAYMENTS (OPTION 5)
This option provides guaranteed payments for life, a cash value for
the Annuitant (while alive) and a variable period of time during
which annuity payments will be made whether or not the Annuitant is
still alive. We calculate the initial annuity payment amount by
multiplying the number of units scheduled to be redeemed under a
schedule of units by the Unit Values determined on the annuitization
date. The schedule of units is established for each Sub-account you
choose on the annuitization date based on the applicable benchmark
rate, meaning the AIR, and the annuity factors. The annuity factors
reflect our assumptions regarding the costs we expect to bear in
guaranteeing payments for the lives of the Annuitant and will depend
on the benchmark rate, the annuitant's attained age and gender
(where permitted). Unlike variable payments (described above) where
each payment can vary based on Sub-account performance, this payment
option cushions the immediate impact of Sub-account performance by
adjusting the length of the time during which annuity payments will
be made whether or not the Annuitant is alive while generally
maintaining a level annuity payment amount. Sub-account performance
that exceeds a benchmark rate will generally extend this time
period, while Sub-account performance that is less than a benchmark
rate will generally shorten the period. If the period reaches zero
and the Annuitant is still alive, Annuity Payments continue,
however, the annuity payment amount will vary depending on
Sub-account performance, similar to conventional variable payments.
The AIR for this option is 4%.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
ACCESS TO ACCOUNT VALUE CONTINUED
- STABILIZED VARIABLE PAYMENTS WITH A GUARANTEED MINIMUM (OPTION 6)
This option provides guaranteed payments for life in the same manner
as Stabilized Variable Payments (described above). In addition to
the stabilization feature, this option also guarantees that variable
annuity payments will not be less than the initial annuity payment
amount regardless of Sub-account performance. The AIR for this
option is 3%.
The variable annuity payment options are described in greater detail in a
separate prospectus which will be provided to you at the time you elect one of
the variable annuity payment options.
ADJUSTABLE ANNUITY PAYMENTS
We may make an adjustable annuity payment option available. Adjustable annuity
payments are calculated similarly to fixed annuity payments except that on every
fifth (5th) anniversary of receiving annuity payments, the annuity payment
amount is adjusted upward or downward depending on the rate we are currently
crediting to annuity payments. The adjustment in the annuity payment amount does
not affect the duration of remaining annuity payments, only the amount of each
payment.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
LIVING BENEFIT PROGRAMS
DO YOU OFFER PROGRAMS DESIGNED TO PROVIDE INVESTMENT PROTECTION FOR OWNERS WHILE
THEY ARE ALIVE?
American Skandia offers different optional benefits, for an additional
charge, that can provide investment protection for Owners while they are alive.
Notwithstanding the additional protection provided under the optional Living
Benefit Programs, the additional cost has the impact of reducing net performance
of the investment options. Each optional benefit offers a distinct type of
guarantee, regardless of the performance of variable investment options, that
may be appropriate for you depending on the manner in which you intend to make
use of your annuity while you are alive. Depending on which optional benefit you
choose, you can have substantial flexibility to invest in variable investment
options while:
- - protecting a principal amount from decreases in value as of specified
future dates due to investment performance;
- - taking withdrawals with a guarantee that you will be able to withdraw not
less than a principal amount over time; or
- - guaranteeing a minimum amount of growth will be applied to your principal,
if it is to be used as the basis for lifetime income payments beginning
after a waiting period.
Below is a brief summary of the "living benefits" that American Skandia
offers. Please refer to the benefit description for a complete description of
the terms, conditions and limitations of each optional benefit. You should
consult with your investment professional to determine if any of these optional
benefits may be appropriate for you based on your financial needs. There are
many factors to consider, but we note that among them you may want to evaluate
the tax implications of these different approaches to meeting your needs, both
between these benefits and in comparison to other potential solutions to your
needs (e.g. comparing the tax implications of the withdrawal benefit and annuity
payments).
I. The GUARANTEED RETURN OPTION PLUS(SM) (GRO PLUS(SM)) guarantees that,
after a seven-year period following commencement of the program ("maturity
date") and on each anniversary of the maturity date thereafter, your
Account Value will not be less than the Account Value on the effective
date of the program. The program also offers you the option to elect a
second, enhanced guarantee amount at a higher Account Value subject to a
separate maturity period (and its anniversaries). The GRO Plus(SM) program
may be appropriate if you wish to protect a principal amount (called the
"Protected Principal Value") against market downturns as of a specific
date in the future, but also wish to exercise control by allocating and
transferring your available Account Value among the variable investment
options to participate in market experience. Under the GRO Plus(SM)
program, you give us the right to allocate amounts to Fixed Allocations as
needed to support the guarantees provided. The available Account Value
that may be allocated among your variable investment options are those
amounts not allocated to the Fixed Allocations to support the guarantees
provided.
II. The GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) guarantees your ability
to make cumulative withdrawals over time equal to an initial principal
value (called the "Protected Value"), regardless of decreases in your
Account Value due to market losses. The GMWB program may be appropriate if
you intend to make periodic withdrawals from your Annuity and wish to
ensure that market performance will not affect your ability to receive
guaranteed minimum withdrawals. Taking income as withdrawals, rather than
annuity payments, may be less tax efficient for non-qualified uses of the
Annuity, but provides greater control over the timing and amount of
withdrawals during the accumulation period, as well as continuing the
Annuity's other benefits, such as the death benefit.
III. The GUARANTEED MINIMUM INCOME BENEFIT (GMIB) guarantees your ability,
after a minimum seven-year waiting period, to begin receiving income from
the Annuity in the form of annuity payments based on your total Purchase
Payments (and any Credits applied to such Purchase Payments) under the
contract and an annual increase of 5% on such Purchase Payments, adjusted
for withdrawals, regardless of the impact of market performance on your
Account Value. The GMIB program may be appropriate if you anticipate using
your Annuity as a future source of periodic fixed income payments for the
remainder of your life and wish to ensure that the basis upon which your
income payments will be calculated will achieve at least a minimum amount
despite fluctuations in market performance.
IV. The LIFETIME FIVE INCOME BENEFIT guarantees your ability to withdraw
amounts equal to a percentage of a "Protected Withdrawal Value" regardless
of decreases in your Account Value due to market losses. The Lifetime Five
Benefit may be appropriate if you intend to make periodic withdrawals from
your Annuity and wish to ensure that market performance will
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
LIVING BENEFIT PROGRAMS CONTINUED
not affect your ability to receive guaranteed minimum withdrawals. Taking
income as withdrawals, rather than annuity payments, may be less tax
efficient for non-qualified uses of the Annuity, but provides greater
control over the timing and amount of withdrawals during the accumulation
period, as well as continuing the Annuity's other benefits, such as the
death benefit.
GUARANTEED RETURN OPTION Plus(SM)
(GRO Plus(SM))
THE GUARANTEED RETURN OPTION PLUS DESCRIBED BELOW IS ONLY BEING OFFERED IN THOSE
JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL, AND WILL BE OFFERED
SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY APPROVAL IN THOSE
JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS
ONCE APPROVED. THE PROGRAM CAN BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF
THEIR ANNUITY, AND CAN BE ELECTED BY EXISTING ANNUITY OWNERS ON EITHER THE
ANNIVERSARY OF THE ISSUE DATE OF THEIR ANNUITY OR ON A DATE OTHER THAN THAT
ANNIVERSARY, AS DESCRIBED BELOW UNDER "ELECTION OF THE PROGRAM". THE GUARANTEED
RETURN OPTION PLUS IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION
PROGRAM (AND IT IS CURRENTLY ACTIVE), THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT
RIDER, THE GUARANTEED MINIMUM INCOME BENEFIT RIDER, THE LIFETIME FIVE INCOME
BENEFIT RIDER, THE HIGHEST DAILY VALUE DEATH BENEFIT, OR THE DOLLAR COST
AVERAGING PROGRAM IF IT INVOLVES TRANSFERS OUT OF THE FIXED ALLOCATIONS.
We offer a program that, after a seven-year period following commencement
of the program (we refer to the end of that period and any applicable subsequent
period as the "maturity date") and on each anniversary of the maturity date
thereafter while the program remains in effect, guarantees your Account Value
will not be less than your Account Value on the effective date of your program
(called the "Protected Principal Value"). The program also offers you the
opportunity to elect a second, enhanced guaranteed amount at a later date if
your Account Value has increased, while preserving the guaranteed amount
established on the effective date of your program. The enhanced guaranteed
amount (called the "Enhanced Protected Principal Value") guarantees that, after
a separate period following election of the enhanced guarantee and on each
anniversary thereafter while this enhanced guarantee amount remains in effect,
your Account Value will not be less than your Account Value on the effective
date of your election of the enhanced guarantee.
The program monitors your Account Value daily and, if necessary,
systematically transfers amounts between variable investment options you choose
and Fixed Allocations used to support the Protected Principal Value(s). The
program may be appropriate if you wish to protect a principal amount against
market downturns as of a specific date in the future, but also wish to invest in
the variable investment options to participate in market performance. There is
an additional charge if you elect the Guaranteed Return Option Plus program.
The guarantees provided by the program exist only on the applicable
maturity date(s) and on each anniversary of the maturity date(s) thereafter.
However, due to the ongoing monitoring of your Account Value and the transfer of
Account Value between the variable investment options and the Fixed Allocations
to support our future guarantees, the program may provide some protection from
significant market losses if you choose to surrender the Annuity or begin
receiving annuity payments prior to a maturity date. For this same reason, the
program may limit your ability to benefit from market increases while it is in
effect.
KEY FEATURE -- PROTECTED PRINCIPAL
VALUE/ENHANCED PROTECTED PRINCIPAL VALUE
The Guaranteed Return Option Plus offers a base guarantee as well as the option
of electing an enhanced guarantee at a later date.
- - BASE GUARANTEE: Under the base guarantee, American Skandia guarantees that
on the maturity date and on each anniversary of the maturity date
thereafter that the program remains in effect, your Account Value will be
no less than the Protected Principal Value. On the maturity date and on
each anniversary after the maturity date that the program remains in
effect, if your Account Value is below the Protected Principal Value,
American Skandia will apply additional amounts to your Annuity from its
general account to increase your Account Value to be equal to the
Protected Principal Value.
- - ENHANCED GUARANTEE: On any anniversary following commencement of the
program, you can establish an enhanced
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
guaranteed amount based on your current Account Value. Under the enhanced
guarantee, American Skandia guarantees that at the end of a specified
period following the election of the enhanced guarantee (also referred to
as its "maturity date"), and on each anniversary of the maturity date
thereafter that the enhanced guaranteed amount remains in effect, your
Account Value will be no less than the Enhanced Protected Principal Value.
YOU CAN ELECT AN ENHANCED GUARANTEE MORE THAN ONCE; HOWEVER, A SUBSEQUENT
ELECTION SUPERSEDES THE PRIOR ELECTION OF AN ENHANCED GUARANTEE. ELECTION
OF AN ENHANCED GUARANTEE DOES NOT IMPACT THE BASE GUARANTEE. IN ADDITION,
YOU MAY ELECT AN "AUTO STEP-UP" FEATURE THAT WILL AUTOMATICALLY CREATE AN
ENHANCED GUARANTEE (OR INCREASE YOUR ENHANCED GUARANTEE, IF PREVIOUSLY
ELECTED) ON EACH ANNIVERSARY OF THE PROGRAM (AND CREATE A NEW MATURITY
PERIOD FOR THE NEW ENHANCED GUARANTEE) IF THE ACCOUNT VALUE AS OF THAT
ANNIVERSARY EXCEEDS THE PROTECTED PRINCIPAL VALUE OR ENHANCED PROTECTED
PRINCIPAL VALUE BY 7% OR MORE. YOU MAY ALSO ELECT TO TERMINATE AN ENHANCED
GUARANTEE. IF YOU ELECT TO TERMINATE THE ENHANCED GUARANTEE, THE BASE
GUARANTEE WILL REMAIN IN EFFECT. If you have elected the enhanced
guarantee, on the guarantee's maturity date and on each anniversary of the
maturity date thereafter that the enhanced guarantee amount remains in
effect, if your Account Value is below the Enhanced Protected Principal
Value, American Skandia will apply additional amounts to your Annuity from
its general account to increase your Account Value to be equal to the
Enhanced Protected Principal Value.
Any amounts added to your Annuity to support our guarantees under the
program will be applied to any Fixed Allocations first and then to the
sub-accounts pro rata, based on your most recent allocation instructions in
accordance with the allocation mechanism we use under the program. We will
notify you of any amounts added to your Annuity under the program. If our
assumptions are correct and the operations relating to the administration of the
program work properly, we do not expect that we will need to add additional
amounts to the Annuity. The Protected Principal Value is referred to as the
"Base Guarantee" and the Enhanced Protected Principal Value is referred to as
the "Step-up Guarantee" in the rider we issue for this benefit.
WITHDRAWALS UNDER YOUR ANNUITY
Withdrawals from your Annuity, while the program is in effect, will reduce the
base guarantee under the program as well as any enhanced guarantee. Cumulative
annual withdrawals up to 5% of the Protected Principal Value as of the effective
date of the program (adjusted for any subsequent Purchase Payments and any
Credits applied to such Purchase Payments) will reduce the applicable guaranteed
amount by the actual amount of the withdrawal (referred to as the
"dollar-for-dollar limit"). If the amount withdrawn is greater than the
dollar-for-dollar limit, the portion of the withdrawal equal to the
dollar-for-dollar limit will be treated as described above, and the portion of
the withdrawal in excess of the dollar-for-dollar limit will reduce the base
guarantee and the enhanced guarantee proportionally, according to the formula as
described in the rider for this benefit (see the examples of this calculation
below). Withdrawals other than Systematic Withdrawals will be taken pro-rata
from the variable investment options and any Fixed Allocations. Systematic
Withdrawals will be taken pro-rata from the variable investment options and any
Fixed Allocations up to growth attributable to the Fixed Allocations and
thereafter pro-rata solely from the variable investment options. Withdrawals
will be subject to all other provisions of the Annuity, including any Contingent
Deferred Sales Charge and Market Value Adjustment that would apply.
Charges for other optional benefits under the Annuity that are deducted as
an annual charge in arrears will not reduce the applicable guaranteed amount
under the Guaranteed Return Option Plus program, however, any partial
withdrawals in payment of charges for any third party investment advisory
service will be treated as withdrawals and will reduce the applicable guaranteed
amount.
The following examples of dollar-for-dollar and proportional reductions
assume that: 1.) the Issue Date and the effective date of the GRO Plus(SM)
program are October 13, 2004; 2.) an initial Purchase Payment of $250,000
(includes any Credits); 3.) a base guarantee amount of $250,000; and 4.) a
dollar-for-dollar limit of $12,500 (5% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 29, 2004 (in the first Annuity Year).
No prior withdrawals have been taken. As the amount withdrawn is less than the
Dollar-for-dollar Limit:
- - The base guarantee amount is reduced by the amount withdrawn (i.e., by
$10,000, from $250,000 to $240,000).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance
of the first Annuity Year is also reduced by the amount withdrawn (from
$12,500 to $2,500).
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
LIVING BENEFIT PROGRAMS CONTINUED
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on December 18, 2004 (still within the
first Annuity Year). The Account Value immediately before the withdrawal is
$180,000. As the amount withdrawn exceeds the Remaining Limit of $2,500 from
Example 1:
- - The base guarantee amount is first reduced by the Remaining Limit (from
$240,000 to $237,500);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the Remaining Limit ($10,000 -
$2,500, or $7,500).
- B is the Account Value less the Remaining Limit ($180,000 - $2,500,
or $177,500).
The resulting base guarantee amount is: $237,500 x (1 - $7,500 /
$177,500), or $227,464.79.
- - The Remaining Limit is set to zero (0) for the balance of the first
Annuity Year.
EXAMPLE 3. RESET OF THE DOLLAR-FOR-DOLLAR LIMIT
A $10,000 withdrawal is made on December 19, 2005 (second Annuity Year). The
Remaining Limit has been reset to the dollar-for-dollar limit of $12,500. As
the amount withdrawn is less than the dollar-for-dollar limit:
- - The base guarantee amount is reduced by the amount withdrawn (i.e.,
reduced by $10,000, from $227,464.79 to $217,464.79).
- - The Remaining Limit for the balance of the second Annuity Year is also
reduced by the amount withdrawn (from $12,500 to $2,500).
KEY FEATURE -- ALLOCATION OF ACCOUNT VALUE
Account Value is transferred to and maintained in Fixed Allocations to the
extent we, in our sole discretion, deem it is necessary to support our
guarantee(s) under the program. We monitor fluctuations in your Account Value
each Valuation Day, as well as the prevailing interest rates on Fixed
Allocations, the remaining duration(s) until the applicable maturity date(s) and
the amount of Account Value allocated to Fixed Allocation(s) relative to a
"reallocation trigger", which determines whether Account Value must be
transferred to or from Fixed Allocation(s). While you are not notified when your
Account Value reaches a reallocation trigger, you will receive a confirmation
statement indicating the transfer of a portion of your Account Value either to
or from Fixed Allocation(s).
- - IF YOUR ACCOUNT VALUE IS GREATER THAN OR EQUAL TO THE REALLOCATION
TRIGGER, your Account Value in the variable investment options will remain
allocated according to your most recent instructions. If a portion of
Account Value was previously allocated to a Fixed Allocation to support
the applicable guaranteed amount, all or a portion of those amounts may be
transferred from the Fixed Allocation and re-allocated to the variable
investment options pro-rata according to your most recent allocation
instructions (including the model allocations under any asset allocation
program you may have elected). A Market Value Adjustment will apply when
we reallocate Account Value from a Fixed Allocation to the variable
investment options, which may result in a decrease or increase in your
Account Value.
- - IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER, a portion of
your Account Value in the variable investment options will be transferred
from your variable investment options pro rata according to your
allocations to a new Fixed Allocation(s) to support the applicable
guaranteed amount. The new Fixed Allocation(s) will have a Guarantee
Period equal to the time remaining until the applicable maturity date(s).
The Account Value allocated to the new Fixed Allocation(s) will be
credited with the fixed interest rate(s) then being credited to a new
Fixed Allocation(s) maturing on the applicable maturity date(s) (rounded
to the next highest yearly duration). The Account Value will remain
invested in each applicable Fixed Allocation until the applicable maturity
date unless, at an earlier date, your Account Value is greater than or
equal to the reallocation trigger and, therefore, amounts can be
transferred to the variable investment options while maintaining the
guaranteed protection under the program (as described above).
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
IF A SIGNIFICANT AMOUNT OF YOUR ACCOUNT VALUE IS SYSTEMATICALLY TRANSFERRED TO
FIXED ALLOCATIONS TO SUPPORT THE PROTECTED PRINCIPAL VALUE AND/OR THE ENHANCED
PROTECTED PRINCIPAL VALUE DURING PERIODS OF MARKET DECLINES, LOW INTEREST RATES,
AND/OR AS THE PROGRAM NEARS ITS MATURITY DATE, LESS OF YOUR ACCOUNT VALUE MAY BE
AVAILABLE TO PARTICIPATE IN THE INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT
OPTIONS IF THERE IS A SUBSEQUENT MARKET RECOVERY. DURING PERIODS CLOSER TO THE
MATURITY DATE OF THE BASE GUARANTEE OR ANY ENHANCED GUARANTEE, OR ANY
ANNIVERSARY OF SUCH MATURITY DATE(S), A SIGNIFICANT PORTION OF YOUR ACCOUNT
VALUE MAY BE ALLOCATED TO FIXED ALLOCATIONS TO SUPPORT ANY APPLICABLE GUARANTEED
AMOUNT(S). IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER AND NEW
FIXED ALLOCATIONS MUST BE ESTABLISHED DURING PERIODS WHERE THE INTEREST RATE(S)
BEING CREDITED TO SUCH FIXED ALLOCATIONS IS LOW, A LARGER PORTION OF YOUR
ACCOUNT VALUE MAY NEED TO BE TRANSFERRED TO FIXED ALLOCATIONS TO SUPPORT THE
APPLICABLE GUARANTEED AMOUNT(S), CAUSING LESS OF YOUR ACCOUNT VALUE TO BE
AVAILABLE TO PARTICIPATE IN THE INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT
OPTIONS.
Separate Fixed Allocations may be established in support of the Protected
Principal Value and the Enhanced Protected Principal Value (if elected). There
may also be circumstances when a Fixed Allocation will be established only in
support of the Protected Principal Value or the Enhanced Protected Principal
Value. If you elect an enhanced guarantee, it is more likely that a portion of
your Account Value may be allocated to Fixed Allocations and will remain
allocated for a longer period of time to support the Enhanced Protected
Principal Value, even during a period of positive market performance and/or
under circumstances where Fixed Allocations would not be necessary to support
the Protected Principal Value. Further, there may be circumstances where Fixed
Allocations in support of the Protected Principal Value or Enhanced Protected
Principal Value are transferred to the variable investment options differently
than each other because of the different guarantees they support.
American Skandia uses an allocation mechanism based on assumptions of
expected and maximum market volatility, interest rates and time left to the
maturity of the program to determine the reallocation trigger. The allocation
mechanism is used to determine the allocation of Account Value between Fixed
Allocations and the Sub-accounts you choose. American Skandia reserves the right
to change the allocation mechanism and the reallocation trigger at its
discretion, subject to regulatory approval where required. Changes to the
allocation mechanism and/or the reallocation trigger may be applied to existing
programs where allowed by law.
ELECTION OF THE PROGRAM
The Guaranteed Return Option Plus program can be elected at the time that you
purchase your Annuity, or on any Valuation Day thereafter (prior to
annuitization). If you elect the program after the Issue Date of your Annuity,
the program will be effective as of the Valuation Day that we receive the
required documentation in good order at our home office, and the guaranteed
amount will be based on your Account Value as of that date. If you previously
elected the Guaranteed Return Option program and wish to elect the Guaranteed
Return Option Plus program, your prior Guaranteed Return Option program will be
terminated. Termination of the Guaranteed Return Option for the purpose of
electing the Guaranteed Return Option Plus, will be treated as any other
termination of the Guaranteed Return Option (see below), including the
termination of any guaranteed amount, and application of any applicable Market
Value Adjustment when amounts are transferred to the variable investment options
as a result of the termination. The Guaranteed Return Option Plus program will
then be added to your Annuity BASED ON THE CURRENT ACCOUNT VALUE.
TERMINATION OF THE PROGRAM
You can elect to terminate the enhanced guarantee but maintain the protection
provided by the base guarantee. You also can terminate the Guaranteed Return
Option Plus program entirely. If you terminate the program entirely, you can
subsequently elect to participate in the program again (based on the Account
Value on that date) by furnishing the documentation we require. In a rising
market, you could, for example, terminate the program on a given Valuation Day
and two weeks later reinstate the program with a higher base guarantee (and a
new maturity date). However, your ability to reinstate the program is limited by
the following: (A) in any Annuity Year, we do not permit more than two program
elections (including any election made effective on the Annuity issue date and
any election made by a surviving spouse) and (B) a program reinstatement cannot
be effected on the same Valuation Day on which a program termination was
effected. Upon termination,
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
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any Account Value in the Fixed Allocations will be transferred to the variable
investment options pro-rata based on the Account Values in such variable
investment options, or in accordance with any effective asset allocation
program. A Market Value Adjustment will apply.
The program will terminate automatically upon: (a) the death of the Owner
or the Annuitant (in an entity owned contract); (b) as of the date Account Value
is applied to begin annuity payments; or (c) upon full surrender of the Annuity.
If you elect to terminate the program, the Guaranteed Return Option Plus will no
longer provide any guarantees. The surviving spouse may elect the benefit at any
time, subject to the limitations described above, after the death of the Annuity
Owner. The surviving spouse's election will be effective on the Valuation Day
that we receive the required documentation in good order at our home office, and
the Account Value on that Valuation Day will be the Protected Principal Value.
The charge for the Guaranteed Return Option Plus program will no longer be
deducted from your Account Value upon termination of the program.
SPECIAL CONSIDERATIONS UNDER THE GUARANTEED RETURN OPTION PLUS
This program is subject to certain rules and restrictions, including, but not
limited to the following:
- - Upon inception of the program, 100% of your Account Value must be
allocated to the variable investment options. No Fixed Allocations may be
in effect as of the date that you elect to participate in the program.
However, the reallocation trigger may transfer Account Value to Fixed
Allocations as of the effective date of the program under some
circumstances.
- - You cannot allocate any portion of Purchase Payments (including any
Credits applied to such Purchase Payments) or transfer Account Value to or
from a Fixed Allocation while participating in the program; however, all
or a portion of any Purchase Payments (including any Credits applied to
such Purchase Payments) may be allocated by us to Fixed Allocations to
support the amount guaranteed. You cannot participate in any dollar cost
averaging program that transfers Account Value from a Fixed Allocation to
a variable investment option.
- - Transfers from Fixed Allocations made as a result of the allocation
mechanism under the program will be subject to the Market Value Adjustment
formula under the Annuity; however, the 0.10% liquidity factor in the
formula will not apply. A Market Value Adjustment may be either positive
or negative. Transfer amounts will be taken from the most recently
established Fixed Allocation.
- - Transfers from the Sub-accounts to Fixed Allocations or from Fixed
Allocations to the Sub-accounts under the program will not count toward
the maximum number of free transfers allowable under the Annuity.
- - Any amounts applied to your Account Value by American Skandia on the
maturity date or any anniversary of the maturity date will not be treated
as "investment in the contract" for income tax purposes.
- - Low interest rates may require allocation to Fixed Allocations even when
the current Account Value exceeds the guarantee.
- - As the time remaining until the applicable maturity date gradually
decreases the program will become increasingly sensitive to moves to Fixed
Allocations.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
CHARGES UNDER THE PROGRAM
We deduct a charge equal to 0.25% of the average daily net assets of the
sub-accounts for participation in the Guaranteed Return Option Plus program. The
annual charge is deducted daily. Account Value allocated to Fixed Allocations
under the program is not subject to the charge. The charge is deducted to
compensate American Skandia for: (a) the risk that your Account Value on the
maturity date is less than the amount guaranteed; and (b) administration of the
program.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
GUARANTEED RETURN OPTION (GRO)
THE GUARANTEED RETURN OPTION DESCRIBED BELOW IS OFFERED ONLY IN THOSE
JURISDICTIONS WHERE WE HAVE NOT YET RECEIVED REGULATORY APPROVAL FOR THE
GUARANTEED RETURN OPTION PLUS AS OF THE DATE THE ELECTION OF THE OPTION IS MADE.
CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS. THE PROGRAM CAN
BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY, AND CAN BE
ELECTED BY EXISTING ANNUITY OWNERS ON EITHER THE ANNIVERSARY OF THE ISSUE DATE
OF THEIR ANNUITY OR ON A DATE OTHER THAN THAT ANNIVERSARY, AS DESCRIBED BELOW
UNDER "ELECTION OF THE PROGRAM". THE GUARANTEED RETURN OPTION IS NOT AVAILABLE
IF YOU ELECT THE GRO PLUS RIDER, THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT
RIDER, THE GUARANTEED MINIMUM INCOME BENEFIT RIDER, THE LIFETIME FIVE INCOME
BENEFIT RIDER, THE HIGHEST DAILY VALUE DEATH BENEFIT OR THE DOLLAR COST
AVERAGING PROGRAM IF IT INVOLVES TRANSFERS OUT OF THE FIXED ALLOCATIONS.
We offer a program that, after a seven-year period following commencement
of the program (we refer to the end of that period as the "maturity date")
guarantees your Account Value will not be less than your Account Value on the
effective date of your program (called the "Protected Principal Value").
The program monitors your Account Value daily and, if necessary,
systematically transfers amounts between variable investment options you choose
and the Fixed Allocation used to support the Protected Principal Value. The
program may be appropriate if you wish to protect a principal amount against
market downturns as of a specific date in the future, but also wish to invest in
the variable investment options to participate in market performance. There is
an additional charge if you elect the Guaranteed Return Option program.
The guarantees provided by the program exist only on the applicable
maturity date. However, due to the ongoing monitoring of your Account Value and
the transfer of Account Value between the variable investment options and the
Fixed Allocation to support our future guarantee, the program may provide some
protection from significant market losses if you choose to surrender the Annuity
or begin receiving annuity payments prior to a maturity date. For this same
reason, the program may limit your ability to benefit from market increases
while it is in effect.
KEY FEATURE -- PROTECTED PRINCIPAL VALUE
- - Under the GRO option, American Skandia guarantees that on the maturity
date, your Account Value will be no less than the Protected Principal
Value. On the maturity date if your Account Value is below the Protected
Principal Value, American Skandia will apply additional amounts to your
Annuity from its general account to increase your Account Value to be
equal to the Protected Principal Value.
Any amounts added to your Annuity to support our guarantees under the
program will be applied to the Fixed Allocation first and then to the
Sub-accounts pro-rata, based on your most recent allocation instructions in
accordance with the allocation mechanism we use under the program. We will
notify you of any amounts added to your Annuity under the program. If our
assumptions are correct and the operations relating to the administration of the
program work properly, we do not expect that we will need to add additional
amounts to the Annuity. The Protected Principal Value is generally referred to
as the "Guaranteed Amount" in the rider we issue for this benefit.
KEY FEATURE -- ALLOCATION OF ACCOUNT VALUE
Account Value is transferred to and maintained in a Fixed Allocation to the
extent we, in our sole discretion, deem it is necessary to support our guarantee
under the program. We monitor fluctuations in your Account Value each Valuation
Day, as well as the prevailing interest rates on the Fixed Allocation, the
remaining duration until the applicable maturity date and the amount of Account
Value allocated to the Fixed Allocation relative to a "reallocation trigger",
which determines whether Account Value must be transferred to or from the Fixed
Allocation. While you are not notified when your Account Value reaches a
reallocation trigger, you will receive a confirmation statement indicating the
transfer of a portion of your Account Value either to or from the Fixed
Allocation.
- - IF YOUR ACCOUNT VALUE IS GREATER THAN OR EQUAL TO THE REALLOCATION
TRIGGER, your Account Value in the variable investment options will remain
allocated according to your most recent instructions. If a portion of
Account Value was previously allocated to the Fixed Allocation to support
the guaranteed amount, all or a portion of those amounts may be
transferred from the Fixed Allocation and re-allocated to the variable
investment options pro-rata according to your most recent allocation
instructions (including the model
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
LIVING BENEFIT PROGRAMS CONTINUED
allocations under any asset allocation program you may have elected). A
Market Value Adjustment will apply when we reallocate Account Value from
the Fixed Allocation to the variable investment options, which may result
in a decrease or increase in your Account Value.
- - IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER, a portion of
your Account Value in the variable investment options will be transferred
from your variable investment options pro rata according to your
allocations to a new Fixed Allocation to support the guaranteed amount.
The new Fixed Allocation will have a Guarantee Period equal to the time
remaining until the applicable maturity date. The Account Value allocated
to the new Fixed Allocation will be credited with the fixed interest rate
then being credited to a new Fixed Allocation maturing on the applicable
maturity date (rounded to the next highest yearly duration). The Account
Value will remain invested in the Fixed Allocation until the maturity date
unless, at an earlier date, your Account Value is greater than or equal to
the reallocation trigger and, therefore, amounts can be transferred to the
variable investment options while maintaining the guaranteed protection
under the program (as described above).
IF A SIGNIFICANT AMOUNT OF YOUR ACCOUNT VALUE IS SYSTEMATICALLY TRANSFERRED TO
THE FIXED ALLOCATION TO SUPPORT THE PROTECTED PRINCIPAL VALUE DURING PERIODS OF
MARKET DECLINES, LOW INTEREST RATES, AND/OR AS THE PROGRAM NEARS ITS MATURITY
DATE, LESS OF YOUR ACCOUNT VALUE MAY BE AVAILABLE TO PARTICIPATE IN THE
INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS IF THERE IS A
SUBSEQUENT MARKET RECOVERY. DURING PERIODS CLOSER TO THE MATURITY DATE OF THE
GUARANTEE A SIGNIFICANT PORTION OF YOUR ACCOUNT VALUE MAY BE ALLOCATED TO THE
FIXED ALLOCATION TO SUPPORT ANY APPLICABLE GUARANTEED AMOUNT. IF YOUR ACCOUNT
VALUE IS LESS THAN THE REALLOCATION TRIGGER AND A NEW FIXED ALLOCATION MUST BE
ESTABLISHED DURING PERIODS WHERE THE INTEREST RATE BEING CREDITED TO SUCH FIXED
ALLOCATIONS IS LOW, A LARGER PORTION OF YOUR ACCOUNT VALUE MAY NEED TO BE
TRANSFERRED TO THE FIXED ALLOCATION TO SUPPORT THE GUARANTEED AMOUNT, CAUSING
LESS OF YOUR ACCOUNT VALUE TO BE AVAILABLE TO PARTICIPATE IN THE INVESTMENT
EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS.
American Skandia uses an allocation mechanism based on assumptions of
expected and maximum market volatility, interest rates and time left to the
maturity of the program to determine the reallocation trigger. The allocation
mechanism is used to determine the allocation of Account Value between Fixed
Allocation and the Sub-accounts you choose. American Skandia reserves the right
to change the allocation mechanism and the reallocation trigger at its
discretion, subject to regulatory approval where required. Changes to the
allocation mechanism and/or the reallocation trigger may be applied to existing
programs where allowed by law.
ELECTION OF THE PROGRAM
The Guaranteed Return Option can be elected at the time that you purchase your
Annuity, or on any Valuation Day thereafter (prior to annuitization). If you
elect the program after the Issue Date of your Annuity, the program will be
effective as of the Valuation Day that we receive the required documentation in
good order at our home office, and the guaranteed amount will be based on your
Account Value as of that date.
TERMINATION OF THE PROGRAM
The Annuity Owner also can terminate the Guaranteed Return Option program. Upon
termination, any Account Value in the Fixed Allocations will be transferred to
the variable investment options pro-rata based on the Account Values in such
variable investment options, or in accordance with any effective asset
allocation program. A Market Value Adjustment will apply.
The program will terminate automatically upon: (a) the death of the Owner
or the Annuitant (in an entity owned con tract); (b) as of the date Account
Value is applied to begin annuity payments; or (c) upon full surrender of the
Annuity. If you elect to terminate the program, the Guaranteed Return Option
will no longer provide any guarantees. If the surviving spouse assumes the
Annuity, he/she may re-elect the benefit on any anniversary of the Issue Date of
the Annuity or, if the deceased Owner had not previously elected the benefit,
may elect the benefit at any time. The surviving spouse's election will be
effective on the Valuation Day that we receive the required documentation in
good order at our home office, and the Account Value on that Valuation Day will
be the Protected Principal Value.
The charge for the Guaranteed Return Option program will no longer be
deducted from your Account Value upon termination of the program.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
SPECIAL CONSIDERATIONS UNDER THE GUARANTEED RETURN OPTION
This program is subject to certain rules and restrictions, including, but not
limited to the following:
- - Upon inception of the program, 100% of your Account Value must be
allocated to the variable investment options. The Fixed Allocations may
not be in effect as of the date that you elect to participate in the
program. However, the reallocation trigger may transfer Account Value to
the Fixed Allocation as of the effective date of the program under some
circumstances.
- - Annuity Owners cannot allocate any portion of Purchase Payments (including
any Credits applied to such Purchase Payments) or transfer Account Value
to or from the Fixed Allocation while participating in the program;
however, all or a portion of any Purchase Payments (including any Credits
applied to such Purchase Payments) may be allocated by us to the Fixed
Allocation to support the amount guaranteed. You cannot participate in any
dollar cost averaging program that transfers Account Value from the Fixed
Allocation to a variable investment option.
- - Transfers from the Fixed Allocation made as a result of the allocation
mechanism under the program will be subject to the Market Value Adjustment
formula under the Annuity; however, the 0.10% liquidity factor in the
formula will not apply. A Market Value Adjustment may be either positive
or negative. Transfer amounts will be taken from the most recently
established Fixed Allocation.
- - Transfers from the Sub-accounts to the Fixed Allocation or from the Fixed
Allocation to the Sub-accounts under the program will not count toward the
maximum number of free transfers allowable under the Annuity.
- - Any amounts applied to your Account Value by American Skandia on the
maturity date or any anniversary of the maturity date will not be treated
as "investment in the contract" for income tax purposes.
- - Low interest rates may require allocation to the Fixed Allocation even
when the current Account Value exceeds the guarantee.
- - As the time remaining until the applicable maturity date gradually
decreases the program will become increasingly sensitive to moves to the
Fixed Allocation.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
CHARGES UNDER THE PROGRAM
We deduct a charge equal to 0.25% of the average daily net assets of the
sub-accounts for participation in the Guaranteed Return Option program. The
annual charge is deducted daily. In those states where the daily deduction of
the charge has not yet been approved, the annual charge is deducted annually, in
arrears. Account Value allocated to the Fixed Allocation under the program is
not subject to the charge. The charge is deducted to compensate American Skandia
for: (a) the risk that your Account Value on the maturity date is less than the
amount guaranteed; and (b) administration of the program.
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL AND
WILL BE OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY
APPROVAL IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. CURRENTLY, THE PROGRAM CAN ONLY BE ELECTED BY NEW
PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY. WE MAY OFFER THE PROGRAM TO
EXISTING ANNUITY OWNERS IN THE FUTURE, SUBJECT TO OUR ELIGIBILITY RULES AND
RESTRICTIONS. THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT PROGRAM IS NOT AVAILABLE
IF YOU ELECT THE GUARANTEED RETURN OPTION, GUARANTEED RETURN OPTION PLUS, THE
GUARANTEED MINIMUM INCOME BENEFIT RIDER, OR THE LIFETIME FIVE INCOME BENEFIT
RIDER.
We offer a program that guarantees your ability to withdraw amounts equal
to an initial principal value (called the "Protected Value"), regardless of the
impact of market performance on your Account Value, subject to our program rules
regarding the timing and amount of withdrawals. The program may be appropriate
if you intend to make periodic withdrawals from your Annuity and wish to ensure
that market performance
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
LIVING BENEFIT PROGRAMS CONTINUED
will not affect your ability to protect your principal. You are not required to
make withdrawals as part of the program -- the guarantee is not lost if you
withdraw less than the maximum allowable amount of principal each year under the
rules of the program. There is an additional charge if you elect the GMWB
program; however, the charge may be waived under certain circumstances described
below.
KEY FEATURE -- PROTECTED VALUE
The Protected Value is the total amount that we guarantee will be available to
you through withdrawals from your Annuity and/or benefit payments, regardless of
the impact of market performance on your Account Value. The Protected Value is
reduced with each withdrawal you make until the Protected Value is reduced to
zero. When the Protected Value is reduced to zero due to your withdrawals, the
GMWB program terminates. Additionally, the Protected Value is used to determine
the maximum annual amount that you can withdraw from your Annuity, called the
Protected Annual Withdrawal Amount, without triggering an adjustment in the
Protected Value on a proportional basis. The Protected Value is referred to as
the "Benefit Base" in the rider we issue for this benefit.
The Protected Value is determined as of the date you make your first
withdrawal under the Annuity following your election of the GMWB program. The
initial Protected Value is equal to the greater of (A) the Account Value on the
date you elect the GMWB program, plus any additional Purchase Payments and any
Credits that may be applied to such Purchase Payments before the date of your
first withdrawal; or (B) the Account Value as of the date of the first
withdrawal from your Annuity. The Protected Value may be enhanced by increases
in your Account Value due to market performance during the period between your
election of the GMWB program and the date of your first withdrawal.
- - If you elect the GMWB program at the time you purchase your Annuity, the
Account Value will be your initial Purchase Payment plus any Credit
applied to such Purchase Payment.
- - IF WE OFFER THE GMWB PROGRAM TO EXISTING ANNUITY OWNERS, the Account Value
on the anniversary of the Issue Date of your Annuity following your
election of the GMWB program will be used to determine the initial
Protected Value.
- - If you make additional Purchase Payments after your first withdrawal, the
Protected Value will be increased by the amount of the additional Purchase
Payment and any Credits that we apply to the Purchase Payment.
You may elect to step-up your Protected Value if, due to positive market
performance, your Account Value is greater than the Protected Value. You are
eligible to step-up the Protected Value on or after the 5th contract anniversary
following the first withdrawal under the GMWB program. The Protected Value can
be stepped up again on or after the 5th contract anniversary following the
preceding step-up. If you elect to step-up the Protected Value, you must do so
during the 30-day period prior to your eligibility date. If you elect to step-up
the Protected Value under the program, and on the date you elect to step-up, the
charges under the GMWB program have changed for new purchasers, your program may
be subject to the new charge going forward.
Upon election of the step-up, we reset the Protected Value to be equal to
the then current Account Value. For example, assume your initial Protected Value
was $100,000 and you have made cumulative withdrawals of $40,000, reducing the
Protected Value to $60,000. On the date you are eligible to step-up the
Protected Value, your Account Value is equal to $75,000. You could elect to
step-up the Protected Value to $75,000 on the date you are eligible. Upon
election of the step-up, we also reset the Protected Annual Withdrawal Amount
(discussed immediately below) to be equal to the greater of (A) the Protected
Annual Withdrawal Amount immediately prior to the reset; and (B) 7% of the
Protected Value immediately after the reset.
KEY FEATURE -- PROTECTED ANNUAL WITHDRAWAL AMOUNT
The initial Protected Annual Withdrawal Amount is equal to 7% of the Protected
Value. Under the GMWB program, if your cumulative withdrawals each Annuity Year
are less than or equal to the Protected Annual Withdrawal Amount, your Protected
Value will be reduced on a "dollar-for-dollar" basis (the Protected Value is
reduced by the actual amount of the withdrawal, including any CDSC or MVA that
may apply). Cumulative withdrawals in any Annuity Year that exceed the Protected
Annual Withdrawal Amount trigger a proportional adjustment to both the Protected
Value and the Protected Annual Withdrawal Amount, as described in the rider for
this benefit (see the examples of this calculation below). The Protected Annual
Withdrawal Amount is referred to as the "Maximum Annual Benefit" in the rider we
issue for this benefit.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
THE GMWB PROGRAM DOES NOT AFFECT YOUR ABILITY TO MAKE WITHDRAWALS UNDER
YOUR ANNUITY OR LIMIT YOUR ABILITY TO REQUEST WITHDRAWALS THAT EXCEED THE
PROTECTED ANNUAL WITHDRAWAL AMOUNT. You are not required to withdraw all or any
portion of the Protected Annual Withdrawal Amount each Annuity Year.
- - If, cumulatively, you withdraw an amount less than the Protected Annual
Withdrawal Amount in any Annuity Year, you cannot carry-over the unused
portion of the Protected Annual Withdrawal Amount to subsequent Annuity
Years. However, because the Protected Value is only reduced by the actual
amount of withdrawals you make under these circumstances, any unused
Protected Annual Withdrawal Amount may extend the period of time until the
remaining Protected Value is reduced to zero.
- - Additional Purchase Payments will increase the Protected Annual Withdrawal
Amount by 7% of the applicable Purchase Payment (and any Credits we apply
to such Purchase Payment).
- - If the Protected Annual Withdrawal Amount after an adjustment exceeds the
Protected Value, the Protected Annual Withdrawal Amount will be set equal
to the Protected Value.
The following examples of dollar-for-dollar and proportional reductions
and the reset of the Maximum Annual Benefit assume that: 1.) the Issue Date and
the effective date of the GMWB program are October 13, 2004; 2.) an initial
Purchase Payment of $250,000 (includes any Credits); 3.) a Protected Value of
$250,000; and 4.) a Protected Annual Withdrawal Amount of $17,500 (7% of
$250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 13, 2004 (in the first Annuity Year).
No prior withdrawals have been taken. As the amount withdrawn is less than the
Protected Annual Withdrawal Amount:
- - The Protected Value is reduced by the amount withdrawn (i.e., by $10,000,
from $250,000 to $240,000).
- - The remaining Protected Annual Withdrawal Amount for the balance of the
first Annuity Year is also reduced by the amount withdrawn (from $17,500
to $7,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on December 13, 2004 (still within the
first Annuity Year). The Account Value immediately before the withdrawal is
$220,000. As the amount withdrawn exceeds the remaining Protected Annual
Withdrawal Amount of $7,500 from Example 1:
- - the Protected Value is first reduced by the remaining Protected Annual
Withdrawal Amount (from $240,000 to $232,500);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the remaining Protected Annual
Withdrawal Amount ($10,000 - $7,500, or $2,500).
- B is the Account Value less the remaining Protected Annual
Withdrawal Amount ($220,000 - $7,500, or $212,500).
The resulting Protected Value is: $232,500 x (1 - $2,500 /
$212,500), or $229,764.71.
- - the Protected Annual Withdrawal Amount is also reduced by the ratio of A
to B: The resulting Protected Annual Withdrawal Amount is: $17,500 x (1 -
$2,500 / $212,500), or $17,294.12.
- - The remaining Protected Annual Withdrawal Amount is set to zero (0) for
the balance of the first Annuity Year.
EXAMPLE 3. RESET OF THE MAXIMUM ANNUAL BENEFIT
A $10,000 withdrawal is made on October 13, 2005 (second Annuity Year). The
remaining Protected Annual Withdrawal Amount has been reset to the Protected
Annual Withdrawal Amount of $17,294.12 from Example 2. As the amount withdrawn
is less than the remaining Protected Annual Withdrawal Amount:
- - the Protected Value is reduced by the amount withdrawn (i.e., reduced by
$10,000, from $229,764.71 to $219,764.71).
- - The remaining Protected Annual Withdrawal Amount for the balance of the
second Annuity Year is also reduced by the amount withdrawn (from
$17,294.12 to $7,294.12).
BENEFITS UNDER THE GMWB PROGRAM
- - In addition to any withdrawals you make under the GMWB program, market
performance may reduce your Account Value. If your Account Value is equal
to zero, and you have not received all of your Protected Value in the form
of withdrawals from your Annuity, we will continue to make payments equal
to the remaining Protected Value in the form of fixed, periodic payments
until the remainder of the Protected Value is paid, at which time the
rider terminates. The fixed, periodic payments will each be equal to the
Protected Annual Withdrawal Amount, except for the last pay-
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LIVING BENEFIT PROGRAMS CONTINUED
ment which may be equal to the remaining Protected Value. We will
determine the duration for which periodic payments will continue by
dividing the Protected Value by the Protected Annual Withdrawal Amount.
You will not have the right to make additional Purchase Payments or
receive the remaining Protected Value in a lump sum. You can elect the
frequency of payments, subject to our rules then in effect.
- - If the death benefit under the Annuity becomes payable before you have
received all of your Protected Value in the form of withdrawals from your
Annuity, your Beneficiary has the option to elect to receive the remaining
Protected Value as an alternate death benefit payout in lieu of the amount
payable under any other death benefit provided under the Annuity. The
remaining Protected Value will be payable in the form of fixed, periodic
payments. Your beneficiary can elect the frequency of payments, subject to
our rules then in effect. We will determine the duration for which
periodic payments will continue by dividing the Protected Value by the
Protected Annual Withdrawal Amount. THE PROTECTED VALUE IS NOT EQUAL TO
THE ACCOUNT VALUE FOR PURPOSES OF THE ANNUITY'S OTHER DEATH BENEFIT
OPTIONS. THE GMWB PROGRAM DOES NOT INCREASE OR DECREASE THE AMOUNT
OTHERWISE PAYABLE UNDER THE ANNUITY'S OTHER DEATH BENEFIT OPTIONS.
GENERALLY, THE GMWB PROGRAM WOULD BE OF VALUE TO YOUR BENEFICIARY ONLY
WHEN THE PROTECTED VALUE AT DEATH EXCEEDS ANY OTHER AMOUNT AVAILABLE AS A
DEATH BENEFIT.
- - If you elect to begin receiving annuity payments before you have received
all of your Protected Value in the form of withdrawals from your Annuity,
an additional annuity payment option will be available that makes fixed
annuity payments for a certain period, determined by dividing the
Protected Value by the Protected Annual Withdrawal Amount. If you elect to
receive annuity payments calculated in this manner, the assumed interest
rate used to calculate such payments will be 0%, which is less than the
assumed interest rate on other annuity payment options we offer. This 0%
assumed interest rate results in lower annuity payments than what would
have been paid if the assumed interest rate was higher than 0%. YOU CAN
ALSO ELECT TO TERMINATE THE GMWB PROGRAM AND BEGIN RECEIVING ANNUITY
PAYMENTS BASED ON YOUR THEN CURRENT ACCOUNT VALUE (NOT THE REMAINING
PROTECTED VALUE) UNDER ANY OF THE AVAILABLE ANNUITY PAYMENT OPTIONS.
OTHER IMPORTANT CONSIDERATIONS
- - Withdrawals under the GMWB program are subject to all of the terms and
conditions of the Annuity, including any CDSC and MVA that may apply.
- - Withdrawals made while the GMWB program is in effect will be treated, for
tax purposes, in the same way as any other withdrawals under the Annuity.
- - The GMWB program does not directly affect the Annuity's Account Value or
Surrender Value, but any withdrawal will decrease the Account Value by the
amount of the withdrawal. If you surrender your Annuity, you will receive
the current Surrender Value, not the Protected Value.
- - You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the GMWB program. The GMWB program
provides a guarantee that if your Account Value declines due to market
performance, you will be able to receive your Protected Value in the form
of periodic benefit payments.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
ELECTION OF THE PROGRAM
Currently, the GMWB program can only be elected at the time that you purchase
your Annuity. In the future, we may offer existing Annuity Owners the option to
elect the GMWB program after the Issue Date of their Annuity, subject to our
eligibility rules and restrictions. If you elect the GMWB program after the
Issue Date of your Annuity, the program will be effective as of the next
anniversary date. Your Account Value as of such anniversary date will be used to
calculate the initial Protected Value and the initial Protected Annual
Withdrawal Amount.
We reserve the right to restrict the maximum amount of Protected Value
that may be covered under the GMWB program under this Annuity or any other
annuities that you own that are issued by American Skandia or its affiliated
companies.
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TERMINATION OF THE PROGRAM
The program terminates automatically when your Protected Value reaches zero
based on your withdrawals. You may terminate the program at any time by
notifying us. If you terminate the program, any guarantee provided by the
benefit will terminate as of the date the termination is effective. The program
terminates upon your surrender of the Annuity, upon due proof of death (unless
your surviving spouse elects to continue the Annuity and the GMWB program or
your Beneficiary elects to receive the amounts payable under the GMWB program in
lieu of the death benefit) or upon your election to begin receiving annuity
payments.
The charge for the GMWB program will no longer be deducted from your
Account Value upon termination of the program.
CHARGES UNDER THE PROGRAM
Currently, we deduct a charge equal to 0.35% of the average daily net assets of
the Sub-accounts per year to purchase the GMWB program. The annual charge is
deducted daily. Account Value allocated to Fixed Allocations under the program
is not subject to the charge.
- - If, during the seven years following the effective date of the program,
you do not make any withdrawals, and do not make any additional Purchase
Payments after a five-year period following the effective date of the
program, the program will remain in effect; however, we will waive the
annual charge going forward. If you make an additional Purchase Payment
following the waiver of the annual charge, we will begin charging for the
program. After year seven (7) following the effective date of the program,
withdrawals will not cause a charge to be re-imposed.
- - If you elect to step-up the Protected Value under the program, and on the
date you elect to step-up, the charges under the program have changed for
new purchasers, your program may be subject to the new charge level for
the benefit.
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS
If you purchase an Annuity as an investment vehicle for "qualified" investments,
including an IRA, SEP-IRA, Roth IRA or Tax Sheltered Annuity (or 403(b)), the
minimum distribution rules under the Code require that you begin receiving
periodic amounts from your Annuity beginning after age 70 1/2. The amount
required under the Code may exceed the Protected Annual Withdrawal Amount, which
will cause us to recalculate the Protected Value and the Protected Annual
Withdrawal Amount, resulting in a lower amount payable in future Annuity Years.
In addition, the amount and duration of payments under the annuity payment and
death benefit provisions may be adjusted so that the payments do not trigger any
penalty or excise taxes due to tax considerations such as minimum distribution
requirements.
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
THE GUARANTEED MINIMUM INCOME BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL, AND
WILL BE OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY
APPROVAL IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. CURRENTLY, THE PROGRAM CAN ONLY BE ELECTED BY NEW
PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY. WE MAY OFFER THE PROGRAM TO
EXISTING ANNUITY OWNERS IN THE FUTURE, SUBJECT TO OUR ELIGIBILITY RULES AND
RESTRICTIONS. THE GUARANTEED MINIMUM INCOME BENEFIT PROGRAM IS NOT AVAILABLE IF
YOU ELECT THE GUARANTEED RETURN OPTION PROGRAM, GUARANTEED RETURN OPTION PLUS
PROGRAM, THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT RIDER, OR THE LIFETIME FIVE
INCOME BENEFIT RIDER.
We offer a program that, after a seven-year waiting period, guarantees
your ability to begin receiving income from your Annuity in the form of annuity
payments based on a guaranteed minimum value (called the "Protected Income
Value") that increases after the waiting period begins, regardless of the impact
of market performance on your Account Value. The program may be appropriate for
you if you anticipate using your Annuity as a future source of periodic fixed
income payments for the remainder of your life and wish to ensure that the basis
upon which your income payments will be calculated will achieve at least a
minimum amount despite fluctuations in market performance. There is an
additional charge if you elect the GMIB program.
KEY FEATURE -- PROTECTED INCOME VALUE
The Protected Income Value is the minimum amount that we guarantee will be
available (net of any applicable taxes), after a waiting period of at least
seven years, as a basis to begin receiving fixed annuity payments. The Protected
Income Value
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is initially established on the effective date of the GMIB program and is equal
to your Account Value on such date. Currently, since the GMIB program may only
be elected at issue, the effective date is the Issue Date of the Annuity. The
Protected Income Value is increased daily based on an annual growth rate of 5%,
subject to the limitations described below. The Protected Income Value is
referred to as the "Protected Value" in the rider we issue for this benefit. The
5% annual growth rate is referred to as the "Roll-Up Percentage" in the rider we
issue for this benefit.
The Protected Income Value is subject to a limit of 200% (2x) of the sum
of the Protected Income Value established on the effective date of the GMIB
program, or the effective date of any step-up value, plus any additional
Purchase Payments and any Credits that are applied to such Purchase Payments
made after the waiting period begins ("Maximum Protected Income Value"), minus
the sum of any reductions in the Protected Income Value due to withdrawals you
make from the Annuity after the waiting period begins.
- - Subject to the maximum age/durational limits described immediately below,
we will no longer increase the Protected Income Value by the 5% annual
growth rate once you reach the Maximum Protected Income Value. However, we
will increase the Protected Income Value by the amount of any additional
Purchase Payments and any Credits applied to such Purchase Payments after
you reach the Maximum Protected Income Value. Further, if you make
withdrawals after you reach the Maximum Protected Income Value, we will
reduce the Protected Income Value and the Maximum Protected Income Value
by the proportional impact of the withdrawal on your Account Value.
- - Subject to the Maximum Protected Income Value, we will no longer increase
the Protected Income Value by the 5% annual growth rate after the later of
the anniversary date on or immediately following the Annuitant's 80th
birthday or the 7th anniversary of the later of the effective date of the
GMIB program or the effective date of the most recent step-up. However, we
will increase the Protected Income Value by the amount of any additional
Purchase Payments and any Credits applied to such Purchase Payments.
Further, if you make withdrawals after the Annuitant reaches the maximum
age/duration limits, we will reduce the Protected Income Value and the
Maximum Protected Income Value by the proportional impact of the
withdrawal on your Account Value.
- - Subject to the Maximum Protected Income Value, if you make an additional
Purchase Payment, we will increase the Protected Income Value by the
amount of the Purchase Payment (including any Credits that may be applied
to your Account Value based on such Purchase Payment) and will apply the
5% annual growth rate on the new amount from the date the Purchase Payment
is applied.
- - As described below, after the waiting period begins, cumulative
withdrawals each Annuity Year that are up to 5% of the Protected Income
Value on the prior anniversary of the Annuity will reduce the Protected
Income Value by the amount of the withdrawal. Cumulative withdrawals each
Annuity Year in excess of 5% of the Protected Income Value on the prior
anniversary of the Annuity, will reduce the Protected Income Value
proportionately. All withdrawals after the Maximum Protected Income Value
is reached will reduce the Protected Income Value proportionately. The 5%
annual growth rate will be applied to the reduced Protected Income Value
from the date of the withdrawal.
Stepping-Up the Protected Income Value -- You may elect to "step-up" or
"reset" your Protected Income Value if your Account Value is greater than the
current Protected Income Value. Upon exercise of the step-up provision, your
initial Protected Income Value will be reset equal to your current Account
Value. From the date that you elect to step-up the Protected Income Value, we
will apply the 5% annual growth rate to the stepped-up Protected Income Value,
as described above. You can exercise the step-up provision twice while the GMIB
program is in effect, and only while the Annuitant is less than age 76.
- - A new seven-year waiting period will be established upon the effective
date of your election to step-up the Protected Income Value. You cannot
exercise your right to begin receiving annuity payments under the GMIB
program until the end of the new waiting period.
- - The Maximum Protected Income Value will be reset as of the effective date
of any step-up. The new Maximum Protected Income Value will be equal to
200% of the sum of the Protected Income Value as of the effective date of
the step-up plus any subsequent Purchase Payments and any Credits applied
to such Purchase Payments, minus the impact of any withdrawals after the
date of the step-up.
- - When determining the guaranteed annuity purchase rates for annuity
payments under the GMIB program, we will apply such rates based on the
number of years since the most recent step-up.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
- - If you elect to step-up the Protected Income Value under the program, and
on the date you elect to step-up, the charges under the GMIB program have
changed for new purchasers, your program may be subject to the new charge
going forward.
- - A step-up will increase the dollar for dollar limit on the anniversary of
the Issue Date of the Annuity following such step-up.
Impact of Withdrawals on the Protected Income Value -- Cumulative
withdrawals each Annuity Year up to 5% of the Protected Income Value will reduce
the Protected Income Value on a "dollar-for-dollar" basis (the Protected Income
Value is reduced by the actual amount of the withdrawal). Cumulative withdrawals
in any Annuity Year in excess of 5% of the Protected Income Value will reduce
the Protected Income Value proportionately (see the examples of this calculation
below). The 5% annual withdrawal amount is determined on each anniversary of the
Issue Date (or on the Issue Date for the first Annuity Year) and applies to any
withdrawals during the Annuity Year. This means that the amount available for
withdrawals each Annuity Year on a "dollar-for-dollar" basis is adjusted on each
contract anniversary to reflect changes in the Protected Income Value during the
prior Annuity Year.
The following examples of dollar-for-dollar and proportional reductions
assume that: 1.) the Issue Date and the effective date of the GMIB program are
October 13, 2005; 2.) an initial Purchase Payment of $250,000 (includes any
Credits); 3.) an initial Protected Income Value of $250,000; and 4.) a
dollar-for-dollar limit of $12,500 (5% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 13, 2005 (in the first Annuity Year).
No prior withdrawals have been taken. Immediately prior to the withdrawal, the
Protected Income Value is $251,038.10 (the initial value accumulated for 31 days
at an annual effective rate of 5%). As the amount withdrawn is less than the
dollar-for-dollar limit:
- - The Protected Income Value is reduced by the amount withdrawn (i.e., by
$10,000, from $251,038.10 to $241,038.10).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance
of the first Annuity Year is also reduced by the amount withdrawn (from
$12,500 to $2,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on December 13, 2005 (still within the
first Annuity Year). Immediately before the withdrawal, the Account Value is
$220,000 and the Protected Income Value is $242,006.64. As the amount withdrawn
exceeds the Remaining Limit of $2,500 from Example 1:
- - The Protected Income Value is first reduced by the Remaining Limit (from
$242,006.64 to $239,506.64);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the Remaining Limit ($10,000 -
$2,500, or $7,500).
- B is the Account Value less the Remaining Limit ($220,000 - $2,500,
or $217,500).
The resulting Protected Income Value is: $239,506.64 x (1 - $7,500 /
$217,500), or $231,247.79.
- - The Remaining Limit is set to zero (0) for the balance of the first
Annuity Year.
EXAMPLE 3. RESET OF THE DOLLAR-FOR-DOLLAR LIMIT
A $10,000 withdrawal is made on the first anniversary of the Issue Date, October
13, 2006 (second Annuity Year). Prior to the withdrawal, the Protected Income
Value is $240,838.37. The Remaining Limit is reset to 5% of this amount, or
$12,041.92. As the amount withdrawn is less than the dollar-for-dollar limit:
- - The Protected Income Value is reduced by the amount withdrawn (i.e.,
reduced by $10,000, from $240,838.37 to $230,838.37).
- - The Remaining Limit for the balance of the second Annuity Year is also
reduced by the amount withdrawn (from $12,041.92 to $2,041.92).
KEY FEATURE -- GMIB ANNUITY PAYMENTS
You can elect to apply the Protected Income Value to one of the available GMIB
Annuity Payment Options on any anniversary date following the initial waiting
period, or any subsequent waiting period established upon your election to
step-up the Protected Income Value. Once you have completed the waiting period,
you will have a 30-day period each year, prior to the Annuity anniversary,
during which you may elect to begin receiving annuity payments under one of the
available GMIB Annuity Payment Options. You must elect one of the GMIB Annuity
Payment Options by the anniversary of the Annuity's Issue Date on or immediately
following the Annuitant's 95th birthday, except for Annuities used as a funding
vehicle for
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an IRA, SEP IRA or 403(b), in which case you must elect one of the GMIB Annuity
Payment Options by the anniversary of the Annuity's Issue Date on or immediately
following the Annuitant's 92nd birthday.
The amount of each GMIB Annuity Payment will be determined based on the
age and, where permitted by law, sex of the Annuitant by applying the Protected
Income Value (net of any applicable tax charge that may be due) to the GMIB
Annuity Payment Option you choose. We use special annuity purchase rates to
calculate the amount of each payment due under the GMIB Annuity Payment Options.
These special rates for the GMIB Annuity Payment Options are calculated using an
assumed interest rate factor that provides for lower growth in the value applied
to produce annuity payments than if you elected an annuity payment option that
is not part of the GMIB program. These special rates also are calculated using
other factors such as "age setbacks" (use of an age lower than the Annuitant's
actual age) that result in lower payments than would result if you elected an
annuity payment option that is not part of the GMIB program. Use of an age
setback entails a longer assumed life for the Annuitant which in turn results in
lower annuity payments.
ON THE DATE THAT YOU ELECT TO BEGIN RECEIVING GMIB ANNUITY PAYMENTS, WE
GUARANTEE THAT YOUR PAYMENTS WILL BE CALCULATED BASED ON YOUR ACCOUNT VALUE AND
OUR THEN CURRENT ANNUITY PURCHASE RATES IF THE PAYMENT AMOUNT CALCULATED ON THIS
BASIS WOULD BE HIGHER THAN IT WOULD BE BASED ON THE PROTECTED INCOME VALUE AND
THE SPECIAL GMIB ANNUITY PURCHASE RATES.
GMIB ANNUITY PAYMENT OPTION 1 -- PAYMENTS FOR LIFE WITH A CERTAIN PERIOD
Under this option, monthly annuity payments will be made until the death of the
Annuitant. If the Annuitant dies before having received 120 monthly annuity
payments, the remainder of the 120 monthly annuity payments will be made to the
Beneficiary.
GMIB ANNUITY PAYMENT OPTION 2 -- PAYMENTS FOR JOINT LIVES WITH A CERTAIN PERIOD
Under this option, monthly annuity payments will be made until the death of both
the Annuitant and the Joint Annuitant. If the Annuitant and the Joint Annuitant
die before having received 120 monthly annuity payments, the remainder of the
120 monthly annuity payments will be made to the Beneficiary.
- - If the Annuitant dies first, we will continue to make payments until the
later of the death of the Joint Annuitant and the end of the period
certain. However, if the Joint Annuitant is still receiving annuity
payments following the end of the certain period, we will reduce the
amount of each subsequent payment to 50% of the original payment amount.
- - If the Joint Annuitant dies first, we will continue to make payments until
the later of the death of the Annuitant and the end of the period certain.
You cannot withdraw your Account Value or the Protected Income Value under
either GMIB Annuity Payment Option once annuity payments have begun. We may make
other payout frequencies available, such as quarterly, semi-annually or
annually.
OTHER IMPORTANT CONSIDERATIONS
- - YOU SHOULD NOTE THAT GMIB IS DESIGNED TO PROVIDE A TYPE OF INSURANCE THAT
SERVES AS A SAFETY NET ONLY IN THE EVENT YOUR ACCOUNT VALUE DECLINES
SIGNIFICANTLY DUE TO NEGATIVE INVESTMENT PERFORMANCE. IF YOUR CONTRACT
VALUE IS NOT SIGNIFICANTLY AFFECTED BY NEGATIVE INVESTMENT PERFORMANCE, IT
IS UNLIKELY THAT THE PURCHASE OF THE GMIB WILL RESULT IN YOUR RECEIVING
LARGER ANNUITY PAYMENTS THAN IF YOU HAD NOT PURCHASED GMIB. This is
because the assumptions that we use in computing the GMIB, such as the
annuity purchase rates, (which include assumptions as to age-setbacks and
assumed interest rates), are more conservative than the assumptions that
we use in computing annuity payout options outside of GMIB. Therefore, you
may generate higher income payments if you were to annuitize a lower
Account Value at the current annuity purchase rates, than if you were to
annuitize under the GMIB with a higher Protected Value than your Account
Value but, at the annuity purchase rates guaranteed under the GMIB. The
GMIB program does not directly affect the Annuity's Account Value,
Surrender Value or the amount payable under either the basic death benefit
provision of the Annuity or any optional death benefit provision. If you
surrender your Annuity, you will receive the current Surrender Value, not
the Protected Income Value. The Protected Income Value is only applicable
if you elect to begin receiving annuity payments under one of the GMIB
annuity options after the waiting period.
- - The Annuity offers other annuity payment options that you can elect which
do not impose an additional charge, but which do not offer to guarantee a
minimum value on which to make annuity payments.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
- - Where allowed by law, we reserve the right to limit subsequent purchase
payments if we determine, at our sole discretion, that based on the timing
of your Purchase Payments and withdrawals, your Protected Income Value is
increasing in ways we did not intend. In determining whether to limit
Purchase Payments, we will look at Purchase Payments which are
disproportionately larger than your initial Purchase Payment and other
actions that may artificially increase the Protected Income Value.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
- - If you change the Annuitant after the effective date of the GMIB program,
the period of time during which we will apply the 5% annual growth rate
may be changed based on the age of the new Annuitant. If the new Annuitant
would not be eligible to elect the GMIB program based on his or her age at
the time of the change, then the GMIB program will terminate.
- - Annuity payments made under the GMIB program are subject to the same tax
treatment as any other annuity payment.
- - At the time you elect to begin receiving annuity payments under the GMIB
program or under any other annuity payment option we make available, the
protection provided by the Annuity's basic death benefit or any optional
death benefit provision you elected will no longer apply.
ELECTION OF THE PROGRAM
Currently, the GMIB program can only be elected at the time that you purchase
your Annuity. The Annuitant must be age 75 or less as of the effective date of
the GMIB program. In the future, we may offer existing Annuity Owners the option
to elect the GMIB program after the Issue Date of their Annuity, subject to our
eligibility rules and restrictions. If you elect the GMIB program after the
Issue Date of your Annuity, the program will be effective as of the date of
election. Your Account Value as of the that date will be used to calculate the
Protected Income Value as of the effective date of the program.
TERMINATION OF THE PROGRAM
The GMIB program cannot be terminated by the Owner once elected. The GMIB
program automatically terminates as of the date the Annuity is fully
surrendered, on the date the death benefit is payable to your Beneficiary
(unless your surviving spouse elects to continue the Annuity), or on the date
that your Account Value is transferred to begin making annuity payments. The
GMIB program may also be terminated if you designate a new Annuitant who would
not be eligible to elect the GMIB program based on his or her age at the time of
the change.
Upon termination of the GMIB program we will deduct the charge from your
Account Value for the portion of the Annuity Year since the prior anniversary of
the Annuity's Issue Date (or the Issue Date if in the first Annuity Year).
CHARGES UNDER THE PROGRAM
Currently, we deduct a charge equal to 0.50% per year of the average Protected
Income Value for the period the charge applies. Because the charge is calculated
based on the average Protected Income Value, it does not increase or decrease
based on changes to the Annuity's Account Value due to market performance. The
dollar amount you pay each year will increase in any year the Protected Income
Value increases, and it will decrease in any year the Protected Income Value
decreases due to withdrawal, irrespective of whether your Account Value
increases or decreases.
The charge is deducted annually in arrears each Annuity Year on the
anniversary of the Issue Date of the Annuity. We deduct the amount of the charge
pro-rata from the Account Value allocated to the variable investment options and
the Fixed Allocations. No MVA will apply to Account Value deducted from a Fixed
Allocation. If you surrender your Annuity, begin receiving annuity payments
under the GMIB program or any other annuity payment option we make available
during an Annuity Year, or the GMIB program terminates, we will deduct the
charge for the portion of the Annuity Year since the prior anniversary of the
Annuity's Issue Date (or the Issue Date if in the first Annuity Year).
No charge applies after the Annuity Date.
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LIVING BENEFIT PROGRAMS CONTINUED
LIFETIME FIVE INCOME BENEFIT (LIFETIME FIVE)
THE LIFETIME FIVE INCOME BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING OFFERED
IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL AND WILL BE
OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY APPROVAL
IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. CURRENTLY, LIFETIME FIVE CAN BE ELECTED ONLY ONCE
EACH ANNUITY YEAR, AND ONLY WHERE THE ANNUITANT AND THE OWNER ARE THE SAME
PERSON OR, IF THE ANNUITY OWNER IS AN ENTITY, WHERE THERE IS ONLY ONE ANNUITANT.
WE RESERVE THE RIGHT TO LIMIT THE ELECTION FREQUENCY IN THE FUTURE. BEFORE
MAKING ANY SUCH CHANGE TO THE ELECTION FREQUENCY, WE WILL PROVIDE PRIOR NOTICE
TO OWNERS WHO HAVE AN EFFECTIVE LIFETIME FIVE INCOME BENEFIT. THE ANNUITANT MUST
BE AT LEAST 45 YEARS OLD WHEN THE PROGRAM IS ELECTED. THE LIFETIME FIVE INCOME
BENEFIT PROGRAM IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION,
GUARANTEED RETURN OPTION PLUS, GUARANTEED MINIMUM WITHDRAWAL BENEFIT OR THE
GUARANTEED MINIMUM INCOME BENEFIT RIDER. AS LONG AS YOUR LIFETIME FIVE INCOME
BENEFIT IS IN EFFECT, YOU MUST ALLOCATE YOUR ACCOUNT VALUE IN ACCORDANCE WITH AN
ELIGIBLE MODEL UNDER OUR ASSET ALLOCATION PROGRAMS, WHICH ARE GENERALLY
DESCRIBED IN THE "ARE ANY ASSET ALLOCATION PROGRAMS AVAILABLE?" SECTION ABOVE.
FOR FURTHER INFORMATION ON ASSET ALLOCATION PROGRAMS, PLEASE CONSULT WITH YOUR
INVESTMENT PROFESSIONAL OR CALL 1-800-752-6342.
WE OFFER A PROGRAM THAT GUARANTEES YOUR ABILITY TO WITHDRAW AMOUNTS EQUAL TO A
PERCENTAGE OF AN INITIAL PRINCIPAL VALUE (CALLED THE "PROTECTED WITHDRAWAL
VALUE"), REGARDLESS OF THE IMPACT OF MARKET PERFORMANCE ON YOUR ACCOUNT VALUE,
SUBJECT TO OUR PROGRAM RULES REGARDING THE TIMING AND AMOUNT OF WITHDRAWALS.
THERE ARE TWO OPTIONS -- ONE IS DESIGNED TO PROVIDE AN ANNUAL WITHDRAWAL AMOUNT
FOR LIFE (THE "LIFE INCOME BENEFIT") AND THE OTHER IS DESIGNED TO PROVIDE A
GREATER ANNUAL WITHDRAWAL AMOUNT AS LONG AS THERE IS PROTECTED WITHDRAWAL VALUE
(ADJUSTED AS DESCRIBED BELOW) (THE "WITHDRAWAL BENEFIT"). IF THERE IS NO
PROTECTED WITHDRAWAL VALUE, THE WITHDRAWAL BENEFIT WILL BE ZERO. YOU DO NOT
CHOOSE BETWEEN THESE TWO OPTIONS; EACH OPTION WILL CONTINUE TO BE AVAILABLE AS
LONG AS THE ANNUITY HAS AN ACCOUNT VALUE AND THE LIFETIME FIVE IS IN EFFECT.
CERTAIN BENEFITS UNDER LIFETIME FIVE MAY REMAIN IN EFFECT EVEN IF THE ACCOUNT
VALUE OF THE ANNUITY IS ZERO. THE PROGRAM MAY BE APPROPRIATE IF YOU INTEND TO
MAKE PERIODIC WITHDRAWALS FROM YOUR ANNUITY AND WISH TO ENSURE THAT MARKET
PERFORMANCE WILL NOT AFFECT YOUR ABILITY TO RECEIVE ANNUAL PAYMENTS. YOU ARE NOT
REQUIRED TO MAKE WITHDRAWALS AS PART OF THE PROGRAM -- THE GUARANTEES ARE NOT
LOST IF YOU WITHDRAW LESS THAN THE MAXIMUM ALLOWABLE AMOUNT EACH YEAR UNDER THE
RULES OF THE PROGRAM.
KEY FEATURE -- PROTECTED WITHDRAWAL VALUE
The Protected Withdrawal Value is initially used to determine the amount of each
initial annual payment under the Life Income Benefit and the Withdrawal Benefit.
The initial Protected Withdrawal Value is determined as of the date you make
your first withdrawal under the Annuity following your election of Lifetime
Five. The initial Protected Withdrawal Value is equal to the greater of (A) the
Account Value on the date you elect Lifetime Five, plus any additional Purchase
Payments and associated Credits each growing at 5% per year from the date of
your election of the program, or application of the Purchase Payment and
associated Credit to your Annuity, as applicable, until the date of your first
withdrawal or the 10th anniversary of the benefit effective date, if earlier,
(B) the Account Value as of the date of the first withdrawal from your Annuity,
prior to the withdrawal, and (C) the highest Account Value on each Annuity
anniversary prior to the first withdrawal or on the first 10 Annuity
anniversaries if earlier than the date of your first withdrawal after the
benefit effective date. Each value is increased by the amount of any subsequent
Purchase Payments and associated Credits.
- If you elect the Lifetime Five program at the time you purchase your
Annuity, the Account Value will be your initial Purchase Payment
plus the amount of any associated Credits.
- For existing Owners who are electing the Lifetime Five benefit, the
Account Value on the date of your election of the Lifetime Five
program will be used to determine the initial Protected Withdrawal
Value.
- If you make additional Purchase Payments after your first
withdrawal, the Protected Withdrawal Value will be increased by the
amount of each additional Purchase Payment plus associated Credits.
You may elect to step-up your Protected Withdrawal Value if, due to
positive market performance, your Account Value is
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
greater than the Protected Withdrawal Value. You are eligible to step-up the
Protected Withdrawal Value on or after the 5th anniversary of the first
withdrawal under the Lifetime Five program. The Protected Withdrawal Value can
be stepped up again on or after the 5th anniversary following the preceding
step-up. If you elect to step-up the Protected Withdrawal Value under the
program, and on the date you elect to step-up, the charges under the Lifetime
Five program have changed for new purchasers, your program may be subject to the
new charge going forward.
Upon election of the step-up, we increase the Protected Withdrawal Value
to be equal to the then current Account Value. For example, assume your initial
Protected Withdrawal Value was $100,000 and you have made cumulative withdrawals
of $40,000, reducing the Protected Withdrawal Value to $60,000. On the date you
are eligible to step-up the Protected Withdrawal Value, your Account Value is
equal to $75,000. You could elect to step-up the Protected Withdrawal Value to
$75,000 on the date you are eligible. If your current Annual Income Amount and
Annual Withdrawal Amount are less than they would be if we did not reflect the
step-up in Protected Withdrawal Value, then we will increase these amounts to
reflect the step-up as described below.
The Protected Withdrawal Value is reduced each time a withdrawal is made
on a dollar-for-dollar basis up to 7% per Annuity Year of the Protected
Withdrawal Value and on the greater of a dollar-for-dollar basis or a pro-rata
basis for withdrawals in an Annuity Year in excess of that amount until the
Protected Withdrawal Value is reduced to zero. At that point the Annual
Withdrawal Amount will be zero until such time (if any) as the Annuity reflects
a Protected Withdrawal Value (for example, due to a step-up or additional
Purchase Payments being made into the Annuity).
KEY FEATURE -- ANNUAL INCOME AMOUNT UNDER THE LIFE INCOME BENEFIT
The initial Annual Income Amount is equal to 5% of the initial Protected
Withdrawal Value. Under the Lifetime Five program, if your cumulative
withdrawals in an Annuity Year are less than or equal to the Annual Income
Amount, they will not reduce your Annual Income Amount in subsequent Annuity
Years. If your cumulative withdrawals are in excess of the Annual Income Amount
("Excess Income"), your Annual Income Amount in subsequent years will be reduced
(except with regard to required minimum distributions) by the result of the
ratio of the Excess Income to the Account Value immediately prior to such
withdrawal (see examples of this calculation below). Reductions include the
actual amount of the withdrawal, including any CDSC that may apply. A withdrawal
can be considered Excess Income under the Life Income Benefit even though it
does not exceed the Annual Withdrawal Amount under the Withdrawal Benefit. When
you elect a step-up, your Annual Income Amount increases to equal 5% of your
Account Value after the step-up if such amount is greater than your Annual
Income Amount. Your Annual Income Amount also increases if you make additional
Purchase Payments. The amount of the increase is equal to 5% of any additional
Purchase Payments plus any associated Credits. Any increase will be added to
your Annual Income Amount beginning on the day that the step-up is effective or
the Purchase Payment is made. A determination of whether you have exceeded your
Annual Income Amount is made at the time of each withdrawal; therefore, a
subsequent increase in the Annual Income Amount will not offset the effect of a
withdrawal that exceeded the Annual Income Amount at the time the withdrawal was
made.
KEY FEATURE -- ANNUAL WITHDRAWAL AMOUNT UNDER THE WITHDRAWAL BENEFIT
The initial Annual Withdrawal Amount is equal to 7% of the initial Protected
Withdrawal Value. Under the Lifetime Five program, if your cumulative
withdrawals each Annuity Year are less than or equal to the Annual Withdrawal
Amount, your Protected Withdrawal Value will be reduced on a dollar-for-dollar
basis. If your cumulative withdrawals are in excess of the Annual Withdrawal
Amount ("Excess Withdrawal"), your Annual Withdrawal Amount will be reduced
(except with regard to required minimum distributions) by the result of the
ratio of the Excess Withdrawal to the Account Value immediately prior to such
withdrawal (see the examples of this calculation below). Reductions include the
actual amount of the withdrawal, including any CDSC that may apply. When you
elect a step-up, your Annual Withdrawal Amount increases to equal 7% of your
Account Value after the step-up if such amount is greater than your Annual
Withdrawal Amount. Your Annual Withdrawal Amount also increases if you make
additional Purchase Payments. The amount of the increase is equal to 7% of any
additional Purchase Payments. A determination of whether you have exceeded your
Annual Withdrawal Amount is made at the time of each withdrawal; therefore, a
subsequent increase in the Annual Withdrawal Amount will not offset the effect
of a withdrawal that exceeded the Annual Withdrawal Amount at the time the
withdrawal was made.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
LIVING BENEFIT PROGRAMS CONTINUED
The Lifetime Five program does not affect your ability to make withdrawals
under your Annuity or limit your ability to request withdrawals that exceed the
Annual Income Amount and the Annual Withdrawal Amount. You are not required to
withdraw all or any portion of the Annual Withdrawal Amount or Annual Income
Amount in each Annuity Year.
- If, cumulatively, you withdraw an amount less than the Annual
Withdrawal Amount under the Withdrawal Benefit in any Annuity Year,
you cannot carry-over the unused portion of the Annual Withdrawal
Amount to subsequent Annuity Years. However, because the Protected
Withdrawal Value is only reduced by the actual amount of withdrawals
you make under these circumstances, any unused Annual Withdrawal
Amount may extend the period of time until the remaining Protected
Withdrawal Value is reduced to zero.
- If, cumulatively, you withdraw an amount less than the Annual Income
Amount under the Life Income Benefit in any Annuity Year, you cannot
carry-over the unused portion of the Annual Income Amount to
subsequent Annuity Years. However, because the Protected Withdrawal
Value is only reduced by the actual amount of withdrawals you make
under these circumstances, any unused Annual Income Amount may
extend the period of time until the remaining Protected Withdrawal
Value is reduced to zero.
The following examples of dollar-for-dollar and proportional reductions
and the step-up of the Protected Withdrawal Value, Annual Withdrawal Amount and
Annual Income Amount assume: 1.) the Issue Date and the Effective Date of the
Lifetime Five program are February 1, 2005; 2.) an initial Purchase Payment of
$250,000 (includes any Credits); 3.) the Account Value on February 1, 2006 is
equal to $265,000; 4.) the first withdrawal occurs on March 1, 2006 when the
Account Value is equal to $263,000; and 5.) the Account Value on March 1, 2011
is equal to $240,000.
The initial Protected Withdrawal Value is calculated as the greatest of
(a), (b) and (c):
(a) Purchase Payment accumulated at 5% per year from February 1, 2005
until March 1, 2006 (393 days) = $250,000 x 1.05(393/365) =
$263,484.33
(b) Account Value on March 1, 2006 (the date of the first withdrawal) =
$263,000
(c) Account Value on February 1, 2006 (the first Annuity Anniversary) =
$265,000
Therefore, the initial Protected Withdrawal Value is equal to $265,000.
The Annual Withdrawal Amount is equal to $18,550 under the Withdrawal Benefit
(7% of $265,000). The Annual Income Amount is equal to $13,250 under the Life
Income Benefit (5% of $265,000).
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
If $10,000 was withdrawn (less than both the Annual Income Amount and the Annual
Withdrawal Amount) on March 1, 2006, then the following values would result:
- Remaining Annual Withdrawal Amount for current Annuity Year =
$18,550 - $10,000 = $8,550
Annual Withdrawal Amount for future Annuity Years remains at $18,550
- Remaining Annual Income Amount for current Annuity Year = $13,250 -
$10,000 = $3,250
Annual Income Amount for future Annuity Years remains at $13,250
- Protected Withdrawal Value is reduced by $10,000 from $265,000 to
$255,000
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
(a) If $15,000 was withdrawn (more than the Annual Income Amount but
less than the Annual Withdrawal Amount) on March 1, 2006, then the
following values would result:
- Remaining Annual Withdrawal Amount for current Annuity Year =
$18,550 - $15,000 = $3,550
Annual Withdrawal Amount for future Annuity Years remains at $18,550
- Remaining Annual Income Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Income Amount ($15,000 -
$13,250 = $1,750) reduces Annual Income Amount for future Annuity
Years.
- Reduction to Annual Income Amount = Excess Income/ Account Value
before Excess Income x Annual Income Amount = $1,750 / ($263,000 -
$13,250) x $13,250 = $93
Annual Income Amount for future Annuity Years = $13,250 - $93 =
$13,157
- Protected Withdrawal Value is reduced by $15,000 from $265,000 to
$250,000
(b) If $25,000 was withdrawn (more than both the Annual Income Amount
and the Annual Withdrawal Amount) on March 1, 2006, then the
following values would result:
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
- Remaining Annual Withdrawal Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Withdrawal Amount ($25,000 -
$18,550 = $6,450) reduces Annual Withdrawal Amount for future
Annuity Years.
- Reduction to Annual Withdrawal Amount = Excess Withdrawal/Account
Value before Excess Withdrawal x Annual Withdrawal Amount = $6,450 /
($263,000 - $18,550) $18,550 = $489
Annual Withdrawal Amount for future Annuity Years = $18,550 - $489 =
$18,061
- Remaining Annual Income Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Income Amount ($25,000 -
$13,250 = $11,750) reduces Annual Income Amount for future Annuity
Years.
- Reduction to Annual Income Amount = Excess Income/ Account Value
before Excess Income x Annual Income Amount = $11,750 / ($263,000 -
$13,250) x $13,250 = $623
Annual Income Amount for future Annuity Years = $13,250 - $623 =
$12,627
- Protected Withdrawal Value is first reduced by the Annual Withdrawal
Amount ($18,550) from $265,000 to $246,450. It is further reduced by
the greater of a dollar-for-dollar reduction or a proportional
reduction. Dollar-for-dollar reduction = $25,000 - $18,550 = $6,450
- Proportional reduction = Excess Withdrawal / Account Value before
Excess Withdrawal x Protected Withdrawal Value = $6,450 / ($263,000
- $18,550) x $246,450 = $6,503
Protected Withdrawal Value = $246,450 - max x {$6,450, $6,503} =
$239,947
EXAMPLE 3. STEP-UP OF THE PROTECTED WITHDRAWAL VALUE
If the Annual Income Amount ($13,250) is withdrawn each year starting on March
1, 2006 for a period of 5 years, the Protected Withdrawal Value on March 1, 2011
would be reduced to $198,750 {$265,000 - ($13,250 x 5)}. If a step-up is elected
on March 1, 2011, then the following values would result:
- Protected Withdrawal Value = Account Value on March 1, 2011 =
$240,000
- Annual Income Amount is equal to the greater of the current Annual
Income Amount or 5% of the stepped up Protected Withdrawal Value.
Current Annual Income Amount is $13,250. 5% of the stepped up
Protected Withdrawal Value is 5% of $240,000, which is $12,000.
Therefore, the Annual Income Amount remains $13,250.
- Annual Withdrawal Amount is equal to the greater of the current
Annual Withdrawal Amount or 7% of the stepped up Protected
Withdrawal Value. Current Annual Withdrawal Amount is $18,550. 7% of
the stepped up Protected Withdrawal Value is 7% of $240,000, which
is $16,800. Therefore, the Annual Withdrawal Amount remains $18,550.
BENEFITS UNDER THE LIFETIME FIVE PROGRAM
- - If your Account Value is equal to zero, and the cumulative withdrawals in
the current Annuity Year are greater than the Annual Withdrawal Amount,
the Lifetime Five program will terminate. To the extent that your Account
Value was reduced to zero as a result of cumulative withdrawals that are
equal to or less than the Annual Income Amount and amounts are still
payable under both the Life Income Benefit and the Withdrawal Benefit, you
will be given the choice of receiving the payments under the Life Income
Benefit or under the Withdrawal Benefit. Once you make this election we
will make an additional payment for that Annuity Year equal to either the
remaining Annual Income Amount or Annual Withdrawal Amount for the Annuity
Year, if any, depending on the option you choose. In subsequent Annuity
Years we make payments that equal either the Annual Income Amount or the
Annual Withdrawal Amount as described in this Prospectus. You will not be
able to change the option after your election and no further Purchase
Payments will be accepted under your Annuity. If you do not make an
election, we will pay you annually under the Life Income Benefit. To the
extent that cumulative withdrawals in the current Annuity Year that
reduced your Account Value to zero are more than the Annual Income Amount
but less than or equal to the Annual Withdrawal Amount and amounts are
still payable under the Withdrawal Benefit, you will receive the payments
under the Withdrawal Benefit. In the year of a withdrawal that reduced
your Account Value to zero, we will make an additional payment to equal
any remaining Annual Withdrawal Amount and make payments equal to the
Annual With-
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
LIVING BENEFIT PROGRAMS CONTINUED
drawal Amount in each subsequent year (until the Protected Withdrawal
Value is depleted). Once your Account Value equals zero, no further
Purchase Payments will be accepted under your Annuity.
- If annuity payments are to begin under the terms of your Annuity or
if you decide to begin receiving annuity payments and there is any
Annual Income Amount due in subsequent Annuity Years or any
remaining Protected Withdrawal Value, you can elect one of the
following three options:
(1) apply your Account Value to any annuity option available; or
(2) request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We
make such annuity payments until the Annuitant's death; or
(3) request that, as of the date annuity payments are to begin, we pay
out any remaining Protected Withdrawal Value as annuity payments.
Each year such annuity payments will equal the Annual Withdrawal
Amount or the remaining Protected Withdrawal Value if less. We make
such annuity payments until the earlier of the Annuitant's death or
the date the Protected Withdrawal Value is depleted.
We must receive your request in a form acceptable to us at our office.
- In the absence of an election when mandatory annuity payments are to
begin, we will make annual annuity payments as a single life fixed
annuity with five payments certain using the greater of the annuity
rates then currently available or the annuity rates guaranteed in
your Annuity. The amount that will be applied to provide such
annuity payments will be the greater of:
(1) the present value of future Annual Income Amount payments.
Such present value will be calculated using the greater of the
single life fixed annuity rates then currently available or
the single life fixed annuity rates guaranteed in your
Annuity; and
(2) the Account Value.
- If no withdrawal was ever taken, we will determine a Protected
Withdrawal Value and calculate an Annual Income Amount and an Annual
Withdrawal Amount as if you made your first withdrawal on the date
the annuity payments are to begin.
OTHER IMPORTANT CONSIDERATIONS
- Withdrawals under the Lifetime Five program are subject to all of
the terms and conditions of the Annuity, including any CDSC.
- Withdrawals made while the Lifetime Five program is in effect will
be treated, for tax purposes, in the same way as any other
withdrawals under the Annuity. The Lifetime Five program does not
directly affect the Annuity's Account Value or Surrender Value, but
any withdrawal will decrease the Account Value by the amount of the
withdrawal (plus any applicable CDSC). If you surrender your
Annuity, you will receive the current Surrender Value, not the
Protected Withdrawal Value.
- You can make withdrawals from your Annuity while your Account Value
is greater than zero without purchasing the Lifetime Five program.
The Lifetime Five program provides a guarantee that if your Account
Value declines due to market performance, you will be able to
receive your Protected Withdrawal Value or Annual Income Amount in
the form of periodic benefit payments.
- You must allocate your Account Value in accordance with an eligible
model under an available asset allocation program in order to elect
and maintain the Lifetime Five program or in accordance with other
options that we may permit. Asset allocation programs are described
generally in the "Are Any Asset Allocation Programs Available?"
section above. For further information on asset allocation programs,
please consult with your Investment Professional or call
1-800-752-6342.
ELECTION OF THE PROGRAM
The Lifetime Five program can be elected at the time that you purchase your
Annuity. We also offer existing Owners the option to elect the Lifetime Five
program after the Issue Date of their Annuity, subject to our eligibility rules
and restrictions. Your Account Value as the date of election will be used as a
basis to calculate the initial Protected Withdrawal Value, the initial Protected
Annual Withdrawal Amount, and the Annual Income Amount.
TERMINATION OF THE PROGRAM
The program terminates automatically when your Protected Withdrawal Value and
Annual Income Amount equals zero. You
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
may terminate the program at any time by notifying us. If you terminate the
program, any guarantee provided by the benefit will terminate as of the date the
termination is effective. The program terminates upon your surrender of the
Annuity, upon the death of the Annuitant (but your surviving spouse may elect a
new Lifetime Five if your spouse elects the spousal continuance option and your
spouse would then be eligible to elect the benefit if he or she was a new
purchaser), upon a change in ownership of the Annuity that changes the tax
identification number of the Owner, upon change in the Annuitant or upon your
election to begin receiving annuity payments.
The charge for the Lifetime Five program will no longer be deducted from
your Account Value upon termination of the program.
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS
If you purchase an Annuity as an investment vehicle for "qualified" investments,
including an IRA, SEP-IRA, or Tax Sheltered Annuity (or 403(b)), the minimum
distribution rules under the Code require that you begin receiving periodic
amounts from your Annuity beginning after age 70 1/2. The amount required under
the Code may exceed the Annual Withdrawal Amount and the Annual Income Amount,
which will cause us to increase the Annual Income Amount and the Annual
Withdrawal Amount in any Annuity Year that required minimum distributions due
from your Annuity are greater than such amounts. Any such payments will reduce
your Protected Withdrawal Value. In addition, the amount and duration of
payments under the annuity payment and death benefit provisions may be adjusted
so that the payments do not trigger any penalty or excise taxes due to tax
considerations such as minimum distribution requirements.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
DEATH BENEFIT
WHAT TRIGGERS THE PAYMENT OF A DEATH BENEFIT?
The Annuity provides a Death Benefit during its accumulation period. If the
Annuity is owned by one or more natural persons, the Death Benefit is payable
upon the first death of an Owner. If the Annuity is owned by an entity, the
Death Benefit is payable upon the Annuitant's death, if there is no Contingent
Annuitant. If a Contingent Annuitant was designated before the Annuitant's death
and the Annuitant dies, then the Contingent Annuitant becomes the Annuitant and
a Death Benefit will not be paid at that time. The person upon whose death the
Death Benefit is paid is referred to below as the "decedent."
BASIC DEATH BENEFIT
The Annuity provides a basic Death Benefit at no additional charge. The
Insurance Charge we deduct daily from your Account Value allocated to the
Sub-accounts is used, in part, to pay us for the risk we assume in providing
the basic Death Benefit guarantee under the Annuity. The Annuity also offers
three different optional Death Benefits that can be purchased for an additional
charge. The additional charge is deducted to compensate American Skandia for
providing increased insurance protection under the optional Death Benefits.
NOTWITHSTANDING THE ADDITIONAL PROTECTION PROVIDED UNDER THE OPTIONAL DEATH
BENEFITS, THE ADDITIONAL COST HAS THE IMPACT OF REDUCING THE NET PERFORMANCE OF
THE INVESTMENT OPTIONS. UNDER CERTAIN CIRCUMSTANCES, YOUR DEATH BENEFIT MAY BE
REDUCED BY THE AMOUNT OF ANY CREDITS WE APPLIED TO YOUR PURCHASE PAYMENTS. (SEE
"HOW ARE CREDITS APPLIED TO MY ACCOUNT VALUE".)
The BASIC DEATH BENEFIT is the greater of:
- - The sum of all Purchase Payments less the sum of all proportional
withdrawals.
- - The sum of your Account Value in the variable investment options and your
Interim Value in the Fixed Allocations, less the amount of any Credits
applied within 12-months prior to the date of death.
"PROPORTIONAL WITHDRAWALS" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn. For
example, a withdrawal of 50% of Account Value would be considered as a 50%
reduction in Purchase Payments for purposes of calculating the basic Death
Benefit.
OPTIONAL DEATH BENEFITS
Three optional Death Benefits are offered for purchase with your Annuity to
provide an enhanced level of protection for your beneficiaries.
CURRENTLY, THESE BENEFITS ARE ONLY OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE
RECEIVED REGULATORY APPROVAL AND MUST BE ELECTED AT THE TIME THAT YOU PURCHASE
YOUR ANNUITY. WE MAY, AT A LATER DATE, ALLOW EXISTING ANNUITY OWNERS TO PURCHASE
AN OPTIONAL DEATH BENEFIT SUBJECT TO OUR RULES AND ANY CHANGES OR RESTRICTIONS
IN THE BENEFITS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS
ONCE APPROVED AND IF YOU PURCHASE YOUR ANNUITY AS PART OF AN EXCHANGE,
REPLACEMENT OR TRANSFER, IN WHOLE OR IN PART, FROM ANY OTHER ANNUITY WE ISSUE.
THE "COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE" DEATH BENEFIT MAY
ONLY BE ELECTED INDIVIDUALLY, AND CANNOT BE ELECTED IN COMBINATION WITH ANY
OTHER OPTIONAL DEATH BENEFIT. UNDER CERTAIN CIRCUMSTANCES, EACH OPTIONAL DEATH
BENEFIT THAT YOU ELECT MAY BE REDUCED BY THE AMOUNT OF CREDITS APPLIED TO YOUR
PURCHASE PAYMENTS.
ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT
The Enhanced Beneficiary Protection Optional Death Benefit can provide
additional amounts to your Beneficiary that may be used to offset federal and
state taxes payable on any taxable gains in your Annuity at the time of your
death. Whether this benefit is appropriate for you may depend on your particular
circumstances, including other financial resources that may be available to your
Beneficiary to pay taxes on your Annuity should you die during the accumulation
period. No benefit is payable if death occurs on or after the Annuity Date.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT PROVIDES A
BENEFIT THAT IS PAYABLE IN ADDITION TO THE BASIC DEATH BENEFIT. If the Annuity
has one Owner, the Owner must be age 75 or less at the time the benefit is
purchased. If the Annuity has joint Owners, the oldest Owner must be age 75 or
less. If the Annuity is owned by an entity, the Annuitant must be age 75 or
less.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
CALCULATION OF ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT
If you purchase the Enhanced Beneficiary Protection Optional Death Benefit, the
Death Benefit is calculated as follows:
1. the BASIC DEATH BENEFIT described above;
PLUS
2. 40% of your "GROWTH" under the Annuity, as defined below.
"GROWTH" means the sum of your Account Value in the variable investment
options and your Interim Value in the Fixed Allocations, minus the total of all
Purchase Payments, less the amount of any Credits applied within 12 months prior
to the date of death, reduced by the sum of all proportional withdrawals.
"PROPORTIONAL WITHDRAWALS" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT IS SUBJECT TO A
MAXIMUM OF 100% OF ALL PURCHASE PAYMENTS APPLIED TO THE ANNUITY AT LEAST 12
MONTHS PRIOR TO THE DEATH OF THE DECEDENT THAT TRIGGERS THE PAYMENT OF THE DEATH
BENEFIT.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT DESCRIBED ABOVE IS
CURRENTLY BEING OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY
APPROVAL. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE
APPROVED. PLEASE REFER TO THE SECTION ENTITLED "TAX CONSIDERATIONS" FOR A
DISCUSSION OF SPECIAL TAX CONSIDERATIONS FOR PURCHASERS OF THIS BENEFIT. THE
ENHANCED BENEFICIARY PROTECTION DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT THE
"COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE" DEATH BENEFIT.
See Appendix B for examples of how the Enhanced Beneficiary Protection
Optional Death Benefit is calculated.
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT ("HAV")
If the Annuity has one Owner, the Owner must be age 79 or less at the time
Highest Anniversary Value Optional Death Benefit is purchased. If the Annuity
has joint Owners, the oldest Owner must be age 79 or less. If the Annuity is
owned by an entity, the Annuitant must be age 79 or less.
CERTAIN OF THE PORTFOLIOS OFFERED AS SUB-ACCOUNTS UNDER THE ANNUITY ARE
NOT AVAILABLE IF YOU ELECT THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT. IN
ADDITION, WE RESERVE THE RIGHT TO REQUIRE YOU TO USE CERTAIN ASSET ALLOCATION
MODEL(S) IF YOU ELECT THIS DEATH BENEFIT.
CALCULATION OF HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
The HAV Death Benefit depends on whether death occurs before or after the Death
Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value as of the Owner's date of death.
If the Owner dies on or after the Death Benefit Target Date, the Death
Benefit equals the greater of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value on the Death Benefit Target Date plus
the sum of all Purchase Payments less the sum of all proportional
withdrawals since the Death Benefit Target Date.
THE AMOUNT DETERMINED BY THIS CALCULATION IS INCREASED BY ANY PURCHASE
PAYMENTS RECEIVED AFTER THE OWNER'S DATE OF DEATH AND DECREASED BY ANY
PROPORTIONAL WITHDRAWALS SINCE SUCH DATE. THE AMOUNT CALCULATED IN ITEMS 1 & 2
ABOVE (BEFORE, ON OR AFTER THE DEATH BENEFIT TARGET DATE) MAY BE REDUCED BY ANY
CREDITS UNDER CERTAIN CIRCUMSTANCES.
THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT DESCRIBED ABOVE IS CURRENTLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL.
CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. THE
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT THE
"COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE" OR THE "HIGHEST DAILY
VALUE" DEATH BENEFIT.
See Appendix B for examples of how the Highest Anniversary Value Death
Benefit is calculated.
Please refer to the definition of Death Benefit Target Date below. This
death benefit may not be an appropriate feature where the Owner's age is near
the age specified in the Death
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
DEATH BENEFIT CONTINUED
Benefit Target Date. This is because the benefit may not have the same potential
for growth as it otherwise would, since there will be fewer contract
anniversaries before the death benefit target date is reached. The death benefit
target date under this death benefit is earlier than the death benefit target
date under the Combination 5% Roll-up and Highest Anniversary Value Death
Benefit for Owners who are age 76 or older when the Annuity is issued, which may
result in a lower value on the death benefit, since there will be fewer contract
anniversaries before the death benefit target date is reached.
COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
If the Annuity has one Owner, the Owner must be age 79 or less at the time the
Combination 5% Roll-up and HAV Optional Death Benefit is purchased. If the
Annuity has joint Owners, the oldest Owner must be age 79 or less. If the
Annuity is owned by an entity, the Annuitant must be age 79 or less.
CERTAIN OF THE PORTFOLIOS OFFERED AS SUB-ACCOUNTS UNDER THE ANNUITY ARE
NOT AVAILABLE IF YOU ELECT THE COMBINATION 5% ROLL-UP AND HAV DEATH BENEFIT. IN
ADDITION, WE RESERVE THE RIGHT TO REQUIRE YOU TO USE CERTAIN ASSET ALLOCATION
MODEL(S) IF YOU ELECT THIS DEATH BENEFIT.
CALCULATION OF THE COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH
BENEFIT
The Combination 5% Roll-up and HAV Death Benefit equals the greatest of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value death benefit described above, and
3. 5% Roll-up described below.
The calculation of the 5% Roll-up depends on whether death occurs before
or after the Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date the 5% Roll up is
equal to:
- - all Purchase Payments (including any Credits applied to such Purchase
Payments more than twelve (12) months prior to date of death) increasing
at an annual effective interest rate of 5% starting on the date that each
Purchase Payment is made and ending on the Owner's date of death;
MINUS
- - the sum of all withdrawals, dollar for dollar up to 5% of the death
benefit's value as of the prior contract anniversary (or issue date if the
withdrawal is in the first contract year). Any withdrawals in excess of
the 5% dollar for dollar limit are proportional.
If the Owner dies on or after the Death Benefit Target Date the 5% Roll-up
is equal to:
- - the 5% Roll-up value as of the Death Benefit Target Date increased by
total Purchase Payments (including any Credits applied to such Purchase
Payments more than twelve (12) months prior to date of death) made after
the Death Benefit Target Date;
MINUS
- - the sum of all withdrawals which reduce the 5% Roll-up proportionally.
THE AMOUNTS CALCULATED ABOVE (BEFORE, ON OR AFTER THE DEATH BENEFIT TARGET
DATE) MAY BE REDUCED BY ANY CREDITS UNDER CERTAIN CIRCUMSTANCES.
PLEASE REFER TO THE DEFINITIONS OF DEATH BENEFIT TARGET DATE BELOW. THIS
DEATH BENEFIT MAY NOT BE AN APPROPRIATE FEATURE WHERE THE OWNER'S AGE IS NEAR
THE AGE SPECIFIED IN THE DEATH BENEFIT TARGET DATE. THIS IS BECAUSE THE BENEFIT
MAY NOT HAVE THE SAME POTENTIAL FOR GROWTH AS IT OTHERWISE WOULD, SINCE THERE
WILL BE FEWER CONTRACT ANNIVERSARIES BEFORE THE DEATH BENEFIT TARGET DATE IS
REACHED.
THE "COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE" DEATH BENEFIT
DESCRIBED ABOVE IS CURRENTLY BEING OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE
RECEIVED REGULATORY APPROVAL. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. THE "COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY
VALUE" DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT ANY OTHER OPTIONAL DEATH
BENEFIT.
See Appendix B for examples of how the Combination 5% Roll-up and Highest
Anniversary Value Death Benefit is calculated.
KEY TERMS USED WITH THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT AND THE
COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT:
- - The Death Benefit Target Date for the Highest Anniversary Value Death
Benefit is the contract anniversary on or after the 80th birthday of the
current Owner, the oldest of either joint Owner or the Annuitant, if
entity owned.
- - The Death Benefit Target Date for the Combination 5% Roll-up and HAV Death
Benefit is the later of the contract anniversary on or after the 80th
birthday of the current Owner, the oldest
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
of either joint Owner or the Annuitant, if entity owned, or five years
after the Issue Date of the Annuity.
- - The Highest Anniversary Value equals the highest of all previous
"Anniversary Values" less proportional withdrawals since such anniversary
and plus any Purchase Payments since such anniversary.
- - The Anniversary Value is the Account Value as of each anniversary of the
Issue Date of the Annuity. The Anniversary Value on the Issue Date is
equal to your Purchase Payment.
- - Proportional withdrawals are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
Proportional withdrawals result in a reduction to the Highest Anniversary
Value or 5% Roll-up value by reducing such value in the same proportion as
the Account Value was reduced by the withdrawal as of the date the
withdrawal occurred. For example, if your Highest Anniversary Value or 5%
Roll-up value is $125,000 and you subsequently withdraw $10,000 at a time
when your Account Value is equal to $100,000 (a 10% reduction), when
calculating the optional Death Benefit we will reduce your Highest
Anniversary Value ($125,000) by 10% or $12,500.
HIGHEST DAILY VALUE DEATH BENEFIT ("HDV")
If the Annuity has one Owner, the Owner must be age 79 or less at the time the
Highest Daily Value Death Benefit is elected. If the Annuity has joint Owners,
the older Owner must be age 79 or less. If there are Joint Owners, death of the
Owner refers to the first to die of the Joint Owners. If the Annuity is owned by
an entity, the Annuitant must be age 79 or less and death of the Owner refers to
the death of the Annuitant.
IF YOU ELECT THIS BENEFIT, YOU MUST ALLOCATE YOUR ACCOUNT VALUE IN
ACCORDANCE WITH AN ELIGIBLE MODEL UNDER AN AVAILABLE ASSET ALLOCATION PROGRAM OR
IN ACCORDANCE WITH OTHER OPTIONS THAT WE MAY PERMIT. Because this benefit, once
elected, may not be terminated, you must keep your Account Value allocated to an
eligible model throughout the life of the Annuity. You may, however, switch from
one eligible model to another eligible model. Our asset allocation programs are
generally described in the "Are Any Asset Allocation Programs Available?"
section above. For further information on asset allocation programs, please
consult with your Investment Professional or call 1-800-752-6342.
The HDV Death Benefit depends on whether death occurs before or after the
Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the basic Death Benefit described above (including any credits
applied to such Purchase Payments more than twelve (12) months prior
to the date of death); and
2. the HDV as of the Owner's date of death.
If the Owner dies on or after the Death Benefit Target Date, the Death
Benefit equals the greater of:
1. the basic Death Benefit described above (including any credits
applied to such Purchase Payments more than twelve (12) months prior
to the date of death); and
2. the HDV on the Death Benefit Target Date plus the sum of all
Purchase Payments less the sum of all proportional withdrawals since
the Death Benefit Target Date.
The amount determined by this calculation is increased by any Purchase
Payments received after the Owner's date of death and decreased by any
proportional withdrawals since such date.
THE HIGHEST DAILY VALUE DEATH BENEFIT DESCRIBED ABOVE IS CURRENTLY BEING OFFERED
IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL. CERTAIN TERMS
AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. THE HIGHEST DAILY
VALUE DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION,
GUARANTEED RETURN OPTION PLUS, THE "COMBINATION 5% ROLL-UP AND HIGHEST
ANNIVERSARY VALUE" DEATH BENEFIT, OR THE HIGHEST ANNIVERSARY VALUE DEATH
BENEFIT.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
DEATH BENEFIT CONTINUED
KEY TERMS USED WITH THE HIGHEST DAILY VALUE DEATH BENEFIT:
- The Death Benefit Target Date for the Highest Daily Value Death
Benefit is the later of the Annuity anniversary on or after the 80th
birthday of the current Owner, or the older of either the joint
Owner or the Annuitant, if entity owned, or five years after the
Issue Date of the Annuity.
- The Highest Daily Value equals the highest of all previous "Daily
Values" less proportional withdrawals since such date and plus any
Purchase Payments (and associated Credits) since such date.
- The Daily Value is the Account Value as of the end of each Valuation
Day. The Daily Value on the Issue Date is equal to your Purchase
Payment (plus any associated Credit).
- Proportional withdrawals are determined by calculating the
percentage of your Account Value that each prior withdrawal
represented when withdrawn. Proportional withdrawals result in a
reduction to the Highest Daily Value by reducing such value in the
same proportion as the Account Value was reduced by the withdrawal
as of the date the withdrawal occurred. For example, if your Highest
Daily Value is $125,000 and you subsequently withdraw $10,000 at a
time when your Account Value is equal to $100,000 (a 10% reduction),
when calculating the optional Death Benefit we will reduce your
Highest Daily Value ($125,000) by 10% or $12,500.
Please see Appendix B to this Prospectus for a hypothetical example of how
the HDV Death Benefit is calculated.
ANNUITIES WITH JOINT OWNERS
For Annuities with Joint Owners, the Death Benefits are calculated as shown
above except that the age of the oldest of the Joint Owners is used to determine
the Death Benefit Target Date. NOTE: If you and your spouse own the Annuity
jointly, we will pay the Death Benefit to the Beneficiary. If the sole primary
Beneficiary is the surviving spouse, then the surviving spouse can elect to
assume ownership of the Annuity and continue the Annuity instead of receiving
the Death Benefit.
ANNUITIES OWNED BY ENTITIES
For Annuities owned by an entity, the Death Benefits are calculated as shown
above except that the age of the Annuitant is used to determine the Death
Benefit Target Date. Payment of the Death Benefit is based on the death of the
Annuitant (or Contingent Annuitant, if applicable).
CAN I TERMINATE THE OPTIONAL DEATH BENEFITS? DO THE OPTIONAL DEATH BENEFITS
TERMINATE UNDER OTHER CIRCUMSTANCES?
You can terminate the Enhanced Beneficiary Protection Death Benefit and Highest
Anniversary Value Death Benefit at any time. The "Combination 5% Roll-up and HAV
Death Benefit" and the HDV Death Benefit may not be terminated once elected. The
optional Death Benefits will terminate automatically on the Annuity Date. We may
also terminate any optional Death Benefit if necessary to comply with our
interpretation of the Code and applicable regulations.
WHAT ARE THE CHARGES FOR THE OPTIONAL DEATH BENEFITS?
We deduct a charge equal to 0.25% per year of the average daily net assets of
the Sub-accounts for each of the Highest Anniversary Value Death Benefit and the
Enhanced Beneficiary Protection Death Benefit and 0.50% per year of the average
daily net assets of the Sub-accounts for the "Combination 5% Roll-up and HAV
Death Benefit" and the HDV Death Benefit. We deduct the charge for each of these
benefits to compensate American Skandia for providing increased insurance
protection under the optional Death Benefits.
Please refer to the section entitled "Tax Considerations" for additional
considerations in relation to the optional Death Benefit.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
AMERICAN SKANDIA'S ANNUITY REWARDS
WHAT IS THE ANNUITY REWARDS BENEFIT?
The Annuity Rewards benefit offers Owners the ability to capture any market
gains since the Issue Date of their Annuity as an enhancement to their current
Death Benefit so their Beneficiaries will not receive less than the Annuity's
value as of the effective date of the benefit. Under the Annuity Rewards
benefit, American Skandia guarantees that the Death Benefit will not be less
than:
- - your Account Value in the variable investment options plus the Interim
Value in any Fixed Allocations as of the effective date of the benefit
- - MINUS any proportional withdrawals* following the effective date of the
benefit
- - PLUS any additional Purchase Payments applied to the Annuity following the
effective date of the benefit.
The Annuity Rewards Death Benefit enhancement does not affect the basic
Death Benefit calculation or any Optional Death Benefits available under the
Annuity. If the Death Benefit amount payable under your Annuity's basic Death
Benefit or any Optional Death Benefits you purchase is greater than the enhanced
Death Benefit under the Annuity Rewards benefit on the date the Death Benefit is
calculated, your Beneficiary will receive the higher amount.
WHO IS ELIGIBLE FOR THE ANNUITY REWARDS BENEFIT?
Owners can elect the Annuity Rewards Death Benefit enhancement following the
tenth (10th) anniversary of the Annuity's Issue Date. However, the Account Value
on the date that the Annuity Rewards Benefit is effective must be greater than
the amount that would be payable to the Beneficiary under the Death Benefit
(including any amounts payable under any Optional Death Benefit then in effect).
The effective date must occur before annuity payments begin. There can only be
one effective date for the Annuity Rewards Death Benefit enhancement. There is
no additional charge for electing the Annuity Rewards Death Benefit enhancement.
* "Proportional withdrawals" are determined by calculating the percentage of the
Account Value that each withdrawal represented when withdrawn. For example, a
withdrawal of 50% of your Account Value would be treated as a 50% reduction in
the amount payable under the Death Benefit.
PAYMENT OF DEATH BENEFITS
PAYMENT OF DEATH BENEFIT TO BENEFICIARY
Except in the case of a spousal assumption as described below, in the event of
your death, the death benefit must be distributed:
- - as a lump sum amount at any time within five (5) years of the date of
death; or
- - as a series of annuity payments not extending beyond the life expectancy
of the Beneficiary or over the life of the Beneficiary. Payments under
this option must begin within one year of the date of death.
Unless you have made an election prior to death benefit proceeds becoming
due, a Beneficiary can elect to receive the Death Benefit proceeds as a series
of fixed annuity payments (annuity payment options 1-4) or as a series of
variable annuity payments (annuity payment options 1-3 or 5 and 6). See the
section entitled "What Types of Annuity Options are Available."
SPOUSAL BENEFICIARY -- ASSUMPTION OF ANNUITY
You may name your spouse as your Beneficiary. If you and your spouse own the
Annuity jointly, we assume that the sole primary Beneficiary will be the
surviving spouse unless you elect an alternative Beneficiary designation. Unless
you elect an alternative Beneficiary designation, the spouse Beneficiary may
elect to assume ownership of the Annuity instead of taking the Death Benefit
payment. Any Death Benefit (including any optional Death Benefits) that would
have been payable to the Beneficiary will become the new Account Value as of the
date we receive due proof of death and any required proof of a spousal
relationship. As of the date the assumption is effective, the surviving spouse
will have all the rights and benefits that would be available under the Annuity
to a new purchaser of the same attained age. For purposes of determining any
future Death Benefit for the surviving spouse, the new Account Value will be
considered as the initial Purchase Payment. No CDSC will apply to the new
Account Value. However, any additional Purchase Payments applied after the date
the assumption is effective will be subject to all provisions of the Annuity,
including any CDSC that may apply to the additional Purchase Payments.
See the section entitled "Managing Your Annuity -- Spousal Contingent
Annuitant" for a discussion of the treatment of a spousal Contingent Annuitant
in the case of the death of the Annuitant in an entity owned Annuity.
QUALIFIED BENEFICIARY CONTINUATION OPTION
The Code provides for alternative death benefit payment options when an Annuity
is used as an IRA, 403(b) or other "qualified investment" that requires Minimum
Distributions. Upon the Owner's death under an IRA, 403(b) or other "qualified
investment", a Beneficiary may generally elect to continue the Annuity and
receive Minimum Distributions under the Annu-
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
DEATH BENEFIT CONTINUED
ity instead of receiving the death benefit in a single payment. The available
payment options will depend on whether the Owner died on or before the date he
or she was required to begin receiving Minimum Distributions under the Code and
whether the Beneficiary is the surviving spouse.
- - If death occurs BEFORE the date Minimum Distributions must begin under the
Code, the Death Benefit can be paid out in either a lump sum, within five
years from the date of death, or over the life or life expectancy of the
designated Beneficiary (as long as payments begin by December 31st of the
year following the year of death). However, if the spouse is the
Beneficiary, the Death Benefit can be paid out over the life or life
expectancy of the spouse with such payments beginning no earlier than
December 31st of the year following the year of death or December 31st of
the year in which the deceased would have reached age 70 1/2, which ever
is later.
- - If death occurs AFTER the date Minimum Distributions must begin under the
Code, the Death Benefit must be paid out at least as rapidly as under the
method then in effect.
A Beneficiary has the flexibility to take out more each year than required
under the Minimum Distribution rules. Until withdrawn, amounts in an IRA, 403(b)
or other "qualified investment" continue to be tax deferred. Amounts withdrawn
each year, including amounts that are required to be withdrawn under the Minimum
Distribution rules, are subject to tax. You may wish to consult a professional
tax advisor for tax advice as to your particular situation.
Upon election of this Qualified Beneficiary Continuation option:
- - the Annuity contract will be continued in the Owner's name, for the
benefit of the Beneficiary.
- - the Beneficiary will be charged at an amount equal to 1.40% daily against
the average daily assets allocated to the Sub-accounts.
- - the Account Value will be equal to any Death Benefit (including any
optional Death Benefit) that would have been payable to the Beneficiary if
they had taken a lump sum distribution.
- - the Beneficiary may request transfers among Sub-accounts, subject to the
same limitations and restrictions that applied to the Owner, except that
the Sub-accounts offered will be those under the Qualified Beneficiary
Continuation option at the time the option is elected.
- - the Fixed Allocations will be those offered under the Qualified
Beneficiary Continuation option at the time the option is elected.
- - no additional Purchase Payments can be applied to the Annuity.
- - other optional Benefits will be those offered under the Qualified
Beneficiary Continuation option at the time of election.
- - the basic Death Benefit and any optional Death Benefits elected by the
Owner will no longer apply to the Beneficiary.
- - the Beneficiary can request a withdrawal of all or a portion of the
Account Value at any time without application of a CDSC.
- - upon the death of the Beneficiary, any remaining Account Value will be
paid in a lump sum to the person(s) named by the Beneficiary.
- - all amounts in the Annuity must be paid out to the Beneficiary according
to the Minimum Distribution rules described above.
Your Beneficiary will be provided with a prospectus and settlement option
that will describe this option at the time he or she elects this option. Please
contact American Skandia for additional information on the availability,
restrictions and limitations that will apply to a Beneficiary under the
Qualified Beneficiary Continuation option.
ARE THERE ANY EXCEPTIONS TO THESE RULES FOR PAYING THE DEATH BENEFIT?
Yes, there are exceptions that apply no matter how your Death Benefit is
calculated. There are exceptions to the Death Benefit if the decedent was not
the Owner or Annuitant as of the Issue Date and did not become the Owner or
Annuitant due to the prior Owner's or Annuitant's death. Any Death Benefit
(including any optional Death Benefit) that applies will be suspended for a
two-year period from the date he or she first became Owner or Annuitant. After
the two-year suspension period is completed, the Death Benefit is the same as if
this person had been an Owner or Annuitant on the Issue Date.
WHEN DO YOU DETERMINE THE DEATH BENEFIT?
We determine the amount of the Death Benefit as of the date we receive "due
proof of death", any instructions we require to determine the method of payment
and any other written representations we require to determine the proper payment
of the
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Death Benefit to all Beneficiaries. "Due proof of death" may include a certified
copy of a death certificate, a certified copy of a decree of a court of
competent jurisdiction as to the finding of death or other satisfactory proof of
death. Upon our receipt of "due proof of death" we automatically transfer the
Death Benefit to the AST Money Market Sub-account until we further determine the
universe of eligible Beneficiaries. Once the universe of eligible Beneficiaries
has been determined each eligible Beneficiary may allocate his or her eligible
share of the Death Benefit to the Sub-accounts according to our rules.
Each Beneficiary must make an election as to the method they wish to
receive their portion of the Death Benefit. Absent an election of a Death
Benefit payment method, no Death Benefit can be paid to the Beneficiary. We may
require written acknowledgment of all named Beneficiaries before we can pay the
Death Benefit. DURING THE PERIOD FROM THE DATE OF DEATH UNTIL WE RECEIVE ALL
REQUIRED PAPER WORK, THE AMOUNT OF THE DEATH BENEFIT MAY BE SUBJECT TO MARKET
FLUCTUATIONS.
85
VALUING YOUR INVESTMENT
HOW IS MY ACCOUNT VALUE DETERMINED?
During the accumulation period, the Annuity has an Account Value. The Account
Value is determined separately for each Sub-account allocation and for each
Fixed Allocation. The Account Value is the sum of the values of each
Sub-account allocation and the value of each Fixed Allocation. The Account
Value does not reflect any CDSC that may apply to a withdrawal or surrender.
The Account Value includes any Credit we apply to your Purchase Payments that
we are entitled to recover under certain circumstances. When determining the
Account Value on any day other than 30 days prior to a Fixed Allocation's
Maturity Date, the Account Value may include any Market Value Adjustment that
would apply to a Fixed Allocation (if withdrawn or transferred) on that day.
WHAT IS THE SURRENDER VALUE OF MY ANNUITY?
The Surrender Value of your Annuity is the value available to you on any day
during the accumulation period. The Surrender Value is defined under "Glossary
of Terms" above.
HOW AND WHEN DO YOU VALUE THE SUB-ACCOUNTS?
When you allocate Account Value to a Sub-account, you are purchasing units of
the Sub-account. Each Sub-account invests exclusively in shares of an underlying
Portfolio. The value of the Units fluctuates with the market fluctuations of the
Portfolios. The value of the Units also reflects the daily accrual for the
Insurance Charge, the Distribution Charge (if applicable), and if you elected
one or more optional benefits whose annual charge is deducted daily, the
additional charge made for such benefits. There may be several different Unit
Prices for each Sub-account to reflect the Insurance Charge, Distribution Charge
(if applicable) and the charges for any optional benefits. The Unit Price for
the Units you purchase will be based on the total charges for the benefits that
apply to your Annuity. See the section entitled "What Happens to My Units When
There is a Change in Daily Asset-Based Charges?" for a detailed discussion of
how Units are purchased and redeemed to reflect changes in the daily charges
that apply to your Annuity.
Each Valuation Day, we determine the price for a Unit of each Sub-account,
called the "Unit Price." The Unit Price is used for determining the value of
transactions involving Units of the Sub-accounts. We determine the number of
Units involved in any transaction by dividing the dollar value of the
transaction by the Unit Price of the Sub-account as of the Valuation Day.
EXAMPLE
Assume you allocate $5,000 to a Sub-account. On the Valuation Day you make the
allocation, the Unit Price is $14.83. Your $5,000 buys 337.154 Units of the
Sub-account. Assume that later, you wish to transfer $3,000 of your Account
Value out of that Sub-account and into another Sub-account. On the Valuation Day
you request the transfer, the Unit Price of the original Sub-account has
increased to $16.79. To transfer $3,000, we sell 178.677 Units at the current
Unit Price, leaving you 158.477 Units. We then buy $3,000 of Units of the new
Sub-account at the Unit Price of $17.83. You would then have 168.255 Units of
the new Sub-account.
HOW DO YOU VALUE FIXED ALLOCATIONS?
During the Guarantee Period, we use the concept of an Interim Value. The Interim
Value can be calculated on any day and is equal to the initial value allocated
to a Fixed Allocation plus all interest credited to a Fixed Allocation as of the
date calculated. The Interim Value does not include the impact of any Market
Value Adjustment. If you made any transfers or withdrawals from a Fixed
Allocation, the Interim Value will reflect the withdrawal of those amounts and
any interest credited to those amounts before they were withdrawn. To determine
the Account Value of a Fixed Allocation on any day more than 30 days prior to
its Maturity Date, we multiply the Account Value of the Fixed Allocation times
the Market Value Adjustment factor.
WHEN DO YOU PROCESS AND VALUE TRANSACTIONS?
American Skandia is generally open to process financial transactions on those
days that the New York Stock Exchange (NYSE) is open for trading. There may be
circumstances where the NYSE does not open on a regularly scheduled date or time
or closes at an earlier time than scheduled (normally 4:00 p.m. EST). Financial
transactions requested before the close of the NYSE which meet our requirements
will be processed according to the value next determined following the close of
business. Financial transactions requested on a non-business day or after the
close of the NYSE will be processed based on the value next computed on the next
Valuation Day. There may be circumstances when the opening or closing time of
the NYSE is different than other major stock exchanges, such as NASDAQ or the
American Stock Exchange. Under such circumstances, the closing time of the NYSE
will be used when valuing and processing transactions.
There may be circumstances where the NYSE is open, however, due to
inclement weather, natural disaster or other circum-
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
stances beyond our control, our offices may be closed or our business processing
capabilities may be restricted. Under those circumstances, your Account Value
may fluctuate based on changes in the Unit Values, but you may not be able to
transfer Account Value, or make a purchase or redemption request.
The NYSE is closed on the following nationally recognized holidays: New
Year's Day, Martin Luther King, Jr. Day, Washington's Birthday, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas. On
those dates, we will not process any financial transactions involving purchase
or redemption orders.
American Skandia will also not process financial transactions involving
purchase or redemption orders or transfers on any day that:
- - trading on the NYSE is restricted;
- - an emergency exists making redemption or valuation of securities held in
the separate account impractical; or
- - the SEC, by order, permits the suspension or postponement for the
protection of security holders.
INITIAL PURCHASE PAYMENTS: We are required to allocate your initial
Purchase Payment to the Sub-accounts within two (2) business days after we
receive all of our requirements at our office to issue the Annuity. If we do not
have all the required information to allow us to issue your Annuity, we may
retain the Purchase Payment while we try to reach you or your representative to
obtain all of our requirements. If we are unable to obtain all of our required
information within five (5) business days, we are required to return the
Purchase Payment at that time, unless you specifically consent to our retaining
the Purchase Payment while we gather the required information. Once we obtain
the required information, we will invest the Purchase Payment and issue the
Annuity within two (2) business days. During any period that we are trying to
obtain the required information, your money is not invested.
ADDITIONAL PURCHASE PAYMENTS: We will apply any additional Purchase
Payments on the Valuation Day that we receive the Purchase Payment at our office
with satisfactory allocation instructions. We will allocate any additional
Purchase Payments you make according to your most recent allocation instructions
if none are provided.
SCHEDULED TRANSACTIONS: "Scheduled" transactions include transfers under a
Dollar Cost Averaging, rebalancing, or asset allocation program, Systematic
Withdrawals, Minimum Distributions or annuity payments. Scheduled transactions
are processed and valued as of the date they are scheduled, unless the scheduled
day is not a Valuation Day. In that case, the transaction will be processed and
valued on the next Valuation Day, unless the next Valuation Day falls in the
subsequent calendar year, in which case the transaction will be processed and
valued on the prior Valuation Day.
UNSCHEDULED TRANSACTIONS: "Unscheduled" transactions include any other
non-scheduled transfers and requests for Partial Withdrawals or Free Withdrawals
or Surrenders. Unscheduled transactions are processed and valued as of the
Valuation Day we receive the request at our Office and have all of the required
information.
MEDICALLY-RELATED SURRENDERS & DEATH BENEFITS: Medically-related surrender
requests and Death Benefit claims require our review and evaluation before
processing. We price such transactions as of the date we receive at our Office
all supporting documentation we require for such transactions and that are
satisfactory to us.
TRANSACTIONS IN PROFUNDS VP SUB-ACCOUNTS: Generally, purchase or
redemption orders or transfer requests must be received by us by no later than
the close of the NYSE to be processed on the current Valuation Day. However, any
purchase or redemption order or transfer request involving the ProFunds VP
Sub-accounts must be received by us no later than one hour prior to any
announced closing of the applicable securities exchange (generally, 3:00 p.m.
Eastern time) to be processed on the current Valuation Day. The "cut-off" time
for such financial transactions involving a ProFunds VP Sub-account will be
extended to 1/2 hour prior to any announced closing (generally, 3:30 p.m.
Eastern time) for transactions submitted electronically through American
Skandia's Internet website (www.americanskandia.prudential.com). You cannot
request a transaction involving the purchase, redemption or transfer of Units in
one of the ProFunds VP Sub-accounts between the applicable "cut-off" time and
4:00 p.m. Transactions received after 4:00 p.m. will be treated as received by
us on the next Valuation Day.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Valuing Your Investment continued
WHAT HAPPENS TO MY UNITS WHEN THERE IS A CHANGE IN DAILY ASSET-BASED CHARGES?
TERMINATION OF OPTIONAL BENEFITS: Except for Guaranteed Minimum Income
Benefit, the Combination 5% Roll-up and Highest Anniversary Value Death Benefit
and the Highest Daily Value Death Benefit which cannot be terminated by the
owner once elected, if any optional benefit terminates, we will no longer deduct
the charge we apply to purchase the optional benefit. Certain optional benefits
may be added after you have purchased your Annuity. On the date a charge no
longer applies or a charge for an optional benefit begins to be deducted, your
Annuity will become subject to a different daily asset-based charge. This charge
may result in the number of Units attributed to your Annuity and the value of
those Units being different than it was before the change; however, the
adjustment in the number of Units and Unit Price will not affect your Account
Value (although the change in charges that are deducted will affect your Account
Value).
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Tax Considerations
The tax considerations associated with the Annuity vary depending on whether the
contract is (i) owned by an individual and not associated with a tax-favored
retirement plan (including contracts held by a non-natural person, such as a
trust acting as an agent for a natural person), or (ii) held under a tax-favored
retirement plan. We discuss the tax considerations for these categories of
contracts below. The discussion is general in nature and describes only federal
income tax law (not state or other tax laws). It is based on current law and
interpretations, which may change. The discussion includes a description of
certain spousal rights under the contract and under tax-qualified plans. Our
administration of such spousal rights and related tax reporting accords with our
understanding of the Defense of Marriage Act (which defines a "marriage" as a
legal union between a man and a woman and a "spouse" as a person of the opposite
sex). The information provided is not intended as tax advice. You should consult
with a qualified tax advisor for complete information and advice. References to
purchase payments below relates to your cost basis in your contract. Generally,
your cost basis in a contract not associated with a tax-favored retirement plan
is the amount you pay into your contract, or into annuities exchanged for your
contract, on an after-tax basis less any withdrawals of such payments.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA or 403(b) account, which can hold other permissible assets other than the
annuity. The terms and administration of the trust or custodial account in
accordance with the laws and regulations for IRAs or 403(b)s, as applicable, are
the responsibility of the applicable trustee or custodian.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
TAXES PAYABLE BY YOU
We believe the contract is an annuity contract for tax purposes. Accordingly, as
a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates)
to you during the same calendar year must be treated as one annuity contract for
purposes of determining the amount subject to tax under the rules described
below.
It is possible that the Internal Revenue Service (IRS) would assert that
some or all of the charges for the optional benefits under the contract should
be treated for federal income tax purposes as a partial withdrawal from the
contract. If this were the case, the charge for this benefit could be deemed a
withdrawal and treated as taxable to the extent there are earnings in the
contract. Additionally, for owners under age 59 1/2, the taxable income
attributable to the charge for the benefit could be subject to a tax penalty.
If the IRS determines that the charges for one or more benefits under the
contract are taxable withdrawals, then the sole or surviving owner will be
provided with a notice from us describing available alternatives regarding these
benefits.
If you choose to defer the Annuity Date beyond the default date for your
Annuity, the IRS may not consider your contract to be an annuity under the tax
law. For more information, see "How and When Do I Choose the Annuity Payment
Option?".
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn. You will
generally be taxed on any withdrawals from the contract while you are alive even
if the withdrawal is paid to someone else.
If you assign or pledge all or part of your contract as collateral for a
loan, the part assigned generally will be treated as a withdrawal.
If you transfer your contract for less than full consideration, such as by
gift, you will trigger tax on any gain in the contract. This rule does not apply
if you transfer the contract to your spouse or under most circumstances if you
transfer the contract incident to divorce.
TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment you receive by a fraction, the
numerator of which is your purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the contract.
After the full amount of your purchase payments have been recovered
tax-free, the full amount of the annuity payments will be taxable. If annuity
payments stop due to the death of the annuitant before the full amount of your
purchase payments have been recovered, a tax deduction may be allowed for the
unrecovered amount.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Tax Considerations continued
TAX PENALTY ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount you receive under your contract may be subject to a 10% tax
penalty. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled;
- - generally the amount paid or received is in the form of substantially
equal payments not less frequently than annually. (Please note that
substantially equal payments must continue until the later of reaching age
59 1/2 or 5 years.) Modification of payments during that time period will
result in retroactive application of the 10% tax penalty.); or
- - the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
SPECIAL RULES IN RELATION TO TAX-FREE EXCHANGES UNDER SECTION 1035
Section 1035 of the Internal Revenue Code of 1986, as amended (Code) permits
certain tax-free exchanges of a life insurance, annuity or endowment contract
for an annuity. If the annuity is purchased through a tax-free exchange of a
life insurance, annuity or endowment contract that was purchased prior to August
14, 1982, then any purchase payments made to the original contract prior to
August 14, 1982 will be treated as made to the new contract prior to that date.
(See Federal Tax Status section in the Statement of Additional Information.)
Partial surrenders may be treated in the same way as tax-free 1035
exchanges of entire contracts, therefore avoiding current taxation of any gains
in the contract as well as the 10% tax penalty on pre-age 59 1/2 withdrawals.
The IRS has reserved the right to treat transactions it considers abusive as
ineligible for this favorable partial 1035 exchange treatment. We do not know
what transactions may be considered abusive. For example we do not know how the
IRS may view early withdrawals or annuitizations after a partial exchange. In
addition, it is unclear how the IRS will treat a partial exchange from a life
insurance, endowment, or annuity contract into an immediate annuity. As of the
date of this prospectus, we will accept a partial 1035 exchange from a
non-qualified annuity into an immediate annuity as a "tax-free" exchange for
future tax reporting purposes, except to the extent that we, as a reporting and
withholding agent, believe that we would be expected to deem the transaction to
be abusive. However, some insurance companies may not recognize these partial
surrenders as tax-free exchanges and may report them as taxable distributions to
the extent of any gain distributed as well as subjecting the taxable portion of
the distribution to the 10% tax penalty. We strongly urge you to discuss any
transaction of this type with your tax advisor before proceeding with the
transaction.
TAXES PAYABLE BY BENEFICIARIES
The death benefit options are subject to income tax to the extent the
distribution exceeds the cost basis in the contract. The value of the death
benefit, as determined under federal law, is also included in the owner's
estate.
Generally, the same tax rules described above would also apply to amounts
received by your beneficiary. Choosing any option other than a lump sum death
benefit may defer taxes. Certain minimum distribution requirements apply upon
your death, as discussed further below.
Tax consequences to the beneficiary vary among the death benefit payment
options.
- - Choice 1: the beneficiary is taxed on earnings in the contract.
- - Choice 2: the beneficiary is taxed as amounts are withdrawn (in this case
earnings are treated as being distributed first).
- - Choice 3: the beneficiary is taxed on each payment (part will be treated
as earnings and part as return of premiums).
CONSIDERATIONS FOR CONTINGENT ANNUITANTS: There may be adverse tax
consequences if a Contingent Annuitant succeeds an Annuitant when the Annuity is
owned by a trust that is neither tax exempt nor qualifies for preferred
treatment under certain sections of the Code. In general, the Code is designed
to prevent indefinite deferral of tax. Continuing the benefit of tax deferral by
naming one or more Contingent Annuitants when the Annuity is owned by a
non-qualified trust might be deemed an attempt to extend the tax deferral for an
indefinite period. Therefore, adverse tax treatment may depend on the terms of
the trust, who is named as Contingent Annuitant, as well as the particular facts
and circumstances. You should consult your tax advisor before naming a
Contingent Annuitant if you expect to use an Annuity in such a fashion.
REPORTING AND WITHHOLDING ON DISTRIBUTIONS
Taxable amounts distributed from your annuity contracts are subject to federal
and state income tax reporting and withholding. In general, we will withhold
federal income tax from the taxable portion of such distribution based on the
type of distribution. In the case of an annuity or similar periodic payment, we
will withhold as if you are a married individual with 3
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
exemptions unless you designate a different withholding status. In the case of
all other distributions, we will withhold at a 10% rate. You may generally elect
not to have tax withheld from your payments. An election out of withholding must
be made on forms that we provide.
State income tax withholding rules vary and we will withhold based on the
rules of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident aliens
at a 30% rate. A different withholding rate may be applicable to a nonresident
alien based on the terms of an existing income tax treaty between the United
States and the nonresident alien's country. Please refer to the discussion below
regarding withholding rules for tax favored plans (for example, an IRA).
Regardless of the amount withheld by us, you are liable for payment of
federal and state income tax on the taxable portion of annuity distributions.
You should consult with your tax advisor regarding the payment of the correct
amount of these income taxes and potential liability if you fail to pay such
taxes.
ANNUITY QUALIFICATION
Diversification And Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the assets underlying the
variable investment options of the annuity contract must be diversified,
according to certain rules. We believe these diversification rules will be met.
An additional requirement for qualification for the tax treatment
described above is that we, and not you as the contract owner, must have
sufficient control over the underlying assets to be treated as the owner of the
underlying assets for tax purposes. While we also believe these investor control
rules will be met, 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. It is unclear whether such guidelines, if in fact
promulgated, would have retroactive effect. It is also unclear what effect, if
any, such guidelines may have on transfers between the investment options
offered pursuant to this Prospectus. We will take any action, including
modifications to your Annuity or the investment options, required to comply with
such guidelines if promulgated.
Please refer to the Statement of Additional information for further
information on these Diversification and Investor Control issues.
Required Distributions Upon Your Death. Upon your death, certain
distributions must be made under the contract. The required distributions depend
on whether you die before you start taking annuity payments under the contract
or after you start taking annuity payments under the contract.
If you die on or after the annuity date, the remaining portion of the
interest in the contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract
must be distributed within 5 years after the date of death. However, if a
periodic payment option is selected by your designated beneficiary and if such
payments begin within 1 year of your death, the value of the contract may be
distributed over the beneficiary's life or a period not exceeding the
beneficiary's life expectancy. Your designated beneficiary is the person to whom
benefit rights under the contract pass by reason of death, and must be a natural
person in order to elect a periodic payment option based on life expectancy or a
period exceeding five years.
If the contract is payable to (or for the benefit of) your surviving
spouse, that portion of the contract may be continued with your spouse as the
owner.
Changes In The Contract. We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract owners and you will be
given notice to the extent feasible under the circumstances.
ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
- - The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
- - Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
- - You transfer your contract to, or designate, a beneficiary who is either
37 1/2 years younger than you or a grandchild.
- - You purchased more than one annuity contract from the same insurer within
the same calendar year (other than contracts held by tax favored plans).
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
Currently, the contract may be purchased for use in connection with
individual retirement accounts and annuities (IRAs)
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Tax Considerations continued
which are subject to Sections 408(a), 408(b) and 408A of the Code. In addition,
this contract may be purchased for use in connection with a corporate Pension
and Profit-sharing plan (subject to 401(a) of the Code), H.R. 10 plans (also
known as Keogh Plans, subject to 401(a) of the Code), Tax Sheltered Annuities
(subject to 403(b) of the Code, also known as Tax Deferred Annuities or TDAs),
and Section 457 plans (subject to 457 of the Code). This description assumes
that you have satisfied the requirements for eligibility for these products.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA or 403(b) account, which can hold other permissible assets other than the
annuity. The terms and administration of the trust or custodial account in
accordance with the laws and regulations for IRAs or 403(b)s, as applicable, are
the responsibility of the applicable trustee or custodian.
You should be aware that tax favored plans such as IRAs generally provide
income tax deferral regardless of whether they invest in annuity contracts. This
means that when a tax favored plan invests in an annuity contract, it generally
does not result in any additional tax benefits (such as income tax deferral and
income tax free transfers).
TYPES OF TAX FAVORED PLANS
IRAs. If you buy a contract for use as an IRA, we will provide you a copy of the
prospectus and contract. The "IRA Disclosure Statement" contains information
about eligibility, contribution limits, tax particulars, and other IRA
information. In addition to this information (some of which is summarized
below), the IRS requires that you have a "free look" after making an initial
contribution to the contract. During this time, you can cancel the contract by
notifying us in writing, and we will refund all of the purchase payments under
the contract (or, if provided by applicable state law, the amount credited under
the contract, if greater), less any applicable federal and state income tax
withholding.
Contributions Limits/Rollovers. Because of the way the contract is
designed, you may purchase a contract for an IRA in connection with a "rollover"
of amounts from a qualified retirement plan or transfer from another IRA. In
2005 the limit is $4,000; increasing to $5,000 in 2008. After 2008 the
contribution amount will be indexed for inflation. The tax law also provides for
a catch-up provision for individuals who are age 50 and above. These taxpayers
will be permitted to contri- bute an additional $500, increasing to $1,000 in
2006 and years thereafter.
The "rollover" rules under the Code are fairly technical; however, an
individual (or his or her surviving spouse) may generally "roll over" certain
distributions from tax favored retirement plans (either directly or within 60
days from the date of these distributions) if he or she meets the requirements
for distribution. Once you buy the contract, you can make regular IRA
contributions under the contract (to the extent permitted by law). However, if
you make such regular IRA contributions, you should note that you will not be
able to treat the contract as a "conduit IRA," which means that you will not
retain possible favorable tax treatment if you subsequently "roll over" the
contract funds originally derived from a qualified retirement plan or TDA into
another Section 401(a) plan or TDA.
Required Provisions. Contracts that are IRAs (or endorsements that are
part of the contract) must contain certain provisions:
- - You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree
of divorce);
- - Your rights as owner are non-forfeitable;
- - You cannot sell, assign or pledge the contract;
- - The annual contribution you pay cannot be greater than the maximum amount
allowed by law, including catch-up contributions if applicable (which does
not include any rollover amounts);
- - The date on which annuity payments must begin cannot be later than April
1st of the calendar year after the calendar year you turn age 70 1/2; and
- - Death and annuity payments must meet "minimum distribution requirements"
described below.
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
- - A 10% "early distribution penalty" described below;
- - Liability for "prohibited transactions" if you, for example, borrow
against the value of an IRA; or
- - Failure to take a minimum distribution also described below.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
SEPs. SEPs are a variation on a standard IRA, and contracts issued to a SEP
must satisfy the same general requirements described under IRAs (above). There
are, however, some differences:
- - If you participate in a SEP, you generally do not include in income any
employer contributions made to the SEP on your behalf up to the lesser of
(a) $42,000 in 2005 or (b) 25% of the employee's earned income (not
including contribution as "earned income" for these purposes). However,
for these purposes, compensation in excess of certain limits established
by the IRS will not be considered. In 2005, this limit is $210,000;
- - SEPs must satisfy certain participation and nondiscrimination requirements
not generally applicable to IRAs; and
- - SEPs for small employers permit salary deferrals up to $14,000 in 2005
with the employer making these contributions to the SEP. However, no new
"salary reduction" or "SARSEPs" can be established after 1996. Individuals
participating in a SARSEP who are age 50 or above by the end of the year
will be permitted to contribute an additional $4,000 in 2005, increasing
to $5,000 in 2006. Thereafter, the amount is indexed for inflation.
You will also be provided the same information, and have the same "free
look" period, as you would have if you purchased the contract for a standard
IRA.
ROTH IRAs. Like standard IRAs, income within a Roth IRA accumulates
tax-free, and contributions are subject to specific limits. Roth IRAs have,
however, the following differences:
- - Contributions to a Roth IRA cannot be deducted from your gross income;
- - "Qualified distributions" from a Roth IRA are excludable from gross
income. A "qualified distribution" is a distribution that satisfies two
requirements: (1) the distribution must be made (a) after the owner of the
IRA attains age 59 1/2; (b) after the owner's death; (c) due to the
owner's disability; or (d) for a qualified first time homebuyer
distribution within the meaning of Section 72(t)(2)(F) of the Code; and
(2) the distribution must be made in the year that is at least five tax
years after the first year for which a contribution was made to any Roth
IRA established for the owner or five years after a rollover, transfer, or
conversion was made from a traditional IRA to a Roth IRA. Distributions
from a Roth IRA that are not qualified distributions will be treated as
made first from contributions and then from earnings, and taxed generally
in the same manner as distributions from a traditional IRA.
- - If eligible (including meeting income limitations and earnings
requirements), you may make contributions to a Roth IRA after attaining
age 70 1/2, and distributions are not required to begin upon attaining
such age or at any time thereafter.
Because of the way the contract is designed, you may purchase a contract
for a Roth IRA in connection with a "rollover" of amounts of another traditional
IRA, conduit IRA, SEP, SIMPLE-IRA or Roth IRA. The Code permits persons who meet
certain income limitations (generally, adjusted gross income under $100,000),
and who receive certain qualifying distributions from such non-Roth IRAs, to
directly rollover or make, within 60 days, a "rollover" of all or any part of
the amount of such distribution to a Roth IRA which they establish. This
conversion triggers current taxation (but is not subject to a 10% early
distribution penalty). Once the contract has been purchased, regular Roth IRA
contributions will be accepted to the extent permitted by law.
TDAs. You may own a TDA generally if you are either an employer or
employee of a tax-exempt organization (as defined under Code Section 501 (c)(3))
or a public educational organization, and you may make contributions to a TDA so
long as the employee's rights to the annuity are nonforfeitable. Contributions
to a TDA, and any earnings, are not taxable until distribution. You may also
make contributions to a TDA under a salary reduction agreement, generally up to
a maximum of $14,000 in 2005. Individuals participating in a TDA who are age 50
or above by the end of the year will be permitted to contribute an additional
$4,000 in 2005, increasing to $5,000 in 2006. Thereafter, the amount is indexed
for inflation. Further, you may roll over TDA amounts to another TDA or an IRA.
You may also roll over TDA amounts to a qualified retirement plan, a SEP and a
457 government plan. A contract may only qualify as a TDA if distributions
(other than "grandfathered" amounts held as of December 31, 1988) may be made
only on account of:
- - Your attainment of age 59 1/2;
- - Your severance of employment;
- - Your death;
- - Your total and permanent disability; or
- - Hardship (under limited circumstances, and only related to salary
deferrals and any earnings attributable to these amounts).
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Tax Considerations continued
In any event, you must begin receiving distributions from your TDA by
April 1st of the calendar year after the calendar year you turn age 70 1/2 or
retire, whichever is later.
These distribution limits do not apply either to transfers or exchanges of
investments under the contract, or to any "direct transfer" of your interest in
the contract to another TDA or to a mutual fund "custodial account" described
under Code Section 403(b)(7).
Employer contributions to TDAs are subject to the same general
contribution, nondiscrimination, and minimum participation rules applicable to
"qualified" retirement plans.
MINIMUM DISTRIBUTION REQUIREMENTS AND PAYMENT OPTION
If you hold the contract under an IRA (or other tax-favored plan), IRS minimum
distribution requirements must be satisfied. This means that generally payments
must start by April 1 of the year after the year you reach age 70 1/2 and must
be made for each year thereafter. The amount of the payment must at least equal
the minimum required under the IRS rules. Several choices are available for
calculating the minimum amount. More information on the mechanics of this
calculation is available on request. Please contact us at a reasonable time
before the IRS deadline so that a timely distribution is made. Please note that
there is a 50% tax penalty on the amount of any minimum distribution not made in
a timely manner.
Effective in 2006, in accordance with recent changes in laws and
regulations, required minimum distributions will be calculated based on the sum
of the contract value and the actuarial value of any additional death benefits
and benefits from optional riders that you have purchased under the contract. As
a result, the required minimum distributions may be larger than if the
calculation were based on the contract value only, which may in turn result in
an earlier (but not before the required beginning date) distribution under the
Contract and an increased amount of taxable income distributed to the contract
owner, and a reduction of death benefits and the benefits of any optional
riders.
You can use the Minimum Distribution option to satisfy the IRS minimum
distribution requirements for this contract without either beginning annuity
payments or surrendering the contract. We will distribute to you this minimum
distribution amount, less any other partial withdrawals that you made during the
year.
Although the IRS rules determine the required amount to be distributed
from your IRA each year, certain payment alternatives are still available to
you. If you own more than one IRA, you can choose to satisfy your minimum
distribution requirement for each of your IRAs by withdrawing that amount from
any of your IRAs.
PENALTY FOR EARLY WITHDRAWALS
You may owe a 10% tax penalty on the taxable part of distributions received
from an IRA, SEP, Roth IRA, TDA or qualified retirement plan before you attain
age 59 1/2. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled; or
- - generally the amount paid or received is in the form of substantially
equal payments not less frequently than annually. (Please note that
substantially equal payments must continue until the later of reaching age
59 1/2 or 5 years.) Modification of payments during that time period will
result in retroactive application of the 10% tax penalty.).
Other exceptions to this tax may apply. You should consult your tax
advisor for further details.
WITHHOLDING
Unless a distribution is an eligible rollover distribution that is "directly"
rolled over into another qualified plan, IRA (including the IRA variations
described above), SEP, 457 government plan or TDA, we will withhold federal
income tax at the rate of 20%. This 20% withholding does not apply to
distributions from IRAs and Roth IRAs. For all other distributions, unless you
elect otherwise, we will withhold federal income tax from the taxable portion of
such distribution at an appropriate percentage. The rate of withholding on
annuity payments where no mandatory withholding is required is determined on the
basis of the withholding certificate that you file with us. If you do not file a
certificate, we will automatically withhold federal taxes on the following
basis:
- - For any annuity payments not subject to mandatory withholding, you will
have taxes withheld by us as if you are a married individual, with 3
exemptions; and
- - For all other distributions, we will withhold at a 10% rate.
We will provide you with forms and instructions concerning the right to
elect that no amount be withheld from payments in the ordinary course. However,
you should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should consult with
your tax advisor to find out more information on your potential liability if you
fail to pay such taxes. There may be additional state income tax withholding
requirements.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevents a fiduciary and other "parties in interest" with respect to a plan
(and, for these purposes, an IRA would also constitute a "plan") from receiving
any benefit from any party dealing with the plan, as a result of the sale of the
contract. Administrative exemptions under ERISA generally permit the sale of
insurance/annuity products to plans, provided that certain information is
disclosed to the person purchasing the contract. This information has to do
primarily with the fees, charges, discounts and other costs related to the
contract, as well as any commissions paid to any agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found in the applicable sections of this Prospectus.
Information about sales representatives and commissions may be found in
the sections of this Prospectus addressing distribution of the Annuity.
Please consult your tax advisor if you have any additional questions.
SPOUSAL CONSENT RULES FOR RETIREMENT PLANS -- QUALIFIED CONTRACTS
If you are married at the time your payments commence, you may be required by
federal law to choose an income option that provides survivor annuity income to
your spouse, unless your spouse waives that right. Similarly, if you are married
at the time of your death, federal law may require all or a portion of the death
benefit to be paid to your spouse, even if you designated someone else as your
beneficiary. A brief explanation of the applicable rules follows. For more
information, consult the terms of your retirement arrangement.
Defined Benefit Plans and Money Purchase Pension Plans. If you are married
at the time your payments commence, federal law requires that benefits be paid
to you in the form of a "qualified joint and survivor annuity" (QJSA), unless
you and your spouse waive that right, in writing. Generally, this means that you
will receive a reduced payment during your life and, upon your death, your
spouse will receive at least one-half of what you were receiving for life. You
may elect to receive another income option if your spouse consents to the
election and waives his or her right to receive the QJSA. If your spouse
consents to the alternative form of payment, your spouse may not receive any
benefits from the plan upon your death. Federal law also requires that the plan
pay a death benefit to your spouse if you are married and die before you begin
receiving your benefit. This benefit must be available in the form of an annuity
for your spouse's lifetime and is called a "qualified pre-retirement survivor
annuity" (QPSA). If the plan pays death benefits to other beneficiaries, you may
elect to have a beneficiary other than your spouse receive the death benefit,
but only if your spouse consents to the election and waives his or her right to
receive the QPSA. If your spouse consents to the alternate beneficiary, your
spouse will receive no benefits from the plan upon your death. Any QPSA waiver
prior to your attaining age 35 will become null and void on the first day of the
calendar year in which you attain age 35, if still employed.
Defined Contribution Plans (including 401(k) Plans and ERISA 403(b)
Annuities). Spousal consent to a distribution is generally not required. Upon
your death, your spouse will receive the entire death benefit, even if you
designated someone else as your beneficiary, unless your spouse consents in
writing to waive this right. Also, if you are married and elect an annuity as a
periodic income option, federal law requires that you receive a QJSA (as
described above), unless you and your spouse consent to waive this right.
IRAs, non-ERISA 403(b) Annuities, and 457 Plans. Spousal consent to a
distribution is not required. Upon your death, any death benefit will be paid to
your designated beneficiary.
ADDITIONAL INFORMATION
For additional information about federal tax law requirements applicable to tax
favored plans, see the IRA Disclosure Statement.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
General Information
HOW WILL I RECEIVE STATEMENTS AND REPORTS?
We send any statements and reports required by applicable law or regulation to
you at your last known address of record. You should therefore give us prompt
notice of any address change. We reserve the right, to the extent permitted by
law and subject to your prior consent, to provide any prospectus, prospectus
supplements, confirmations, statements and reports required by applicable law or
regulation to you through our Internet Website at
http://www.americanskandia.prudential.com or any other electronic means,
including diskettes or CD ROMs. We send a confirmation statement to you each
time a transaction is made affecting Account Value, such as making additional
Purchase Payments, transfers, exchanges or withdrawals. We also send quarterly
statements detailing the activity affecting your Annuity during the calendar
quarter. We may confirm regularly scheduled transactions, such as the Annual
Maintenance Fee, systematic withdrawals (including 72(t) payments and required
minimum distributions), bank drafting, dollar cost averaging, and static
rebalancing, in quarterly statements instead of confirming them immediately. You
should review the information in these statements carefully. You may request
additional reports. We reserve the right to charge up to $50 for each such
additional report. We may also send an annual report and a semi-annual report
containing applicable financial statements for the Separate Account and the
Portfolios, as of December 31 and June 30, respectively, to Owners or, with your
prior consent, make such documents available electronically through our Internet
Website or other electronic means.
WHO IS AMERICAN SKANDIA?
American Skandia Life Assurance Corporation, a Prudential Financial Company
("American Skandia") is a stock life insurance company domiciled in Connecticut
with licenses in all 50 states, the District of Columbia and Puerto Rico.
American Skandia is a wholly-owned subsidiary of American Skandia, Inc. ("ASI"),
whose ultimate parent is Prudential Financial, Inc. American Skandia markets its
products to broker-dealers and financial planners through an internal field
marketing staff. In addition, American Skandia markets through and in
conjunction with financial institutions such as banks that are permitted
directly, or through affiliates, to sell annuities.
American Skandia is in the business of issuing annuity and life insurance
products. American Skandia currently offers the following products: (a) flexible
premium deferred annuities and single premium fixed deferred annuities that are
registered with the SEC; (b) certain other fixed deferred annuities that are not
registered with the SEC; and (c) both fixed and variable immediate adjustable
annuities.
Effective May 1, 2003, Skandia U.S. Inc., the sole shareholder of ASI,
which is the parent of American Skandia, was purchased by Prudential Financial,
Inc. Prudential Financial, Inc. is a New Jersey insurance holding company whose
subsidiary companies serve individual and institutional customers worldwide and
include The Prudential Insurance Company of America, one of the largest life
insurance companies in the U.S. These companies offer a variety of products and
services, including life insurance, property and casualty insurance, mutual
funds, annuities, pension and retirement related services and administration,
asset management, securities brokerage, banking and trust services, real estate
brokerage franchises, and relocation services.
No company other than American Skandia has any legal responsibility to pay
amounts that it owes under its annuity and variable life insurance contracts.
However, Prudential Financial exercises significant influence over the
operations and capital structure of American Skandia.
WHAT ARE SEPARATE ACCOUNTS?
The separate accounts are where American Skandia sets aside and invests the
assets of some of our annuities. In the accumulation period, assets supporting
Account Values of the Annuities are held in a separate account established under
the laws of the State of Connecticut. We are the legal owner of assets in the
separate accounts. In the payout period, assets supporting fixed annuity
payments and any adjustable annuity payments we make available are held in our
general account. Assets supporting variable annuity payment options may be
invested in our separate accounts. Income, gains and losses from assets
allocated to these separate accounts are credited to or charged against each
such separate account without regard to other income, gains or losses of
American Skandia or of any other of our separate accounts. These assets may only
be charged with liabilities which arise from the Annuities issued by American
Skandia. The amount of our obligation in relation to allocations to the
Sub-accounts is based on the investment performance of such Sub-accounts.
However, the obligations themselves are our general corporate obligations.
Separate Account B
During the accumulation period, the assets supporting obligations based on
allocations to the variable investment options are held in Sub-accounts of
American Skandia Life Assurance
96
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Corporation Variable Account B, also referred to as "Separate Account B".
Separate Account B was established by us pursuant to Connecticut law on November
25, 1987. 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.
Separate Account B consists of multiple Sub-accounts. Each Sub-account
invests only in a single mutual fund or mutual fund portfolio. The name of each
Sub-account generally corresponds to the name of the underlying Portfolio. Each
Sub-account in Separate Account B may have several different Unit Prices to
reflect the Insurance Charge, Distribution Charge (when applicable) and the
charges for any optional benefits that are offered under this Annuity and other
annuities issued by us through Separate Account B. Separate Account B is
registered with the SEC under the Investment Company Act of 1940 ("Investment
Company Act") as a unit investment trust, which is a type of investment company.
The SEC does not supervise investment policies, management or practices of
Separate Account B.
Prior to November 18, 2002, Separate Account B was organized as a single
separate account with six different Sub-account classes, each of which was
registered as a distinct unit investment trust under the Investment Company Act.
Effective November 18, 2002, each Sub-account class of Separate Account B was
consolidated into the unit investment trust formerly named American Skandia Life
Assurance Corporation Variable Account B (Class 1 Sub-accounts), which was
subsequently renamed American Skandia Life Assurance Corporation Variable
Account B. Each Sub-account of Separate Account B has multiple Unit Prices to
reflect the daily charge deducted for each combination of the applicable
Insurance Charge, Distribution Charge (when applicable) and the charge for each
optional benefit offered under Annuity contracts funded through Separate Account
B. The consolidation of Separate Account B had no impact on Annuity Owners.
We reserve the right to make changes to the Sub-accounts available under
the Annuity as we determine appropriate. We may offer new Sub-accounts,
eliminate Sub-accounts, or combine Sub-accounts at our sole discretion. We may
also close Sub-accounts to additional Purchase Payments on existing Annuity
contracts or close Sub-accounts for Annuities purchased on or after specified
dates. We may also substitute an underlying mutual fund or portfolio of an
underlying mutual fund for another underlying mutual fund or portfolio of an
underlying mutual fund, subject to our receipt of any exemptive relief that we
are required to obtain under the Investment Company Act. We will notify Owners
of changes we make to the Sub-accounts available under the Annuity.
VALUES AND BENEFITS BASED ON ALLOCATIONS TO THE SUB-ACCOUNTS WILL VARY
WITH THE INVESTMENT PERFORMANCE OF THE UNDERLYING MUTUAL FUNDS OR FUND
PORTFOLIOS, AS APPLICABLE. WE DO NOT GUARANTEE THE INVESTMENT RESULTS OF ANY
SUB-ACCOUNT. YOUR ACCOUNT VALUE ALLOCATED TO THE SUB-ACCOUNTS MAY INCREASE OR
DECREASE. YOU BEAR THE ENTIRE INVESTMENT RISK. THERE IS NO ASSURANCE THAT THE
ACCOUNT VALUE OF YOUR ANNUITY WILL EQUAL OR BE GREATER THAN THE TOTAL OF THE
PURCHASE PAYMENTS YOU MAKE TO US.
SEPARATE ACCOUNT D
During the accumulation period, assets supporting our obligations based on Fixed
Allocations are held in American Skandia Life Assurance Corporation Separate
Account D, also referred to as "Separate Account D". Such obligations are based
on the fixed interest rates we credit to Fixed Allocations and the terms of the
Annuities. These obligations do not depend on the investment performance of the
assets in Separate Account D. Separate Account D was established by us pursuant
to Connecticut law.
There are no units in Separate Account D. The Fixed Allocations are
guaranteed by our general account. An Annuity Owner who allocates a portion of
their Account Value to Separate Account D does not participate in the investment
gain or loss on assets maintained in Separate Account D. Such gain or loss
accrues solely to us. We retain the risk that the value of the assets in
Separate Account D may drop below the reserves and other liabilities we must
maintain. Should the value of the assets in Separate Account D drop below the
reserve and other liabilities we must maintain in relation to the annuities
supported by such assets, we will transfer assets from our general account to
Separate Account D to make up the difference. We have the right to transfer to
our general account any assets of Separate Account D in excess of such reserves
and other liabilities. We maintain assets in Separate Account D supporting a
number of annuities we offer.
We currently employ investment managers to manage the assets maintained in
Separate Account D. Each manager we employ is responsible for investment
management of a different portion of Separate Account D. From time to time
additional investment managers may be employed or investment
97
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
General Information continued
managers may cease being employed. We are under no obligation to employ or
continue to employ any investment manager(s) and have sole discretion over the
investment managers we retain.
We are not obligated to invest according to specific guidelines or
strategies except as may be required by Connecticut and other state insurance
laws.
WHAT IS THE LEGAL STRUCTURE OF THE UNDERLYING FUNDS?
Each underlying mutual fund is registered as an open-end management investment
company under the Investment Company Act. Shares of the underlying mutual fund
portfolios are sold to separate accounts of life insurance companies offering
variable annuity and variable life insurance products. The shares may also be
sold directly to qualified pension and retirement plans.
VOTING RIGHTS
We are the legal owner of the shares of the underlying mutual funds in which the
Sub-accounts invest. However, under SEC rules, you have voting rights in
relation to Account Value maintained in the Sub-accounts. If an underlying
mutual fund portfolio requests a vote of shareholders, we will vote our shares
based on instructions received from Owners with Account Value allocated to that
Sub-account. Owners have the right to vote an amount equal to the number of
shares attributable to their contracts. If we do not receive voting instructions
in relation to certain shares, we will vote those shares in the same manner and
proportion as the shares for which we have received instructions. We will
furnish those Owners who have Account Value allocated to a Sub-account whose
underlying mutual fund portfolio has requested a "proxy" vote with proxy
materials and the necessary forms to provide us with their voting instructions.
Generally, you will be asked to provide instructions for us to vote on matters
such as changes in a fundamental investment strategy, adoption of a new
investment advisory agreement, or matters relating to the structure of the
underlying mutual fund that require a vote of shareholders.
American Skandia Trust (the "Trust") has obtained an exemption from the
Securities and Exchange Commission that permits its co-investment advisers,
American Skandia Investment Services, Incorporated ("ASISI") and Prudential
Investments LLC, subject to approval by the Board of Trustees of the Trust, to
change sub-advisors for a Portfolio and to enter into new sub-advisory
agreements, without obtaining shareholder approval of the changes. This
exemption (which is similar to exemptions granted to other investment companies
that are organized in a similar manner as the Trust) is intended to facilitate
the efficient supervision and management of the sub-advisors by ASISI,
Prudential Investments LLC and the Trustees. The Trust is required, under the
terms of the exemption, to provide certain information to shareholders following
these types of changes. We may add new Sub-accounts that invest in a series of
underlying funds other than the Trust that is managed by an affiliate. Such
series of funds may have a similar order from the SEC. You also should review
the prospectuses for the other underlying funds in which various Sub-accounts
invest as to whether they have obtained similar orders from the SEC.
MATERIAL CONFLICTS
It is possible that differences may occur between companies that offer shares of
an underlying mutual fund portfolio to their respective separate accounts
issuing variable annuities and/or variable life insurance products. Differences
may also occur surrounding the offering of an underlying mutual fund portfolio
to variable life insurance policies and variable annuity contracts that we
offer. Under certain circumstances, these differences could be considered
"material conflicts," in which case we would take necessary action to protect
persons with voting rights under our variable annuity contracts and variable
life insurance policies against persons with voting rights under other insurance
companies' variable insurance products. If a "material conflict" were to arise
between owners of variable annuity contracts and variable life insurance
policies issued by us we would take necessary action to treat such persons
equitably in resolving the conflict. "Material conflicts" could arise due to
differences in voting instructions between owners of variable life insurance and
variable annuity contracts of the same or different companies. We monitor any
potential conflicts that may exist.
SERVICE FEES PAYABLE TO AMERICAN SKANDIA
American Skandia or our affiliates have entered into agreements with the
investment adviser or distributor of the underlying Portfolios. Under the terms
of these agreements, American Skandia may provide administrative and support
services to the Portfolios for which it receives a fee of up to 0.75%
(currently) of the average assets allocated to the Portfolios under the Annuity
from the investment adviser, distributor and/or the fund. These agreements may
be different for each underlying mutual fund whose portfolios are offered as
Sub-accounts.
In addition, the investment adviser, sub-advisor or distributor of the
underlying Portfolios may also compensate us by providing reimbursement or
paying directly for, among other things, marketing and/or administrative
services and/or other services they provide in connection with the Annuity.
These services may include, but are not limited to: co-sponsoring various
meetings and seminars attended by broker-dealer firms' registered
representatives and creating marketing material discussing the Annuity and the
available options.
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AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
WHO DISTRIBUTES ANNUITIES OFFERED BY AMERICAN SKANDIA?
American Skandia Marketing, Incorporated ("ASM"), a wholly-owned subsidiary of
American Skandia, Inc., is the distributor and principal underwriter of the
securities offered through this prospectus. ASM acts as the distributor of a
number of annuity and life insurance products we offer and co-distributor
American Skandia Trust and American Skandia Advisor Funds, Inc., a family of
retail mutual funds. ASM also acts as an introducing broker-dealer through
which it receives a portion of brokerage commissions in connection with
purchases and sales of securities held by portfolios of American Skandia Trust
which are offered as underlying investment options under the Annuity.
ASM's principal business address is One Corporate Drive, Shelton,
Connecticut 06484. ASM is registered as broker-dealer under the Securities
Exchange Act of 1934 ("Exchange Act") and is a member of the National
Association of Securities Dealers, Inc. ("NASD").
The Annuity is offered on a continuous basis. ASM enters into distribution
agreements with broker-dealers who are registered under the Exchange Act and
with entities that may offer the Annuity but are exempt from registration
("firms"). Applications for the Annuity are solicited by registered
representatives of those firms. Such representatives will also be our appointed
insurance agents under state insurance law. In addition, ASM may offer the
Annuity directly to potential purchasers.
Commissions are paid to firms on sales of the Annuity according to one or
more schedules. The individual representative will receive a portion of the
compensation, depending on the practice of his or her firm. Commissions are
generally based on a percentage of Purchase Payments made, up to a maximum of
4.0%. Alternative compensation schedules are available that provide a lower
initial commission plus ongoing annual compensation based on all or a portion of
Account Value. We may also provide compensation to the distributing firm for
providing ongoing service to you in relation to the Annuity. Commissions and
other compensation paid in relation to the Annuity do not result in any
additional charge to you or to the Separate Account.
In addition, in an effort to promote the sale of our products (which may
include the placement of American Skandia and/or the Annuity on a preferred or
recommended company or product list and/or access to the firm's registered
representatives), we or ASM may enter into compensation arrangements with
certain broker-dealer firms with respect to certain or all registered
representatives of such firms under which such firms may receive separate
compensation or reimbursement for, among other things, training of sales
personnel and/or marketing and/or administrative services and/or other services
they provide. These services may include, but are not limited to: educating
customers of the firm on the Annuity's features; conducting due diligence and
analysis, providing office access, operations and systems support; holding
seminars intended to educate firm's registered representatives and make them
more knowledgeable about the Annuity; providing a dedicated marketing
coordinator; providing priority sales desk support; and providing expedited
marketing compliance approval. To the extent permitted by NASD rules and other
applicable laws and regulations, ASM may pay or allow other promotional
incentives or payments in the form of cash or non-cash compensation. These
arrangements may not be offered to all firms and the terms of such arrangements
may differ between firms. A list of the firms to whom American Skandia pays an
amount of greater than $10,000 for these arrangements is provided in the
Statement of Additional Information, which is available upon request. You should
note that firms and individual registered representatives and branch managers
within some firms participating in one of these compensation arrangements might
receive greater compensation for selling the Annuity than for selling a
different annuity that is not eligible for these compensation arrangements.
While compensation is generally taken into account as an expense in considering
the charges applicable to an annuity product, any such compensation will be paid
by us or ASM and will not result in any additional charge to you. Overall
compensation paid to the distributing firm does not exceed, based on actuarial
assumptions, 8.5% of the total Purchase Payments made. Your registered
representative can provide you with more information about the compensation
arrangements that apply upon the sale of the Annuity.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
American Skandia publishes annual and quarterly reports that are filed with the
SEC. These reports contain financial information about American Skandia that is
annually audited by an independent registered public accounting firm. American
Skandia's annual report for the year ended December 31, 2004, together with
subsequent periodic reports that American Skandia files with the SEC, are
incorporated by reference into this prospectus. You can obtain copies, at no
cost, of any and all of this information, including the American Skandia annual
report
99
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
General Information continued
that is not ordinarily mailed to contract owners, the more cur- rent reports and
any subsequently filed documents at no cost by contacting us at American Skandia
- -- Variable Annuities; P.O. Box 7960, Philadelphia, PA 19176 (Telephone:
203-926-1888). The SEC file number for American Skandia is 33-44202. You may
read and copy any filings made by American Skandia with the SEC at the SEC's
Public Reference Room at 450 Fifth Street, Washington, D.C. 20549-0102. You can
obtain information on the operation of the Public Reference Room by calling
(202) 942-8090. The SEC maintains an Internet site that contains reports, proxy
and information statements, and other information regarding issuers that file
electronically with the SEC at http://www.sec.gov.
FINANCIAL STATEMENTS
The financial statements of the separate account and American Skandia Life
Assurance Corporation are included in the Statement of Additional Information.
HOW TO CONTACT US
You can contact us by:
- - calling our CUSTOMER SERVICE TEAM at 1-800-680-8920, or Skandia's
telephone automated response system at 1-800-766-4530.
- - writing to us via regular mail at American Skandia -- Variable Annuities,
Attention: STAGECOACH ANNUITY, P.O. Box 7960, Philadelphia, PA 19176 OR
for express mail American Skandia -- Variable Annuities, Attention:
STAGECOACH ANNUITY, 2101 Welsh Road, Dresher, PA 19025. NOTE: Failure to
send mail to the proper address may result in a delay in our receiving and
processing your request.
- - sending an email to service@prudential.com or visiting our Internet
Website at www.americanskandia.prudential.com.
- - accessing information about your Annuity through our Internet Website at
www.americanskandia.prudential.com.
You can obtain account information by calling our automated response
system and at www.americanskandia.prudential.com, our Internet Website. Our
Customer Service representatives are also available during business hours to
provide you with information about your account. You can request certain
transactions through our telephone voice response system, our Internet Website
or through a customer service representative. You can provide authorization for
a third party, including your attorney-in-fact acting pursuant to a power of
attorney, to access your account information and perform certain transactions on
your account. You will need to complete a form provided by us which identifies
those transactions that you wish to authorize via telephonic and electronic
means and whether you wish to authorize a third party to perform any such
transactions. Please note that unless you tell us otherwise, we deem that all
transactions that are directed by your investment professional with respect to
your Annuity have been authorized by you. We require that you or your
representative provide proper identification before performing transactions over
the telephone or through our Internet Website. This may include a Personal
Identification Number (PIN) that will be provided to you upon issue of your
Annuity or you may establish or change your PIN by calling our automated
response system and at www.americanskandia.prudential.com, our Internet Website.
Any third party that you authorize to perform financial transactions on your
account will be assigned a PIN for your account.
Transactions requested via telephone are recorded. To the extent permitted
by law, we will not be responsible for any claims, loss, liability or expense in
connection with a transaction requested by telephone or other electronic means
if we acted on such transaction instructions after following reasonable
procedures to identify those persons authorized to perform transactions on your
Annuity using verification methods which may include a request for your Social
Security number, PIN or other form of electronic identification. We may be
liable for losses due to unauthorized or fraudulent instructions if we did not
follow such procedures.
American Skandia does not guarantee access to telephonic, facsimile,
Internet or any other electronic information or that we will be able to accept
transaction instructions via such means at all times. Regular and/or express
mail will be the only means by which we will accept transaction instructions
when telephonic, facsimile, Internet or any other electronic means are
unavailable or delayed. American Skandia reserves the right to limit, restrict
or terminate telephonic, facsimile, Internet or any other electronic transaction
privileges at any time.
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Securities Act") may be permitted to directors, officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
LEGAL PROCEEDINGS
As of the date of this Prospectus, American Skandia and its affiliates are not
involved in any legal proceedings outside of
100
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
the ordinary course of business. American Skandia and its affiliates are
involved in pending and threatened legal proceedings in the normal course of its
business, however, we do not anticipate that the outcome of any such legal
proceedings will have a material adverse affect on the Separate Account, or
American Skandia's ability to meet its obligations under the Annuity, or on the
distribution of the Annuity.
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The following are the contents of the Statement of Additional Information:
General Information about American Skandia
- - American Skandia Life Assurance Corporation
- - American Skandia Life Assurance Corporation Variable Account B
- - American Skandia Life Assurance Corporation Separate Account D
Principal Underwriter/Distributor -- American Skandia Marketing, Incorporated
Payments Made to Promote Sale of Our Products
How the Unit Price is Determined
Additional Information on Fixed Allocations
- - How We Calculate the Market Value Adjustment
General Information
- - Voting Rights
- - Modification
- - Deferral of Transactions
- - Misstatement of Age or Sex
- - Ending the Offer
Annuitization
Experts
Legal Experts
Financial Statements
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APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
APPENDIX A -- CONDENSED FINANCIAL INFORMATION ABOUT SEPARATE ACCOUNT B
Separate Account B consists of multiple Sub-accounts. Each Sub-account invests
only in a single mutual fund or mutual fund portfolio. All or some of these
Sub-accounts are available as investment options for other variable annuities
we offer pursuant to different prospectuses.
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 Sub-accounts of Separate
Account B that are being offered pursuant to this Prospectus; and (b) the
number of Units outstanding for each such Sub-account as of the dates shown.
Since November 18, 2002, we have been determining, on a daily basis, multiple
Unit Prices for each Sub-account of Separate Account B. We compute multiple
Unit Prices because several of our variable annuities invest in the same
Sub-accounts, and these annuities deduct varying charges that correspond to
each combination of the applicable Insurance Charge, Distribution Charge (when
applicable) and the charges for each optional benefit. Where an asset-based
charge corresponding to a particular Sub-account within a new annuity product
is identical to that in the same Sub-account within an existing annuity, the
Unit Price for the new annuity will be identical to that of the existing
annuity. In such cases, we will for reference purposes depict, in the condensed
financial information for the new annuity, Unit Prices of the existing annuity.
The year in which operations commenced in each such Sub-account is noted in
parentheses. To the extent a Sub-account commenced operations during a
particular calendar year, the Unit Price as of the end of the period reflects
only the partial year results from the commencement of operations until
December 31st of the applicable year. When a Unit Price was first calculated
for a particular Sub-account, we set the price of that Unit at $10.00 per Unit.
Thereafter, Unit Prices vary based on market performance. Unit Prices and Units
are provided for Sub-accounts that commenced operations prior to January 1,
2005.
A-1
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ----------------------------------------------------------- ------------- ------------- ------------
Wells Fargo Variable Trust -- INTERNATIONAL EQUITY (1) (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.70 $ 12.71 9.83
Number of Units 36,282 30,093 4,125
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.63 -- --
Number of Units 3,086 -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.55 -- --
Number of Units 1,400 -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
Wells Fargo Variable Trust -- SMALL-CAP GROWTH(2) (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 15.25 $ 13.63 9.74
Number of Units 31,804 27,988 2,121
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.17 -- --
Number of Units 4,467 -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-2
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ----------------------------------------------------------- -------------- -------------- ------------
Wells Fargo Variable Trust -- GROWTH (3) (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.42 $ 11.65 9.59
Number of Units 9,541 8,938 1,090
With any one of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With GMWB
Unit Value $ 11.01 -- --
Number of Units 714 -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
Wells Fargo Variable Trust -- LARGE COMPANY GROWTH (4) (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.81 $ 11.63 9.36
Number of Units 145,943 94,737 8,608
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.74 $ 11.59 --
Number of Units 12,589 1,333 --
With GMWB
Unit Value $ 10.50 -- --
Number of Units 6,708 -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-3
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ---------------------------------------------------- -------------- -------------- --------------
Wells Fargo Variable Trust -- EQUITY VALUE (5) (1998)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.47 $ 12.32 9.97
Number of Units 43,291 30,911 900
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.40 -- --
Number of Units 6,651 -- --
With GMWB
Unit Value $ 13.37 -- --
Number of Units 931 -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 9.53 $ 8.77 --
Number of Units 2,185 2,290 --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
Wells Fargo Variable Trust -- EQUITY INCOME (6) (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.18 $ 10.23 8.25
Number of Units 590,808 314,757 196,720
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.36 $ 12.26 9.90
Number of Units 285,526 251,071 10,707
With GMWB
Unit Value $ 13.33 $ 12.25 --
Number of Units 39,530 5,900 --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.29 $ 12.23 9.90
Number of Units 63,454 15,983 91
With any one of EBP or HAV and GMWB
Unit Price $ 16.60 $ 15.29 --
Number of Units 14,303 15,958 --
With HAV, EBP and GRO Plus
Unit Price $ 13.22 -- --
Number of Units 480 -- --
With HAV, EBP and GMWB
Unit Value $ 11.61 -- --
Number of Units 13 -- --
A-4
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- -------------------------------------------------------- -------------- -------------- ------------
Wells Fargo Variable Trust -- ASSET ALLOCATION (7) (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.67 $ 11.79 9.82
Number of Units 88,663 62,075 2,641
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.61 $ 11.75 --
Number of Units 903 701 --
With GMWB
Unit Value $ 11.07 -- --
Number of Units 5,863 -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.54 -- --
Number of Units 961 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.24 -- --
Number of Units 1,339 -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
Wells Fargo Variable Trust -- TOTAL RETURN BOND (8) (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.19 $ 10.89 10.21
Number of Units 38,158 29,473 74
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.13 $ 10.86 --
Number of Units 0 89 --
With GMWB
Unit Value $ 10.26 -- --
Number of Units 1,190 -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 10.29 -- --
Number of Units 354 -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-5
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ---------------------------------------------- --------------- --------------- ---------------
AST JP MORGAN INTERNATIONAL EQUITY PORTFOLIO
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.67 $ 11.00 8.56
Number of Units 3,227,381 2,415,394 2,569,506
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.65 $ 12.75 9.95
Number of Units 2,064,681 936,678 90,759
With GMWB
Unit Value $ 14.62 $ 12.74 --
Number of Units 217,166 17,098 --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.57 $ 12.72 9.95
Number of Units 284,319 141,470 6,047
With any one of EBP or HAV and GMWB
Unit Value $ 7.86 $ 6.87 --
Number of Units 428,765 400,112 --
With HAV, EBP and GRO Plus
Unit Price $ 14.49 $ 12.68 --
Number of Units 38,292 13,590 --
With HAV, EBP and GMWB
Unit Price $ 12.32 -- --
Number of Units 20,718 -- --
AST WILLIAM BLAIR INTERNATIONAL GROWTH (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 15.30 $ 13.39 9.72
Number of Units 11,265,469 5,547,558 835,523
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.21 $ 13.35 9.72
Number of Units 15,481,627 6,498,151 78,368
With GMWB
Unit Value $ 15.18 $ 13.34 --
Number of Units 1,821,923 103,740 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.13 $ 13.32 9.71
Number of Units 2,722,552 1,009,679 5,178
With any one of EBP or HAV and GMWB
Unit Value $ 15.74 $ 13.86 --
Number of Units 545,075 29,434 --
With HAV, EBP and GRO Plus
Unit Price $ 15.05 $ 13.28 --
Number of Units 325,809 32,626 --
With HAV, EBP and GMWB
Unit Price $ 11.94 -- --
Number of Units 135,829 -- --
A-6
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
--------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- --------------- --------------- --------------
AST LSV INTERNATIONAL VALUE (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.84 $ 10.79 8.19
Number of Units 1,897,469 1,201,268 269,995
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.27 $ 12.86 9.79
Number of Units 810,108 368,945 22,770
With GMWB
Unit Value $ 15.24 $ 12.85 --
Number of Units 69,494 5,504 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.19 $ 12.82 --
Number of Units 119,845 24,374 --
With any one of EBP or HAV and GMWB
Unit Value $ 6.69 $ 5.65 --
Number of Units 122,795 72,406 --
With HAV, EBP and GRO Plus
Unit Price $ 15.11 $ 12.79 --
Number of Units 16,366 1,767 --
With HAV, EBP and GMWB
Unit Value $ 12.70 -- --
Number of Units 5,736 -- --
AST MFS GLOBAL EQUITY (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.16 $ 11.30 9.04
Number of Units 2,276,801 1,393,001 969,509
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.29 $ 12.31 9.87
Number of Units 1,897,254 916,888 32,306
With GMWB
Unit Value $ 14.26 $ 12.29 --
Number of Units 98,046 4,306 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.22 $ 12.27 --
Number of Units 219,580 62,490 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.48 $ 9.06 --
Number of Units 273,401 308,725 --
With HAV, EBP and GRO Plus
Unit Price $ 14.14 $ 12.24 --
Number of Units 26,943 6,069 --
With HAV, EBP and GMWB
Unit Value $ 12.40 -- --
Number of Units 5,188 -- --
A-7
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------------- --------------- --------------- ---------------
AST STATE STREET RESEARCH SMALL-CAP GROWTH (9)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.05 $ 9.89 6.92
Number of Units 2,242,129 3,292,593 1,970,250
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.33 $ 13.50 9.48
Number of Units 1,200,247 1,059,046 47,261
With GMWB
Unit Value $ 12.30 $ 13.49 --
Number of Units 113,913 9,676 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.26 $ 13.46 9.47
Number of Units 136,313 138,936 6,595
With any one of EBP or HAV and GMWB
Unit Value $ 15.30 $ 16.82 --
Number of Units 67,370 64,850 --
With HAV, EBP and GRO Plus
Unit Price $ 12.19 $ 13.43 --
Number of Units 23,253 4,691 --
With HAV, EBP and GMWB
Unit Value $ 9.32 -- --
Number of Units 1,043 -- --
AST DEAM SMALL-CAP GROWTH (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.98 $ 11.13 7.67
Number of Units 1,618,719 1,682,193 639,695
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.10 $ 14.06 9.71
Number of Units 779,045 480,221 12,122
With GMWB
Unit Value $ 15.07 $ 14.05 --
Number of Units 56,414 1,850 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.02 $ 14.02 9.71
Number of Units 192,105 89,708 1,728
With any one of EBP or HAV and GMWB
Unit Value $ 7.07 $ 6.61 --
Number of Units 129,475 131,605 --
With HAV, EBP and GRO Plus
Unit Price $ 14.94 $ 13.98 --
Number of Units 18,825 3,753 --
With HAV, EBP and GMWB
Unit Value $ 11.03 -- --
Number of Units 3,398 -- --
A-8
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- --------------- --------------- ---------------
AST FEDERATED AGGRESSIVE GROWTH (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 15.42 $ 12.74 7.64
Number of Units 4,808,453 3,085,373 1,255,415
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.79 $ 16.40 9.86
Number of Units 5,192,694 2,615,505 63,097
With GMWB
Unit Value $ 19.75 $ 16.38 --
Number of Units 562,771 37,078 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 19.69 $ 16.35 9.86
Number of Units 808,007 362,906 4,107
With any one of EBP or HAV and GMWB
Unit Value $ 9.70 $ 8.06 --
Number of Units 324,340 79,226 --
With HAV, EBP and GRO Plus
Unit Price $ 19.58 $ 16.30 --
Number of Units 95,514 20,181 --
With HAV, EBP and GMWB
Unit Value $ 12.64 -- --
Number of Units 53,866 -- --
AST SMALL-CAP VALUE (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 14.22 $ 12.42 9.30
Number of Units 10,785,030 10,183,346 6,141,523
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.34 $ 13.43 10.08
Number of Units 10,169,483 5,824,200 209,790
With GMWB
Unit Value $ 15.31 $ 13.41 --
Number of Units 1,007,926 100,155 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.26 $ 13.39 10.08
Number of Units 1,690,870 767,455 17,411
With any one of EBP or HAV and GMWB
Unit Value $ 15.87 $ 13.95 --
Number of Units 465,784 275,971 --
With HAV, EBP and GRO Plus
Unit Price $ 15.17 $ 13.35 --
Number of Units 166,852 34,978 --
With HAV, EBP and GMWB
Unit Value $ 12.11 -- --
Number of Units 91,011 -- --
A-9
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ---------------------------------------- --------------- --------------- ---------------
AST DeAM Small-Cap Value (2002)
With No Optional Benefits
Unit Price $ 12.99 $ 10.81 7.66
Number of Units 2,143,020 1,134,865 423,387
With any one of GRO Plus, EBP or HAV
Unit Price $ 17.00 $ 14.19 10.08
Number of Units 1,054,696 434,509 11,686
With GMWB
Unit Value $ 16.96 $ 14.17 --
Number of Units 236,402 10,756 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 16.90 $ 14.15 10.08
Number of Units 213,632 70,597 5,211
With any one of EBP or HAV and GMWB
Unit Value $ 12.78 $ 10.70 --
Number of Units 63,057 22,847 --
With HAV, EBP and GRO Plus
Unit Price $ 16.81 $ 14.11 --
Number of Units 14,277 879 --
With HAV, EBP and GMWB
Unit Value $ 12.71 -- --
Number of Units 634 -- --
AST GOLDMAN SACHS MID-CAP GROWTH (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.80 $ 10.31 7.97
Number of Units 4,375,813 3,027,057 1,273,118
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.55 $ 12.75 9.87
Number of Units 5,139,643 2,379,820 66,279
With GMWB
Unit Value $ 14.52 $ 12.73 --
Number of Units 516,261 37,400 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.47 $ 12.71 9.87
Number of Units 994,493 365,115 2,488
With any one of EBP or HAV and GMWB
Unit Value $ 4.24 $ 3.73 --
Number of Units 457,010 175,708 --
With HAV, EBP and GRO Plus
Unit Price $ 14.39 $ 12.68 --
Number of Units 124,672 12,201 --
With HAV, EBP and GMWB
Unit Value $ 11.91 -- --
Number of Units 33,665 -- --
A-10
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------------- --------------- --------------- ---------------
AST NEUBERGER BERMAN MID-CAP GROWTH (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.86 $ 9.51 7.41
Number of Units 4,715,301 3,415,318 2,175,250
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.87 $ 12.18 9.51
Number of Units 2,211,800 1,089,649 44,760
With GMWB
Unit Value $ 13.84 $ 12.17 --
Number of Units 153,923 16,702 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.80 $ 12.15 9.51
Number of Units 377,548 96,879 1,311
With any one of EBP or HAV and GMWB
Unit Value $ 6.81 $ 6.01 --
Number of Units 369,234 294,816 --
With HAV, EBP and GRO Plus
Unit Price $ 13.72 $ 12.11 --
Number of Units 38,051 5,407 --
With HAV, EBP and GMWB
Unit Value $ 11.70 -- --
Number of Units 18,225 -- --
AST NEUBERGER BERMAN MID-CAP VALUE (1993)
WITH NO OPTIONAL BENEFITS
Unit Price $ 14.51 $ 12.01 8.96
Number of Units 11,461,684 8,530,129 5,118,558
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.08 $ 13.34 9.98
Number of Units 9,335,291 4,786,623 163,415
With GMWB
Unit Value $ 16.04 $ 13.33 --
Number of Units 937,314 87,253 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.99 $ 13.31 9.97
Number of Units 1,457,788 610,598 10,745
With any one of EBP or HAV and GMWB
Unit Value $ 15.99 $ 13.32 --
Number of Units 537,445 370,965 --
With HAV, EBP and GRO Plus
Unit Price $ 15.91 $ 13.27 --
Number of Units 154,749 21,843 --
With HAV, EBP and GMWB
Unit Value $ 12.97 -- --
Number of Units 95,076 -- --
A-11
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- --------------- --------------- ---------------
AST ALGER ALL-CAP GROWTH (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.67 $ 9.07 6.80
Number of Units 1,798,457 2,002,166 658,419
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.25 $ 12.45 9.36
Number of Units 715,598 636,548 6,409
With GMWB
Unit Value $ 13.22 $ 12.43 --
Number of Units 119,566 10,356 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.17 $ 12.41 9.36
Number of Units 141,575 106,376 3,466
With any one of EBP or HAV and GMWB
Unit Value $ 6.19 $ 5.84 --
Number of Units 107,188 87,326 --
With HAV, EBP and GRO Plus
Unit Price $ 13.10 $ 12.38 --
Number of Units 22,732 4,810 --
With HAV, EBP and GMWB
Unit Value $ 10.73 -- --
Number of Units 6,346 -- --
AST GABELLI ALL-CAP VALUE (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.38 $ 10.91 8.17
Number of Units 2,587,064 2,513,413 1,200,225
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.14 $ 13.38 10.04
Number of Units 1,071,978 727,500 28,449
With GMWB
Unit Value $ 15.11 $ 13.37 --
Number of Units 116,474 12,627 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.06 $ 13.35 10.04
Number of Units 256,671 127,279 88
With any one of EBP or HAV and GMWB
Unit Value $ 11.15 $ 9.89 --
Number of Units 194,765 166,080 --
With HAV, EBP and GRO Plus
Unit Price $ 14.98 $ 13.31 --
Number of Units 8,849 1,455 --
With HAV, EBP and GMWB
Unit Value $ 12.11 -- --
Number of Units 7,555 -- --
A-12
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------------- --------------- --------------- ---------------
AST T. ROWE PRICE NATURAL RESOURCES (1995)
WITH NO OPTIONAL BENEFITS
Unit Price $ 16.25 $ 12.59 9.59
Number of Units 2,040,188 2,011,627 724,670
With any one of GRO Plus, EBP or HAV
Unit Price $ 17.60 $ 13.67 10.44
Number of Units 1,025,462 433,891 7,378
With GMWB
Unit Value $ 17.56 $ 13.66 --
Number of Units 172,186 24,634 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 17.50 $ 13.63 10.44
Number of Units 158,672 77,245 5,472
With any one of EBP or HAV and GMWB
Unit Value $ 14.40 $ 11.23 --
Number of Units 41,428 6,747 --
With HAV, EBP and GRO Plus
Unit Price $ 17.41 $ 13.60 --
Number of Units 37,779 1,035 --
With HAV, EBP and GMWB
Unit Value $ 14.36 -- --
Number of Units 13,775 -- --
AST ALLIANCE GROWTH (10) (1996)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.44 $ 9.08 7.46
Number of Units 2,378,881 2,098,873 1,869,353
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.76 $ 11.34 9.34
Number of Units 1,189,655 717,430 31,105
With GMWB
Unit Value $ 11.73 $ 11.32 --
Number of Units 84,417 2,206 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.70 $ 11.30 9.34
Number of Units 297,369 114,477 3,975
With any one of EBP or HAV and GMWB
Unit Value $ 5.91 $ 5.72 --
Number of Units 307,367 267,109 --
With HAV, EBP and GRO Plus
Unit Price $ 11.63 $ 11.27 --
Number of Units 15,562 8,067 --
With HAV, EBP and GMWB
Unit Value $ 10.57 -- --
Number of Units 4,945 -- --
A-13
APPENDIX A
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- --------------- --------------- ---------------
AST MFS GROWTH (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.97 $ 9.16 7.58
Number of Units 4,529,834 4,784,269 2,930,432
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.39 $ 11.41 9.47
Number of Units 2,897,175 2,222,614 134,574
With GMWB
Unit Value $ 12.37 $ 11.40 --
Number of Units 304,760 18,900 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.33 $ 11.38 9.46
Number of Units 442,758 207,063 2,437
With any one of EBP or HAV and GMWB
Unit Value $ 6.72 $ 6.21 --
Number of Units 387,463 262,995 --
With HAV, EBP and GRO Plus
Unit Price $ 12.26 $ 11.35 --
Number of Units 52,718 10,550 --
With HAV, EBP and GMWB
Unit Value $ 11.00 -- --
Number of Units 33,939 -- --
AST MARSICO CAPITAL GROWTH (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.26 $ 10.78 8.32
Number of Units 28,117,310 20,138,164 10,144,317
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.95 $ 12.30 9.51
Number of Units 30,793,077 14,975,841 457,013
With GMWB
Unit Value $ 13.92 $ 12.28 --
Number of Units 3,136,818 215,988 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.88 $ 12.26 9.51
Number of Units 4,692,895 2,031,583 30,465
With any one of EBP or HAV and GMWB
Unit Value $ 9.22 $ 8.16 --
Number of Units 2,016,277 925,591 --
With HAV, EBP and GRO Plus
Unit Price $ 13.80 $ 12.23 --
Number of Units 578,919 70,776 --
With HAV, EBP and GMWB
Unit Value $ 11.61 -- --
Number of Units 263,104 -- --
A-14
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------------- --------------- --------------- ---------------
AST GOLDMAN SACHS CONCENTRATED GROWTH (1992)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.64 $ 9.45 7.67
Number of Units 2,785,100 2,053,023 1,349,939
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.83 $ 11.63 9.46
Number of Units 1,641,544 715,845 41,632
With GMWB
Unit Value $ 11.80 $ 11.61 --
Number of Units 122,739 17,452 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.76 $ 11.59 --
Number of Units 277,607 49,620 --
With any one of EBP or HAV and GMWB
Unit Value $ 4.46 $ 4.40 --
Number of Units 541,661 395,905 --
With HAV, EBP and GRO Plus
Unit Price $ 11.70 $ 11.56 --
Number of Units 10,426 242 --
With HAV, EBP and GMWB
Unit Value $ 10.54 -- --
Number of Units 12,303 -- --
AST DEAM LARGE-CAP VALUE (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.53 $ 10.78 8.66
Number of Units 2,351,197 1,072,256 664,649
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.36 $ 12.39 9.98
Number of Units 1,347,344 583,969 18,250
With GMWB
Unit Value $ 14.33 $ 12.38 --
Number of Units 175,087 9,674 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.29 $ 12.36 9.97
Number of Units 234,446 58,333 4,906
With any one of EBP or HAV and GMWB
Unit Value $ 10.72 $ 9.28 --
Number of Units 199,601 137,247 --
With HAV, EBP and GRO Plus
Unit Price $ 14.21 $ 12.32 --
Number of Units 16,355 4,412 --
With HAV, EBP and GMWB
Unit Value $ 12.25 -- --
Number of Units 6,163 -- --
A-15
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------------------ --------------- --------------- ---------------
AST ALLIANCE/BERNSTEIN GROWTH + VALUE (11) (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.72 $ 9.91 7.99
Number of Units 1,620,391 1,387,072 965,912
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.07 $ 12.11 9.79
Number of Units 1,011,796 667,395 11,345
With GMWB
Unit Value $ 13.05 $ 12.09 --
Number of Units 72,365 5,118 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.00 $ 12.07 9.79
Number of Units 256,194 115,455 704
With any one of EBP or HAV and GMWB
Unit Value $ 9.31 $ 8.65 --
Number of Units 215,645 154,955 --
With HAV, EBP and GRO Plus
Unit Price $ 12.93 $ 12.04 --
Number of Units 7,165 1,041 --
With HAV, EBP and GMWB
Unit Value $ 11.15 -- --
Number of Units 1,191 -- --
AST SANFORD BERNSTEIN CORE VALUE (12) (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.39 $ 11.06 8.76
Number of Units 4,643,022 3,621,862 6,005,922
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.18 $ 12.69 10.08
Number of Units 3,959,115 2,277,726 386,259
With GMWB
Unit Value $ 14.15 $ 12.67 --
Number of Units 220,419 11,518 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.10 $ 12.65 10.08
Number of Units 534,389 328,567 30,510
With any one of EBP or HAV and GMWB
Unit Value $ 11.83 $ 10.62 --
Number of Units 303,689 216,416 --
With HAV, EBP and GRO Plus
Unit Price $ 14.03 $ 12.62 --
Number of Units 49,912 10,893 --
With HAV, EBP and GMWB
Unit Value $ 11.86 -- --
Number of Units 57,669 -- --
A-16
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- -------------------------------------------------- --------------- --------------- ---------------
AST COHEN & STEERS REALTY (1998)
WITH NO OPTIONAL BENEFITS
Unit Price $ 18.49 $ 13.63 10.08
Number of Units 4,080,179 3,097,315 1,563,489
With any one of GRO Plus, EBP or HAV
Unit Price $ 18.84 $ 13.92 10.33
Number of Units 2,863,749 1,376,696 41,098
With GMWB
Unit Value $ 18.80 $ 13.91 --
Number of Units 184,027 13,615 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 18.74 $ 13.88 10.32
Number of Units 538,151 270,852 6,429
With any one of EBP or HAV and GMWB
Unit Value $ 14.12 $ 10.47 --
Number of Units 68,406 8,884 --
With HAV, EBP and GRO Plus
Unit Price $ 18.64 $ 13.84
Number of Units 17,014 8,189
With HAV, EBP and GMWB
Unit Value $ 14.07 -- --
Number of Units 5,246 -- --
AST SANFORD BERNSTEIN MANAGED INDEX 500 (13) (1998)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.07 $ 10.23 8.17
Number of Units 6,845,369 5,442,511 3,662,406
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.22 $ 12.25 9.81
Number of Units 3,486,237 2,209,334 79,915
With GMWB
Unit Value $ 13.19 $ 12.24 --
Number of Units 389,368 16,957 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.15 $ 12.22 9.81
Number of Units 352,176 203,573 383
With any one of EBP or HAV and GMWB
Unit Value $ 8.58 $ 7.98 --
Number of Units 343,296 293,662 --
With HAV, EBP and GRO Plus
Unit Price $ 13.08 $ 12.18 --
Number of Units 9,296 4,899 --
With HAV, EBP and GMWB
Unit Value $ 11.31 -- --
Number of Units 43,627 -- --
A-17
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- -------------------------------------------- --------------- --------------- ---------------
AST AMERICAN CENTURY INCOME & GROWTH (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.57 $ 10.45 8.25
Number of Units 4,670,846 2,115,438 1,751,136
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.80 $ 12.50 9.89
Number of Units 2,219,323 846,118 36,829
With GMWB
Unit Value $ 13.77 $ 12.48 --
Number of Units 198,789 2,386 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.73 $ 12.46 9.89
Number of Units 368,328 124,008 8,874
With any one of EBP or HAV and GMWB
Unit Value $ 9.04 $ 8.22 --
Number of Units 372,540 195,232 --
With HAV, EBP and GRO Plus
Unit Price $ 13.65 $ 12.43 --
Number of Units 25,550 4,612 --
With HAV, EBP and GMWB
Unit Value $ 11.72 -- --
Number of Units 7,406 -- --
AST ALLIANCE GROWTH AND INCOME (14) (1992)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.46 $ 10.50 8.06
Number of Units 25,850,506 21,264,670 6,667,373
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.91 $ 12.77 9.83
Number of Units 27,268,222 13,386,166 165,588
With GMWB
Unit Value $ 13.88 $ 12.76 --
Number of Units 2,899,917 187,011 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.83 $ 12.74 9.83
Number of Units 4,694,207 2,029,598 6,100
With any one of EBP or HAV and GMWB
Unit Value $ 10.72 $ 9.88 --
Number of Units 1,731,512 976,756 --
With HAV, EBP and GRO Plus
Unit Price $ 13.76 $ 12.70 --
Number of Units 564,502 69,435 --
With HAV, EBP and GMWB
Unit Value $ 11.50 -- --
Number of Units 228,955 -- --
A-18
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- --------------- --------------- ---------------
AST HOTCHKIS & WILEY LARGE-CAP VALUE
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.17 $ 9.83 8.34
Number of Units 3,717,848 2,647,064 2,110,071
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.19 $ 11.65 9.90
Number of Units 1,916,775 651,074 30,714
With GMWB
Unit Value $ 13.16 $ 11.63 --
Number of Units 173,888 21,961 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.12 $ 11.61 9.90
Number of Units 198,898 90,092 5,934
With any one of EBP or HAV and GMWB
Unit Value $ 9.78 $ 8.66 --
Number of Units 419,818 347,275 --
With HAV, EBP and GRO Plus
Unit Price $ 13.05 $ 11.58 --
Number of Units 37,159 332 --
With HAV, EBP and GMWB
Unit Value $ 11.75 -- --
Number of Units 23,032 -- --
AST DEAM GLOBAL ALLOCATION (15) (1993)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.19 $ 10.24 8.71
Number of Units 1,061,887 898,161 847,517
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.70 $ 11.65 9.94
Number of Units 278,657 155,865 3,088
With GMWB
Unit Value $ 12.67 $ 11.64 --
Number of Units 35,622 483 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.63 $ 11.62 9.93
Number of Units 52,110 34,914 94
With any one of EBP or HAV and GMWB
Unit Value $ 9.12 $ 8.40 --
Number of Units 290,887 303,295 --
With HAV, EBP and GRO Plus
Unit Price $ 12.56 $ 11.58 --
Number of Units 2,849 1,169 --
With HAV, EBP and GMWB
Unit Value $ 11.23 -- --
Number of Units 2,193 -- --
A-19
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ----------------------------------------------- --------------- --------------- ---------------
AST AMERICAN CENTURY STRATEGIC BALANCED (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.46 $ 10.69 9.14
Number of Units 2,335,598 2,045,205 1,126,058
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.43 $ 11.62 9.97
Number of Units 1,308,462 930,516 15,835
With GMWB
Unit Value $ 12.40 $ 11.61 --
Number of Units 175,763 18,977 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.36 $ 11.59 9.97
Number of Units 186,307 58,741 2,760
With any one of EBP or HAV and GMWB
Unit Value $ 10.08 $ 9.46 --
Number of Units 218,686 196,909 --
With HAV, EBP and GRO Plus
Unit Price $ 12.29 $ 11.56 --
Number of Units 18,231 11,783 --
With HAV, EBP and GMWB
Unit Value $ 10.98 -- --
Number of Units 125 -- --
AST T. ROWE PRICE ASSET ALLOCATION (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.13 $ 11.09 9.09
Number of Units 3,551,315 2,243,566 921,329
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.22 $ 12.12 9.96
Number of Units 2,109,855 955,716 21,928
With GMWB
Unit Value $ 13.19 $ 12.11 --
Number of Units 349,177 27,414 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.15 $ 12.09 9.96
Number of Units 464,055 160,339 150
With any one of EBP or HAV and GMWB
Unit Value $ 11.38 $ 10.48 --
Number of Units 39,231 2,741 --
With HAV, EBP and GRO Plus
Unit Price $ 13.08 $ 12.05 --
Number of Units 46,336 31,706 --
With HAV, EBP and GMWB
Unit Value $ 11.35 -- --
Number of Units 9,372 -- --
A-20
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- --------------- --------------- ---------------
AST T. ROWE PRICE GLOBAL BOND (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.45 $ 12.59 11.34
Number of Units 4,717,822 2,962,471 1,739,313
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.17 $ 11.42 10.31
Number of Units 6,387,666 1,827,606 36,822
With GMWB
Unit Value $ 12.14 $ 11.40 --
Number of Units 712,411 24,361 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.10 $ 11.38 10.31
Number of Units 1,195,848 279,110 3,700
With any one of EBP or HAV and GMWB
Unit Value $ 14.05 $ 13.23 --
Number of Units 191,816 148,319 --
With HAV, EBP and GRO Plus
Unit Price $ 12.04 $ 11.35 --
Number of Units 137,089 12,591 --
With HAV, EBP and GMWB
Unit Value $ 10.94 -- --
Number of Units 43,652 -- --
AST GOLDMAN SACHS HIGH YIELD PORTFOLIO
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.69 $ 11.61 9.71
Number of Units 13,717,128 12,201,163 5,592,940
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.34 $ 12.24 10.26
Number of Units 4,901,936 3,684,174 74,022
With GMWB
Unit Value $ 13.31 $ 12.23 --
Number of Units 426,333 27,535 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.27 $ 12.21 10.26
Number of Units 707,876 379,114 6,524
With any one of EBP or HAV and GMWB
Unit Value $ 11.51 $ 10.60 --
Number of Units 545,726 346,126 --
With HAV, EBP and GRO Plus
Unit Price $ 13.20 $ 12.17 --
Number of Units 54,058 28,237 --
With HAV, EBP and GMWB
Unit Value $ 11.24 -- --
Number of Units 65,084 -- --
A-21
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- -------------------------------------- --------------- --------------- ---------------
AST LORD ABBETT BOND-DEBENTURE (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.26 $ 11.61 9.94
Number of Units 8,369,008 7,751,236 4,146,530
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.56 $ 11.92 10.23
Number of Units 7,337,467 4,628,945 162,571
With GMWB
Unit Value $ 12.53 $ 11.90 --
Number of Units 904,128 42,593 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.49 $ 11.88 10.23
Number of Units 1,314,641 624,019 7,474
With any one of EBP or HAV and GMWB
Unit Value $ 12.18 $ 11.60 --
Number of Units 732,155 423,485 --
With HAV, EBP and GRO Plus
Unit Price $ 12.42 $ 11.85 --
Number of Units 155,764 28,346 --
With HAV, EBP and GMWB
Unit Value $ 10.88 -- --
Number of Units 85,669 -- --
AST PIMCO TOTAL RETURN BOND (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.31 $ 10.95 10.57
Number of Units 33,208,757 26,287,388 20,544,075
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.82 $ 10.51 10.17
Number of Units 30,067,867 16,012,778 604,147
With GMWB
Unit Value $ 10.79 $ 10.49 --
Number of Units 3,495,678 378,676 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.76 $ 10.48 10.17
Number of Units 4,319,279 2,192,336 36,236
With any one of EBP or HAV and GMWB
Unit Value $ 13.09 $ 12.76 --
Number of Units 2,344,332 1,558,557 --
With HAV, EBP and GRO Plus
Unit Price $ 10.70 $ 10.45 --
Number of Units 476,033 119,982 --
With HAV, EBP and GMWB
Unit Value $ 10.32 -- --
Number of Units 323,335 -- --
A-22
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- ---------------- ---------------- ----------------
AST PIMCO LIMITED MATURITY BOND (1995)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.55 $ 10.51 10.34
Number of Units 21,299,789 15,242,856 11,274,642
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.23 $ 10.22 10.08
Number of Units 19,103,280 5,152,783 215,314
With GMWB
Unit Value $ 10.21 $ 10.21 --
Number of Units 2,764,809 36,640 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.17 $ 10.19 10.08
Number of Units 2,785,690 636,860 80,547
With any one of EBP or HAV and GMWB
Unit Value $ 11.62 $ 11.65 --
Number of Units 1,143,298 329,629 --
With HAV, EBP and GRO Plus
Unit Price $ 10.12 $ 10.16 --
Number of Units 301,108 35,430 --
With HAV, EBP and GMWB
Unit Value $ 9.96 -- --
Number of Units 240,337 -- --
AST MONEY MARKET (1992)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.78 $ 9.86 9.96
Number of Units 29,870,585 32,730,501 36,255,772
With any one of GRO Plus, EBP or HAV
Unit Price $ 9.75 $ 9.86 9.99
Number of Units 8,152,893 7,176,983 999,737
With GMWB
Unit Value $ 9.73 $ 9.85 --
Number of Units 1,312,018 81,304 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 9.70 $ 9.83 9.99
Number of Units 1,742,703 1,118,618 70,899
With any one of EBP or HAV and GMWB
Unit Value $ 9.98 $ 10.13 --
Number of Units 234,402 35,505 --
With HAV, EBP and GRO Plus
Unit Price $ 9.65 $ 9.80 --
Number of Units 432,144 149,705 --
With HAV, EBP and GMWB
Unit Value $ 9.79 -- --
Number of Units 61,321 -- --
A-23
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
--------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ---------------------------- --------------- --------------- --------------
Gartmore Variable Investment Trust -- GVIT DEVELOPING MARKETS (1996)
WITH NO OPTIONAL BENEFITS
Unit Price $ 16.02 $ 13.60 8.66
Number of Units 2,103,950 1,763,660 283,466
With any one of GRO Plus, EBP or HAV
Unit Price $ 18.29 $ 15.56 9.93
Number of Units 934,258 415,864 21,816
With GMWB
Unit Value $ 18.25 $ 15.54 --
Number of Units 161,653 12,503 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 18.19 $ 15.52 9.93
Number of Units 141,365 44,993 442
With any one of EBP or HAV and GMWB
Unit Value $ 12.74 $ 10.88 --
Number of Units 25,630 843 --
With HAV, EBP and GRO Plus
Unit Price $ 18.09 $ 15.47 --
Number of Units 17,121 1,871 --
With HAV, EBP and GMWB
Unit Value $ 12.70 -- --
Number of Units 11,161 -- --
AIM V.I. -- DYNAMICS (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.72 $ 9.61 7.09
Number of Units 668,032 889,464 543,762
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.59 $ 13.12 9.70
Number of Units 590,157 634,308 32,635
With GMWB
Unit Value $ 14.56 $ 13.11 --
Number of Units 61,543 4,848 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.51 $ 13.08 9.70
Number of Units 55,199 38,518 576
With any one of EBP or HAV and GMWB
Unit Value $ 11.67 -- --
Number of Units 1,825 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.43 $ 13.05 --
Number of Units 4,253 3,083 --
With HAV, EBP and GMWB
Unit Value $ 11.63 -- --
Number of Units 13 -- --
A-24
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ----------------------------------- ------------- ------------- --------------
AIM V.I. -- TECHNOLOGY (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 8.09 $ 7.87 5.50
Number of Units 512,424 578,651 293,307
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.71 $ 13.35 --
Number of Units 5,184 3,695 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
AIM V.I. -- HEALTH SCIENCES (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.64 $ 10.05 8.00
Number of Units 937,586 698,364 475,873
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.58 $ 11.93 9.51
Number of Units 578,826 381,478 5,444
With GMWB
Unit Value $ 12.56 $ 11.91 --
Number of Units 87,037 2,077 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.52 $ 11.89 9.51
Number of Units 181,513 55,867 140
With any one of EBP or HAV and GMWB
Unit Value $ 11.41 $ 10.85 --
Number of Units 5,057 1,330 --
With HAV, EBP and GRO Plus
Unit Price $ 12.45 -- --
Number of Units 5,438 -- --
With HAV, EBP and GMWB
Unit Value $ 11.38 -- --
Number of Units 2,157 -- --
A-25
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- -------------------------------------------- -------------- -------------- --------------
AIM V.I. -- FINANCIAL SERVICES (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.94 $ 11.17 8.76
Number of Units 585,185 607,265 366,258
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.44 $ 12.61 9.92
Number of Units 387,921 200,360 1,897
With GMWB
Unit Value $ 13.42 $ 12.60 --
Number of Units 67,581 20,268 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.37 $ 12.58 9.92
Number of Units 84,188 50,250 141
With any one of EBP or HAV and GMWB
Unit Value $ 11.11 $ 10.46 --
Number of Units 15,566 1,378 --
With HAV, EBP and GRO Plus
Unit Price $ 13.30 $ 12.54 --
Number of Units 8,806 751 --
With HAV, EBP and GMWB
Unit Value $ 11.08 -- --
Number of Units 468 -- --
EVERGREEN VA -- INTERNATIONAL EQUITY (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.66 $ 11.65 8.15
Number of Units 414,631 189,143 113,389
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.94 $ 12.78 9.67
Number of Units 195,986 76,749 3,669
With GMWB
Unit Value $ 12.21 $ 10.45 --
Number of Units 32,858 827 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.86 $ 12.74 --
Number of Units 67,201 6,492 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.40 $ 10.64 --
Number of Units 83,727 81,555 --
With HAV, EBP and GRO Plus
Unit Price $ 14.78 $ 12.71 --
Number of Units 7,362 1,395 --
With HAV, EBP and GMWB
Unit Value $ 12.36 -- --
Number of Units 2,878 -- --
A-26
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ----------------------------------------- -------------- -------------- --------------
Evergreen VA -- SPECIAL EQUITY (16) (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.58 $ 11.12 7.44
Number of Units 702,642 815,621 127,728
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.25 $ 14.69 9.85
Number of Units 509,734 293,794 12,520
With GMWB
Unit Value $ 15.22 $ 14.67 --
Number of Units 46,748 3,620 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.17 $ 14.65 9.85
Number of Units 177,731 58,548 533
With any one of EBP or HAV and GMWB
Unit Value $ 9.13 $ 8.83 --
Number of Units 114,259 23,503 --
With HAV, EBP and GRO Plus
Unit Price $ 15.09 -- --
Number of Units 3,411 -- --
With HAV, EBP and GMWB
Unit Value $ 10.53 -- --
Number of Units 26,034 -- --
Evergreen VA -- OMEGA (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.29 $ 10.71 7.78
Number of Units 570,123 404,789 39,943
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.89 $ 13.21 --
Number of Units 387,492 56,002 --
With GMWB
Unit Value $ 13.86 $ 13.19 --
Number of Units 31,153 283 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.81 $ 13.17 --
Number of Units 108,796 25,003 --
With any one of EBP or HAV and GMWB
Unit Value $ 9.40 $ 8.97 --
Number of Units 84,876 19,658 --
With HAV, EBP and GRO Plus
Unit Price $ 13.74 $ 13.13 --
Number of Units 3,028 1,855 --
With HAV, EBP and GMWB
Unit Value $ 10.92 -- --
Number of Units 30,383 -- --
A-27
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
--------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------- -------------- -------------- --------------
ProFund VP -- EUROPE 30 (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.17 $ 10.83 7.93
Number of Units 1,812,435 2,116,400 292,396
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.80 $ 13.20 9.70
Number of Units 313,111 158,208 2,625
With GMWB
Unit Value $ 14.77 $ 13.18 --
Number of Units 99,557 13,365 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.72 $ 13.16 --
Number of Units 162,300 40,636 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.39 $ 11.09 --
Number of Units 17,205 3,060 --
With HAV, EBP and GRO Plus
Unit Price $ 14.64 -- --
Number of Units 7,739 -- --
With HAV, EBP and GMWB
Unit Value $ 12.35 -- --
Number of Units 7,758 -- --
ProFund VP -- ASIA 30 (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.30 $ 12.57 7.75
Number of Units 896,010 942,605 281,993
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.57 $ 15.96 9.86
Number of Units 253,337 131,276 6,995
With GMWB
Unit Value $ 15.54 $ 15.94 --
Number of Units 74,988 10,432 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.49 $ 15.91 --
Number of Units 67,805 33,050 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.14 $ 10.43 --
Number of Units 28,325 1,873 --
With HAV, EBP and GRO Plus
Unit Price $ 15.40 -- --
Number of Units 5,612 -- --
With HAV, EBP and GMWB
Unit Value $ 10.10 -- --
Number of Units 6,082 -- --
A-28
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------- ------------- ------------- --------------
ProFund VP -- JAPAN (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.55 $ 9.03 7.24
Number of Units 710,879 426,718 65,845
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.40 $ 12.70 10.21
Number of Units 137,584 76,553 351
With GMWB
Unit Value $ 13.38 $ 12.69 --
Number of Units 35,968 1,883 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.33 $ 12.67 --
Number of Units 62,668 10,769 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.35 -- --
Number of Units 8,278 -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.26 -- --
Number of Units 7,559 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- BANKS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.98 $ 10.90 8.56
Number of Units 229,711 93,067 101,136
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.10 $ 12.86 10.13
Number of Units 171,696 34,962 3,422
With GMWB
Unit Value $ 14.07 -- --
Number of Units 8,847 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.03 $ 12.83 --
Number of Units 29,071 6,833 --
With any one of EBP or HAV and GMWB
Unit Value $ 11.58 -- --
Number of Units 20,936 -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.95 $ 12.79 --
Number of Units 788 1,039 --
With HAV, EBP and GMWB
Unit Value $ 11.54 -- --
Number of Units 582 -- --
A-29
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------- -------------- --------------- --------------
ProFund VP -- BASIC MATERIALS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.87 $ 10.95 8.46
Number of Units 529,237 1,512,864 76,331
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.43 $ 13.35 10.34
Number of Units 170,212 100,189 12
With GMWB
Unit Value $ 14.40 $ 13.33 --
Number of Units 23,555 8,054 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.35 $ 13.31 --
Number of Units 35,537 15,986 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.43 -- --
Number of Units 15,658 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.28 -- --
Number of Units 3,155 -- --
With HAV, EBP and GMWB
Unit Value $ 12.40 -- --
Number of Units 1,246 -- --
ProFund VP -- BIOTECHNOLOGY (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.52 $ 9.75 7.09
Number of Units 757,678 208,971 130,082
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.56 $ 13.53 --
Number of Units 5,878 847 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-30
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------------- ------------- ------------- --------------
ProFund VP -- CONSUMER SERVICES (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.56 $ 9.04 7.25
Number of Units 430,620 136,269 128,022
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.31 $ 11.66 9.37
Number of Units 87,433 30,700 2,426
With GMWB
Unit Value $ 12.28 -- --
Number of Units 17,197 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.24 $ 11.62 --
Number of Units 8,198 5,655 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.69 -- --
Number of Units 2,087 -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.17 $ 11.59 --
Number of Units 1,211 3,817 --
With HAV, EBP and GMWB
Unit Value $ 10.66 -- --
Number of Units 14 -- --
ProFund VP -- CONSUMER GOODS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.36 $ 9.64 8.28
Number of Units 369,007 58,425 148,446
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.33 $ 11.51 9.90
Number of Units 102,706 12,720 2,303
With GMWB
Unit Value $ 12.31 $ 11.49 --
Number of Units 8,437 954 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.27 -- --
Number of Units 54,297 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 11.40 $ 10.67 --
Number of Units 9,175 4,737 --
With HAV, EBP and GRO Plus
Unit Price $ 12.20 -- --
Number of Units 1,731 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-31
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
--------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- -------------------------------- --------------- --------------- --------------
ProFund VP -- OIL & GAS (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.33 $ 10.48 8.71
Number of Units 1,856,882 1,225,844 299,833
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.40 $ 12.14 10.12
Number of Units 888,111 114,553 1,660
With GMWB
Unit Value $ 15.37 $ 12.12 --
Number of Units 58,804 4,007 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.32 $ 12.10 --
Number of Units 174,913 25,623 --
With any one of EBP or HAV and GMWB
Unit Value $ 13.80 -- --
Number of Units 29,672 -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.23 $ 12.07 --
Number of Units 14,353 2,434 --
With HAV, EBP and GMWB
Unit Value $ 13.76 -- --
Number of Units 6,676 -- --
ProFund VP -- FINANCIALS (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.19 $ 11.23 8.85
Number of Units 553,342 398,159 221,377
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.48 $ 12.45 9.84
Number of Units 323,190 134,420 2,066
With GMWB
Unit Value $ 13.45 $ 12.44 --
Number of Units 17,749 1,060 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.41 $ 12.42 --
Number of Units 35,528 27,402 --
With any one of EBP or HAV and GMWB
Unit Value $ 11.26 -- --
Number of Units 15,974 -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.33 -- --
Number of Units 1,103 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-32
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- --------------------------------- --------------- ------------- --------------
ProFund VP -- HEALTH CARE (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.23 $ 9.17 7.94
Number of Units 1,318,525 707,449 388,508
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.10 $ 11.05 9.59
Number of Units 518,389 244,228 6,831
With GMWB
Unit Value $ 11.07 $ 11.04 --
Number of Units 8,570 1,969 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.04 $ 11.02 --
Number of Units 139,890 56,392 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.65 -- --
Number of Units 5,322 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.98 $ 10.99 --
Number of Units 4,035 2,123 --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- INDUSTRIALS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.15 $ 10.01 7.93
Number of Units 253,411 318,339 12,642
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.27 $ 12.85 --
Number of Units 88,729 20,601 --
With GMWB
Unit Value $ 14.24 -- --
Number of Units 4,426 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.20 $ 12.81 --
Number of Units 14,026 4,507 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.08 -- --
Number of Units 4,381 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.12 -- --
Number of Units 945 -- --
With HAV, EBP and GMWB
Unit Value $ 12.04 -- --
Number of Units 807 -- --
A-33
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------- -------------- -------------- --------------
ProFund VP -- INTERNET (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 17.89 $ 15.00 8.57
Number of Units 992,879 206,876 306,572
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.83 $ 16.67 --
Number of Units 3,806 1,210 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- PHARMACEUTICALS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.93 $ 8.89 8.56
Number of Units 527,336 266,978 136,559
With any one of GRO Plus, EBP or HAV
Unit Price $ 8.88 $ 9.97 9.63
Number of Units 246,789 77,105 2,545
With GMWB
Unit Value $ 8.86 $ 9.96 --
Number of Units 23,137 2,871 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 8.83 $ 9.94 --
Number of Units 70,946 6,346 --
With any one of EBP or HAV and GMWB
Unit Value $ 9.44 -- --
Number of Units 5,382 -- --
With HAV, EBP and GRO Plus
Unit Price $ 8.78 $ 9.91 --
Number of Units 3,939 1,646 --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-34
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
-------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------- --------------- --------------- -------------
ProFund VP -- PRECIOUS METALS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.77 $ 13.29 9.70
Number of Units 1,479,384 1,329,806 1,175,651
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.64 $ 15.44 11.3
Number of Units 457,761 390,896 19,964
With GMWB
Unit Value $ 13.61 -- --
Number of Units 42,627 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.57 $ 15.39 --
Number of Units 111,588 44,664 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.17 -- --
Number of Units 93,541 -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.49 $ 15.35 --
Number of Units 7,072 1,458 --
With HAV, EBP and GMWB
Unit Value $ 10.14 $ 11.55 --
Number of Units 11,671 23,284 --
ProFund VP -- REAL ESTATE (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 16.15 $ 12.91 9.86
Number of Units 1,816,706 462,906 441,318
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.63 $ 13.33 10.20
Number of Units 509,763 136,941 12,789
With GMWB
Unit Value $ 16.60 $ 13.31 --
Number of Units 58,062 3,835 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 16.54 $ 13.29 --
Number of Units 128,625 32,970 --
With any one of EBP or HAV and GMWB
Unit Value $ 13.06 -- --
Number of Units 22,857 -- --
With HAV, EBP and GRO Plus
Unit Price $ 16.45 -- --
Number of Units 629 -- --
With HAV, EBP and GMWB
Unit Value $ 13.02 -- --
Number of Units 1,198 -- --
A-35
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ----------------------------------- ------------- ------------- --------------
ProFund VP -- SEMICONDUCTOR (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.15 $ 9.51 5.14
Number of Units 694,352 423,958 93,241
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.95 $ 15.93 --
Number of Units 3,639 3,475 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- TECHNOLOGY (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 8.48 $ 8.66 6.03
Number of Units 727,580 497,972 254,131
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.99 $ 13.30 --
Number of Units 9,239 6,845 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-36
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ---------------------------------------- --------------- ------------- --------------
ProFund VP -- TELECOMMUNICATIONS (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 8.19 $ 7.21 7.15
Number of Units 460,848 398,350 272,408
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.43 $ 10.08 10.03
Number of Units 212,127 47,283 3,642
With GMWB
Unit Value $ 11.40 -- --
Number of Units 6,379 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.37 $ 10.05 --
Number of Units 34,691 13,783 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.54 -- --
Number of Units 4,099 -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.31 -- --
Number of Units 11,741 -- --
With HAV, EBP and GMWB
Unit Value $ 12.50 -- --
Number of Units 2,691 -- --
ProFund VP -- UTILITIES (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.13 $ 9.34 7.83
Number of Units 1,060,939 618,427 521,419
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.00 $ 12.63 10.61
Number of Units 332,768 93,690 8,871
With GMWB
Unit Value $ 14.97 $ 12.62 --
Number of Units 57,208 8,137 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.92 $ 12.60 --
Number of Units 87,691 10,588 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.51 -- --
Number of Units 21,365 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.84 -- --
Number of Units 7,490 -- --
With HAV, EBP and GMWB
Unit Value $ 12.47 -- --
Number of Units 573 -- --
A-37
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- -------------------------- --------------- --------------- ---------------
ProFund VP -- BULL (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.53 $ 9.84 7.97
Number of Units 8,215,357 3,563,562 954,792
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.82 $ 12.01 9.75
Number of Units 2,052,501 708,248 10,297
With GMWB
Unit Value $ 12.79 $ 12.00 --
Number of Units 171,187 1,179 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.75 $ 11.98 9.75
Number of Units 570,114 58,349 400
With any one of EBP or HAV and GMWB
Unit Value $ 11.25 $ 10.58 --
Number of Units 31,600 427 --
With HAV, EBP and GRO Plus
Unit Price $ 12.68 $ 11.94 --
Number of Units 88,697 10,714 --
With HAV, EBP and GMWB
Unit Value $ 11.21 -- --
Number of Units 12,971 -- --
ProFund VP -- BEAR (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.45 $ 8.44 11.38
Number of Units 1,202,243 1,886,515 1,532,543
With any one of GRO Plus, EBP or HAV
Unit Price $ 6.60 $ 7.49 10.13
Number of Units 289,105 716,467 28,618
With GMWB
Unit Value $ 6.58 -- --
Number of Units 41,480 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 6.56 $ 7.47 10.13
Number of Units 60,475 36,686 1,514
With any one of EBP or HAV and GMWB
Unit Value $ 8.15 $ 9.29 --
Number of Units 10,709 7,927 --
With HAV, EBP and GRO Plus
Unit Price $ 6.52 $ 7.45 --
Number of Units 14,578 13,622 --
With HAV, EBP and GMWB
Unit Value $ 8.12 $ 9.29 --
Number of Units 1,620 7,293 --
A-38
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- -------------------------- --------------- --------------- ---------------
ProFund VP -- ULTRABULL (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.76 $ 10.20 6.78
Number of Units 2,817,803 1,431,345 297,435
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.58 $ 14.42 9.61
Number of Units 9,518 1,432 245
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- OTC (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.94 $ 9.32 6.45
Number of Units 4,885,351 4,445,234 1,346,852
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.34 $ 13.47 9.36
Number of Units 1,807,904 810,005 13,113
With GMWB
Unit Value $ 14.31 $ 13.46 --
Number of Units 128,923 5,378 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.27 $ 13.44 --
Number of Units 225,055 34,480 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.92 -- --
Number of Units 28,507 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.19 -- --
Number of Units 32,376 -- --
With HAV, EBP and GMWB
Unit Value $ 10.88 -- --
Number of Units 14,308 -- --
A-39
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------- --------------- --------------- ---------------
ProFund VP -- SHORT OTC (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 5.93 $ 6.78 11.00
Number of Units 908,064 1,535,439 433,181
With any one of GRO Plus, EBP or HAV
Unit Price $ 5.60 $ 6.42 10.43
Number of Units 181,352 196,526 15,308
With GMWB
Unit Value $ 5.58 -- --
Number of Units 7,191 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 5.57 $ 6.40 --
Number of Units 65,148 20,167 --
With any one of EBP or HAV and GMWB
Unit Value -- $ 9.49 --
Number of Units -- 7,708 --
With HAV, EBP and GRO Plus
Unit Price $ 5.54 $ 6.38 --
Number of Units 16,306 16,907 --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- ULTRAOTC (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.89 $ 7.03 3.53
Number of Units 6,592,447 3,410,589 1,003,123
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.36 $ 17.30 8.70
Number of Units 22,282 5,905 233
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-40
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------ ------------ ------------- ------------
ProFund VP -- MID-CAP VALUE (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.67 $ 10.23 7.66
Number of Units 2,632,869 1,455,513 438,387
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.24 $ 13.40 10.06
Number of Units 626,618 462,172 4,777
With GMWB
Unit Value $ 15.21 $ 13.39 --
Number of Units 110,312 4,164 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.16 $ 13.36 10.06
Number of Units 304,648 99,189 4,799
With any one of EBP or HAV and GMWB
Unit Value $ 12.20 $ 10.77 --
Number of Units 39,454 3,516 --
With HAV, EBP and GRO Plus
Unit Price $ 15.08 $ 13.33 --
Number of Units 12,473 916 --
With HAV, EBP and GMWB
Unit Value $ 12.17 -- --
Number of Units 3,507 -- --
ProFund VP -- MID-CAP GROWTH (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.58 $ 9.69 7.70
Number of Units 2,220,901 1,009,867 439,054
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.42 $ 12.32 9.82
Number of Units 579,666 295,528 1,587
With GMWB
Unit Value $ 13.39 $ 12.31 --
Number of Units 53,472 2,028 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.35 $ 12.28 9.81
Number of Units 163,302 47,141 1,583
With any one of EBP or HAV and GMWB
Unit Value $ 11.12 $ 10.24 --
Number of Units 21,341 3,933 --
With HAV, EBP and GRO Plus
Unit Price $ 13.28 $ 12.25 --
Number of Units 6,489 1,274 --
With HAV, EBP and GMWB
Unit Value $ 11.09 -- --
Number of Units 9,859 -- --
A-41
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- -------------------------- --------------- --------------- ---------------
ProFund VP -- ULTRAMID-CAP (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.99 $ 9.55 5.71
Number of Units 3,106,849 1,112,311 477,953
With any one of GRO Plus, EBP or HAV
Unit Price $ 20.62 $ 16.46 9.86
Number of Units 338,303 136,523 1,673
With GMWB
Unit Value $ 20.57 $ 16.44 --
Number of Units 101,493 3,746 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 20.51 $ 16.41 --
Number of Units 150,540 88,028 --
With any one of EBP or HAV and GMWB
Unit Value $ 13.86 -- --
Number of Units 27,449 -- --
With HAV, EBP and GRO Plus
Unit Price $ 20.40 $ 16.37 --
Number of Units 2,161 557 --
With HAV, EBP and GMWB
Unit Value $ 13.81 -- --
Number of Units 14,660 -- --
ProFund VP -- SMALL-CAP VALUE (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.10 $ 9.39 7.09
Number of Units 4,088,760 5,144,632 994,778
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.80 $ 13.41 10.15
Number of Units 2,597,154 1,218,990 19,019
With GMWB
Unit Value $ 15.76 $ 13.39 --
Number of Units 163,443 24,769 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.71 $ 13.37 --
Number of Units 596,413 207,523 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.53 $ 10.67 --
Number of Units 31,732 4,223 --
With HAV, EBP and GRO Plus
Unit Price $ 15.63 $ 13.33 --
Number of Units 29,856 28,687 --
With HAV, EBP and GMWB
Unit Value $ 12.49 -- --
Number of Units 6,158 -- --
A-42
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
--------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- -------------------------------------- --------------- --------------- --------------
ProFund VP -- SMALL-CAP GROWTH (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.98 $ 10.16 7.69
Number of Units 4,677,820 3,868,951 772,260
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.34 $ 13.05 9.91
Number of Units 1,611,060 1,289,398 10,572
With GMWB
Unit Value $ 15.31 $ 13.04 --
Number of Units 170,800 21,997 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.26 $ 13.01 --
Number of Units 285,725 210,595 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.23 $ 10.44 --
Number of Units 42,134 2,529 --
With HAV, EBP and GRO Plus
Unit Price $ 15.17 $ 12.98 --
Number of Units 9,388 30,164 --
With HAV, EBP and GMWB
Unit Value $ 12.19 -- --
Number of Units 13,290 -- --
ProFund VP -- ULTRASMALL-CAP (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 15.52 $ 12.04 6.14
Number of Units 5,098,565 1,702,558 212,085
With any one of GRO Plus, EBP or HAV
Unit Price $ 24.98 $ 19.43 --
Number of Units 32,780 13,082 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-43
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ---------------------------------------------- --------------- --------------- ---------------
ProFund VP -- U.S. GOVERNMENT PLUS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.79 $ 11.08 11.56
Number of Units 1,051,158 731,470 2,486,854
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.34 $ 9.75 10.19
Number of Units 372,142 291,892 22,148
With GMWB
Unit Value $ 10.32 $ 9.73 --
Number of Units 120,311 14,956 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.29 $ 9.72 10.19
Number of Units 111,072 32,854 609
With any one of EBP or HAV and GMWB
Unit Value $ 10.80 -- --
Number of Units 4,588 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.23 -- --
Number of Units 13,114 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- RISING RATES OPPORTUNITY (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 6.63 $ 7.56 8.02
Number of Units 5,314,528 1,817,924 165,792
With any one of GRO Plus, EBP or HAV
Unit Price $ 7.97 $ 9.12 9.69
Number of Units 2,060,525 445,486 9,028
With GMWB
Unit Value $ 7.95 $ 9.11 --
Number of Units 333,355 4,991 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 7.93 $ 9.09 --
Number of Units 588,490 82,598 --
With any one of EBP or HAV and GMWB
Unit Value $ 8.31 -- --
Number of Units 219,942 -- --
With HAV, EBP and GRO Plus
Unit Price $ 7.89 $ 9.07 --
Number of Units 52,002 10,876 --
With HAV, EBP and GMWB
Unit Value $ 8.28 -- --
Number of Units 14,108 -- --
A-44
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------- -------------- ------- -------
ProFund VP -- LARGE-CAP GROWTH
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.37 -- --
Number of Units 72,725 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.37 -- --
Number of Units 18,860 -- --
With GMWB
Unit Value $ 10.37 -- --
Number of Units 2,860 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.37 -- --
Number of Units 6,286 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.37 -- --
Number of Units 554 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.37 -- --
Number of Units 84 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- LARGE-CAP VALUE
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.37 -- --
Number of Units 159,605 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.36 -- --
Number of Units 36,170 -- --
With GMWB
Unit Value $ 10.36 -- --
Number of Units 3,802 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.36 -- --
Number of Units 1,123 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.36 -- --
Number of Units 554 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.36 -- --
Number of Units 84 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-45
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------ --------------- ------ -------
ProFund VP -- SHORT MID-CAP
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.70 -- --
Number of Units 39,360 -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
ProFund VP -- SHORT SMALL-CAP
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.98 -- --
Number of Units 4,677,820 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.34 -- --
Number of Units 1,611,060 -- --
With GMWB
Unit Value $ 15.31 -- --
Number of Units 170,800 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.26 -- --
Number of Units 285,725 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 12.23 -- --
Number of Units 42,134 -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.17 -- --
Number of Units 9,388 -- --
With HAV, EBP and GMWB
Unit Value $ 12.19 -- --
Number of Units 13,290 -- --
A-46
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------------------ -------------- ------------- -------------
FIRST TRUST(R) 10 UNCOMMON VALUES (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.03 $ 9.16 6.8
Number of Units 91,924 66,435 19,826
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.39 $ 13.17 --
Number of Units 28 467 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
FIRST TRUST GLOBAL TARGET 15 (17)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.85 -- --
Number of Units 311,233 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.83 -- --
Number of Units 303,452 -- --
With GMWB
Unit Value $ 11.82 -- --
Number of Units 108,014 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.81 -- --
Number of Units 65,909 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 11.80 -- --
Number of Units 6,777 -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.79 -- --
Number of Units 4,718 -- --
With HAV, EBP and GMWB
Unit Value $ 11.78 -- --
Number of Units 3,816 -- --
A-47
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------- ------------- ------- -------
FIRST TRUST TARGET MANAGED VIP
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.32 -- --
Number of Units 1,777,316 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.30 -- --
Number of Units 1,562,079 -- --
With GMWB
Unit Value $ 11.30 -- --
Number of Units 1,057,901 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.28 -- --
Number of Units 429,320 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 11.28 -- --
Number of Units 40,194 -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.27 -- --
Number of Units 217,324 -- --
With HAV, EBP and GMWB
Unit Value $ 11.26 -- --
Number of Units 23,730 -- --
FIRST TRUST NASDAQ TARGET 15
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.66 -- --
Number of Units 82,809 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.64 -- --
Number of Units 1,635 -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
A-48
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------
SUB-ACCOUNT 2004 2003 2002
- ------------------------------ -------------- ------- -------
FIRST TRUST S&P TARGET 24
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.75 -- --
Number of Units 173,851 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.73 -- --
Number of Units 152,355 -- --
With GMWB
Unit Value $ 10.72 -- --
Number of Units 38,677 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.71 -- --
Number of Units 72,575 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.70 -- --
Number of Units 11,933 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.69 -- --
Number of Units 3,409 -- --
With HAV, EBP and GMWB
Unit Value $ 10.68 -- --
Number of Units 2,359 -- --
FIRST TRUST THE DOW(SM) DART 10
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.48 -- --
Number of Units 155,695 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.46 -- --
Number of Units 160,820 -- --
With GMWB
Unit Value $ 10.46 -- --
Number of Units 78,082 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.45 -- --
Number of Units 82,728 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.44 -- --
Number of Units 3,913 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.43 -- --
Number of Units 10,531 -- --
With HAV, EBP and GMWB
Unit Value $ 10.42 -- --
Number of Units 105 -- --
A-49
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------
SUB-ACCOUNT 2004 2003 2002
- ---------------------------------------- -------------- ------- ------
FIRST TRUST VALUE LINE(R) TARGET 25
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.59 -- --
Number of Units 389,792 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.57 -- --
Number of Units 4,909 -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
SP WILLIAM BLAIR INTERNATIONAL GROWTH
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.53 -- --
Number of Units 269,671 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.53 -- --
Number of Units 172,859 -- --
With GMWB
Unit Value $ 10.53 -- --
Number of Units 73,031 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.52 -- --
Number of Units 23,863 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.52 -- --
Number of Units 6,604 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.52 -- --
Number of Units 4,127 -- --
With HAV, EBP and GMWB
Unit Value $ 10.52 -- --
Number of Units 806 -- --
A-50
APPENDIX A
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
1. Effective May 2, 2005 the name of the Wells Fargo Variable Trust
International Equity Portfolio has changed to Wells Fargo Variable Trust
Advantage International Core Portfolio.
2. Effective May 2, 2005 the name of the Wells Fargo Variable Trust Small-Cap
Growth Portfolio has changed to Wells Fargo Variable Trust Advantage Small-Cap
Growth Portfolio.
3. Effective May 2, 2005 the name of the Wells Fargo Variable Trust Growth
Portfolio has changed to Wells Fargo Variable Trust Advantage Large Company Core
Portfolio.
4. Effective May 2, 2005 the name of the Wells Fargo Variable Trust Large
Company Growth Portfolio has changed to Wells Fargo Variable Trust Advantage
Large Company Growth Portfolio.
5. Effective May 2, 2005 the name of the Wells Fargo Variable Trust Equity Value
Portfolio has changed to Wells Fargo Variable Trust Advantage C&B Large-Cap
Value Portfolio.
6. Effective May 2, 2005 the name of the Wells Fargo Variable Trust Equity
Income Portfolio has changed to Wells Fargo Variable Trust Advantage Equity
Income Portfolio.
7. Effective May 2, 2005 the name of the Wells Fargo Variable Trust Asset
Allocation Portfolio has changed to Wells Fargo Variable Trust Advantage Asset
Allocation Portfolio.
8. Effective May 2, 2005 the name of the Wells Fargo Variable Trust Total Return
Bond Portfolio has changed to Wells Fargo Variable Trust Advantage Total Return
Bond Portfolio.
9. Effective May 2, 2005 the name of the AST State Street Research Small-Cap
Growth Portfolio has changed to AST Small-Cap Growth Portfolio.
10. Effective May 2, 2005 the name of the AST Alliance Growth Portfolio has
changed to AST AllianceBernstein Large-Cap Growth Portfolio.
11. Effective May 2, 2005 the name of the AST Alliance/Bernstein Growth + Value
Portfolio has changed to AST AllianceBernstein Growth + Value Portfolio.
12. Effective May 2, 2005 the name of the AST Sanford Bernstein Core Value
Portfolio has changed to AST AllianceBernstein Core Value Portfolio.
13. Effective May 2, 2005 the name of the AST Sanford Bernstein Managed Index
500 Portfolio has changed to AST AllianceBernstein Managed Index 500 Portfolio.
14. Effective May 2, 2005 the name of the AST Alliance Growth and Income
Portfolio has changed to AST AllianceBernstein Growth & Income Portfolio.
15. Effective May 2, 2005 the name of the AST DeAM Global Allocation Portfolio
has changed to AST Global Allocation Portfolio.
16. Effective April 15, 2005 the name of the Evergreen VA--Special Equity
Portfolio has changed to Evergreen VA Growth Portfolio.
17. Effective May 2, 2005 the name of the First Trust Global Target 15 Portfolio
has changed to First Trust Global Dividend Target 15 Portfolio.
A-51
This page intentionally left blank
APPENDIX B
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits
EXAMPLES OF ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT CALCULATION
The following are examples of how the Enhanced Beneficiary Protection Optional
Death Benefit is calculated. Each example assumes that a $50,000 initial
Purchase Payment is made. Each example assumes that there is one Owner who is
age 50 on the Issue Date and that all Account Value is maintained in the
variable investment options. The formula for determining the Enhanced
Beneficiary Protection Optional Death Benefit is as follows:
Account Value of variable
investment options plus Interim Purchase Payments -
Growth = minus
Value of Fixed Allocations proportional withdrawals
(no MVA applies)
Example with market increase
Assume that the Owner has made no withdrawals and that the Account Value has
been increasing due to positive market performance. On the date we receive due
proof of death, the Account Value is $75,000. The basic Death Benefit is
calculated as Purchase Payments minus proportional withdrawals, or Account
Value, less the amount of any Credits applied within 12 months prior to the
date of death, which ever is greater. Therefore, the basic Death Benefit is
equal to $75,000. The Enhanced Beneficiary Protection Optional Death Benefit is
equal to the amount payable under the basic Death Benefit ($75,000) PLUS 40% of
the "Growth" under the Annuity.
Growth = $ 75,000 - [$50,000 - $0]
= $ 25,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit =
40% of Growth
= $ 25,000 x 0.40
= $ 10,000
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $ 85,000
Examples with market decline
Assume that the Owner has made no withdrawals and that the Account Value has
been decreasing due to declines in market performance. On the date we receive
due proof of death, the Account Value is $45,000. The basic Death Benefit is
calculated as Purchase Payments minus proportional withdrawals, or Account
Value, less the amount of any Credits applied within 12 months prior to the
date of death, which ever is greater. Therefore, the basic Death Benefit is
equal to $50,000. The Enhanced Beneficiary Protection Optional Death Benefit is
equal to the amount payable under the basic Death Benefit ($50,000) PLUS the
"Growth" under the Annuity.
Growth = $ 45,000 - [$50,000 - $0]
= $ -5,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit =
40% of Growth
NO BENEFIT IS PAYABLE
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $ 50,000
B-1
APPENDIX B
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits continued
IN THIS EXAMPLE YOU WOULD RECEIVE NO ADDITIONAL BENEFIT FROM PURCHASING THE
ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT.
EXAMPLE WITH MARKET INCREASE AND WITHDRAWALS
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 5 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $90,000. The basic Death Benefit is calculated as Purchase
Payments minus proportional withdrawals, or Account Value, less the amount of
any Credits applied within 12 months prior to the date of death, which ever is
greater. Therefore, the basic Death Benefit is equal to $90,000. The Enhanced
Beneficiary Protection Optional Death Benefit is equal to the amount payable
under the basic Death Benefit ($90,000) PLUS 40% of the "Growth" under the
Annuity.
Growth = $90,000 - [$50,000 - ($50,000 x $15,000/$75,000)]
= $90,000 - [$50,000 - $10,000]
= $90,000 - $40,000
= $50,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death
Benefit = 40% of Growth
= $50,000 x 0.40
= $20,000
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary
Protection Optional Death Benefit
= $110,000
EXAMPLES OF HIGHEST ANNIVERSARY VALUE DEATH BENEFIT CALCULATION
The following are examples of how the Highest Anniversary Value Death Benefit is
calculated. Each example assumes an initial Purchase Payment of $50,000. Each
example assumes that there is one Owner who is age 70 on the Issue Date and that
all Account Value is maintained in the variable investment options.
NOTE: The examples below do not include Credits which may be recovered by
American Skandia under certain circumstances.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the date
we receive due proof of death, the Account Value is $75,000; however, the
Anniversary Value on the 5th anniversary of the Issue Date was $90,000. Assume
as well that the Owner has died before the Death Benefit Target Date. The Death
Benefit is equal to the greater of the Highest Anniversary Value or the basic
Death Benefit. The Death Benefit would be the Highest Anniversary Value
($90,000) because it is greater than the amount that would have been payable
under the basic Death Benefit ($75,000).
Example with withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $80,000; however, the Anniversary Value on the 5th anniversary
of the Issue Date was $90,000. Assume as well that the Owner has died before
the Death Benefit Target Date. The Death Benefit is equal to the greater of the
Highest Anniversary Value or the basic Death Benefit.
B-2
APPENDIX B
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Highest Anniversary Value = $90,000 - [$90,000 x $15,000/$75,000]
= $90,000 - $18,000
= $72,000
Basic Death Benefit = max [$80,000, $50,000 - ($50,000 x $15,000/$75,000)]
= max [$80,000, $40,000]
= $80,000
The Death Benefit therefore is $80,000.
Example with death after Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals had been made prior to the
Death Benefit Target Date. Further assume that the Owner dies after the Death
Benefit Target Date, when the Account Value is $75,000. The Highest Anniversary
Value on the Death Benefit Target Date was $80,000; however, following the Death
Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had
taken a withdrawal of $5,000 when the Account Value was $70,000. The Death
Benefit is equal to the greater of the Highest Anniversary Value plus Purchase
Payments minus proportional withdrawals after the Death Benefit Target Date or
the basic Death Benefit.
Highest Anniversary Value = $80,000 + $15,000 - [($80,000 + $15,000) x $5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $ 88,214
Basic Death Benefit = max [$75,000, ($50,000 + $15,000) - {($50,000 + $15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $ 75,000
The Death Benefit therefore is $88,214.
EXAMPLES OF COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
CALCULATION
The following are examples of how the Combination 5% Roll-Up and Highest
Anniversary Value Death Benefit are calculated. Each example assumes an initial
Purchase Payment of $50,000. Each example assumes that there is one Owner who is
age 70 on the Issue Date and that all Account Value is maintained in the
variable investment options.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the 7th
anniversary of the Issue Date we receive due proof of death, at which time the
Account Value is $75,000; however, the Anniversary Value on the 5th anniversary
of the Issue Date was $90,000. Assume as well that the Owner has died before the
Death Benefit Target Date. The Roll-Up Value is equal to initial Purchase
Payment accumulated at 5% for 6 years, or $67,005. The Death Benefit is equal to
the greatest of the Roll-Up Value, Highest Anniversary Value or the basic Death
Benefit. The Death Benefit would be the Highest Anniversary Value ($90,000)
because it is greater than both the Roll-Up Value ($67,005) and the amount that
would have been payable under the basic Death Benefit ($75,000).
Example with withdrawals
Assume that the Owner made a withdrawal of $5,000 on the 6th anniversary of the
Issue Date when the Account Value was $45,000. The Roll-Up Value on the 6th
anniversary of the Issue Date is equal to initial Purchase Payment accumulated
at 5% for 6 years, or $67,005. The 5% Dollar-for-Dollar Withdrawal Limit for
the 7th annuity year is equal to 5% of the Roll-Up Value as of the 6th
anniversary of the Issue Date, or $3,350. Therefore, the remaining $1,650 of
the withdrawal results in a proportional reduction to the Roll-Up Value. On the
7th anniversary of the Issue Date we receive due proof of death, at which time
the Account Value is $43,000; however, the Anniversary Value on the 2nd
anniversary of the Issue Date was $70,000. Assume as well that the Owner has
died before the Death Benefit Target Date. The Death Benefit is equal to the
greatest of the Roll-Up Value, Highest Anniversary
B-3
APPENDIX B
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits continued
Value or the basic Death Benefit.
Roll-Up Value = {($67,005 - $3,350) - [($67,005 - $3,350) x $1,650/($45,000 - $3,350)]} x 1.05
= ($63,655 - $2,522) x 1.05
= $64,190
Highest Anniversary Value = $70,000 - [$70,000 x $5,000/$45,000]
= $70,000 - $7,778
= $62,222
Basic Death Benefit = max [$43,000, $50,000 - ($50,000 x $5,000/$45,000)]
= max [$43,000, $44,444]
= $44,444
The Death Benefit therefore is $64,190.
EXAMPLE WITH DEATH AFTER DEATH BENEFIT TARGET DATE
Assume that the Owner has not made any withdrawals prior to the Death Benefit
Target Date. Further assume that the Owner dies after the Death Benefit Target
Date, when the Account Value is $75,000. The Roll-Up Value on the Death Benefit
Target Date (the contract anniversary on or following the Owner's 80th
birthday) is equal to initial Purchase Payment accumulated at 5% for 10 years,
or $81,445. The Highest Anniversary Value on the Death Benefit Target Date was
$85,000; however, following the Death Benefit Target Date, the Owner made a
Purchase Payment of $15,000 and later had taken a withdrawal of $5,000 when the
Account Value was $70,000. The Death Benefit is equal to the greatest of the
Roll-Up Value, Highest Anniversary Value or the basic Death Benefit as of the
Death Benefit Target Date; each increased by subsequent purchase payments and
reduced proportionally for subsequent withdrawals.
Roll-Up Value = $81,445 + $15,000 - [($81,445 + 15,000) x $5,000/$70,000]
= $81,445 + $15,000 - $6,889
= $89,556
Highest Anniversary Value = $85,000 + $15,000 - [($85,000 + 15,000) x $5,000/$70,000]
= $85,000 + $15,000 - $7,143
= $92,857
Basic Death Benefit = max [$75,000, $50,000 + $15,000 - {(50,000 + $15,000) x
$5,000/$70,000}]
= max [$75,000, $60,357]
= $75,000
The Death Benefit therefore is $92,857.
Examples of Highest Daily Value Death Benefit Calculation
The following are examples of how the HDV Death Benefit is calculated. Each
example assumes an initial Purchase Payment of $50,000 (includes any Credits).
Each example assumes that there is one Owner who is age 70 on the Issue Date.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the date
we receive due proof of death, the Account Value is $75,000; however, the
Highest Daily Value was $90,000. Assume, as well, that the Owner has died before
the Death Benefit Target Date. The Death Benefit is equal to the greater of the
Highest Daily Value or the basic Death Benefit. The Death Benefit would be the
HDV ($90,000) because it is greater than the amount that would have been payable
under the basic Death Benefit ($75,000).
B-4
APPENDIX B
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Example with withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $80,000; however, the Highest Daily Value ($90,000) was
attained during the fifth Annuity Year. Assume, as well, that the Owner has died
before the Death Benefit Target Date. The Death Benefit is equal to the greater
of the Highest Daily Value (proportionally reduced by the subsequent withdrawal)
or the basic Death Benefit.
Highest Daily Value = $90,000 - [$90,000 x $15,000/$75,000]
= $90,000 - $18,000
= $72,000
Basic Death Benefit = max [$80,000, $50,000 - ($50,000 x $15,000/$75,000)]
= max [$80,000, $40,000]
= $80,000
The Death Benefit therefore is $80,000.
Example with death after Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals had been made prior to the
Death Benefit Target Date. Further assume that the Owner dies after the Death
Benefit Target Date, when the Account Value is $75,000. The Highest Daily Value
on the Death Benefit Target Date was $80,000; however, following the Death
Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had
taken a withdrawal of $5,000 when the Account Value was $70,000. The Death
Benefit is equal to the greater of the Highest Daily Value on the Death Benefit
Target Date plus Purchase Payments minus proportional withdrawals after the
Death Benefit Target Date or the basic Death Benefit.
Highest Daily Value = $80,000 + $15,000 - [($80,000 + $15,000) x $5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $ 88,214
Basic Death Benefit = max [$75,000, ($50,000 + $15,000) - {($50,000 + $15,000) x $50,000/$70,000}]
= max [$75,000, $60,357]
= $ 75,000
The Death Benefit therefore is $88,214.
B-5
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APPENDIX C
AMERICAN SKANDIA STAGECOACH XTRA CREDIT SIX PROSPECTUS
Appendix C -- Additional Information on Asset Allocation Programs
PROGRAM RULES
- - You can elect an asset allocator program where the Sub-accounts for each
asset class in each model portfolio are designated based on an evaluation
of available Sub-accounts. If you elect the Lifetime Five Benefit ("LT5")
or the Highest Daily Value Death Benefit ("HDV"), you must enroll in one
of the eligible model portfolios. Asset allocation is a sophisticated
method of diversification that allocates assets among asset classes in
order to manage investment risk and potentially enhance returns over the
long term. However, asset allocation does not guarantee a profit or
protect against a loss.
HOW THE ASSET ALLOCATION PROGRAM WORKS
- - Amounts will automatically be allocated in accordance with the percentages
and to Sub-accounts indicated for the model portfolio that you choose. If
you allocate your Account Value or transfer your Account Value among any
Sub-accounts that are outside of your model portfolio, we will allocate
these amounts according to the allocation percentages of the applicable
model portfolio upon the next rebalancing. You may only choose one model
portfolio at a time. When you enroll in the asset allocation program and
upon each rebalance thereafter, 100% of your Account Value allocated to
the variable Sub-accounts will be allocated to the asset allocation
program. Any Account Value not invested in the Sub-accounts will not be
part of the program.
- - ADDITIONAL PURCHASE PAYMENTS: Unless otherwise requested, any additional
Purchase Payments applied to the variable Sub-accounts in the Annuity will
be allocated to the Sub-accounts according to the allocation percentages
for the model portfolio you choose. Allocation of additional Purchase
Payments outside of your model portfolio but into a Sub-account, will be
reallocated according to the allocation percentages of the applicable
model portfolio upon the next rebalancing.
- - REBALANCING YOUR MODEL PORTFOLIO: Changes in the value of the Sub-account
will cause your Account Value allocated to the Sub-accounts to vary from
the percentage allocations of the model portfolio you select. By selecting
the asset allocation program, you have directed us to periodically (e.g.,
quarterly) rebalance your Account Value allocated to the Sub-accounts in
accordance with the percentage allocations assigned to each Sub-account
within your model portfolio at the time you elected the program or as
later modified with your consent. Some asset allocation programs will only
require that a rebalancing occur when the percent of your Account Value
allocated to the Sub-accounts are outside of the acceptable range
permitted under such asset allocation program. Note -- Any Account Value
not invested in the Sub-accounts will not be affected by any rebalance.
- - SUB-ACCOUNT CHANGES WITHIN THE MODEL PORTFOLIOS: From time to time you may
be notified of a suggested change in a Sub-account or percentage allocated
to a Sub-account within your model portfolio. If you consent (in the
manner that is then permitted or required) to the suggested change, then
it will be implemented upon the next rebalance. If you do not consent then
rebalancing will continue in accordance with your unchanged model
portfolio, unless the Sub-account is no longer available under your
Annuity, in which case your lack of consent will be deemed a request to
terminate the asset allocation program and the provisions under
"Termination or Modification of the Asset Allocation Program" will apply.
- - OWNER CHANGES IN CHOICE OF MODEL PORTFOLIO: You may change from the model
portfolio that you have elected to any other currently available model
portfolio at any time. The change will be implemented on the date we
receive all required information in the manner that is then permitted or
required.
TERMINATION OR MODIFICATION OF THE ASSET ALLOCATION PROGRAM:
- - You may request to terminate your asset allocation program at any time.
Any termination will be effective on the date that American Skandia
receives your termination request in good order. If you are enrolled in
HDV or LT5, termination of your asset allocation program must coincide
with enrollment in a then currently available and approved asset
allocation program or other approved option. However, if you are enrolled
in LT5 you may terminate the LT5 benefit in order to then terminate your
asset allocation program. American Skandia reserves the right to terminate
or modify the asset allocation program at any time with respect to any
programs.
RESTRICTIONS ON ELECTING THE ASSET ALLOCATION:
- - You cannot participate in auto-rebalancing or a DCA program while enrolled
in an asset allocation program. Upon election of an asset allocation
program, American Skandia will automatically terminate your enrollment in
any auto-rebalancing or DCA program.
C-1
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PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS FURTHER
DETAILS ABOUT THE AMERICAN SKANDIA ANNUITY DESCRIBED IN PROSPECTUS
WFVXT-SIX-PROS (05/2005).
--------------------------------------
(print your name)
--------------------------------------
(address)
--------------------------------------
(city/state/zip code)
NOTES
NOTES
NOTES
NOTES
Variable Annuity Issued by: Variable Annuity Distributed by:
AMERICAN SKANDIA LIFE AMERICAN SKANDIA
ASSURANCE CORPORATION MARKETING, INCORPORATED
A Prudential Financial Company A Prudential Financial Company
One Corporate Drive One Corporate Drive
Shelton, Connecticut 06484 Shelton, Connecticut 06484
Telephone: 1-800-680-8920 Telephone: 203-926-1888
http://www.americanskandia.prudential.com http://www.americanskandia.prudential.com
MAILING ADDRESSES:
AMERICAN SKANDIA -- VARIABLE ANNUITIES
Attention: STAGECOACH ANNUITY
P.O. Box 7960
Philadelphia, PA 19176
EXPRESS MAIL:
AMERICAN SKANDIA -- VARIABLE ANNUITIES
Attention: STAGECOACH ANNUITY
2101 Welsh Road
Dresher, PA 19025
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
A Prudential Financial Company
One Corporate Drive, Shelton, Connecticut 06484
-----------------------------------------------
OPTIMUM PLUS(SM)
Flexible Premium Deferred Annuity
- --------------------------------------------------------------------------------
PROSPECTUS: MAY 2, 2005
This Prospectus describes The Optimum Plus(SM), a flexible premium deferred
annuity (the "Annuity") offered by American Skandia Life Assurance Corporation
("American Skandia", "we", "our" or "us") exclusively through Linsco/Private
Ledger, Corp. The Annuity may be offered as an individual annuity contract or
as an interest in a group annuity. This Prospectus describes the important
features of the Annuity and what you should consider before purchasing the
Annuity. The Annuity or certain of its investment options and/or features may
not be available in all states. Various rights and benefits may differ between
states to meet applicable laws and/or regulations. For more information about
variations applicable to your state, please refer to your Annuity contract or
consult your Investment Professional. Certain terms are capitalized in this
Prospectus. Those terms are either defined in the Glossary of Terms or in the
context of the particular section.
- --------------------------------------------------------------------------------
American Skandia offers several different annuities which your investment
professional may be authorized to offer to you. Each annuity has different
features and benefits that may be appropriate for you based on your financial
situation, your age and how you intend to use the annuity. The different
features and benefits include variations in death benefit protection and the
ability to access your annuity's account value. The fees and charges you pay
and compensation paid to your investment professional may also be different
between each annuity.
- --------------------------------------------------------------------------------
The Variable Investment Options
- -------------------------------
The variable investment options, each a Sub-account of American Skandia Life
Assurance Corporation Variable Account B, invest in an underlying mutual fund
portfolio. Currently, portfolios of the following underlying mutual funds are
being offered: American Skandia Trust and Evergreen Variable Annuity Trust.
Please Read This Prospectus
- ---------------------------
Please read this prospectus and the current prospectus for the underlying
mutual funds. Keep them for future reference. If you are purchasing the Annuity
as a replacement for existing variable annuity or variable life coverage, you
should consider any surrender or penalty charges you may incur when replacing
your existing coverage and that this Annuity may be subject to a contingent
deferred sales charge if you elect to surrender the Annuity or take a partial
withdrawal. You should consider your need to access the Annuity's Account Value
and whether the annuity's liquidity features will satisfy that need.
Available Information
- ---------------------
We have also filed a Statement of Additional Information that is available from
us, without charge, upon your request. The contents of the Statement of
Additional Information are described on page 83. This Prospectus is part of the
registration statement we filed with the SEC regarding this offering.
Additional information on us and this offering is available in the registration
statement and the exhibits thereto. You may review and 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. These documents, as well as
documents incorporated by reference, may also be obtained through the SEC's
Internet Website (http://www.sec.gov) for this registration statement as well
as for other registrants that file electronically with the SEC.
For Further Information call:
- -----------------------------
- --> 1-800-752-6342
These annuities are NOT deposits or obligations of, or issued, guaranteed or
endorsed by, any bank, are NOT insured or guaranteed by the U.S. government,
the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board or
any other agency. An investment in this annuity involves investment risks,
including possible loss of value, even with respect to amounts allocated to the
AST Money Market sub-account. 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.
Optimum Plus(SM) is a service mark of Linsco/Private Ledger, Corp.
Prospectus Dated: May 2, 2005
Statement of Additional Information Dated: May 2, 2005
XT6LPLPROS505 LPLOP-PROS
PLEASE SEE OUR PRIVACY POLICY AND IRA DISCLOSURE STATEMENT ATTACHED TO THE BACK
COVER OF THIS PROSPECTUS.
Contents
- -------------------------------------------------------------------------------
Introduction ............................................................................. 1
Why Would I Choose to Purchase This Annuity? ........................................... 1
What Are Some of the Key Features of This Annuity? ..................................... 2
How Do I Purchase This Annuity? ........................................................ 2
Glossary of Terms ........................................................................ 3
Summary of Contract Fees and Charges ..................................................... 4
Expense Examples ......................................................................... 10
Investment Options ....................................................................... 11
What Are the Investment Objectives and Policies of the Portfolios? ..................... 11
What Are the Fixed Allocations? ........................................................ 14
Fees and Charges ......................................................................... 15
What Are the Contract Fees and Charges? ................................................ 15
What Charges Apply Solely to the Variable Investment Options? .......................... 16
What Fees and Expenses Are Incurred by the Portfolios? ................................. 17
What Charges Apply to the Fixed Allocations? ........................................... 17
What Charges Apply if I Choose an Annuity Payment Option? .............................. 17
Exceptions/Reductions to Fees and Charges .............................................. 17
Purchasing Your Annuity .................................................................. 18
What Are our Requirements for Purchasing the Annuity? .................................. 18
Managing Your Annuity .................................................................... 20
May I Change the Owner, Annuitant and Beneficiary Designations? ........................ 20
May I Return the Annuity if I Change my Mind? .......................................... 20
May I Make Additional Purchase Payments? ............................................... 20
May I Make Scheduled Payments Directly from my Bank Account? ........................... 20
May I Make Purchase Payments Through a Salary Reduction Program? ....................... 21
Managing Your Account Value .............................................................. 22
How and When Are Purchase Payments Invested? ........................................... 22
How Do I Receive Credits? .............................................................. 22
How Are Credits Applied to my Account Value? ........................................... 22
Are There Restrictions or Charges on Transfers Between Investment Options? ............. 24
Do You Offer Dollar Cost Averaging? .................................................... 25
Do You Offer any Automatic Rebalancing Programs? ....................................... 26
Are any Asset Allocation Programs Available? ........................................... 26
Do You Offer Programs Designed to Guarantee a "Return of Premium" at a Future Date? .... 26
May I Give my Investment Professional Permission to Manage my Account Value? ........... 28
May I Authorize my Third Party Investment Advisor to Manage my Account? ................ 28
How Do the Fixed Allocations Work? ..................................................... 29
How Do You Determine Rates for Fixed Allocations? ...................................... 29
How Does the Market Value Adjustment Work? ............................................. 30
What Happens When my Guarantee Period Matures? ......................................... 31
Access To Account Value .................................................................. 32
What Types of Distributions Are Available to Me? ....................................... 32
Are There Tax Implications for Distributions? .......................................... 32
Can I Withdraw a Portion of my Annuity? ................................................ 32
How Much Can I Withdraw as a Free Withdrawal? .......................................... 32
Is There a Charge for a Partial Withdrawal? ............................................ 33
Can I Make Periodic Withdrawals from the Annuity During the Accumulation Period? ....... 33
Do You Offer a Program for Withdrawals Under Section 72(t) of the Internal Revenue Code? 33
What Are Minimum Distributions and When Would I Need to Make Them? ..................... 34
Can I Surrender my Annuity for its Value? .............................................. 34
What is a Medically-Related Surrender and How Do I Qualify? ............................ 34
What Types of Annuity Options Are Available? ........................................... 35
(i)
Contents
- --------------------------------------------------------------------------------
How and When Do I Choose the Annuity Payment Option? ............................... 36
How Are Annuity Payments Calculated? ............................................... 36
Living Benefit Programs .............................................................. 38
Do You Offer Programs Designed to Provide Investment Protection for Owners While
They Are Alive? .................................................................. 38
Guaranteed Return Option Plus(SM) (GRO PlusSM) ..................................... 39
Guaranteed Return Option (GRO) ..................................................... 44
Guaranteed Minimum Withdrawal Benefit (GMWB) ....................................... 47
Guaranteed Minimum Income Benefit (GMIB) ........................................... 51
LifeTime Five Income Benefit (LifeTime Five) ....................................... 55
Death Benefit ........................................................................ 61
What Triggers the Payment of a Death Benefit? ...................................... 61
Basic Death Benefit ................................................................ 61
Optional Death Benefits ............................................................ 61
American Skandia's Annuity Rewards ................................................. 65
Payment of Death Benefits .......................................................... 66
Valuing Your Investment .............................................................. 68
How Is my Account Value Determined? ................................................ 68
What Is the Surrender Value of my Annuity? ......................................... 68
How and When Do You Value the Sub-Accounts? ........................................ 68
How Do You Value Fixed Allocations? ................................................ 68
When Do You Process and Value Transactions? ........................................ 68
What Happens to My Units When There is a Change In Daily Asset-Based Charges? ...... 70
Tax Considerations ................................................................... 71
General Information .................................................................. 78
How Will I Receive Statements and Reports? ......................................... 78
Who is American Skandia? ........................................................... 78
What Are Separate Accounts? ........................................................ 78
What Is the Legal Structure of the Underlying Funds? ............................... 80
Who Distributes Annuities Offered by American Skandia? ............................. 81
Incorporation of Certain Documents by Reference .................................... 81
Financial Statements ............................................................... 82
How to Contact Us .................................................................. 82
Indemnification .................................................................... 82
Legal Proceedings .................................................................. 83
Contents of the Statement of Additional Information ................................ 83
Appendix A -- Condensed Financial Information about Separate Account B ............... A-1
Appendix B -- Calculation of Optional Death Benefits ................................. B-1
Appendix C -- Additional Information on Asset Allocation Programs .................... C-1
(ii)
OPTIMUM PLUS(SM) PROSPECTUS
Introduction
- -------------------------------------------------------------------------------
Why Would I Choose to Purchase This Annuity?
- --------------------------------------------
This Annuity is frequently used for retirement planning because it allows you
to accumulate retirement savings and also offers annuity payment options when
you are ready to begin receiving income. The Annuity also offers a choice of
different optional benefits, for an additional charge, that can provide
principal protection or guaranteed minimum income protection for Owners while
they are alive and one or more death benefits that can protect your retirement
savings if you die during a period of declining markets. It may be used as an
investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Roth
IRA, Section 401(a) plans (defined benefit plans and defined contribution plans
such as 401(k), profit sharing and money purchase plans) or Tax Sheltered
Annuity (or 403(b)). It may also be used as an investment vehicle for
"non-qualified" investments. The Annuity allows you to invest your money in a
number of variable investment options as well as in one or more fixed
allocations.
When an Annuity is purchased as a "non-qualified" investment, you generally are
not taxed on any investment gains the Annuity earns until you make a withdrawal
or begin to receive annuity payments. This feature, referred to as
"tax-deferral", can be beneficial to the growth of your Account Value because
money that would otherwise be needed to pay taxes on investment gains each year
remains invested and can earn additional money. However, because the Annuity is
designed for long-term retirement savings, a 10% penalty tax may be applied on
withdrawals you make before you reach age 59-1/2. Annuities purchased as a
non-qualified investment are not subject to the maximum contribution limits
that may apply to a qualified investment, and are not subject to required
minimum distributions after age 70-1/2.
When an Annuity is purchased as a "qualified" investment, you should consider
that the Annuity does not provide any tax advantages in addition to the
preferential treatment already available through your retirement plan under the
Internal Revenue Code. An Annuity may offer features and benefits in addition
to providing tax deferral that other investment vehicles may not offer,
including death benefit protection for your beneficiaries, lifetime income
options, and the ability to make transfers between numerous variable investment
options offered under the Annuity. You should consult with your investment
professional as to whether the overall benefits and costs of the Annuity are
appropriate considering your overall financial plan.
- -------------------------------------------------------------------------------
If you purchase this Annuity, we apply an additional amount (an Optimum
Plus(SM)) to your account value with each purchase payment you make, including
your initial purchase payment and any additional purchase payments during the
first six annuity years.
o This Annuity features an annual Insurance Charge of 0.65% and an annual
Distribution Charge of 1.00%. We only deduct the Distribution Charge during
the first 10 years following the effective date of your Annuity. During the
first 10 years, the total asset-based charges on this Annuity are higher
than many of our other annuities.
o Unlike many other annuities, the contingent deferred sales charge (CDSC)
that may apply to a withdrawal or surrender of your Annuity is based on the
number of years since the effective date of your Annuity. We do not assess
a separate CDSC based on the date that each purchase payment is applied.
The CDSC on this Annuity is higher and is deducted for a longer period of
time as compared to our other annuities. As with any investment product
that features a CDSC, you should consider your need to access your account
value during the CDSC period and whether the liquidity provision under the
Annuity will satisfy that need. The CDSC is only deducted if you make a
withdrawal that exceeds the free withdrawal amount or choose to surrender
your Annuity. If you make a withdrawal or surrender your Annuity which is
subject to a CDSC, we do not recover the Optimum Plus(SM) amount.
o The Optimum Plus(SM) amount is included in your account value. However,
American Skandia may take back the original Optimum Plus(SM) amount applied
to your purchase payment if you "free-look" your Annuity or within twelve
(12) months of having received an Optimum Plus amount, you die or elect to
withdraw your account value under the medically-related surrender
provision. In these situations, your Account Value could be substantially
reduced. However, any investment gain on the Optimum Plus(SM) amount will
not be recovered. Additional conditions and restrictions apply. We do not
deduct a CDSC in any situation where we recover the Optimum Plus(SM)
amount.
- -------------------------------------------------------------------------------
1
OPTIMUM PLUS(SM) PROSPECTUS
Introduction continued
- --------------------------------------------------------------------------------
What Are Some of the Key Features of This Annuity?
--------------------------------------------------
o This Annuity is a "flexible premium deferred annuity." It is called
"flexible premium" because you have considerable flexibility in the timing
and amount of premium payments. Generally, investors "defer" receiving
annuity payments until after an accumulation period.
o This Annuity offers both variable investment options and Fixed Allocations.
If you allocate your Account Value to variable investment options, the
value of your Annuity will vary daily to reflect the investment performance
of the underlying investment options. Fixed Allocations of different
durations are offered that are guaranteed by us, but may have a Market
Value Adjustment if you withdraw or transfer your Account Value before the
Maturity Date.
o The Annuity features two distinct phases -- the accumulation period and the
payout period. During the accumulation period your Account Value is
allocated to one or more investment options.
o During the payout period, commonly called "annuitization," you can elect to
receive annuity payments (1) for life; (2) for life with a guaranteed
minimum number of payments; (3) based on joint lives; or (4) for a
guaranteed number of payments. We currently make annuity payments available
on a fixed or variable basis.
o This Annuity offers a Credit which we add to your Annuity with each
Purchase Payment we receive in Annuity Years one (1) through six (6).
o This Annuity offers optional benefits, for an additional charge, that can
provide principal protection or guaranteed minimum income protection for
Owners while they are alive.
o This Annuity offers a basic Death Benefit. It also offers optional Death
Benefits that provide an enhanced level of protection for your
beneficiary(ies) for an additional charge.
o You are allowed to withdraw a limited amount of money from your Annuity on
an annual basis without any charges, although any optional guaranteed
benefit you elect may be reduced. Other product features allow you to
access your Account Value as necessary, although a charge may apply.
o Transfers between investment options are tax-free. Currently, you may make
twenty transfers each year free of charge. We also offer several programs
that enable you to manage your Account Value as your financial needs and
investment performance change.
How Do I Purchase This Annuity?
- -------------------------------
We sell the Annuity through licensed, registered investment professionals. You
must complete an application and submit a minimum initial purchase payment of
$10,000. We may allow you to make a lower initial purchase payment provided you
establish a bank drafting program under which purchase payments received in the
first Annuity Year total at least $10,000. If the Annuity is owned by an
individual or individuals, the oldest of those Owners must be age 75 or under,
as of the Issue Date of the Annuity. If the Annuity is owned by an entity, the
annuitant must be age 75 or under, as of the Issue Date of the Annuity. The
availability and level of protection of certain optional benefits may vary
based on the age of the Owner on the Issue Date of the Annuity or the Owner's
date of death.
2
OPTIMUM PLUS(SM) PROSPECTUS
Glossary of Terms
- -----------------
Many terms used within this Prospectus are described within the text where they
appear. The description of those terms are not repeated in this Glossary of
Terms.
ACCOUNT VALUE
- -------------
The value of each allocation to a Sub-account (also referred to as "variable
investment option") or a Fixed Allocation prior to the Annuity Date, plus any
earnings, and/or less any losses, distributions and charges. The Account Value
is calculated before we assess any applicable Contingent Deferred Sales Charge
("CDSC" or "surrender charge") and/or, other than on a contract anniversary,
any fee that is deducted from the contract annually in arrears. The Account
Value includes any Credits we applied to your Purchase Payments that we are
entitled to recover under certain circumstances. The Account Value is
determined separately for each Sub-account and for each Fixed Allocation, and
then totaled to determine the Account Value for your entire Annuity. The
Account Value of each Fixed Allocation on other than its Maturity Date may be
calculated using a market value adjustment.
ANNUITIZATION
- -------------
The application of Account Value (or Protected Income Value for the Guaranteed
Minimum Income Benefit, if applicable) to one of the available annuity options
for the Annuitant to begin receiving periodic payments for life, for a
guaranteed minimum number of payments or for life with a guaranteed minimum
number of payments.
ANNUITY DATE
- ------------
The date you choose for annuity payments to commence. A maximum Annuity Date
may apply.
ANNUITY YEAR
- ------------
A 12-month period commencing on the Issue Date of the Annuity and each
successive 12-month period thereafter.
CODE
- ----
The Internal Revenue Code of 1986, as amended from time to time.
FIXED ALLOCATION
- ----------------
An allocation of Account Value that is to be credited a fixed rate of interest
for a specified Guarantee Period during the accumulation period.
GUARANTEE PERIOD
- ----------------
A period of time during the accumulation period where we credit a fixed rate of
interest on a Fixed Allocation.
INTERIM VALUE
- -------------
The value of a Fixed Allocation on any date other than the Maturity Date. The
Interim Value is equal to the initial value allocated to the Fixed Allocation
plus all interest credited to the Fixed Allocation as of the date calculated,
less any transfers or withdrawals from the Fixed Allocation.
ISSUE DATE
- ----------
The effective date of your Annuity.
MVA
- ---
A market value adjustment used in the determination of Account Value of each
Fixed Allocation on any day more than 30 days prior to the Maturity Date of
such Fixed Allocation.
OWNER
- -----
With an Annuity issued as an individual annuity contract, the Owner is either
an eligible entity or person named as having ownership rights in relation to
the Annuity. With an Annuity issued as a certificate under a group annuity
contract, the "Owner" refers to the person or entity who has the rights and
benefits designated as to the "Participant" in the certificate.
SURRENDER VALUE
- ---------------
The value of your Annuity available upon surrender prior to the Annuity Date.
It equals the Account Value as of the date we price the surrender minus any
applicable CDSC, Annual Maintenance Fee, Tax Charge, the charge for any
optional benefits, and any additional amounts we applied to your Purchase
Payments that we may be entitled to recover under certain circumstances. The
Surrender Value may be calculated using a Market Value Adjustment with respect
to amounts in any Fixed Allocation.
UNIT
- ----
A measure used to calculate your Account Value in a Sub-account during the
accumulation period.
VALUATION DAY
- -------------
Every day the New York Stock Exchange is open for trading or any other day the
Securities and Exchange Commission requires mutual funds or unit investment
trusts to be valued.
3
OPTIMUM PLUS(SM) PROSPECTUS
Summary of Contract Fees and Charges
- --------------------------------------------------------------------------------
Below is a summary of the fees and charges for the Annuity. Some fees and
charges are assessed against your Annuity while others are assessed against
assets allocated to the variable investment options. The fees and charges that
are assessed against the Annuity include the Contingent Deferred Sales Charge,
Transfer Fee, Tax Charge and Annual Maintenance Fee. The charges that are
assessed against the variable investment options are the mortality and expense
risk charge, the charge for administration of the Annuity, the Distribution
Charge, and the charge for certain optional benefits you elect, other than the
Guaranteed Minimum Income Benefit, which is assessed against the Protected
Income Value. Each underlying mutual fund portfolio assesses a charge for
investment management, other expenses and with some mutual funds, a 12b-1
charge. The prospectus for each underlying mutual fund provides more detailed
information about the expenses for the underlying mutual funds.
The following table provides a summary of the fees and charges you will pay if
you surrender the Annuity or transfer Account Value among investment options.
These fees and charges are described in more detail within this Prospectus.
YOUR TRANSACTION FEES AND CHARGES
- --------------------------------------------------------------------------------------------------------------
(ASSESSED AGAINST THE ANNUITY)
FEE/CHARGE AMOUNT DEDUCTED
- --------------------------------------------------------------------------------------------------------------
9.0%
The charge is a percentage of each applicable Purchase
Payment deducted upon surrender or withdrawal. The period
during which a particular percentage applies is measured from the
Issue Date of the Annuity.
Contingent Deferred Sales Charge*
- --------------------------------------------------------------------------------------------------------------
$10 (currently, $15 maximum)
(Currently, we deduct the fee after the 20th transfer each Annuity Year.
We guarantee that the number of charge free transfers per
Annuity Year will never be less than 8.)
Transfer Fee
- --------------------------------------------------------------------------------------------------------------
Up to 3.5% of the value that is annuitized, depending on the
requirements of the applicable jurisdiction. This charge is deducted
generally at the time you annuitize your contract.
Tax Charge
- --------------------------------------------------------------------------------------------------------------
* The following are the Contingent Deferred Sales Charges (as a percentage of
each applicable Purchase Payment) upon surrender or withdrawal. For purposes of
calculating this charge we consider the year following the Issue Date of your
Annuity as Year 1.
- -----------------------------------------------------------------------------------------------------------------
Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9 Yr. 10 Yr. 11+
- -----------------------------------------------------------------------------------------------------------------
9.0% 9.0% 8.5% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 0.0%
- -----------------------------------------------------------------------------------------------------------------
4
- --------------------------------------------------------------------------------
OPTIMUM PLUS(SM) PROSPECTUS
The following table provides a summary of the periodic fees and charges you will
pay while you own the Annuity, excluding the underlying mutual fund Portfolio
annual expenses. These fees and charges are described in more detail within this
Prospectus.
YOUR PERIODIC FEES AND CHARGES
- ----------------------------------------------------------------------------------------------------------------------
ANNUAL FEES/CHARGES ASSESSED AGAINST THE ANNUITY
FEE/CHARGE AMOUNT DEDUCTED
- ----------------------------------------------------------------------------------------------------------------------
Smaller of $35 or 2% of Account Value
(Assessed annually on the Annuity's anniversary date
Annual Maintenance Fee or upon surrender)
- ----------------------------------------------------------------------------------------------------------------------
ANNUAL FEES/CHARGES OF THE SUB-ACCOUNTS(1)
- ----------------------------------------------------------------------------------------------------------------------
(AS A PERCENTAGE OF THE AVERAGE DAILY NET ASSETS OF THE SUB-ACCOUNTS)
FEE/CHARGE AMOUNT DEDUCTED
- ----------------------------------------------------------------------------------------------------------------------
Mortality & Expense Risk Charge(2) 0.50%
- ----------------------------------------------------------------------------------------------------------------------
Administration Charge(2) 0.15%
- ----------------------------------------------------------------------------------------------------------------------
Distribution Charge(3) 1.00% in Annuity Years 1-10
- ----------------------------------------------------------------------------------------------------------------------
1.40% per year of the value of each Sub-account if the Owner's
beneficiary elects the Qualified Beneficiary Continuation
Settlement Service Charge4 Option 5 ("Qualified BCO")
- -----------------------------------------------------------------------------------------------------------------------
1.65% per year of the value of each Sub-account in Annuity Years
1-10; 0.65% in Annuity Years 11 and later
Total Annual Charges of the Sub-accounts (1.40% per year if you are a beneficiary electing the Qualified BCO)
- -----------------------------------------------------------------------------------------------------------------------
1: These charges are deducted daily and apply to Variable Investment Options
only.
2: The combination of the Mortality and Expense Risk Charge and Administration
Charge is referred to as the "Insurance Charge" elsewhere in this Prospectus.
3: The Distribution Charge in Annuity Years 11+ is 0.00%.
4: The Mortality & Expense Risk Charge, the Administration Charge and the
Distribution Charge do not apply if you are a beneficiary under the Qualified
Beneficiary Continuation Option. The Settlement Service Charge applies only if
your beneficiary elects the Qualified Beneficiary Continuation Option.
5: When an Annuity is used as an IRA, 403(b) or other "qualified investment",
upon the Owner's death a beneficiary may generally elect to continue the Annuity
and receive Minimum Distributions under the Annuity instead of receiving the
death benefit in a single payment. If a beneficiary elects this option, the
beneficiary will incur the Settlement Service Charge. Please refer to the
section of this Prospectus that describes the Qualified Beneficiary Continuation
Option for more detailed information about this option, including certain
restrictions and limitations that may apply.
5
OPTIMUM PLUS(SM) PROSPECTUS
Summary of Contract Fees and Charges continued
- --------------------------------------------------------------------------------
The following table provides a summary of the fees and charges you will pay if
you elect any of the following optional benefits.
Not all optional benefits may be purchased in combination with one another. You
may only elect one optional living benefit. The optional living benefits are the
Guaranteed Return Option Plus program (and where not available, Guaranteed
Return Option), the Guaranteed Minimum Withdrawal Benefit, the Guaranteed
Minimum Income Benefit and the Lifetime Five(SM) Income Benefit. For the
optional death benefits, you may elect the Highest Anniversary Value Death
Benefit or the Highest Daily Value Death Benefit together with the Enhanced
Beneficiary Protection Death Benefit or any of these three benefits
individually, but the Combination 5% Roll-up and HAV Death Benefit may only be
purchased individually. The fees and charges of each of the optional benefits
are described in more detail within this Prospectus.
YOUR OPTIONAL BENEFIT FEES AND CHARGES
- ---------------------------------------------------------------------------------------------------------
OPTIONAL
BENEFIT FEE/
OPTIONAL BENEFIT CHARGE
- ---------------------------------------------------------------------------------------------------------
GUARANTEED RETURN OPTION Plus(SM) (GRO Plus(SM))/ GUARANTEED RETURN OPTION
- ---------------------------------------------------------------------------------------------------------
We offer a program that guarantees a "return of premium" at a future date, 0.25% of average daily
while allowing you to allocate all or a portion of your Account Value to net assets of the
certain Sub-accounts. Sub-accounts
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
- ---------------------------------------------------------------------------------------------------------
We offer a program that guarantees your ability to withdraw amounts equal 0.35% of average daily
to an initial principal value, regardless of the impact of market performance net assets of the
on your Account Value. Sub-accounts
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)**
- ---------------------------------------------------------------------------------------------------------
We offer a program that, after a seven-year waiting period, guarantees your 0.50% per year of the
ability to begin receiving income from your Annuity in the form of annuity average Protected
payments based on your total Purchase Payments (and any Credits applied to Income Value during
such Purchase Payments) and an annual increase of 5% on such Purchase each year; deducted
Payments adjusted for withdrawals (called the "Protected Income Value"), annually in arrears each
regardless of the impact of market performance on your Account Value. Annuity Year
LIFETIME FIVE INCOME BENEFIT**
- ---------------------------------------------------------------------------------------------------------
We offer a program that guarantees your ability to withdraw amounts equal 0.60% of average daily
to a percentage of an initial principal value, regardless of the impact of net assets of the
market performance on your Account Value, subject to our program rules Sub-accounts
regarding the timing and amount of withdrawals.
ENHANCED BENEFICIARY PROTECTION DEATH BENEFIT**
- ---------------------------------------------------------------------------------------------------------
We offer an Optional Death Benefit that provides an enhanced level of 0.25% of average daily
protection for your beneficiary(ies) by providing amounts in addition to the net assets of the
basic Death Benefit that can be used to offset federal and state taxes Sub-accounts
payable on any taxable gains in your Annuity at the time of your death.
- ---------------------------------------------------------------------------------------------------------
TOTAL ANNUAL
OPTIONAL BENEFIT CHARGE*
- ---------------------------------------------------------------------------------------------------------
GUARANTEED RETURN OPTION Plus(SM) (GRO Plus(SM))/ GUARANTEED RETURN OPTION
- ---------------------------------------------------------------------------------------------------------
We offer a program that guarantees a "return of premium" at a future date, 1.90% in Annuity
while allowing you to allocate all or a portion of your Account Value to Years 1-10; 0.90%
certain Sub-accounts. in Annuity Years
11 and later; 1.65%
for Qualified BCO
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
- ---------------------------------------------------------------------------------------------------------
We offer a program that guarantees your ability to withdraw amounts equal 2.00% in Annuity
to an initial principal value, regardless of the impact of market performance Years 1-10; 1.00%
on your Account Value. in Annuity Years 11
and later; 1.75%
for Qualified BCO
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)**
- ---------------------------------------------------------------------------------------------------------
We offer a program that, after a seven-year waiting period, guarantees your 1.65% in Annuity
ability to begin receiving income from your Annuity in the form of annuity Years 1-10; 0.65%
payments based on your total Purchase Payments (and any Credits applied to in Annuity Years 11 and later
such Purchase Payments) and an annual increase of 5% on such Purchase PLUS
Payments adjusted for withdrawals (called the "Protected Income Value"), 0.50% per year of average
regardless of the impact of market performance on your Account Value. Protected Income Value
LIFETIME FIVE INCOME BENEFIT**
- ---------------------------------------------------------------------------------------------------------
We offer a program that guarantees your ability to withdraw amounts equal 2.25% in Annuity
to a percentage of an initial principal value, regardless of the impact of Years 1-10; 1.25% in
market performance on your Account Value, subject to our program rules Annuity Years 11 and later
regarding the timing and amount of withdrawals.
ENHANCED BENEFICIARY PROTECTION DEATH BENEFIT**
- ---------------------------------------------------------------------------------------------------------
We offer an Optional Death Benefit that provides an enhanced level of 1.90% in Annuity
protection for your beneficiary(ies) by providing amounts in addition to the Years 1-10; 0.90% in
basic Death Benefit that can be used to offset federal and state taxes Annuity Years 11 and later
payable on any taxable gains in your Annuity at the time of your death.
- ---------------------------------------------------------------------------------------------------------
6
OPTIMUM PLUS(SM) PROSPECTUS
- --------------------------------------------------------------------------------
OPTIONAL
BENEFIT FEE/
OPTIONAL BENEFIT CHARGE
- --------------------------------------------------------------------------------------------------------------
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT ("HAV")**
- ---------------------------------------------------------------------------------------------------------
We offer an Optional Death Benefit that provides an enhanced level of 0.25% of average daily
protection for your beneficiary(ies) by providing a death benefit equal to the net assets of the
greater of the basic Death Benefit and the Highest Anniversary Value, less Sub-accounts
proportional withdrawals.
COMBINATION 5% ROLL-UP AND HAV DEATH BENEFIT **
- --------------------------------------------------------------------------------------------------------------
We offer an Optional Death Benefit that provides an enhanced level of 0.50% of average daily
protection for your beneficiary(ies) by providing the greater of the Highest net assets of the
Anniversary Value Death Benefit and a 5% annual increase on Purchase Sub-accounts
Payments (and any Credits applied to such Purchase Payments) adjusted for
withdrawals.
HIGHEST DAILY VALUE DEATH BENEFIT ("HDV")**
- --------------------------------------------------------------------------------------------------------------
We offer an Optional Death Benefit that provides an enhanced level of 0.50% of average daily
protection for your beneficiary(ies) by providing a death benefit equal to the net assets of the
greater of the basic Death Benefit and the Highest Daily Value, less Sub-accounts
proportional withdrawals.
- --------------------------------------------------------------------------------------------------------------
Please refer to the section of this Prospectus that describes each optional
benefit for a complete description of the benefit, including any restrictions or
limitations that may apply.
- --------------------------------------------------------------------------------------------------------------
TOTAL ANNUAL
OPTIONAL BENEFIT CHARGE*
- -------------------------------------------------------------------------------------------------------------------------
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT ("HAV")**
- -------------------------------------------------------------------------------------------------------------------------
We offer an Optional Death Benefit that provides an enhanced level of 1.90% in Annuity
protection for your beneficiary(ies) by providing a death benefit equal to the Years 1-10; 0.90%
greater of the basic Death Benefit and the Highest Anniversary Value, less in Annuity Years 11 and later
proportional withdrawals.
COMBINATION 5% ROLL-UP AND HAV DEATH BENEFIT **
- -------------------------------------------------------------------------------------------------------------------------
We offer an Optional Death Benefit that provides an enhanced level of 2.15% in Annuity
protection for your beneficiary(ies) by providing the greater of the Highest Years 1-10; 1.15%
Anniversary Value Death Benefit and a 5% annual increase on Purchase in Annuity Years 11 and later
Payments (and any Credits applied to such Purchase Payments) adjusted for
withdrawals.
HIGHEST DAILY VALUE DEATH BENEFIT ("HDV")**
- -------------------------------------------------------------------------------------------------------------------------
We offer an Optional Death Benefit that provides an enhanced level of 2.15% in Annuity
protection for your beneficiary(ies) by providing a death benefit equal to the Years 1-10; 1.15%
greater of the basic Death Benefit and the Highest Daily Value, less in Annuity Years 11 and later
proportional withdrawals.
- -------------------------------------------------------------------------------------------------------------------------
Please refer to the section of this Prospectus that describes each optional benefit for a complete description of the
benefit, including any restrictions or limitations that may apply.
- -------------------------------------------------------------------------------------------------------------------------
* The Total Annual Charge includes the Insurance Charge and Distribution Charge
assessed against the average daily net assets allocated to the Sub-accounts. If
you elect more than one optional benefit, the Total Annual Charge would be
increased to include the charge for each optional benefit.
** These optional benefits are not available under the Qualified BCO.
The following table provides the range (minimum and maximum) of the total
annual expenses for the underlying mutual funds ("Portfolios") as of December
31, 2004. Each figure is stated as a percentage of the underlying Portfolio's
average daily net assets.
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES
- -------------------------------------------------------------------------------
MINIMUM MAXIMUM
- -------------------------------------------------------------------------------
Total Portfolio Operating Expense 0.63% 3.06%
- -------------------------------------------------------------------------------
The following are the investment management fees, other expenses, 12b-1 fees
(if applicable) and the total annual expenses for each underlying mutual fund
("Portfolio") as of December 31, 2004, except as noted. Each figure is stated
as a percentage of the underlying Portfolio's average daily net assets. For
certain of the underlying Portfolios, a portion of the management fee has been
waived and/or other expenses have been partially reimbursed. Any such fee
waivers and/or reimbursements have been reflected in the footnotes. The "Total
Annual Portfolio Operating Expenses" reflect the combination of the underlying
Portfolio's investment management fee, other expenses and any 12b-1 fees. The
following expenses are deducted by the underlying Portfolio before it provides
American Skandia with the daily net asset value. Any footnotes about expenses
appear after the list of all the Portfolios. The underlying Portfolio
information was provided by the underlying mutual funds and has not been
independently verified by us. See the prospectuses or statements of additional
information of the underlying Portfolios for further details. The current
prospectus and statement of additional information for the underlying
Portfolios can be obtained by calling 1-800-752-6342.
7
OPTIMUM PLUS(SM) PROSPECTUS
Summary of Contract Fees and Charges continued
- ----------------------------------------------------------------------------------------------
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
- ----------------------------------------------------------------------------------------------
(AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS)
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
American Skandia Trust:(2, 3)
- ----------------------------------------------------------------------------------------------
AST William Blair International Growth 1.00% 0.22% None 1.22%
AST LSV International Value4 1.00% 0.37% None 1.37%
AST Small-Cap Growth5 0.90% 0.24% None 1.14%
AST DeAM Small-Cap Growth 0.95% 0.22% None 1.17%
AST Federated Aggressive Growth 0.95% 0.24% None 1.19%
AST Small-Cap Value6 0.90% 0.18% None 1.08%
AST Goldman Sachs Mid-Cap Growth 1.00% 0.25% None 1.25%
AST Neuberger Berman Mid-Cap Value 0.90% 0.15% None 1.05%
AST MFS Growth 0.90% 0.20% None 1.10%
AST Marsico Capital Growth 0.90% 0.14% None 1.04%
AST AllianceBernstein Core Value7 0.75% 0.24% None 0.99%
AST Hotchkis & Wiley Large-Cap Value 0.75% 0.19% None 0.94%
AST Lord Abbett Bond-Debenture 0.80% 0.22% None 1.02%
AST PIMCO Total Return Bond 0.65% 0.16% None 0.81%
AST PIMCO Limited Maturity Bond 0.65% 0.17% None 0.82%
AST Money Market 0.50% 0.13% None 0.63%
Evergreen Variable Annuity Trust:
- ----------------------------------------------------------------------------------------------
International Equity 0.42% 0.30% None 0.72%
Omega 0.52% 0.16% None 0.68%
1: As noted above, shares of the Portfolios generally are purchased through
variable insurance products. Many of the Portfolios and/or their investment
advisers and/or distributors have entered into arrangements with us as the
issuer of the Annuity under which they compensate us for providing ongoing
services in lieu of the Trust providing such services. Amounts paid by a
Portfolio under those arrangements are included under "Other Expenses." For
more information see the prospectus for each underlying portfolio and, "Service
Fees payable to American Skandia," later in this prospectus.
2: The Portfolios' total actual annual operating expenses for the year ended
December 31, 2004 were less than the amount shown in the table due to fee
waivers, reimbursement of expenses and expense offset arrangements. These
waivers, reimbursements, and offset arrangements are voluntary and may be
terminated by American Skandia Investment Services, Inc. and Prudential
Investments LLC at any time. After accounting for the waivers, reimbursements
and offset arrangements, the Portfolios' actual annual operating expenses were:
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
AST William Blair International Growth 1.11%
AST LSV International Value 1.22%
AST DeAM Small-Cap Growth 1.02%
AST DeAM Small-Cap Value 1.13%
AST Goldman Sachs Mid-Cap Growth 1.13%
AST Neuberger Berman Mid-Cap Growth 1.11%
AST Neuberger Berman Mid-Cap Value 1.04%
AST AllianceBernstein Large-Cap Growth 1.10%
AST MFS Growth 1.07%
AST Marsico Capital Growth 1.02%
AST Goldman Sachs Concentrated Growth 1.00%
AST DeAM Large-Cap Value 0.99%
AST Cohen & Steers Realty 1.11%
AST AllianceBernstein Growth & Income 0.87%
AST Hotchkis & Wiley Large-Cap Value 0.90%
AST American Century Strategic Balanced 1.09%
AST T. Rowe Price Asset Allocation 1.07%
AST Lord Abbett Bond-Debenture Portfolio 0.97%
AST PIMCO Total Return Bond 0.78%
AST PIMCO Limited Maturity Bond 0.79%
AST Money Market 0.58%
8
- --------------------------------------------------------------------------------
OPTIMUM PLUS(SM) PROSPECTUS
3: Until November 18, 2004, the Trust had a Distribution Plan under Rule 12b-1
to permit an affiliate of the Trust's Investment Managers to receive brokerage
commissions in connection with
purchases and sales of securities held by the Portfolios, and to use these
commissions to promote the sale of shares of the Portfolio. The Distribution
Plan was terminated effective November 18, 2004. The total annual portfolio
operating expenses do not reflect any brokerage commissions paid pursuant to
the Distribution Plan prior to the Plan's termination.
4: Effective November 18, 2004, LSV Asset Management became the Sub-advisor of
the Portfolio. Prior to November 18, 2004, Deutsche Asset Management, Inc.
served as Sub-advisor of the Portfolio, then named "AST DeAM International
Equity Portfolio."
5: Effective May 1, 2005, Eagle Asset Management and Neuberger Berman
Management, Inc. became Co-Sub-advisors of the Portfolio. Prior to May 1, 2005,
State Street Research and Management Company served as Sub-advisor of the
Portfolio, then named "AST State Street Research Small-Cap Growth Portfolio."
6: Effective November 18, 2004, Integrity Asset Management, Lee Munder Capital
Group, J.P. Morgan Fleming Asset Management became Co-Sub-advisors of the
Portfolio. Prior to November 18, 2004, GAMCO Advisors Inc. served as
Sub-advisor of the Portfolio, then named "AST Gabelli Small-Cap Value
Portfolio."
7: Effective May 1, 2005, the name of the Portfolio was changed from "AST
Sanford Bernstein Core Value Portfolio" to "AST AllianceBernstein Core Value
Portfolio."
9
OPTIMUM PLUS(SM) PROSPECTUS
Expense Examples
- --------------------------------------------------------------------------------
These examples are designed to assist you in understanding the various expenses
you may incur with the Annuity over certain periods of time based on specific
assumptions. The examples reflect the Contingent Deferred Sales Charges, Annual
Maintenance Fee, Insurance Charge, Distribution Charge, and the highest total
annual portfolio operating expenses for any underlying Portfolio offered under
the product, as well as the maximum charges for the optional benefits that are
offered under the Annuity that can be elected in combination with one another.
Below are examples showing what you would pay in expenses at the end of the
stated time periods had you invested $10,000 in the Annuity and received a 5%
annual return on assets, and elected all optional benefits available.
The examples shown assume that: (a) you only allocate Account Value to the
Sub-account with the maximum total annual portfolio operating expenses for the
underlying Portfolio (shown above), not to a Fixed Allocation; (b) the
Insurance Charge is assessed as 0.65% per year; (c) the Distribution Charge is
assessed as 1.00% per year in Annuity Years 1-10; (d) the Annual Maintenance
Fee is reflected as an asset-based charge based on an assumed average contract
size; (e) you make no withdrawals of Account Value during the period shown; (f)
you make no transfers, or other transactions for which we charge a fee during
the period shown; (g) no tax charge applies; (h) the highest total annual
portfolio operating expenses for any underlying Portfolio offered under the
product applies; (i) the charge for each optional benefit is reflected as an
additional charge equal to 0.60% per year of the average daily net assets of
the Sub-accounts for the Lifetime Five Income Benefit, 0.50% per year of the
average daily net assets of the Sub-accounts for the Highest Daily Value Death
Benefit and 0.25% of the average daily net assets of the Sub-accounts for the
Enhanced Beneficiary Protection Death Benefit; and (j) the Credit applicable to
your Annuity is 6% of Purchase Payments. Amounts shown in the examples are
rounded to the nearest dollar. The Credit we apply to Purchase Payments
received after the first Annuity Year is less than 6% (see "How do I Receive
Credits?").
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 will be less than those shown if you elect
a different combination of optional benefits than indicated in the examples or
if you allocate account value to any other available Sub-accounts.
Expense Examples are provided as follows: 1.) if you surrender the Annuity at
the end of the stated time period; 2.) if you annuitize at the end of the
stated time period; and 3.) if you do not surrender your Annuity. A table of
accumulation values appears in Appendix A to this Prospectus.
IF YOU ANNUITIZE AT THE END OF
THE APPLICABLE TIME PERIOD
IF YOU SURRENDER YOUR ANNUITY AT (YOU MAY NOT ANNUITIZE IN THE
THE END OF THE APPLICABLE TIME PERIOD: FIRST THREE (3) ANNUITY YEARS):
- -------------------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,339 $2,249 $3,073 $5,058 N/A N/A $2,401 $4,866
IF YOU DO NOT SURRENDER
YOUR ANNUITY:
- -------------------------------------
1 YR 3 YRS 5 YRS 10 YRS
$475 $1,433 $2,401 $4,866
10
OPTIMUM PLUS(SM) PROSPECTUS
Investment Options
- --------------------------------------------------------------------------------
WHAT ARE THE INVESTMENT OBJECTIVES AND
POLICIES OF THE PORTFOLIOS?
Each variable investment option is a Sub-account of American Skandia Life
Assurance Corporation Variable Account B (see "What are Separate Accounts" for
more detailed information). Each Sub-account invests exclusively in one
Portfolio. You should carefully read the prospectus for any Portfolio in which
you are interested. The following chart classifies each of the Portfolios based
on our assessment of their investment style (as of the date of this
Prospectus). The chart also provides a description of each Portfolio's
investment objective (in italics) and a short, summary description of their key
policies to assist you in determining which Portfolios may be of interest to
you. There is no guarantee that any underlying Portfolio will meet its
investment objective.
The name of the advisor/sub-advisor for each Portfolio appears next to the
description. Those Portfolios whose name includes the prefix "AST" are
Portfolios of American Skandia Trust. The investment managers for AST are
American Skandia Investment Services, Incorporated, a Prudential Financial
Company, and Prudential Investments LLC, affiliated companies of American
Skandia. However, a sub-advisor, as noted below, is engaged to conduct
day-to-day investment decisions.
The Portfolios are not publicly traded mutual funds. They are only
available as investment options in variable annuity contracts and variable life
insurance policies issued by insurance companies, or in some cases, to
participants in certain qualified retirement plans. However, some of the
Portfolios available as Sub-accounts under the Annuity are managed by the same
portfolio advisor or sub-advisor as a retail mutual fund of the same or similar
name that the Portfolio may have been modeled after at its inception. Certain
retail mutual funds may also have been modeled after a Portfolio. While the
investment objective and policies of the retail mutual funds and the Portfolios
may be substantially similar, the actual investments will differ to varying
degrees. Differences in the performance of the funds can be expected, and in
some cases could be substantial. You should not compare the performance of a
publicly traded mutual fund with the performance of any similarly named
Portfolio offered as a Sub-account. Details about the investment objectives,
policies, risks, costs and management of the Portfolios are found in the
prospectuses for the underlying mutual funds. The current prospectus and
statement of additional information for the underlying Portfolios can be
obtained by calling 1-800-752-6342.
11
OPTIMUM PLUS(SM) PROSPECTUS
Investment Options
- --------------------------------------------------------------------------------
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------------------------
International AST William Blair International Growth: seeks long-term capital William Blair &
Equity appreciation. The Portfolio invests primarily in stocks of large and medium-sized Company, L.L.C.
companies located in countries included in the Morgan Stanley Capital
International All Country World Ex-U.S. Index.
- ---------------------------------------------------------------------------------------------------------------------------------
International AST LSV International Value (formerly AST DeAM International Equity): seeks Deutsche Asset
Equity capital growth. The Portfolio pursues its objective by primarily investing at least Management, Inc.
80% of the value of its assets in the equity securities of companies in
developed non-U.S. countries that are represented in the MSCI EAFE Index.
- ---------------------------------------------------------------------------------------------------------------------------------
Small Cap AST Small-Cap Growth (formerly AST State Street Research Small-Cap Eagle Asset
Growth Growth): seeks long-term capital growth. The Portfolio pursues its objective by Management,
primarily investing in the common stocks of small-capitalization companies. Neuberger Berman
Management, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
Small Cap AST DeAM Small-Cap Growth: seeks maximum growth of investors' capital Deutsche Asset
Growth from a portfolio of growth stocks of smaller companies. The Portfolio pursues its Management, Inc.
objective, under normal circumstances, by primarily investing at least 80% of its
total assets in the equity securities of small-sized companies included in the
Russell 2000 Growth[RegTM] Index.
- ---------------------------------------------------------------------------------------------------------------------------------
Small Cap AST Federated Aggressive Growth: seeks capital growth. The Portfolio Federated Equity
Growth pursues its investment objective by investing primarily in the stocks of small Management
companies that are traded on national security exchanges, the NASDAQ stock Company of
exchange and the over-the-counter market. Pennsylvania/
Federated Global
Investment
Management Corp.
- ---------------------------------------------------------------------------------------------------------------------------------
Small Cap AST Small-Cap Value (formerly AST Gabelli Small-Cap Value): seeks to provide Integrity Asset
Value long-term capital growth by investing primarily in small-capitalization stocks that Management, Lee
appear to be undervalued. The Portfolio will have a non-fundamental policy to Munder Capital
invest, under normal circumstances, at least 80% of the value of its assets in Group, J.P. Morgan
small capitalization companies. Fleming Asset
Management
- ---------------------------------------------------------------------------------------------------------------------------------
Mid Cap AST Goldman Sachs Mid-Cap Growth: seeks long-term capital growth. The Goldman Sachs
Growth Portfolio pursues its investment objective by investing primarily in equity Asset Management,
securities selected for their growth potential, and normally invests at least 80% L.P.
of the value of its assets in medium capitalization companies.
- ---------------------------------------------------------------------------------------------------------------------------------
Mid Cap Value AST Neuberger Berman Mid-Cap Value: seeks capital growth. Under normal Neuberger Berman
market conditions, the Portfolio primarily invests at least 80% of its net assets Management Inc.
in the common stocks of mid-cap companies. Under the Portfolio's value-oriented
investment approach, the Sub-advisor looks for well-managed companies whose
stock prices are undervalued and that may rise before other investors realize
their worth.
- ---------------------------------------------------------------------------------------------------------------------------------
12
OPTIMUM PLUS(SM) PROSPECTUS
- --------------------------------------------------------------------------------
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
Large Cap AST MFS Growth: seeks long-term capital growth and future income. Under Massachusetts
Growth normal market conditions, the Portfolio invests at least 80% of its total assets in Financial Services
common stocks and related securities, such as preferred stocks, convertible Company
securities and depository receipts, of companies that the Sub-advisor believes
offer better than average prospects for long-term growth.
- ---------------------------------------------------------------------------------------------------------------------------------
Large Cap AST Marsico Capital Growth: seeks capital growth. Income realization is not Marsico Capital
Growth an investment objective and any income realized on the Portfolio's investments, Management, LLC
therefore, will be incidental to the Portfolio's objective. The Portfolio will pursue
its objective by investing primarily in common stocks of larger, more established
companies.
- ---------------------------------------------------------------------------------------------------------------------------------
Large Cap AST AllianceBernstein Core Value (formerly AST Sanford Bernstein Core Alliance Capital
Value Value): seeks long-term capital growth by investing primarily in common stocks. Management, L.P.
The Sub-advisor expects that the majority of the Portfolio's assets will be
invested in the common stocks of large companies that appear to be
undervalued.
- ---------------------------------------------------------------------------------------------------------------------------------
Large Cap AST Hotchkis & Wiley Large-Cap Value: seeks current income and long-term Hotchkis and
Value growth of income, as well as capital appreciation. The Portfolio invests, under Wiley Capital
normal circumstances, at least 80% of its net assets plus borrowings for Management, LLC
investment purposes in common stocks of large cap U.S. companies that have a
high cash dividend or payout yield relative to the market.
- ---------------------------------------------------------------------------------------------------------------------------------
Fixed Income AST Lord Abbett Bond-Debenture: seeks high current income and the Lord, Abbett & Co.
opportunity for capital appreciation to produce a high total return. To pursue its LLC
objective, the Portfolio will invest, under normal circumstances, at least 80% of
the value of its assets in fixed income securities and normally invests primarily
in high yield and investment grade debt securities, securities convertible into
common stock and preferred stocks.
- ---------------------------------------------------------------------------------------------------------------------------------
Fixed Income AST PIMCO Total Return Bond: seeks to maximize total return consistent with Pacific Investment
preservation of capital and prudent investment management. The Portfolio will Management
invest in a diversified portfolio of fixed-income securities of varying maturities. Company LLC
The average portfolio duration of the Portfolio generally will vary within a three- (PIMCO)
to six-year time frame based on the Sub-advisor's forecast for interest rates.
- ---------------------------------------------------------------------------------------------------------------------------------
Fixed Income AST PIMCO Limited Maturity Bond: seeks to maximize total return consistent Pacific Investment
with preservation of capital and prudent investment management. The Portfolio Management
will invest in a diversified portfolio of fixed-income securities of varying Company LLC
maturities. The average portfolio duration of the Portfolio generally will vary (PIMCO)
within a one- to three-year time frame based on the Sub-advisor's forecast for
interest rates.
- ---------------------------------------------------------------------------------------------------------------------------------
Fixed Income AST Money Market: seeks high current income while maintaining high levels Wells Capital
of liquidity. The Portfolio attempts to accomplish its objective by maintaining a Management, Inc.
dollar-weighted average maturity of not more than 90 days and by investing in
securities which have effective maturities of not more than 397 days.
13
Investment Options continued
- --------------------------------------------------------------------------------
OPTIMUM PLUS(SM) PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------------------------
International Evergreen VA International Equity (formerly Evergreen VA International Evergreen
Equity Growth): seeks long-term capital growth and secondarily, modest income. The Investment
Portfolio normally invests 80% of its assets in equity securities issued by Management
established, quality, non-U.S. companies located in countries with developed Company, LLC
markets and may purchase across all market capitalizations. The Portfolio
normally invests at least 65% of its assets in securities of companies in at least
three different countries (other than the U.S.).
- ---------------------------------------------------------------------------------------------------------------------------------
Specialty Evergreen VA Omega: seeks long-term capital growth. The Portfolio invests Evergreen
primarily, and under normal conditions, substantially all of its assets in common Investment
stocks and securities convertible into common stocks of U.S. companies across Management
all market capitalizations. Company, LLC
- ---------------------------------------------------------------------------------------------------------------------------------
WHAT ARE THE FIXED ALLOCATIONS?
We offer Fixed Allocations of different durations during the accumulation
period. These "Fixed Allocations" earn a guaranteed fixed rate of interest for
a specified period of time, called the "Guarantee Period." In most states, we
offer Fixed Allocations with Guarantee Periods from 1 to 10 years. We may also
offer special purpose Fixed Allocations for use with certain optional
investment programs. We guarantee the fixed rate for the entire Guarantee
Period. However, if you withdraw or transfer Account Value before the end of
the Guarantee Period, we will adjust the value of your withdrawal or transfer
based on a formula, called a "Market Value Adjustment." The Market Value
Adjustment can either be positive or negative, depending on the rates that are
currently being credited on Fixed Allocations. Please refer to the section
entitled "How does the Market Value Adjustment Work?" for a description of the
formula along with examples of how it is calculated. You may allocate Account
Value to more than one Fixed Allocation at a time.
Fixed Allocations may not be available in all states. Availability of
Fixed Allocations is subject to change and may differ by state and by the
annuity product you purchase. Please call American Skandia at 1-800-752-6342 to
determine availability of Fixed Allocations in your state and for your annuity
product.
14
OPTIMUM PLUS(SM) PROSPECTUS
Fees and Charges
- --------------------------------------------------------------------------------
The charges under the contracts are designed to cover, in the aggregate, our
direct and indirect costs of selling, administering and providing benefits under
the contracts. They are also designed, in the aggregate, to compensate us for
the risks of loss we assume pursuant to the contracts. If, as we expect, the
charges that we collect from the contracts exceed our total costs in connection
with the contracts, we will earn a profit. Otherwise we will incur a loss. For
example, American Skandia may make a profit on the Insurance Charge if, over
time, the actual costs of providing the guaranteed insurance obligations under
the Annuity are less than the amount we deduct for the Insurance Charge. To the
extent we make a profit on the Insurance Charge, such profit may be used for any
other corporate purpose, including payment of other expenses that American
Skandia incurs in promoting, distributing, issuing and administering the Annuity
and to offset a portion of the costs associated with offering Credits which are
funded through American Skandia's general account
The rates of certain of our charges have been set with reference to
estimates of the amount of specific types of expenses or risks that we will
incur. In most cases, this prospectus identifies such expenses or risks in the
name of the charge; however, the fact that any charge bears the name of, or is
designed primarily to defray a particular expense or risk does not mean that
the amount we collect from that charge will never be more than the amount of
such expense or risk, nor does it mean that we may not also be compensated for
such expense or risk out of any other charges we are permitted to deduct by the
terms of the contract. A portion of the proceeds that American Skandia receives
from the charges that apply solely to the variable investment options may
include amounts based on market appreciation of the variable investment option
values, including appreciation on amounts that represent Credits.
WHAT ARE THE CONTRACT FEES AND CHARGES?
Contingent Deferred Sales Charge: We do not deduct a sales charge from Purchase
Payments you make to your Annuity. However, we may deduct a CDSC if you
surrender your Annuity or when you make a partial withdrawal. The CDSC
reimburses us for expenses related to sales and distribution of the Annuity,
including commissions, marketing materials and other promotional expenses. The
CDSC is calculated as a percentage of your Purchase Payment being surrendered
or withdrawn during the applicable Annuity Year. For purposes of calculating
the CDSC, we consider the year following the Issue Date of your Annuity as Year
1. The amount of the CDSC decreases over time, measured from the Issue Date of
the Annuity. The CDSC percentages are shown below.
YEARS 1 2 3 4 5 6 7 8 9 10 11+
- -----------------------------------------------------------------------------------------------------------
CHARGE (%) 9.0 9.0 8.5 8.0 7.0 6.0 5.0 4.0 3.0 2.0 0.0
The CDSC period is based on the Issue Date of the Annuity, not on the date
each Purchase Payment is applied to the Annuity. Purchase Payments applied to
the Annuity after the Issue Date do not have their own CDSC period. Under
certain circumstances, during the first ten (10) Annuity Years, you can
withdraw a limited amount from your Annuity without paying a CDSC. This is
referred to as a "Free Withdrawal." Free Withdrawals are not treated as a
withdrawal of Purchase Payments for purposes of calculating the CDSC on a
subsequent withdrawal or surrender. Withdrawals of amounts greater than the
maximum Free Withdrawal amount are treated as a withdrawal of Purchase Payments
and will be assessed a CDSC during Annuity Years 1 through 10. For purposes of
calculating the CDSC on a surrender, the Purchase Payments being withdrawn may
be greater than your remaining Account Value or the amount of your withdrawal
request. This is most likely to occur if you have made prior withdrawals under
the Free Withdrawal provision or if your Account Value has declined in value
due to negative market performance.
We may waive the CDSC under certain medically-related circumstances or
when taking a Minimum Distribution from an Annuity purchased as a "qualified"
investment. Free Withdrawals, Medically-Related Surrenders and Minimum
Distributions are each explained more fully in the section entitled "Access to
Your Account Value".
Transfer Fee: Currently, you may make twenty (20) free transfers between
investment options each Annuity Year. We will charge $10.00 for each transfer
after the twentieth in each Annuity Year. We do not consider transfers made as
part of a dollar cost averaging, automatic rebalancing or asset allocation
program when we count the twenty free transfers. All transfers made on the same
day will be treated as one (1) transfer. Renewals or transfers of Account Value
from a Fixed Allocation at the end of its Guarantee Period are not subject to
the Transfer Fee and are not counted toward the twenty free transfers. We may
reduce the number of free transfers allowable each Annuity Year (subject to a
minimum of eight) without charging a Transfer Fee unless you make use of
electronic means to transmit your transfer requests. We may eliminate the
Transfer Fee for transfer requests transmitted electronically or through
15
OPTIMUM PLUS(SM) PROSPECTUS
Fees and Charges continued
- --------------------------------------------------------------------------------
other means that reduce our processing costs. If enrolled in any program that
does not permit transfer requests to be transmitted electronically, the Transfer
Fee will not be waived.
Annual Maintenance Fee: During the accumulation period we deduct an Annual
Maintenance Fee. The Annual Maintenance Fee is $35.00 or 2% of your Account
Value invested in the variable investment options, whichever is less. This fee
will be deducted annually on the anniversary of the Issue Date of your Annuity
or, if you surrender your Annuity during the Annuity Year, the fee is deducted
at the time of surrender. We may increase the Annual Maintenance Fee. However,
any increase will only apply to Annuities issued after the date of the
increase.
Tax Charge: Several states and some municipalities charge premium taxes or
similar taxes on annuities that we are required to pay. The amount of tax will
vary from jurisdiction to jurisdiction and is subject to change. The tax charge
currently ranges up to 3-1/2% of your premium and is designed to approximate the
taxes that we are required to pay. We generally will deduct the charge at the
time the tax is imposed, but may also decide to deduct the charge from each
Purchase Payment at the time of a withdrawal or surrender of your Annuity or at
the time you elect to begin receiving annuity payments. We may assess a charge
against the Sub-accounts and the Fixed Allocations equal to any taxes which may
be imposed upon the separate accounts.
We will pay company income taxes on the taxable corporate earnings created
by this separate account product. While we may consider company income taxes
when pricing our products, we do not currently include such income taxes in the
tax charges you pay under the contract. We will periodically review the issue
of charging for these taxes and may impose a charge in the future.
In calculating our corporate income tax liability, we derive certain
corporate income tax benefits associated with the investment of company assets,
including separate account assets, which are treated as company assets under
applicable income tax law. These benefits reduce our overall corporate income
tax liability. Under current law, such benefits may include foreign tax credits
and corporate dividends received deductions. We do not pass these tax benefits
through to holders of the separate account annuity contracts because (i) the
contract owners are not the owners of the assets generating these benefits
under applicable income tax law and (ii) we do not currently include company
income taxes in the tax charges you pay under the contract.
WHAT CHARGES APPLY SOLELY TO THE VARIABLE INVESTMENT OPTIONS?
Insurance Charge: We deduct an Insurance Charge daily. The charge is assessed
against the average daily assets allocated to the Sub-accounts and is equal to
0.65% on an annual basis. The Insurance Charge is a combination of the
Mortality & Expense Risk Charge (0.50%) and the Administration Charge (0.15%).
The Insurance Charge is intended to compensate American Skandia for providing
the insurance benefits under the Annuity, including the Annuity's basic death
benefit that provides guaranteed benefits to your beneficiaries even if the
market declines and the risk that persons we guarantee annuity payments to will
live longer than our assumptions. The charge also covers administrative costs
associated with providing the Annuity benefits, including preparation of the
contract, confirmation statements, annual account statements and annual
reports, legal and accounting fees as well as various related expenses.
Finally, the charge covers the risk that our assumptions about the mortality
risks and expenses under this Annuity are incorrect and that we have agreed not
to increase these charges over time despite our actual costs. We may increase
the portion of the total Insurance Charge that is deducted for administrative
costs; however, any increase will only apply to Annuities issued after the date
of the increase.
The Insurance Charge is not deducted against assets allocated to a Fixed
Allocation. However, the amount we credit to Fixed Allocations may also reflect
similar assumptions about the insurance guarantees provided under the Annuity.
Distribution Charge: We deduct a Distribution Charge daily. The charge is
assessed against the average assets allocated to the Sub-accounts and is equal
to 1.00% on an annual basis in Annuity Years 1 through 10. After the end of the
first ten Annuity Years, the 1.00% charge for distribution will no longer be
assessed. The Distribution Charge is intended to compensate us for a portion of
our acquisition expenses under the Annuity, including promotion and
distribution of the Annuity and costs associated with offering Credits which
are funded through American Skandia's general account.
Optional Benefits for which we Assess a Charge Solely Against the Variable
Investment Options: If you elect to purchase certain optional benefits, we will
deduct an
16
OPTIMUM PLUS(SM) PROSPECTUS
- --------------------------------------------------------------------------------
additional charge on a daily basis solely from your Account Value allocated to
the Sub-accounts. The additional charge is included in the daily calculation of
the Unit Price for each Sub-account. We may assess charges for other optional
benefits on a different basis as described elsewhere in the Prospectus. Please
refer to the section entitled "Living Benefit Programs" and "Death Benefit" for
a description of the charge for each Optional Benefit.
WHAT FEES AND EXPENSES ARE INCURRED BY
THE PORTFOLIOS?
Each Portfolio incurs total annual operating expenses comprised of an
investment management fee, other expenses and any distribution and service
(12b-1) fees that may apply. These fees and expenses are reflected daily by
each Portfolio before it provides American Skandia with the net asset value as
of the close of business each day. More detailed information about fees and
expenses can be found in the prospectuses for the Portfolios.
WHAT CHARGES APPLY TO THE FIXED
ALLOCATIONS?
No specific fee or expenses are deducted when determining the rate we credit to
a Fixed Allocation. However, for some of the same reasons that we deduct the
Insurance Charge against Account Value allocated to the Sub-accounts, we also
take into consideration mortality, expense, administration, profit and other
factors in determining the interest rates we credit to Fixed Allocations. Any
CDSC or Tax Charge applies to amounts that are taken from the variable
investment options or the Fixed Allocations. A Market Value Adjustment may also
apply to transfers, certain withdrawals, surrender or annuitization from a
Fixed Allocation.
WHAT CHARGES APPLY IF I CHOOSE AN ANNUITY PAYMENT OPTION?
If you select a fixed payment option, the amount of each fixed payment will
depend on the Account Value of your Annuity when you elect to annuitize. There
is no specific charge deducted from these payments; however, the amount of each
annuity payment reflects assumptions about our insurance expenses. If you
select a variable payment option that we may offer, then the amount of your
benefits will reflect changes in the value of your Annuity and will be subject
to charges that apply under the variable immediate annuity option. Also, a tax
charge may apply (see "Tax Charge" above).
EXCEPTIONS/REDUCTIONS TO FEES
AND CHARGES
We may reduce or eliminate certain fees and charges or alter the manner in
which the particular fee or charge is deducted. For example, we may reduce the
amount of the CDSC or the length of time it applies, reduce or eliminate the
amount of the Annual Maintenance Fee or reduce the portion of the total
Insurance Charge that is deducted as an Administration Charge. Generally, these
types of changes will be based on a reduction to our sales, maintenance or
administrative expenses due to the nature of the individual or group purchasing
the Annuity. Some of the factors we might consider in making such a decision
are: (a) the size and type of group; (b) the number of Annuities purchased by
an Owner; (c) the amount of Purchase Payments or likelihood of additional
Purchase Payments; and/or (d) other transactions where sales, maintenance or
administrative expenses are likely to be reduced. We will not discriminate
unfairly between Annuity purchasers if and when we reduce any fees and charges.
17
OPTIMUM PLUS(SM) PROSPECTUS
Purchasing Your Annuity
- --------------------------------------------------------------------------------
WHAT ARE OUR REQUIREMENTS FOR
PURCHASING THE ANNUITY?
Initial Purchase Payment: You must make a minimum initial Purchase Payment of
$10,000. However, if you decide to make payments under a systematic investment
or "bank drafting" program, we will accept a lower initial Purchase Payment
provided that, within the first Annuity Year, you make at least $10,000 in
total Purchase Payments.
Where allowed by law, we must approve any initial and additional Purchase
Payments of $1,000,000 or more. We may apply certain limitations and/or
restrictions on the Annuity as a condition of our acceptance, including
limiting the liquidity features or the Death Benefit protection provided under
the Annuity, limiting the right to make additional Purchase Payments, changing
the number of transfers allowable under the Annuity or restricting the
Sub-accounts or Fixed Allocations that are available. Other limitations and/or
restrictions may apply.
Except as noted below, Purchase Payments must be submitted by check drawn
on a U.S. bank, in U.S. dollars, and made payable to American Skandia. Purchase
Payments may also be submitted via 1035 exchange or direct transfer of funds.
Under certain circumstances, Purchase Payments may be transmitted to American
Skandia via wiring funds through your investment professional's broker-dealer
firm. Additional Purchase Payments may also be applied to your Annuity under an
arrangement called "bank drafting" where you authorize us to deduct money
directly from your bank account. We may reject any payment if it is received in
an unacceptable form. Our acceptance of a check is subject to our ability to
collect funds.
Age Restrictions: The Owner must be age 75 or under as of the Issue Date
of the Annuity. If the Annuity is owned jointly, the oldest of the Owners must
be age 75 or under on the Issue Date. If the Annuity is owned by an entity, the
Annuitant must be age 75 or under as of the Issue Date. You should consider
your need to access your Account Value and whether the Annuity's liquidity
features will satisfy that need. If you take a distribution prior to age 59-1/2,
you may be subject to a 10% penalty in addition to ordinary income taxes on any
gain. The availability and level of protection of certain optional benefits may
vary based on the age of the Owner on the Issue Date of the Annuity or the date
of the Owner's death.
Special Considerations for Purchasers of Bonus or Credit Products
o This Annuity features an annual Insurance Charge of 0.65% and an annual
Distribution Charge of 1.00%. We only deduct the Distribution Charge during
the first 10 years following the effective date of your Annuity. During the
first 10 years, the total asset-based charges on this Annuity are higher
than many of our other annuities.
o The CDSC on this Annuity is higher and is deducted for a longer period of
time as compared to our other annuities. As with any investment product
that features a CDSC, you should consider your need to access your account
value during the CDSC period and whether the liquidity provision under the
Annuity will satisfy that need. The CDSC is only deducted if you make a
withdrawal that exceeds the free withdrawal amount or choose to surrender
your Annuity. If you make a withdrawal or surrender your Annuity and are
subject to a CDSC, we do not recover the Optimum Plus(SM) amount.
o The Optimum Plus(SM) amount is included in your Account Value. However,
American Skandia may take back any credits applied to your Purchase Payment
if you "free-look" your Annuity or within twelve (12) months of having
received an Optimum Plus amount, you die or elect to withdraw your Account
Value under the medically-related surrender provision. In these situations,
your Account Value could be substantially reduced. However, any investment
gain on the Optimum Plus(SM) amount will not be recovered. Additional
conditions and restrictions apply. We do not deduct a CDSC in any situation
where we recover the Optimum Plus(SM) amount. Owner, Annuitant and
Beneficiary Designations: We will ask you to name the Owner(s), Annuitant
and one or more Beneficiaries for your Annuity.
o Owner: The Owner(s) holds all rights under the Annuity. You may name up to
two Owners in which case all ownership rights are held jointly. Generally,
joint owners are required to act jointly; however, if each owner provides
us with an instruction that we find acceptable, we will permit each owner
to act separately. All information and documents that we are required to
send you will be sent to the first named owner. This Annuity does not
provide a right of survivorship. Refer to the Glossary of Terms for a
complete description of the term "Owner."
o Annuitant: The Annuitant is the person we agree to make annuity payments to
and upon whose life we continue to make such payments. You must name an
Annuitant who is a natural person. We do not accept a designation of joint
Annuitants during the accumulation period. Where allowed by law, you may
name one or more Contingent Annuitants. A Contingent Annuitant will become
the Annuitant if the Annuitant
18
OPTIMUM PLUS(SM) PROSPECTUS
- --------------------------------------------------------------------------------
dies before the Annuity Date. Please refer to the discussion of
"Considerations for Contingent Annuitants" in the Tax Considerations
section of the Prospectus.
o Beneficiary: The Beneficiary is the person(s) or entity you name to receive
the death benefit. Your beneficiary designation must be the exact name of
your beneficiary, not only a reference to the beneficiary's relationship to
you. For example, a designation of "surviving spouse" would not be
acceptable. If no beneficiary is named the death benefit will be paid to
you or your estate.
Your right to make certain designations may be limited if your Annuity is
to be used as an IRA or other "qualified" investment that is given beneficial
tax treatment under the Code. You should seek competent tax advice on the
income, estate and gift tax implications of your designations.
19
OPTIMUM PLUS(SM) PROSPECTUS
Managing Your Annuity
- --------------------------------------------------------------------------------
MAY I CHANGE THE OWNER, ANNUITANT AND
BENEFICIARY DESIGNATIONS?
You may change the Owner, Annuitant and Beneficiary designations by sending us
a request in writing. Upon an ownership change, any automated investment or
withdrawal programs will be canceled. The new owner must submit the applicable
program enrollment if they wish to participate in such a program. 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:
o 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;
o a new Annuitant subsequent to the Annuity Date;
o for "non-qualified" investments, a new Annuitant prior to the Annuity Date
if the Annuity is owned by an entity; and
o a change in Beneficiary if the Owner had previously made the designation
irrevocable.
Spousal Owners/Spousal Beneficiaries
If an Annuity is co-owned by spouses, we will assume that the sole primary
Beneficiary is the surviving spouse that was named as the co-owner unless you
elect an alternative Beneficiary designation. Unless you elect an alternative
Beneficiary designation, upon the death of either spousal Owner, the surviving
spouse may elect to assume ownership of the Annuity instead of taking the Death
Benefit payment. The Death Benefit that would have been payable will be the new
Account Value of the Annuity as of the date of due proof of death and any
required proof of a spousal relationship. As of the date the assumption is
effective, the surviving spouse will have all the rights and benefits that
would be available under the Annuity to a new purchaser of the same attained
age. For purposes of determining any future Death Benefit for the beneficiary
of the surviving spouse, the new Account Value will be considered as the
initial Purchase Payment. No CDSC will apply to the new Account Value. However,
any additional Purchase Payments applied after the date the assumption is
effective will be subject to all provisions of the Annuity, including the CDSC
when applicable.
Spousal Contingent Annuitant
If the Annuity is owned by an entity and the surviving spouse is named as a
Contingent Annuitant, upon the death of the Annuitant, the surviving spouse
that was named as the Contingent Annuitant will become the Annuitant. No Death
Benefit is payable upon the death of the Annuitant. However, the Account Value
of the Annuity as of the date of due proof of death of the Annuitant (and any
required proof of the spousal relationship) will reflect the amount that would
have been payable had a Death Benefit been paid.
MAY I RETURN THE ANNUITY IF I CHANGE MY MIND?
If after purchasing your Annuity you change your mind and decide that you do
not want it, you may return it to us within a certain period of time known as a
right to cancel period. This is often referred to as a "free-look." Depending
on the state in which you purchased your Annuity, and, in some states, if you
purchased the Annuity as a replacement for a prior contract, the right to
cancel period may be ten (10) days, twenty-one (21) days or longer, measured
from the time that you received your Annuity. If you return your Annuity,
during the applicable period, we will refund your current Account Value plus
any tax charge deducted, and depending on your state's requirements, any
applicable insurance charges deducted. The amount returned to you may be higher
or lower than the Purchase Payment(s) applied during the right to cancel
period. Where required by law, we will return your Purchase Payment(s), or the
greater of your current Account Value and the amount of your Purchase
Payment(s) applied during the right to cancel period. If you return your
Annuity, we will not return any Credits we applied to your Annuity based on
your Purchase Payments.
MAY I MAKE ADDITIONAL PURCHASE PAYMENTS?
The minimum amount that we accept as an additional Purchase Payment is $100
unless you participate in American Skandia's Systematic Investment Plan or a
periodic purchase payment program. Unless you participate in an asset
allocation program, or unless you have provided us with other specific
allocation instructions for one, more than one, or all subsequent purchase
payments, we will allocate any additional Purchase Payments you make according
to your initial purchase payment allocation instructions. If you so instruct
us, we will allocate subsequent purchase payments according to any new
allocation instructions. Purchase payments made while you participate in an
asset allocation program will be allocated in accordance with such program.
Additional Purchase Payments may be paid at any time before the Annuity Date.
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OPTIMUM PLUS(SM) PROSPECTUS
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MAY I MAKE SCHEDULED PAYMENTS DIRECTLY
FROM MY BANK ACCOUNT?
You can make additional Purchase Payments to your Annuity by authorizing us to
deduct money directly from your bank account and applying it to your Annuity.
This type of program is often called "bank drafting". We call our bank drafting
program "American Skandia's Systematic Investment Plan." Purchase Payments made
through bank drafting may only be allocated to the variable investment options
when applied. Bank drafting allows you to invest in your Annuity with a lower
initial Purchase Payment, as long as you authorize payments that will equal at
least $10,000 during the first 12 months of your Annuity. We may suspend or
cancel bank drafting privileges if sufficient funds are not available from the
applicable financial institution on any date that a transaction is scheduled to
occur.
MAY I MAKE PURCHASE PAYMENTS THROUGH A SALARY REDUCTION PROGRAM?
These types of programs are only available with certain types of qualified
investments. If your employer sponsors such a program, we may agree to accept
periodic Purchase Payments through a salary reduction program as long as the
allocations are made only to variable investment options and the periodic
Purchase Payments received in the first year total at least $10,000.
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OPTIMUM PLUS(SM) PROSPECTUS
Managing Your Account Value
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HOW AND WHEN ARE PURCHASE PAYMENTS
INVESTED?
(See "Valuing Your Investment" for a description of our procedure for pricing
initial and subsequent Purchase Payments.)
Initial Purchase Payment: Once we accept your application, we invest your
net Purchase Payment in the Annuity. The net Purchase Payment is your initial
Purchase Payment minus any tax charges that may apply. On your application we
ask you to provide us with instructions for allocating your Account Value. You
can allocate Account Value to one or more variable investment options or Fixed
Allocations.
Subsequent Purchase Payments: Unless you participate in an asset
allocation program, or unless you have provided us with other specific
allocation instructions for one, more than one, or all subsequent purchase
payments, we will allocate any additional Purchase Payments you make according
to your initial purchase payment allocation instructions. If you so instruct
us, we will allocate subsequent purchase payments according to any new
allocation instructions. Purchase payments made while you participate in an
asset allocation program will be allocated in accordance with such program.
HOW DO I RECEIVE CREDITS?
We apply a "Credit" to your Annuity's Account Value each time you make a
Purchase Payment during the first six (6) Annuity Years. The amount of the
Credit is payable from our general account. The amount of the Credit depends on
the Annuity Year in which the Purchase Payment(s) is made, according to the
table below:
ANNUITY YEAR CREDIT
1 6.00%
2 5.00%
3 4.00%
4 3.00%
5 2.00%
6 1.00%
7+ 0.00%
CREDITS APPLIED TO PURCHASE PAYMENTS FOR DESIGNATED CLASS OF ANNUITY OWNER
Prior to May 1, 2004, where allowed by state law, Annuities could be purchased
by a member of the class defined below, with a different table of Credits. The
Credit applied to all Purchase Payments on such Annuities is as follows based
on the Annuity Year in which the Purchase Payment was made: Year 1 -- 9.0%;
Year 2 -- 9.0%; Year 3 -- 8.5%; Year 4 -- 8.0%; Year 5 -- 7.0%; Year 6 -- 6.0%;
Year 7 -- 5.0%; Year 8 -- 4.0%; Year 9 -- 3.0%; Year 10 -- 2%; Year 11+ --
0.0%.
The designated class of Annuity Owners included: (a) any parent company,
affiliate or subsidiary of ours; (b) an officer, director, employee, retiree,
sales representative, or in the case of an affiliated broker-dealer, registered
representative of such company; (c) a director, officer or trustee of any
underlying mutual fund; (d) a director, officer or employee of any investment
manager, sub-advisor, transfer agent, custodian, auditing, legal or
administrative services provider that is providing investment management,
advisory, transfer agency, custodianship, auditing, legal and/or administrative
services to an underlying mutual fund or any affiliate of such firm; (e) a
director, officer, employee or registered representative of a broker-dealer or
insurance agency that has a then current selling agreement with us and/or with
American Skandia Marketing, Incorporated, a Prudential Financial Company; (f) a
director, officer, employee or authorized representative of any firm providing
us or our affiliates with regular legal, actuarial, auditing, underwriting,
claims, administrative, computer support, marketing, office or other services;
(g) the then current spouse of any such person noted in (b) through (f), above;
(h) the parents of any such person noted in (b) through (g), above; (i) the
child(ren) or other legal dependent under the age of 21 of any such person
noted in (b) through (h); and (j) the siblings of any such persons noted in (b)
through (h) above.
All other terms and conditions of the Annuity apply to Owners in the
designated class.
HOW ARE CREDITS APPLIED TO MY ACCOUNT VALUE?
Each Credit is allocated to your Account Value at the time the Purchase Payment
is applied to your Account Value. The amount of the Credit is allocated to the
investment options in the same ratio as the applicable Purchase Payment is
applied.
Examples of Applying Credits
Initial Purchase Payment
Assume you make an initial Purchase Payment of $10,000. We would apply a 6.0%
Credit to your Purchase Payment and allocate the amount of the Credit ($600 =
$10,000 x .06) to your Account Value in the proportion that your Account Value
is allocated.
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OPTIMUM PLUS(SM) PROSPECTUS
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Additional Purchase Payment in Annuity Year 2
Assume that you make an additional Purchase Payment of $5,000. We would apply a
5.0% Credit to your Purchase Payment and allocate the amount of the Credit
($250 = $5,000 x .05) to your Account Value.
Additional Purchase Payment in Annuity Year 6
Assume that you make an additional Purchase Payment of $15,000. We would apply
a 1.0% Credit to your Purchase Payment and allocate the amount of the Credit
($150 = $15,000 x .01) to your Account Value.
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The amount of any Credits applied to your Account Value can be recovered by
American Skandia under certain circumstances:
o any Credits applied to your Account Value on Purchase Payments made
within the 12 months before the date of death will be recovered;
o the amount available under the medically-related surrender portion of
the Annuity will not include the amount of any Credits payable on
Purchase Payments made within 12 months of the date the Annuitant
first became eligible for the medically-related surrender; and
o if you elect to "free-look" your Annuity, the amount returned to you
will not include the amount of any Credits.
The Account Value may be substantially reduced if American Skandia
recovers the Optimum Plus(SM) amount under these circumstances. However, any
investment gain on the Optimum Plus(SM) amount will not be taken back. We do
not deduct a CDSC in any situation where we recover the Optimum Plus(SM)
amount. During the first 10 Annuity Years, the total asset-based charges on
this Annuity (including the Insurance Charge and the Distribution Charge)
are higher than many of our other annuities, including other annuities we
offer that apply credits to purchase payments.
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Examples of Recovering Credits
The following are hypothetical examples of how Credits could be recovered by
American Skandia. These examples do not cover every potential situation.
Recovery from payment of Death Benefits
1. Assume you purchase your Annuity with an initial Purchase Payment of
$50,000. You make an additional Purchase of $10,000 in the 6th month after
the Issue Date. Both of the Purchase Payments received a 6.0% Credit, for a
total of $3,600. If the Death Benefit becomes payable in the 9th month
after the Issue Date, the amount of the Death Benefit would be reduced by
the entire amount of the prior Credits ($3,600).
2. Assume you purchase your Annuity with an initial Purchase Payment of
$50,000. You make an additional Purchase of $10,000 in the 6th month after
the Issue Date. Both of the Purchase Payments received a 6.0% Credit, for a
total of $3,600. If death occurs in the 16th month after the Issue Date,
the amount of the Death Benefit would be reduced but only in the amount of
those Credits applied within the previous 12-months. Since the initial
Purchase Payment (and the Credits that were applied) occurred more than
12-months before the date of death, the Death Benefit would not be reduced
by the amount of the Credits applied to the initial Purchase Payment.
However, the $10,000 additional Purchase Payment was made within 12-months
of the date of death. Therefore, the amount of the Death Benefit would be
reduced by the amount of the Credits payable on the additional Purchase
Payment ($600).
3. NOTE: If the Death Benefit would otherwise have been equal to the Purchase
Payments minus any proportional withdrawals due to poor investment
performance, we will not reduce the amount of the Death Benefit by the
amount of the Credits as shown in Example 2 above.
Recovery from Medically-Related Surrenders
1. Assume you purchase your Annuity with an initial Purchase Payment of
$50,000. You receive a Credit of $3,000 ($50,000 x .06). The Annuitant is
diagnosed as terminally ill in the 6th month after the Issue Date and we
grant your request to surrender your Annuity under the medically-related
surrender provision. Assuming the Credits were applied within 12-months of
the date of diagnosis of the terminal illness, the amount that would be
payable under the medically-related surrender provision would be reduced by
the entire amount of the Credits ($3,000).
2. Assume you purchase your Annuity with an initial Purchase Payment of
$50,000. You make an additional Purchase of $10,000 in the 6th month after
the Issue Date. Both of the Purchase Payments received a 6.0% Credit, for a
total of $3,600. The Annuitant is diagnosed as terminally ill in the 16th
month after the Issue Date and we grant your request to surrender your
Annuity under the medically-related surrender provision. Since the initial
Purchase Payment (and the Credits that were applied) occurred more than
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OPTIMUM PLUS(SM) PROSPECTUS
Managing Your Account Value continued
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12-months before the diagnosis, the amount that would be payable upon the
medically-related surrender provision would not be reduced by the amount of
the Credits applied to the initial Purchase Payment. However, the $10,000
additional Purchase Payment was made within 12-months of the date of
diagnosis. Therefore, the amount that would be payable under the
medically-related surrender provision would be reduced by the amount of the
Credits payable on the additional Purchase Payment ($600).
General Information about Credits
o We do not consider Credits to be "investment in the contract" for income
tax purposes.
o You may not withdraw the amount of any Credits under the Free Withdrawal
provision. The Free Withdrawal provision only applies to withdrawals of
Purchase Payments.
ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?
During the accumulation period you may transfer Account Value between
investment options. Transfers are not subject to taxation on any gain. We may
require a minimum of $500 in each Sub-account you allocate Account Value to at
the time of any allocation or transfer. If you request a transfer and, as a
result of the transfer, there would be less than $500 in the Sub-account, we
may transfer the remaining Account Value in the Sub-account pro rata to the
other investment options to which you transferred.
We may impose specific restrictions on financial transactions (including
transfer requests) for certain Portfolios based on the Portfolio's investment
and/or transfer restrictions. We may do so to conform to any present or future
restriction that is imposed by any portfolio available under this Annuity.
Currently, we charge $10.00 for each transfer after the twentieth (20th)
in each Annuity Year. Transfers made as part of a dollar cost averaging,
automatic rebalancing, or asset allocation program do not count toward the
twenty free transfer limit. Renewals or transfers of Account Value from a Fixed
Allocation at the end of its Guarantee Period are not subject to the transfer
charge. We may reduce the number of free transfers allowable each Annuity Year
(subject to a minimum of eight) without charging a Transfer Fee . We may also
increase the Transfer Fee that we charge to $15.00 for each transfer after the
number of free transfers has been used up.
Once you have made 20 transfers among the Sub-accounts during an Annuity
Year, we will accept any additional transfer request during that year only if
the request is submitted to us in writing with an original signature and
otherwise is in good order. For purposes of this 20 transfer limit, we (i) do
not view a facsimile transmission as a "writing", (ii) will treat multiple
transfer requests submitted on the same business day as a single transfer, and
(iii) do not count any transfer that solely involves Sub-accounts corresponding
to the AST Money Market Portfolio, or any transfer that involves one of our
systematic programs, such as asset allocation and automated withdrawals.
Frequent transfers among Sub-accounts in response to short-term
fluctuations in markets, sometimes called "market timing," can make it very
difficult for a Portfolio manager to manage a Portfolio's investments. Frequent
transfers may cause the Portfolio to hold more cash than otherwise necessary,
disrupt management strategies, increase transaction costs, or affect
performance.
In light of the risks posed to Owners and other investors by frequent
transfers, we reserve the right to limit the number of transfers in any Annuity
Year for all existing or new Owners and to take the other actions discussed
below. We also reserve the right to limit the number of transfers in any
Annuity Year or to refuse any transfer request for an Owner or certain Owners
if: (a) we believe that excessive transfer activity (as we define it) or a
specific transfer request or group of transfer requests may have a detrimental
effect on Unit Values or the share prices of the Portfolios; or (b) we are
informed by a Portfolio (e.g., by the Portfolio's portfolio manager) that the
purchase or redemption of shares in the Portfolio must be restricted because
the Portfolio believes the transfer activity to which such purchase and
redemption relates would have a detrimental effect on the share prices of the
affected Portfolio. Without limiting the above, the most likely scenario where
either of the above could occur would be if the aggregate amount of a trade or
trades represented a relatively large proportion of the total assets of a
particular Portfolio. In furtherance of our general authority to restrict
transfers as described above, and without limiting other actions we may take in
the future, we have adopted the following specific restrictions:
o With respect to each Sub-account (other than the AST Money Market
Sub-account, we track amounts exceeding a certain dollar threshold that
were transferred into the Sub-account. If
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OPTIMUM PLUS(SM) PROSPECTUS
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you transfer such amount into a particular Sub-account, and within 30
calendar days thereafter transfer (the "Transfer Out") all or a portion of
that amount into another Sub-account, then upon the Transfer Out, the
former Sub-account becomes restricted (the "Restricted Sub-account").
Specifically, we will not permit subsequent transfers into the Restricted
Sub-account for 90 calendar days after the Transfer Out if the Restricted
Sub-account invests in a non-international Portfolio, or 180 calendar days
after the Transfer Out if the Restricted Sub-account invests in an
international Portfolio. For purposes of this rule, we (i) do not count
transfers made in connection with one of our systematic programs, such as
asset allocation and automated withdrawals (ii) do not count any transfer
that solely involves Sub-accounts corresponding to any ProFund Portfolio
and/or the AST Money Market Portfolio; and (iii) do not categorize as a
transfer the first transfer that you make after the Issue Date, if you make
that transfer within 30 calendar days after the Issue Date. Even if an
amount becomes restricted under the foregoing rules, you are still free to
redeem the amount from your Annuity at any time.
o We reserve the right to effect exchanges on a delayed basis for all
contracts. That is, we may price an exchange involving the Sub-accounts on
the Valuation Day subsequent to the Valu-ation Day on which the exchange
request was received. Before implementing such a practice, we would issue a
separate written notice to Owners that explains the practice in detail.
o If we deny one or more transfer requests under the foregoing rules, we will
inform you or your investment professional promptly of the circumstances
concerning the denial.
o Contract owners in New York who purchased their contracts prior to March
15, 2004 are not subject to the specific restrictions outlined in bulleted
paragraphs immediately above. In addition, there are contract owners of
different variable annuity contracts that are funded through the same
Separate Account that are not subject to the above-referenced transfer
restrictions and, therefore, might make more numerous and frequent
transfers than contract owners who are subject to such limitations.
Finally, there are contract owners of other variable annuity contracts or
variable life contracts that are issued by American Skandia as well as
other insurance companies that have the same underlying mutual fund
portfolios available to them. Since some contract owners are not subject to
the same transfer restrictions, unfavorable consequences associated with
such frequent trading within the underlying mutual fund (e.g., greater
portfolio turnover, higher transaction costs, or performance or tax issues)
may affect all contract owners. Similarly, while contracts managed by an
investment professional or third party investment advisor are subject to
the restrictions on transfers between investment options that are discussed
above, if the advisor manages a number of contracts in the same fashion
unfavorable consequences may be associated with management activity since
it may involve the movement of a substantial portion of an underlying
mutual fund's assets which may affect all contract owners invested in the
affected options. Apart from jurisdiction-specific and contract differences
in transfer restrictions, we will apply these rules uniformly (including
contracts managed by an investment professional or third party investment
advisor), and will not waive a transfer restriction for any contract owner.
Although our transfer restrictions are designed to prevent excessive
transfers, they are not capable of preventing every potential occurrence of
excessive transfer activity.
DO YOU OFFER DOLLAR COST AVERAGING?
Yes. We offer Dollar Cost Averaging during the accumulation period. Dollar Cost
Averaging allows you to systematically transfer an amount periodically from one
investment option to one or more other investment options. You can choose to
transfer earnings only, principal plus earnings or a flat dollar amount. You
may elect a Dollar Cost Averaging program that transfers amounts monthly,
quarterly, semi-annually, or annually from variable investment options, or a
program that transfers amounts monthly from Fixed Allocations. By investing
amounts on a regular basis instead of investing the total amount at one time,
Dollar Cost Averaging may decrease the effect of market fluctuation on the
investment of your purchase payment. This may result in a lower average cost of
units over time. However, there is no guarantee that Dollar Cost Averaging will
result in a profit or protect against a loss in a declining market. There is no
minimum Account Value required to enroll in a Dollar Cost Averaging program and
we do not deduct a charge for participating in a Dollar Cost Averaging program.
You can Dollar Cost Average from variable investment options or Fixed
Allocations. Dollar Cost Averaging from Fixed Allocations is subject to a
number of rules that include, but are not limited to the following:
o You may only use Fixed Allocations with Guarantee Periods of 1, 2 or 3
years.
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OPTIMUM PLUS(SM) PROSPECTUS
Managing Your Account Value continued
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o You may only Dollar Cost Average earnings or principal plus earnings. If
transferring principal plus earnings, the program must be designed to last
the entire Guarantee Period for the Fixed Allocation.
o Dollar Cost Averaging transfers from Fixed Allocations are not subject to a
Market Value Adjustment.
NOTE: When a Dollar Cost Averaging program is established from a Fixed
Allocation, the fixed rate of interest we credit to your Account Value is
applied to a declining balance due to the transfers of Account Value to the
Sub-accounts during the Guarantee Period. This will reduce the effective rate
of return on the Fixed Allocation over the Guarantee Period.
Dollar Cost Averaging program is not available if you elect the Guaranteed
Return Option Plus(SM), the Guaranteed Return Option or the automatic
rebalancing programs when it involves transfers out of the Fixed Allocations and
is also not available when you have elected an asset allocation program.
DO YOU OFFER ANY AUTOMATIC
REBALANCING PROGRAMS?
Yes. During the accumulation period, we offer automatic rebalancing among the
variable investment options you choose. You can choose to have your Account
Value rebalanced monthly, quarterly, semi-annually, or annually. On the
appropriate date, the variable investment options you chose are rebalanced to
the allocation percentages you requested. With automatic rebalancing, we
transfer the appropriate amount from the "overweighted" Sub-accounts to the
"underweighted" Sub-accounts to return your allocations to the percentages you
request. For example, over time the performance of the variable investment
options will differ, causing your percentage allocations to shift. Any transfer
to or from any variable investment option that is not part of your automatic
rebalancing program, will be made, however that variable investment option will
not become part of your rebalancing program unless we receive instructions from
you indicating that you would like such option to become part of the program.
There is no minimum Account Value required to enroll in automatic
rebalancing. All rebalancing transfers as part of an automatic rebalancing
program are not included when counting the number of transfers each year toward
the maximum number of free transfers. We do not deduct a charge for
participating in an automatic rebalancing program. Participation in the
Automatic Rebalancing program may be restricted if you are enrolled in certain
other optional programs.
ARE ANY ASSET ALLOCATION
PROGRAMS AVAILABLE?
Yes. Certain "static asset allocation programs" are available for use with the
Annuity. These programs are considered static because once you have selected a
model portfolio, the Sub-accounts and the percentage of contract value
allocated to each Sub-account cannot be changed without your consent. The
programs are available at no additional charge. Under these programs, the
Sub-account for each asset class in each model portfolio is designated for you.
Under the programs, the values in the Sub-accounts will be rebalanced
periodically back to the indicated percentages for the applicable asset class
within the model portfolio that you have selected. For more information on the
asset allocation programs see the Appendix entitled "Additional Information on
the Asset Allocation Programs".
Asset allocation is a sophisticated method of diversification, which
allocates assets among asset classes in order to manage investment risk and
enhance returns over the long term. However, asset allocation does not
guarantee a profit or protect against a loss. No personalized investment advice
is provided in connection with the asset allocation programs and you should not
rely on these programs as providing individualized investment recommendations
to you. The asset allocation programs do not guarantee better investment
results. We reserve the right to terminate or change the asset allocation
programs at any time. You should consult with your Investment Professional
before electing any asset allocation program.
DO YOU OFFER PROGRAMS DESIGNED TO
GUARANTEE A "RETURN OF PREMIUM" AT
A FUTURE DATE?
Yes. We offer two different programs for investors who wish to invest in the
variable investment options but also wish to protect their principal, as of a
specific date in the future. They are the Balanced Investment Program and the
Guaranteed Return Option Plus(SM). (The Guaranteed Return Option Plus (GRO
Plus(SM)) is not available in all states. In some states where GRO Plus is not
available we offer the Guaranteed Return Option (GRO)). Both the Balanced
Investment Program and GRO Plus allow you to allocate a portion of your Account
Value to the available variable investment options while ensuring that your
Account Value will at least equal your contributions adjusted for withdrawals
and transfers on a specified date.
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OPTIMUM PLUS(SM) PROSPECTUS
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Under GRO Plus, Account Value is allocated to and maintained in Fixed
Allocations to the extent we, in our sole discretion, deem it is necessary to
support our guarantee under the program. This differs from the Balanced
Investment Program where a set amount is allocated to a Fixed Allocation
regardless of the performance of the underlying Sub-accounts or the interest
rate environment after the amount is allocated to a Fixed Allocation. Generally,
more of your Account Value will be allocated to the variable investment options
under the GRO Plus program than under the Balanced Investment Program (although
in periods of poor market performance, low interest rates and/or as the option
progresses to its maturity date, this may not be the case). You may not want to
use either of these programs if you expect to begin taking annuity payments
before the program would be completed. In addition, as with most return of
premium programs, amounts that are available to allocate to the variable
investment options may be substantially less than they would be if you did not
elect a return of premium program. This means that, if investment experience in
the variable investment options were positive, your Account Value would grow at
a slower rate than if you did not elect a return of premium program and
allocated all of your Account Value to the variable investment options.
Balanced Investment Program
We offer a balanced investment program where a portion of your Account Value is
allocated to a Fixed Allocation and the remaining Account Value is allocated to
the variable investment options that you select. When you enroll in the Balanced
Investment Program, you choose the duration that you wish the program to last.
This determines the duration of the Guarantee Period for the Fixed Allocation.
Based on the fixed rate for the Guarantee Period chosen, we calculate the
portion of your Account Value that must be allocated to the Fixed Allocation to
grow to a specific "principal amount" (such as your initial Purchase Payment).
We determine the amount based on the rates then in effect for the Guarantee
Period you choose. If you continue the program until the end of the Guarantee
Period and make no withdrawals or transfers, at the end of the Guarantee Period,
the Fixed Allocation will have grown to equal the "principal amount".
Withdrawals or transfers from the Fixed Allocation before the end of the
Guarantee Period will terminate the program and may be subject to a Market Value
Adjustment. You can transfer the Account Value that is not allocated to the
Fixed Allocation between any of the Sub-accounts available under the Annuity.
Account Value you allocate to the variable investment options is subject to
market fluctuations and may increase or decrease in value. We do not deduct a
charge for participating in the Balanced Investment Program.
Example
Assume you invest $100,000. You choose a 10-year program and
allocate a portion of your Account Value to a Fixed Allocation
with a 10-year Guarantee Period. The rate for the 10-year
Guarantee Period is 2.50%*. Based on the fixed interest rate for
the Guarantee Period chosen, the factor is 0.781198 for
determining how much of your Account Value will be allocated to
the Fixed Allocation. That means that $78,120 will be allocated
to the Fixed Allocation and the remaining Account Value ($21,880)
will be allocated to the variable investment options. Assuming
that you do not make any withdrawals or transfers from the Fixed
Allocation, it will grow to $100,000 at the end of the Guarantee
Period. Of course we cannot predict the value of the remaining
Account Value that was allocated to the variable investment
options.
The Guaranteed Return Option Plus (GRO Plus) guarantees that, after a
seven-year period following commencement of the program ("maturity date") and
on each anniversary of the maturity date thereafter, your Account Value will
not be less than the Account Value on the effective date of the program. The
program also offers you the option to elect a second, enhanced guarantee amount
at a higher Account Value subject to a separate maturity period (and its
anniversaries). The GRO Plus program may be appropriate if you wish to protect
a principal amount (called the "Protected Principal Value") against market
downturns as of a specific date in the future, but also wish to exercise
control of your available Account Value among the variable investment options
to participate in market experience. Under the GRO Plus program, you give us
the right to allocate amounts to Fixed Allocations as needed to support the
guarantees provided. The available Account Value is the amount not allocated to
the Fixed Allocations to support the guarantees provided. There is a fee
associated with this program. See "Living Benefit Programs," later in this
Prospectus, for more information about this program.
* The rate in this example is hypothetical and may not reflect the current rate
for Guarantee Periods of this duration.
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OPTIMUM PLUS(SM) PROSPECTUS
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MAY I GIVE MY INVESTMENT PROFESSIONAL
PERMISSION TO MANAGE MY ACCOUNT VALUE?
Yes. If you agree (or generally, for annuities issued prior to May 1, 2005,
unless you told us otherwise), your Investment Professional may direct the
allocation of your Account Value and request financial transactions between
investment options while you are living, subject to our rules, and unless you
tell us otherwise. If your Investment Professional has this authority, we deem
that all transactions that are directed by your Investment Professional with
respect to your Annuity have been authorized by you. You must contact us
immediately if and when you revoke such authority. We will not be responsible
for acting on instructions from your Investment Professional until we receive
notification of the revocation of such person's authority. We may also suspend,
cancel or limit these privileges at any time. We will notify you if we do.
MAY I AUTHORIZE MY THIRD PARTY INVESTMENT ADVISOR TO MANAGE MY ACCOUNT?
Yes. You may engage your own investment advisor to manage your account. These
investment advisors may be firms or persons who also are appointed by us, or
whose affiliated broker-dealers are appointed by us, as authorized sellers of
the Annuity. Even if this is the case, however, please note that the investment
advisor you engage to provide advice and/or make transfers for you, is not
acting on our behalf, but rather is acting on your behalf. We do not offer
advice about how to allocate your Account Value under any circumstance. As
such, we are not responsible for any recommendations such investment advisors
make, any investment models or asset allocation programs they choose to follow
or any specific transfers they make on your behalf.
Any fee that is charged by your investment advisor is in addition to the
fees and expenses that apply under your Annuity. If you authorize your
investment advisor to withdraw amounts from your Annuity (to the extent
permitted) to pay for the investment advisor's fee, as with any other
withdrawal from your Annuity, you may incur adverse tax consequences, a CDSC
and/or a Market Value Adjustment. Withdrawals to pay your investment advisor
generally will also reduce the level of various living and death benefit
guarantees provided (e.g. the withdrawals will reduce proportionately the
Annuity's guaranteed minimum death benefit.) We are not a party to the
agreement you have with your investment advisor and do not verify that amounts
withdrawn from your Annuity, including amounts withdrawn to pay for the
investment advisor's fee, are within the terms of your agreement with your
investment advisor. You will, however, receive confirmations of transactions
that affect your Annuity. If your investment advisor has also acted as your
Investment Professional with respect to the sale of your Annuity, he or she may
be receiving compensation for services provided both as an Investment
Professional and investment advisor. Alternatively, the investment advisor may
compensate the Investment Professional from whom you purchased your Annuity for
the referral that led you to enter into your investment advisory relationship
with the investment advisor. If you are interested in the details about the
compensation that your investment advisor and/or your Investment Professional
receive in connection with your Annuity, you should ask them for more details.
We or an affiliate of ours may provide administrative support to licensed,
registered Investment Professionals or investment advisors who you authorize to
make financial transactions on your behalf. We may require Investment
Professionals or investment advisors, who are authorized by multiple contract
owners to make financial transactions, to enter into an administrative
agreement with American Skandia as a condition of our accepting transactions on
your behalf. The administrative agreement may impose limitations on the
investment professional's or investment advisor's ability to request financial
transactions on your behalf. These limitations are intended to minimize the
detrimental impact of an investment professional who is in a position to
transfer large amounts of money for multiple clients in a particular Portfolio
or type of portfolio or to comply with specific restrictions or limitations
imposed by a Portfolio(s) on American Skandia. Contracts managed by your
investment professional also are subject to the restrictions on transfers
between investment options that are discussed in the section entitled "ARE
THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?". Since
transfer activity under contracts managed by an investment professional or
third party investment advisor may result in unfavorable consequences to all
contract owners invested in the affected options we reserve the right to limit
the investment options available to a particular Owner whose contract is
managed by the advisor or impose other transfer restrictions we deem necessary.
The administrative agreement may limit the available investment options,
require advance notice of large transactions, or impose other trading
limitations on your investment professional. Your investment professional will
be informed of all such restrictions on an ongoing basis. We may also require
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OPTIMUM PLUS(SM) PROSPECTUS
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that your investment professional transmit all financial transac-
tions using the electronic trading functionality available through our Internet
website (www.americanskandia.prudential.com). Limitations that we may impose on
your investment professional or investment advisor under the terms of the
administrative agreement do not apply to financial transactions requested by an
Owner on their own behalf, except as otherwise described in this Prospectus.
HOW DO THE FIXED ALLOCATIONS WORK?
We credit the fixed interest rate to the Fixed Allocation throughout a set
period of time called a "Guarantee Period." Fixed Allocations currently are
offered with Guarantee Periods from 1 to 10 years. We may make Fixed
Allocations of different durations available in the future including Fixed
Allocations offered exclusively for use with certain optional investment
programs. Fixed Allocations may not be available in all states and may not
always be available for all Guarantee Periods depending on market factors and
other considerations.
The interest rate credited to a Fixed Allocation is the rate in effect
when the Guarantee Period begins and does not change during the Guarantee
Period. The rates are an effective annual rate of interest. We determine the
interest rates for the various Guarantee Periods. At the time that we confirm
your Fixed Allocation, we will advise you of the interest rate in effect and
the date your Fixed Allocation matures. We may change the rates we credit new
Fixed Allocations at any time. Any change in interest rate does not affect
Fixed Allocations that were in effect before the date of the change. To inquire
as to the current rates for Fixed Allocations, please call 1-800-752-6342.
A Guarantee Period for a Fixed Allocation begins:
o when all or part of a net Purchase Payment is allocated to that particular
Guarantee Period;
o upon transfer of any of your Account Value to a Fixed Allocation for that
particular Guarantee Period; or
o when you "renew" a Fixed Allocation by electing a new Guarantee Period.
To the extent permitted by law, we may establish different interest rates
for Fixed Allocations offered to a class of Owners who choose to participate in
various optional investment programs we make available. This may include, but
is not limited to, Owners who elect to use Fixed Allocations under a dollar
cost averaging program (see "Do You Offer Dollar Cost Averaging?") or a
balanced investment program (see "Do you offer programs designed to guarantee a
"Return of Premium" at a future date?"). The interest rate credited to Fixed
Allocations offered to this class of purchasers may be different than those
offered to other purchasers who choose the same Guarantee Period but who do not
participate in an optional investment program. Any such program is at our sole
discretion.
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American Skandia may offer Fixed Allocations with Guarantee Periods of 3
months or 6 months exclusively for use as a short-term Fixed Allocation
("Short-term Fixed Allocations"). Short-term Fixed Allocations may only be
established with your initial Purchase Payment or additional Purchase
Payments. You may not transfer existing Account Value to a Short-term Fixed
Allocation. We reserve the right to terminate offering these special purpose
Fixed Allocations at any time.
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On the Maturity Date of the Short-term Fixed Allocation, the Account Value
will be transferred to the Sub-account(s) you choose at the inception of the
program. If no instructions are provided, such Account Value will be
transferred to the AST Money Market Sub-account. Short-term Fixed Allocations
may not be renewed on the Maturity Date. If you surrender the Annuity or
transfer any Account Value from the Short-term Fixed Allocation to any other
investment option before the end of the Guarantee Period, a Market Value
Adjustment will apply.
HOW DO YOU DETERMINE RATES FOR
FIXED ALLOCATIONS?
We do not have a specific formula for determining the fixed interest rates for
Fixed Allocations. Generally the interest rates we offer for Fixed Allocations
will reflect the investment returns available on the types of investments we
make to support our fixed rate guarantees. These investment types may include
cash, debt securities guaranteed by the United States government and its
agencies and instrumentalities, money market instruments, corporate debt
obligations of different durations, private placements, asset-backed
obligations and municipal bonds. In determining rates we also consider factors
such as the length of the Guarantee Period for the Fixed Allocation, regulatory
and tax requirements, liquidity of the markets for the type of investments we
make, commissions, administrative and investment expenses, our insurance risks
in relation to the Fixed Allocations, general economic trends and competition.
Some of these considerations are similar to those we consider in determining
the Insurance Charge that we deduct from Account Value allocated to the
Sub-accounts.
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OPTIMUM PLUS(SM) PROSPECTUS
Managing Your Account Value continued
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We will credit interest on a new Fixed Allocation in an existing Annuity at
a rate not less than the rate we are then crediting to Fixed Allocations for the
same Guarantee Period selected by new Annuity purchasers in the same class.
The interest rate we credit for a Fixed Allocation is subject to a
minimum. Please refer to the Statement of Additional Information. In certain
states the interest rate may be subject to a minimum under state law or
regulation.
HOW DOES THE MARKET VALUE
ADJUSTMENT WORK?
If you transfer or withdraw Account Value from a Fixed Allocation more than 30
days before the end of its Guarantee Period, we will adjust the value of your
investment based on a formula, called a "Market Value Adjustment" or "MVA". The
amount of any Market Value Adjustment can be either positive or negative,
depending on the movement of a combination of Strip Yields on Strips and an
Option-adjusted Spread (each as defined below) between the time that you
purchase the Fixed Allocation and the time you make a transfer or withdrawal.
The Market Value Adjustment formula compares the combination of Strip Yields
for Strips and the Option-adjusted Spreads as of the date the Guarantee Period
began with the combination of Strip Yields for Strips and the Option-adjusted
Spreads as of the date the MVA is being calculated. In certain states the
amount of any Market Value Adjustment may be limited under state law or
regulation. If your Annuity is governed by the laws of that state, any Market
Value Adjustment that applies will be subject to our rules for complying with
such law or regulation.
o "Strips" are a form of security where ownership of the interest portion of
United States Treasury securities are separated from ownership of the
underlying principal amount or corpus.
o "Strip Yields" are the yields payable on coupon Strips of United States
Treasury securities.
o "Option-adjusted Spread" is the difference between the yields on corporate
debt securities (adjusted to disregard options on such securities) and
government debt securities of comparable duration. We currently use the
Merrill Lynch 1 to 10 year Investment Grade Corporate Bond Index of
Option-adjusted Spreads.
MVA Formula
The MVA formula is applied separately to each Fixed Allocation to determine the
Account Value of the Fixed Allocation on a particular date. The formula is as
follows:
[(1+I) / (1+J+0.0010)](N/365)
where:
I is the Strip Yield as of the start date of the Guarantee Period for
coupon Strips maturing at the end of the applicable Guarantee Period plus
the Option-adjusted Spread. If there are no Strips maturing at that time,
we will 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 being applied for
coupon Strips maturing at the end of the applicable Guarantee Period plus
the Option-adjusted Spread. If there are no Strips maturing at that time,
we will 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 the original Guarantee Period.
If you surrender your Annuity under the right to cancel provision, the MVA
formula is
[(1 + I)/(1 + J)](N/365).
MVA Examples
The following hypothetical examples show the effect of the MVA in determining
Account Value. Assume the following:
o You allocate $50,000 into a Fixed Allocation (we refer to this as the
"Allocation Date" in these examples) with a Guarantee Period of 5 years (we
refer to this as the "Maturity Date" in these examples).
o The Strip Yields for coupon Strips beginning on the Allocation Date and
maturing on the Maturity Date plus the Option-adjusted Spread is 5.50% (I =
5.50%).
o You make no withdrawals or transfers until you decide to withdraw the
entire Fixed Allocation after exactly three (3) years, at which point 730
days remain before the Maturity Date (N = 730).
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OPTIMUM PLUS(SM) PROSPECTUS
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Example of Positive MVA
Assume that at the time you request the withdrawal, the Strip Yields for Strips
maturing on the Maturity Date plus the Option-adjusted Spread is 4.00% (J =
4.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0010)](N/365) =
[1.055/1.041](2) = 1.027078
Interim Value = $57,881.25
Account Value after MVA = Interim Value x MVA
Factor = $59,448.56
Example of Negative MVA
Assume that at the time you request the withdrawal, the Strip Yields for Strips
maturing on the Maturity Date plus the Option-adjusted Spread is 7.00% (J =
7.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0010)](N/365) =
[1.055/1.071)](2) = 0.970345
Interim Value = $57,881.25
Account Value after MVA = Interim Value x MVA
Factor = $56,164.78.
WHAT HAPPENS WHEN MY GUARANTEE PERIOD MATURES?
The "Maturity Date" for a Fixed Allocation is the last day of the Guarantee
Period. Before the Maturity Date, you may choose to renew the Fixed Allocation
for a new Guarantee Period of the same or different length or you may transfer
all or part of that Fixed Allocation's Account Value to another Fixed
Allocation or to one or more Sub-accounts. We will notify you before the end of
the Guarantee Period about the fixed interest rates that we are currently
crediting to all Fixed Allocations that are being offered. The rates being
credited to Fixed Allocations may change before the Maturity Date. We will not
charge a MVA if you choose to renew a Fixed Allocation on its Maturity Date or
transfer the Account Value to one or more variable investment options.
If you do not specify how you want a Fixed Allocation to be allocated on
its Maturity Date, we will then transfer the Account Value of the Fixed
Allocation to the AST Money Market Sub-account. You can then elect to allocate
the Account Value to any of the Sub-accounts or to a new Fixed Allocation.
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OPTIMUM PLUS(SM) PROSPECTUS
Access To Account Value
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WHAT TYPES OF DISTRIBUTIONS ARE AVAILABLE TO ME?
During the accumulation period you can access your Account Value through
partial withdrawals, Systematic Withdrawals, and where required for tax
purposes, Minimum Distributions. You can also surrender your Annuity at any
time. We may deduct a portion of the Account Value being withdrawn or
surrendered as a CDSC. The CDSC will be assessed on the amount of Purchase
Payments, not on the Account Value at the time of the withdrawal or surrender.
If you surrender your Annuity, in addition to any CDSC, we may deduct the
Annual Maintenance Fee, any Tax Charge that applies and the charge for any
optional benefits. We may also apply a Market Value Adjustment to any Fixed
Allocations being withdrawn or surrendered. Certain amounts may be available to
you each Annuity Year that are not subject to a CDSC. These are called "Free
Withdrawals." In addition, under certain circumstances, we may waive the CDSC
for surrenders made for qualified medical reasons or for withdrawals made to
satisfy Minimum Distribution requirements. Unless you notify us differently,
withdrawals are taken pro-rata based on the Account Value in the investment
options at the time we receive your withdrawal request. Each of these types of
distributions is described more fully below.
ARE THERE TAX IMPLICATIONS FOR DISTRIBUTIONS?
(For more information, see "Tax Considerations".)
During the Accumulation Period
A distribution during the accumulation period is deemed to come first from any
"gain" in your Annuity and second as a return of your "tax basis", if any.
Distributions from your Annuity are generally subject to ordinary income
taxation on the amount of any investment gain unless the distribution qualifies
as a non-taxable exchange or transfer. If you take a distribution prior to the
taxpayer's age 59-1/2, you may be subject to a 10% penalty in addition to
ordinary income taxes on any gain. You may wish to consult a professional tax
advisor for advice before requesting a distribution.
During the Annuitization Period
During the annuitization period, a portion of each annuity payment is taxed as
ordinary income at the tax rate you are subject to at the time of the payment.
The Code and regulations have "exclusionary rules" that we use to determine
what portion of each annuity payment should be treated as a return of any tax
basis you have in the Annuity. Once the tax basis in the Annuity has been
distributed, the remaining annuity payments are taxable as ordinary income. The
tax basis in the Annuity may be based on the tax-basis from a prior contract in
the case of a 1035 exchange or other qualifying transfer.
CAN I WITHDRAW A PORTION OF MY ANNUITY?
Yes, you can make a withdrawal during the accumulation period.
o To meet liquidity needs, you can withdraw a limited amount from your
Annuity during each of Annuity Years 1-10 without a CDSC being applied. We
call this the "Free Withdrawal" amount. The Free Withdrawal amount is not
available if you choose to surrender your Annuity. Amounts withdrawn as a
Free Withdrawal do not reduce the amount of CDSC that may apply upon a
subsequent withdrawal or surrender of the Annuity. The minimum Free
Withdrawal you may request is $100.
o You can also make withdrawals in excess of the Free Withdrawal amount. The
maximum amount that you may withdraw will depend on the Annuity's Surrender
Value as of the date we process the withdrawal request. After any partial
withdrawal, your Annuity must have a Surrender Value of at least $1,000, or
we may treat the partial withdrawal request as a request to fully surrender
your Annuity. The minimum partial withdrawal you may request is $100.
When we determine if a CDSC applies to partial withdrawals and Systematic
Withdrawals, we will first determine what, if any, amounts qualify as a Free
Withdrawal. Those amounts are not subject to the CDSC. Partial withdrawals or
Systematic Withdrawals of amounts greater than the maximum Free Withdrawal
amount will be subject to a CDSC.
You may request a withdrawal for an exact dollar amount after deduction of
any CDSC that applies (called a "net withdrawal") or request a gross withdrawal
from which we will deduct any CDSC that applies, resulting in less money being
payable to you than the amount you requested. If you request a net withdrawal,
the amount deducted from your Account Value to pay the CDSC may also be subject
to a CDSC.
Partial withdrawals may also be available following annuitization but only
if you choose certain annuity payment options.
To request the forms necessary to make a withdrawal from your Annuity,
call 1-800-752-6342 or visit our Internet Website at
www.americanskandia.prudential.com.
HOW MUCH CAN I WITHDRAW AS A FREE WITHDRAWAL?
Annuity Years 1-10
The maximum Free Withdrawal amount during each of Annuity Years 1 through 10
(when a CDSC would otherwise apply to a partial withdrawal or surrender of your
initial Purchase Payment) is 10% of all Purchase Payments. We may apply a
Market Value Adjustment to any Fixed Allocations. If you do not make a Free
Withdrawal during an Annuity Year, you are not allowed to carry over the Free
Withdrawal amount to the next Annuity Year. Withdrawals of amounts greater than
the maximum Free Withdrawal
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OPTIMUM PLUS(SM) PROSPECTUS
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amount are treated as a withdrawal of Purchase Payments and will be assessed a
CDSC during Annuity Years 1 through 10.
NOTE: Amounts that you have withdrawn as a Free Withdrawal will not reduce
the amount of any CDSC that we deduct if, during the first ten (10) Annuity
Years, you make a partial withdrawal or choose to surrender the Annuity. If,
during Annuity Years 1 through 10, all Purchase Payments withdrawn are subject
to a CDSC, then any subsequent withdrawals will be withdrawn from any gain in
the Annuity, which may include Credits.
Annuity Years 11+
After Annuity Year 10, you can surrender your Annuity or make a partial
withdrawal without a CDSC being deducted from the amount being withdrawn.
Examples
1. Assume you make an initial Purchase Payment of $10,000 and make no
additional Purchase Payments. The maximum Free Withdrawal amount during
each of the first ten Annuity Years would be 10% of $10,000, or $1,000.
2. Assume you make an initial Purchase Payment of $10,000 and make an
additional Purchase Payment of $5,000 in Annuity Year 2. The maximum Free
Withdrawal amount during Annuity Year 3 through 10 would be 10% of $15,000,
or $1,500. From Annuity Year 11 and thereafter, you can surrender your
Annuity or make a partial withdrawal without a CDSC being deducted from the
amount being withdrawn.
3. Assume you make an initial Purchase Payment of $10,000 and take a Free
Withdrawal of $500 in Annuity Year 2 and $1,000 in Annuity Year 3. If you
surrender your Annuity in Annuity Year 5, the CDSC will be assessed against
the initial Purchase Payment amount ($10,000), not the amount of Purchase
Payments reduced by the amounts that were withdrawn under the Free
Withdrawal provision.
IS THERE A CHARGE FOR A PARTIAL WITHDRAWAL?
A CDSC may be assessed against a partial withdrawal during the first ten (10)
Annuity Years. Whether a CDSC applies and the amount to be charged depends on
whether the Partial Withdrawal exceeds any Free Withdrawal amount and, if so,
the number of years that have elapsed since the Issue Date of the Annuity.
1. If you request a partial withdrawal, we determine if the amount you
requested is available as a Free Withdrawal (in which case it would not be
subject to a CDSC);
2. If the amount requested exceeds the available Free Withdrawal amount, we
determine if a CDSC will apply to the partial withdrawal based on the
number of years that have elapsed since the Annuity was issued. Any CDSC
will only apply to the amount withdrawn that exceeds the Free Withdrawal
amount. The maximum Free Withdrawal amount during each of Annuity Years 1
through 10 is 10% of all Purchase Payments. Withdrawals of amounts greater
than the maximum Free Withdrawal amount are treated as a withdrawal of
Purchase Payments and will be assessed a CDSC. If, during Annuity Years 1
through 10, all Purchase Payments are withdrawn subject to a CDSC, then any
subsequent withdrawals will be withdrawn from any gain in the Annuity,
which may include Credits.
CAN I MAKE PERIODIC WITHDRAWALS FROM THE ANNUITY DURING THE ACCUMULATION
PERIOD?
Yes. We call these "Systematic Withdrawals." You can receive Systematic
Withdrawals of earnings only, principal plus earnings or a flat dollar amount.
Systematic Withdrawals may be subject to a CDSC. We will determine whether a
CDSC applies and the amount in the same way as we would for a partial
withdrawal.
Systematic Withdrawals can be made from Account Value allocated to the
variable investment options or Fixed Allocations. Generally, Systematic
Withdrawals from Fixed Allocations are limited to earnings accrued after the
program of Systematic Withdrawals begins, or payments of fixed dollar amounts
that do not exceed such earnings. Systematic Withdrawals are available on a
monthly, quarterly, semi-annual or annual basis. The Surrender Value of your
Annuity must be at least $20,000 before we will allow you to begin a program of
Systematic Withdrawals.
The minimum amount for each Systematic Withdrawal is $100. If any
scheduled Systematic Withdrawal is for less than $100 (which may occur under a
program that provides payment of an amount equal to the earnings in the Annuity
for the period requested), we may postpone the withdrawal and add the expected
amount to the amount that is to be withdrawn on the next scheduled Systematic
Withdrawal.
DO YOU OFFER A PROGRAM FOR WITHDRAWALS UNDER SECTION 72(t) OF THE INTERNAL
REVENUE CODE?
Yes. If your Annuity is used as a funding vehicle for certain retirement plans
that receive special tax treatment under Sections 401, 403(b) or 408 of the
Code, Section 72(t) of the Code may provide an exception to the 10% penalty tax
on distributions made prior to age 59-1/2 if you elect to receive distributions
as a series of "substantially equal periodic payments". Distributions received
under
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OPTIMUM PLUS(SM) PROSPECTUS
Access To Account Value continued
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this provision in any Annuity Year that exceed the maximum amount available as a
free withdrawal will be subject to a CDSC. We may apply a Market Value
Adjustment to any Fixed Allocations. To request a program that complies with
Section 72(t), you must provide us with certain required information in writing
on a form acceptable to us. We may require advance notice to allow us to
calculate the amount of 72(t) withdrawals. The Surrender Value of your Annuity
must be at least $20,000 before we will allow you to begin a program for
withdrawals under Section 72(t). The minimum amount for any such withdrawal is
$100.
You may also annuitize your contract and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments before age 59-1/2 that are not subject to the 10% penalty.
WHAT ARE MINIMUM DISTRIBUTIONS AND WHEN WOULD I NEED TO MAKE THEM?
(See "Tax Considerations" for a further discussion of Minimum Distributions.)
Minimum Distributions are a type of Systematic Withdrawal we allow to meet
distribution requirements under Sections 401, 403(b) or 408 of the Code. Under
the Code, you may be required to begin receiving periodic amounts from your
Annuity. In such case, we will allow you to make Systematic Withdrawals in
amounts that satisfy the minimum distribution rules under the Code. We do not
assess a CDSC on Minimum Distributions from your Annuity if you are required by
law to take such Minimum Distributions from your Annuity at the time it is
taken. However, a CDSC may be assessed on that portion of a Systematic
Withdrawal that is taken to satisfy the minimum distribution requirements in
relation to other savings or investment plans under other qualified retirement
plans not maintained with American Skandia.
The amount of the required Minimum Distribution for your particular
situation may depend on other annuities, savings or investments. We will only
calculate the amount of your required Minimum Distribution based on the value
of your Annuity. We require three (3) days advance written notice to calculate
and process the amount of your payments. You may elect to have Minimum
Distributions paid out monthly, quarterly, semi-annually or annually. The $100
minimum amount that applies to Systematic Withdrawals applies to monthly
minimum distributions but does not apply to minimum distributions taken out on
a quarterly, semi-annual or annual basis.
You may also annuitize your contract and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments and satisfying the Minimum Distribution requirements under the Code.
CAN I SURRENDER MY ANNUITY FOR ITS VALUE?
Yes. During the accumulation period you can surrender your Annuity at any time.
Upon surrender, you will receive the Surrender Value. Upon surrender of your
Annuity, you will no longer have any rights under the Annuity.
For purposes of calculating the CDSC on surrender, the Purchase Payments
being withdrawn may be greater than your remaining Account Value or the amount
of your withdrawal request. This is most likely to occur if you have made prior
withdrawals under the Free Withdrawal provision or if your Account Value has
declined in value due to negative market performance. We may apply a Market
Value Adjustment to any Fixed Allocations.
Under certain annuity payment options, you may be allowed to surrender
your Annuity for its then current value.
To request the forms necessary to surrender your Annuity, call
1-800-752-6342 or visit our Internet Website at
www.americanskandia.prudential.com.
WHAT IS A MEDICALLY-RELATED SURRENDER AND HOW DO I QUALIFY?
Where permitted by law, you may request to surrender your Annuity prior to the
Annuity Date without application of any CDSC upon occurrence of a
medically-related "Contingency Event". We may apply a Market Value Adjustment
to any Fixed Allocations. The amount payable will be your Account Value minus:
(a) the amount of any Credits applied within 12 months of the applicable
"Contingency Event" as defined below; and (b) the amount of any Credits added
in conjunction with any Purchase Payments received after our receipt of your
request for a medically-related surrender (i.e. Purchase Payments received at
such time pursuant to a salary reduction program).
This waiver of any applicable CDSC is subject to our rules, including but
not limited to the following:
o the Annuitant must have been named or any change of Annuitant must have
been accepted by us, prior to the "Contingency Event" described below in
order to qualify for a medically-related surrender;
o the Annuitant must be alive as of the date we pay the proceeds of such
surrender request;
o if the Owner is one or more natural persons, all such Owners must also be
alive at such time;
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OPTIMUM PLUS(SM) PROSPECTUS
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o we must receive satisfactory proof of the Annuitant's confinement in a
Medical Care Facility or Fatal Illness in writing on a form satisfactory to
us; and
o this benefit is not available if the total Purchase Payments received
exceed $500,000 for all annuities issued by us with this benefit where the
same person is named as Annuitant. A "Contingency Event" occurs if the
Annuitant is:
o first confined in a "Medical Care Facility" while your Annuity is in force
and remains confined for at least 90 days in a row; or
o first diagnosed as having a "Fatal Illness" while your Annuity is in force.
The definitions of "Medical Care Facility" and "Fatal Illness," as well as
additional terms and conditions, are provided in your Annuity. Specific
details and definitions in relation to this benefit may differ in certain
jurisdictions.
WHAT TYPES OF ANNUITY OPTIONS ARE AVAILABLE?
We currently make annuity options available that provide fixed annuity
payments, variable payments or adjustable payments. Fixed options provide the
same amount with each payment. Variable options generally provide a payment
which may increase or decrease depending on the investment performance of the
Sub-accounts. However, currently, we also make a variable payment option that
has a guarantee feature. Adjustable options provide a fixed payment that is
periodically adjusted based on current interest rates. We do not guarantee to
make any annuity payment options available in the future other than those fixed
annuitization options guaranteed in your Annuity. Please refer to "The
Guaranteed Minimum Income Benefit" and "The Lifetime Five Income Benefit" under
"Living Benefits" below for a description of annuity options that are available
when you elect these benefits. For additional information on annuity payment
options you may request a Statement of Additional Information.
When you purchase an Annuity, or at a later date, you may choose an
Annuity Date, an annuity option and the frequency of annuity payments. You may
not choose an Annuity Date that occurs in the first three Annuity Years. You
may change your choices before the Annuity Date under the terms of your
contract. A maximum Annuity Date may be required by law. The Annuity Date may
depend on the annuity option you choose. Certain annuity options may not be
available depending on the age of the Annuitant. You may not annuitize and
receive annuity payments within the first three Annuity Years.
Certain of these annuity options may be available to Beneficiaries who
choose to receive the Death Benefit proceeds as a series of payments instead of
a lump sum payment.
Option 1
Payments for Life: Under this option, income is payable periodically until the
death of the "key life". The "key life" (as used in this section) is the person
or persons upon whose life annuity payments are based. No additional annuity
payments are made after the death of the key life. Since no minimum number of
payments is guaranteed, this option offers the largest amount of periodic
payments of the life contingent annuity options. It is possible that only one
payment will be payable if the death of the key life occurs before the date the
second payment was due, and no other payments nor death benefits would be
payable. This Option is currently available on a fixed or variable basis. Under
this option, you cannot make a partial or full surrender of the annuity.
Option 2
Payments Based on Joint Lives: Under this option, income is payable
periodically during the joint lifetime of two key lives, and thereafter during
the remaining lifetime of the survivor, ceasing with the last payment prior to
the survivor's death. No minimum number of payments is guaranteed under this
option. It is possible that only one payment will be payable if the death of
all the key lives occurs before the date the second payment was due, and no
other payments or death benefits would be payable. This Option is currently
available on a fixed or variable basis. Under this option, you cannot make a
partial or full surrender of the annuity.
Option 3
Payments for Life with a Certain Period: Under this option, income is payable
until the death of the key life. However, if the key life dies before the end
of the period selected (5, 10 or 15 years), the remaining payments are paid to
the Beneficiary until the end of such period. This Option is currently
available on a fixed or variable basis. If you elect to receive payments on a
variable basis under this option, you can request partial or full surrender of
the annuity and receive its then current cash value (if any) subject to our
rules.
Option 4
Fixed Payments for a Certain Period: Under this option, income is payable
periodically for a specified number of years. If the payee dies before the end
of the specified number of
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OPTIMUM PLUS(SM) PROSPECTUS
Access To Account Value continued
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years, the remaining payments are paid to the Beneficiary until the end of such
period. Note that under this option, payments are not based on any assumptions
of life expectancy. Therefore, that portion of the Insurance Charge assessed to
cover the risk that key lives outlive our expectations provides no benefit to an
Owner selecting this option. Under this option, you cannot make a partial or
full surrender of the annuity.
Option 5
Variable Payments for Life with a Cash Value: Under this option, benefits are
payable periodically until the death of the key life. Benefits may increase or
decrease depending on the investment performance of the Sub-accounts. This
option has a cash value that also varies with the investment performance of the
Sub-account. The cash value provides a "cushion" from volatile investment
performance so that negative investment performance does not automatically
result in a decrease in the annuity payment each month, and positive investment
performance does not automatically result in an increase in the annuity payment
each month. The cushion generally "stabilizes" monthly annuity payments. Any
cash value remaining on the death of the key life is paid to the Beneficiary in
a lump sum or as periodic payments. Under this option, you can request partial
or full surrender of the annuity and receive its then current cash value (if
any) subject to our rules.
Option 6
Variable Payments for Life with a Cash Value and Guarantee: Under this option,
benefits are payable as described in Option 5; except that, while the key life
is alive, the annuity payment will not be less than a guaranteed amount, which
generally is equal to the first annuity payment. We charge an additional amount
for this guarantee. Under this option, any cash value remaining on the death of
the key life is paid to the Beneficiary in a lump sum or as periodic payments.
Under this option, you can request partial or full surrender of the annuity and
receive its then current cash value (if any) subject to our rules.
We may make additional annuity payment options available in the future.
HOW AND WHEN DO I CHOOSE THE ANNUITY PAYMENT OPTION?
Unless prohibited by law, we require that you elect either a life annuity or an
annuity with a certain period of at least 5 years if any CDSC would apply were
you to surrender your Annuity on the Annuity Date. Therefore, choosing an
Annuity Date within ten (10) years of the Issue Date of the Annuity may limit
the available annuity payment options. Certain annuity payment options may not
be available if your Annuity Date occurs during the period that a CDSC would
apply.
You have a right to choose your annuity start date. If you have not
provided us with your Annuity Date or annuity payment option in writing, then:
o A default date for the Annuity Date will be the first day of the calendar
month following the later of the Annuitant's 85th birthday or the fifth
anniversary of our receipt of your request to purchase an Annuity; and
o the annuity payments, where allowed by law, will be calculated on a fixed
basis under Option 3, Payments for Life with 10 years certain.
If you choose to defer the Annuity Date beyond the default date, the IRS
may not consider your contract to be an annuity under the tax law. If that
should occur, all gain in your contract at that time will become immediately
taxable to you. Further, each subsequent year's increase in contract value would
be taxable in that year. By choosing to continue to defer after the default
date, you will assume the risk that your contract will not be considered an
annuity for federal income tax purposes.
HOW ARE ANNUITY PAYMENTS CALCULATED?
Fixed Annuity Payments (Options 1-4)
If you choose to receive fixed annuity payments, you will receive equal
fixed-dollar payments throughout the period you select. The amount of the fixed
payment will vary depending on the annuity payment option and payment frequency
you select. Generally, the first annuity payment is determined by multiplying
the Account Value, minus any state premium taxes that may apply, by the factor
determined from our table of annuity rates. The table of annuity rates differs
based on the type of annuity chosen and the frequency of payment selected. Our
rates will not be less than our guaranteed minimum rates. These guaranteed
minimum rates are derived from the a2000 Individual Annuity Mortality Table
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.
Variable Annuity Payments
Generally, we offer three different types of variable annuity payment options.
The first annuity payment will be calculated based upon the assumed investment
return ("AIR"). You select the AIR before we start to make annuity payments.
You will not receive annuity payments until you choose an AIR. The remaining
annuity payments will fluctuate based on the performance of the Sub-accounts
relative to the AIR, as well as, other factors described
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OPTIMUM PLUS(SM) PROSPECTUS
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below. The greater the AIR, the greater the first annuity payment.
A higher AIR may result in smaller potential growth in the annuity payments. A
lower AIR results in a lower initial annuity payment. Within payment options
1-3, if the Sub-accounts you choose perform exactly the same as the AIR, then
subsequent annuity payments will be the same as the first annuity payment. If
the Sub-accounts you choose perform better than the AIR, then subsequent
annuity payments will be higher than the first annuity payment. If the
Sub-accounts you choose perform worse than the AIR, then subsequent annuity
payments will be lower than the first. Within payment options 5 and 6, the cash
value for the Annuitant (while alive) and a variable period of time during
which annuity payments will be made whether or not the Annuitant is still alive
are adjusted based on the performance of the Sub-accounts relative to the AIR;
however, subsequent annuity payments do not always increase or decrease based
on the performance of the Sub-accounts relative to the AIR.
o Variable Payments (Options 1-3)
We calculate each annuity payment amount by multiplying the number of
units scheduled to be redeemed under a schedule of units for each
Sub-account by the Unit Value of each Sub-account on the annuity
payment date. We determine the schedule of units based on your Account
Value (minus any premium tax that applies) at the time you elect to
begin receiving annuity payments. The schedule of units will vary
based on the annuity payment option selected, the length of any
certain period (if applicable), the Annuitant's age and gender (if
annuity payments are due for the life of the Annuitant) and the Unit
Value of the Sub-accounts you initially selected on the Issue Date.
The calculation is performed for each Sub-account, and the sum of the
Sub-account calculations equals the amount of your annuity payment.
Other than to fund annuity payments, the number of units allocated to
each Sub-account will not change unless you transfer among the
Sub-accounts or make a withdrawal (if allowed). You can select one of
three AIRs for these options: 3%, 5% or 7%.
o Stabilized Variable Payments (Option 5)
This option provides guaranteed payments for life, a cash value for
the Annuitant (while alive) and a variable period of time during which
annuity payments will be made whether or not the Annuitant is still
alive. We calculate the initial annuity payment amount by multiplying
the number of units scheduled to be redeemed under a schedule of units
by the Unit Values determined on the annuitization date. The schedule
of units is established for each Sub-account you choose on the
annuitization date based on the applicable benchmark rate, meaning the
AIR, and the annuity factors. The annuity factors reflect our
assumptions regarding the costs we expect to bear in guaranteeing
payments for the lives of the Annuitant and will depend on the
benchmark rate, the annuitant's attained age and gender (where
permitted). Unlike variable payments (described above) where each
payment can vary based on Sub-account performance, this payment option
cushions the immediate impact of Sub-account performance by adjusting
the length of the time during which annuity payments will be made
whether or not the Annuitant is alive while generally maintaining a
level annuity payment amount. Sub-account performance that exceeds a
benchmark rate will generally extend this time period, while
Sub-account performance that is less than a benchmark rate will
generally shorten the period. If the period reaches zero and the
Annuitant is still alive, Annuity Payments continue, however, the
annuity payment amount will vary depending on Sub-account performance,
similar to conventional variable payments. The AIR for this option is
4%.
o Stabilized Variable Payments with a Guaranteed
Minimum (Option 6)
This option provides guaranteed payments for life in the same manner
as Stabilized Variable Payments (described above). In addition to the
stabilization feature, this option also guarantees that variable
annuity payments will not be less than the initial annuity payment
amount regardless of Sub-account performance. The AIR for this option
is 3%.
The variable annuity payment options are described in greater detail in a
separate prospectus which will be provided to you at the time you elect one of
the variable annuity payment options.
Adjustable Annuity Payments
We may make an adjustable annuity payment option available. Adjustable annuity
payments are calculated similarly to fixed annuity payments except that on
every fifth (5th) anniversary of receiving annuity payments, the annuity
payment amount is adjusted upward or downward depending on the rate we are
currently crediting to annuity payments. The adjustment in the annuity payment
amount does not affect the duration of remaining annuity payments, only the
amount of each payment.
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OPTIMUM PLUS(SM) PROSPECTUS
Living Benefit Programs
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DO YOU OFFER PROGRAMS DESIGNED TO PRO-
VIDE INVESTMENT PROTECTION FOR OWNERS WHILE THEY ARE ALIVE?
American Skandia offers different optional benefits, for an additional charge,
that can provide investment protection for Owners while they are alive.
Notwithstanding the additional protection provided under the optional Living
Benefit Programs, the additional cost has the impact of reducing net
performance of the investment options. Each optional benefit offers a distinct
type of guarantee, regardless of the performance of variable investment
options, that may be appropriate for you depending on the manner in which you
intend to make use of your annuity while you are alive. Depending on which
optional benefit you choose, you can have substantial flexibility to invest in
variable investment options while:
o protecting a principal amount from decreases in value as of specified
future dates due to investment performance;
o taking withdrawals with a guarantee that you will be able to withdraw not
less than a principal amount over time; or
o guaranteeing a minimum amount of growth will be applied to your principal,
if it is to be used as the basis for lifetime income payments beginning
after a waiting period.
Below is a brief summary of the "living benefits" that American Skandia
offers. Please refer to the benefit description for a complete description of
the terms, conditions and limitations of each optional benefit. You should
consult with your investment professional to determine if any of these optional
benefits may be appropriate for you based on your financial needs. There are
many factors to consider, but we note that among them you may want to evaluate
the tax implications of these different approaches to meeting your needs, both
between these benefits and in comparison to other potential solutions to your
needs (e.g. comparing the tax implications of the withdrawal benefit and
annuity payments).
I. The Guaranteed Return Option Plus(SM) (GRO Plus(SM)) guarantees that, after
a seven-year period following commencement of the program ("maturity date")
and on each anniversary of the maturity date thereafter, your Account Value
will not be less than the Account Value on the effective date of the
program. The program also offers you the option to elect a second, enhanced
guarantee amount at a higher Account Value subject to a separate maturity
period (and its anniversaries). The GRO Plus(SM) program may be appropriate
if you wish to protect a principal amount (called the "Protected Principal
Value") against market downturns as of a specific date in the future, but
also wish to exercise control by allocating and transferring your available
Account Value among the variable investment options to participate in
market experience. Under the GRO Plus(SM) program, you give us the right to
allocate amounts to Fixed Allocations as needed to support the guarantees
provided. The available Account Value that may be allocated among your
variable investment options are those amounts not allocated to the Fixed
Allocations to support the guarantees provided.
II. The Guaranteed Minimum Withdrawal Benefit (GMWB) guarantees your ability
to make cumulative withdrawals over time equal to an initial principal
value (called the "Protected Value"), regardless of decreases in your
Account Value due to market losses. The GMWB program may be appropriate if
you intend to make periodic withdrawals from your Annuity and wish to
ensure that market performance will not affect your ability to receive
guaranteed minimum withdrawals. Taking income as withdrawals, rather than
annuity payments, may be less tax efficient for non-qualified uses of the
Annuity, but provides greater control over the timing and amount of
withdrawals during the accumulation period, as well as continuing the
Annuity's other benefits, such as the death benefit.
III. The Guaranteed Minimum Income Benefit (GMIB) guarantees your ability,
after a minimum seven-year waiting period, to begin receiving income from
the Annuity in the form of annuity payments based on your total Purchase
Payments (and any Credits applied to such Purchase Payments) under the
contract and an annual increase of 5% on such Purchase Payments, adjusted
for withdrawals, regardless of the impact of market performance on your
Account Value. The GMIB program may be appropriate if you anticipate using
your Annuity as a future source of periodic fixed income payments for the
remainder of your life and wish to ensure that the basis upon which your
income payments will be calculated will achieve at least a minimum amount
despite fluctuations in market performance.
IV. The Lifetime Five Income Benefit guarantees your ability to withdraw
amounts equal to a percentage of a "Protected Withdrawal Value" regardless
of decreases in your Account Value due to market losses. The Lifetime Five
Benefit may be appropriate if you intend to make periodic withdrawals from
your Annuity and wish to ensure that market performance will not affect
your ability to receive guaranteed
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OPTIMUM PLUS(SM) PROSPECTUS
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minimum withdrawals. Taking income as withdrawals, rather than annuity
payments, may be less tax efficient for non-qualified uses of the Annuity,
but provides greater control over the timing and amount of withdrawals
during the accumulation period, as well as continuing the Annuity's other
benefits, such as the death benefit.
GUARANTEED RETURN OPTION Plus(SM)
(GRO Plus(SM))
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The Guaranteed Return Option Plus described below is only being offered in
those jurisdictions where we have received regulatory approval, and will be
offered subsequently in other jurisdictions when we receive regulatory
approval in those jurisdictions. Certain terms and conditions may differ
between jurisdictions once approved. The program can be elected by new
purchasers on the Issue Date of their Annuity, and can be elected by
existing Annuity Owners on either the anniversary of the Issue Date of their
Annuity or on a date other than that anniversary, as described below under
"Election of the Program". The Guaranteed Return Option Plus is not
available if you elect the Guaranteed Return Option program (and it is
currently active), the Guaranteed Minimum Withdrawal Benefit rider, the
Guaranteed Minimum Income Benefit rider, the Lifetime Five Income Benefit
rider, the Highest Daily Value Death Benefit, or the Dollar Cost Averaging
program if it involves transfers out of the Fixed Allocations.
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We offer a program that, after a seven-year period following commencement
of the program (we refer to the end of that period and any applicable
subsequent period as the "maturity date") and on each anniversary of the
maturity date thereafter while the program remains in effect, guarantees your
Account Value will not be less than your Account Value on the effective date of
your program (called the "Protected Principal Value"). The program also offers
you the opportunity to elect a second, enhanced guaranteed amount at a later
date if your Account Value has increased, while preserving the guaranteed
amount established on the effective date of your program. The enhanced
guaranteed amount (called the "Enhanced Protected Principal Value") guarantees
that, after a separate period following election of the enhanced guarantee and
on each anniversary thereafter while this enhanced guarantee amount remains in
effect, your Account Value will not be less than your Account Value on the
effective date of your election of the enhanced guarantee.
The program monitors your Account Value daily and, if necessary,
systematically transfers amounts between variable investment options you choose
and Fixed Allocations used to support the Protected Principal Value(s). The
program may be appropriate if you wish to protect a principal amount against
market downturns as of a specific date in the future, but also wish to invest
in the variable investment options to participate in market performance. There
is an additional charge if you elect the Guaranteed Return Option Plus program.
The guarantees provided by the program exist only on the applicable
maturity date(s) and on each anniversary of the maturity date(s) thereafter.
However, due to the ongoing monitoring of your Account Value and the transfer
of Account Value between the variable investment options and the Fixed
Allocations to support our future guarantees, the program may provide some
protection from significant market losses if you choose to surrender the
Annuity or begin receiving annuity payments prior to a maturity date. For this
same reason, the program may limit your ability to benefit from market
increases while it is in effect.
KEY FEATURE -- Protected Principal Value/
Enhanced Protected Principal Value
The Guaranteed Return Option Plus offers a base guarantee as well as the option
of electing an enhanced guarantee at a later date.
o Base Guarantee: Under the base guarantee, American Skandia guarantees that
on the maturity date and on each anniversary of the maturity date
thereafter that the program remains in effect, your Account Value will be
no less than the Protected Principal Value. On the maturity date and on
each anniversary after the maturity date that the program remains in
effect, if your Account Value is below the Protected Principal Value,
American Skandia will apply additional amounts to your Annuity from its
general account to increase your Account Value to be equal to the Protected
Principal Value.
o Enhanced Guarantee: On any anniversary following commencement of the
program, you can establish an enhanced guaranteed amount based on your
current Account Value. Under the enhanced guarantee, American Skandia
guarantees that at the end of a specified period following the election of
the enhanced guarantee (also referred to as its "maturity date"), and on
each anniversary of the maturity date thereafter that the enhanced
guaranteed amount remains in effect, your
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OPTIMUM PLUS(SM) PROSPECTUS
Living Benefit Programs continued
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Account Value will be no less than the Enhanced Protected
Principal Value. You can elect an enhanced guarantee more than once;
however, a subsequent election supersedes the prior election of an
enhanced guarantee. Election of an enhanced guarantee does not impact the
base guarantee. In addition, you may elect an "auto step-up" feature that
will automatically create an enhanced guarantee (or increase your enhanced
guarantee, if previously elected) on each anniversary of the program (and
create a new maturity period for the new enhanced guarantee) if the
Account Value as of that anniversary exceeds the protected principal value
or enhanced protected principal value by 7% or more. You may also elect to
terminate an enhanced guarantee. If you elect to terminate the enhanced
guarantee, the base guarantee will remain in effect. If you have elected
the enhanced guarantee, on the guarantee's maturity date and on each
anniversary of the maturity date thereafter that the enhanced guarantee
amount remains in effect, if your Account Value is below the Enhanced
Protected Principal Value, American Skandia will apply additional amounts
to your Annuity from its general account to increase your Account Value to
be equal to the Enhanced Protected Principal Value.
Any amounts added to your Annuity to support our guarantees under the
program will be applied to any Fixed Allocations first and then to the
sub-accounts pro rata, based on your most recent allocation instructions in
accordance with the allocation mechanism we use under the program. We will
notify you of any amounts added to your Annuity under the program. If our
assumptions are correct and the operations relating to the administration of
the program work properly, we do not expect that we will need to add additional
amounts to the Annuity. The Protected Principal Value is referred to as the
"Base Guarantee" and the Enhanced Protected Principal Value is referred to as
the "Step-up Guarantee" in the rider we issue for this benefit.
Withdrawals under your Annuity
Withdrawals from your Annuity, while the program is in effect, will reduce the
base guarantee under the program as well as any enhanced guarantee. Cumulative
annual withdrawals up to 5% of the Protected Principal Value as of the
effective date of the program (adjusted for any subsequent Purchase Payments
and any Credits applied to such Purchase Payments) will reduce the applicable
guaranteed amount by the actual amount of the withdrawal (referred to as the
"dollar-for-dollar limit"). If the amount withdrawn is greater than the
dollar-for-dollar limit, the portion of the withdrawal equal to the
dollar-for-dollar limit will be treated as described above, and the portion of
the withdrawal in excess of the dollar-for-dollar limit will reduce the base
guarantee and the enhanced guarantee proportionally, according to the formula
as described in the rider for this benefit (see the examples of this
calculation below). Withdrawals other than Systematic Withdrawals will be taken
pro-rata from the variable investment options and any Fixed Allocations.
Systematic Withdrawals will be taken pro-rata from the variable investment
options and any Fixed Allocations up to growth attributable to the Fixed
Allocations and thereafter pro-rata solely from the variable investment
options. Withdrawals will be subject to all other provisions of the Annuity,
including any Contingent Deferred Sales Charge and Market Value Adjustment that
would apply.
Charges for other optional benefits under the Annuity that are deducted as
an annual charge in arrears will not reduce the applicable guaranteed amount
under the Guaranteed Return Option Plus program, however, any partial
withdrawals in payment of charges for the Plus40(TM) Optional Life Insurance
Rider (not currently offered for sale) and any third party investment advisory
service will be treated as withdrawals and will reduce the applicable
guaranteed amount.
The following examples of dollar-for-dollar and proportional reductions
assume that: 1.) the Issue Date and the effective date of the GRO Plus(SM)
program are October 13, 2004; 2.) an initial Purchase Payment of $250,000
(includes any Credits); 3.) a base guarantee amount of $250,000; and 4.) a
dollar-for-dollar limit of $12,500 (5% of $250,000):
Example 1. Dollar-for-dollar reduction
A $10,000 withdrawal is taken on November 29, 2004 (in the first Annuity Year).
No prior withdrawals have been taken. As the amount withdrawn is less than the
Dollar-for-dollar Limit:
o The base guarantee amount is reduced by the amount withdrawn (i.e., by
$10,000, from $250,000 to $240,000).
o The remaining dollar-for-dollar limit ("Remaining Limit") for the balance
of the first Annuity Year is also reduced by the amount withdrawn (from
$12,500 to $2,500).
Example 2. Dollar-for-dollar and proportional reductions
A second $10,000 withdrawal is taken on December 18, 2004 (still within the
first Annuity Year). The Account Value immediately before the withdrawal is
$180,000. As the amount withdrawn exceeds the Remaining Limit of $2,500 from
Example 1:
o the base guarantee amount is first reduced by the Remaining Limit (from
$240,000 to $237,500);
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OPTIMUM PLUS(SM) PROSPECTUS
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o The result is then further reduced by the ratio of A to B,
where:
o A is the amount withdrawn less the Remaining Limit ($10,000 - $2,500, or
$7,500).
o B is the Account Value less the Remaining Limit ($180,000 - $2,500, or
$177,500). The resulting base guarantee amount is: $237,500 x (1 - $7,500 /
$177,500), or $227,464.79.
o The Remaining Limit is set to zero (0) for the balance of the first Annuity
Year.
Example 3. Reset of the Dollar-for-dollar Limit
A $10,000 withdrawal is made on December 19, 2005 (second Annuity Year). The
Remaining Limit has been reset to the dollar-for-dollar limit of $12,500. As
the amount withdrawn is less than the dollar-for-dollar limit:
o The base guarantee amount is reduced by the amount withdrawn (i.e., reduced
by $10,000, from $227,464.79 to $217,464.79).
o The Remaining Limit for the balance of the second Annuity Year is also
reduced by the amount withdrawn (from $12,500 to $2,500).
KEY FEATURE -- Allocation of Account Value
Account Value is transferred to and maintained in Fixed Allocations to the
extent we, in our sole discretion, deem it is necessary to support our
guarantee(s) under the program. We monitor fluctuations in your Account Value
each Valuation Day, as well as the prevailing interest rates on Fixed
Allocations, the remaining duration(s) until the applicable maturity date(s)
and the amount of Account Value allocated to Fixed Allocation(s) relative to a
"reallocation trigger", which determines whether Account Value must be
transferred to or from Fixed Allocation(s). While you are not notified when
your Account Value reaches a reallocation trigger, you will receive a
confirmation statement indicating the transfer of a portion of your Account
Value either to or from Fixed Allocation(s).
o If your Account Value is greater than or equal to the reallocation trigger,
your Account Value in the variable investment options will remain allocated
according to your most recent instructions. If a portion of Account Value
was previously allocated to a Fixed Allocation to support the applicable
guaranteed amount, all or a portion of those amounts may be transferred
from the Fixed Allocation and re-allocated to the variable investment
options pro-rata according to your most recent allocation instructions
(including the model allocations under any asset allocation program you may
have elected). A Market Value Adjustment will apply when we reallocate
Account Value from a Fixed Allocation to the variable investment options,
which may result in a decrease or increase in your Account Value.
o If your Account Value is less than the reallocation trigger, a portion of
your Account Value in the variable investment options will be transferred
from your variable investment options pro rata according to your
allocations to a new Fixed Allocation(s) to support the applicable
guaranteed amount. The new Fixed Allocation(s) will have a Guarantee Period
equal to the time remaining until the applicable maturity date(s). The
Account Value allocated to the new Fixed Allocation(s) will be credited
with the fixed interest rate(s) then being credited to a new Fixed
Allocation(s) maturing on the applicable maturity date(s) (rounded to the
next highest yearly duration). The Account Value will remain invested in
each applicable Fixed Allocation until the applicable maturity date unless,
at an earlier date, your Account Value is greater than or equal to the
reallocation trigger and, therefore, amounts can be transferred to the
variable investment options while maintaining the guaranteed protection
under the program (as described above).
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OPTIMUM PLUS(SM) PROSPECTUS
Living Benefit Programs continued
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If a significant amount of your Account Value is systematically transferred
to Fixed Allocations to support the Protected Principal Value and/or the
Enhanced Protected Principal Value during periods of market declines, low
interest rates, and/or as the program nears its maturity date, less of your
Account Value may be available to participate in the investment experience
of the variable investment options if there is a subsequent market recovery.
During periods closer to the maturity date of the base guarantee or any
enhanced guarantee, or any anniversary of such maturity date(s), a
significant portion of your Account Value may be allocated to Fixed
Allocations to support any applicable guaranteed amount(s). If your Account
Value is less than the reallocation trigger and new Fixed Allocations must
be established during periods where the interest rate(s) being credited to
such Fixed Allocations is low, a larger portion of your Account Value may
need to be transferred to Fixed Allocations to support the applicable
guaranteed amount(s), causing less of your Account Value to be available to
participate in the investment experience of the variable investment options.
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Separate Fixed Allocations may be established in support of the Protected
Principal Value and the Enhanced Protected Principal Value (if elected). There
may also be circumstances when a Fixed Allocation will be established only in
support of the Protected Principal Value or the Enhanced Protected Principal
Value. If you elect an enhanced guarantee, it is more likely that a portion of
your Account Value may be allocated to Fixed Allocations and will remain
allocated for a longer period of time to support the Enhanced Protected
Principal Value, even during a period of positive market performance and/or
under circumstances where Fixed Allocations would not be necessary to support
the Protected Principal Value. Further, there may be circumstances where Fixed
Allocations in support of the Protected Principal Value or Enhanced Protected
Principal Value are transferred to the variable investment options differently
than each other because of the different guarantees they support.
American Skandia uses an allocation mechanism based on assumptions of
expected and maximum market volatility, interest rates and time left to the
maturity of the program to determine the reallocation trigger. The allocation
mechanism is used to determine the allocation of Account Value between Fixed
Allocations and the Sub-accounts you choose. American Skandia reserves the
right to change the allocation mechanism and the reallocation trigger at its
discretion, subject to regulatory approval where required. Changes to the
allocation mechanism and/or the reallocation trigger may be applied to existing
programs where allowed by law.
Election of the Program
The Guaranteed Return Option Plus program can be elected at the time that you
purchase your Annuity, or on any Valuation Day thereafter (prior to
annuitization). If you elect the program after the Issue Date of your Annuity,
the program will be effective as of the Valuation Day that we receive the
required documentation in good order at our home office, and the guaranteed
amount will be based on your Account Value as of that date. If you previously
elected the Guaranteed Return Option program and wish to elect the Guaranteed
Return Option Plus program, your prior Guaranteed Return Option program will be
terminated. Termination of the Guaranteed Return Option for the purpose of
electing the Guaranteed Return Option Plus, will be treated as any other
termination of the Guarantee Return Option (see below), including the
termination of any guaranteed amount, and application of any applicable market
value adjustment when amounts are transferred to the variable investment
options as a result of the termination. The Guaranteed Return Option Plus
program will then be added to your Annuity based on the current Account Value.
Termination of the Program
You can elect to terminate the enhanced guarantee but maintain the protection
provided by the base guarantee. You also can terminate the Guaranteed Return
Option Plus program entirely. If you terminate the program entirely, you can
subsequently elect to participate in the program again (based on the Account
Value on that date) by furnishing the documentation we require. In a rising
market, you could, for example, terminate the program on a given Valuation Day
and two weeks later reinstate the program with a higher base guarantee (and a
new maturity date). However, your ability to reinstate the program is limited
by the following: (A) in any Annuity Year, we do not permit more than two
program elections (including any election made effective on the Annuity issue
date and any election made by a surviving spouse) and (B) a program
reinstatement cannot be effected on the same Valuation Day on which a program
termination was effected. Upon termination, any Account Value in the Fixed
Allocations will be transferred to the variable investment options pro rata
based on the Account Values in such variable investment options, or in
accordance with
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OPTIMUM PLUS(SM) PROSPECTUS
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any effective asset allocation program. A market value adjustment
will apply.
The program will terminate automatically upon: (a) the death of the Owner
or the Annuitant (in an entity owned contract); (b) as of the date Account
Value is applied to begin annuity payments; or (c) upon full surrender of the
Annuity. If you elect to terminate the program, the Guaranteed Return Option
Plus will no longer provide any guarantees. The surviving spouse may elect the
benefit at any time, subject to the limitations described above, after the
death of the Annuity Owner. The surviving spouse's election will be effective
on the Valuation Day that we receive the required documentation in good order
at our home office, and the Account Value on that Valuation Day will be the
Protected Principal Value.
The charge for the Guaranteed Return Option Plus program will no longer be
deducted from your Account Value upon termination of the program.
Special Considerations under the Guaranteed Return Option Plus
This program is subject to certain rules and restrictions, including, but not
limited to the following:
o Upon inception of the program, 100% of your Account Value must be allocated
to the variable investment options. No Fixed Allocations may be in effect
as of the date that you elect to participate in the program. However, the
reallocation trigger may transfer Account Value to Fixed Allocations as of
the effective date of the program under some circumstances.
o You cannot allocate any portion of Purchase Payments (including any Credits
applied to such Purchase Payments) or transfer Account Value to or from a
Fixed Allocation while participating in the program; however, all or a
portion of any Purchase Payments (including any Credits applied to such
Purchase Payments) may be allocated by us to Fixed Allocations to support
the amount guaranteed. You cannot participate in any dollar cost averaging
program that transfers Account Value from a Fixed Allocation to a variable
investment option.
o Transfers from Fixed Allocations made as a result of the allocation
mechanism under the program will be subject to the Market Value Adjustment
formula under the Annuity; however, the 0.10% liquidity factor in the
formula will not apply. A Market Value Adjustment may be either positive or
negative. Transfer amounts will be taken from the most recently established
Fixed Allocation.
o Transfers from the Sub-accounts to Fixed Allocations or from Fixed
Allocations to the Sub-accounts under the program will not count toward the
maximum number of free transfers allowable under the Annuity.
o Any amounts applied to your Account Value by American Skandia on the
maturity date or any anniversary of the maturity date will not be treated
as "investment in the contract" for income tax purposes.
o Low interest rates may require allocation to Fixed Allocations even when
the current Account Value exceeds the guarantee.
o As the time remaining until the applicable maturity date gradually
decreases the program will become increasingly sensitive to moves to Fixed
Allocations.
o We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to an
eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible investment
options will not be counted in determining the number of free transfers
during an Annuity Year. We may also require that you allocate your Account
Value according to an asset allocation model.
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OPTIMUM PLUS(SM) PROSPECTUS
Living Benefit Programs continued
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Charges under the Program
We deduct a charge equal to 0.25% of the average daily net assets of the
Sub-accounts for participation in the Guaranteed Return Option Plus program.
The annual charge is deducted daily. Account Value allocated to Fixed
Allocations under the program is not subject to the charge. The charge is
deducted to compensate American Skandia for: (a) the risk that your Account
Value on the maturity date is less than the amount guaranteed; and (b)
administration of the program.
GUARANTEED RETURN OPTION (GRO)
- --------------------------------------------------------------------------------
The Guaranteed Return Option described below is offered only in those
jurisdictions where we have not yet received regulatory approval for the
Guaranteed Return Option Plus as of the date the election of the option is
made. Certain terms and conditions may differ between jurisdictions. The
program can be elected by new purchasers on the Issue Date of their Annuity,
and can be elected by existing Annuity Owners on either the anniversary of
the Issue Date of their Annuity or on a date other than that anniversary, as
described below under "Election of the Program". The Guaranteed Return
Option is not available if you elect the GRO Plus Rider, the Guaranteed
Minimum Withdrawal Benefit rider, the Guaranteed Minimum Income Benefit
rider, the Lifetime Five Income Benefit rider, the Highest Daily Value Death
Benefit, or the Dollar Cost Averaging program if it involves transfers out
of the Fixed Allocations.
- --------------------------------------------------------------------------------
We offer a program that, after a seven-year period following commencement
of the program (we refer to the end of that period as the "maturity date")
guarantees your Account Value will not be less than your Account Value on the
effective date of your program (called the "Protected Principal Value").
The program monitors your Account Value daily and, if necessary,
systematically transfers amounts between variable investment options you choose
and the Fixed Allocation used to support the Protected Principal Value. The
program may be appropriate if you wish to protect a principal amount against
market downturns as of a specific date in the future, but also wish to invest
in the variable investment options to participate in market performance. There
is an additional charge if you elect the Guaranteed Return Option program.
The guarantees provided by the program exist only on the applicable
maturity date. However, due to the ongoing monitoring of your Account Value and
the transfer of Account Value between the variable investment options and the
Fixed Allocation to support our future guarantee, the program may provide some
protection from significant market losses if you choose to surrender the
Annuity or begin receiving annuity payments prior to a maturity date. For this
same reason, the program may limit your ability to benefit from market
increases while it is in effect.
KEY FEATURE -- Protected Principal Value
o Under the GRO option, American Skandia guarantees that on the maturity
date, your Account Value will be no less than the Protected Principal
Value. On the maturity date if your Account Value is below the Protected
Principal Value, American Skandia will apply additional amounts to your
Annuity from its general account to increase your Account Value to be equal
to the Protected Principal Value.
Any amounts added to your Annuity to support our guarantees under the
program will be applied to the Fixed Allocation first and then to the
Sub-accounts pro-rata, based on your most recent allocation instructions in
accordance with the allocation mechanism we use under the program. We will
notify you of any amounts added to your Annuity under the program. If our
assumptions are correct and the operations relating to the administration of
the program work properly, we do not expect that we will need to add additional
amounts to the Annuity. The Protected Principal Value is generally referred to
as the "Guaranteed Amount" in the rider we issue for this benefit.
KEY FEATURE -- Allocation of Account Value
Account Value is transferred to and maintained in a Fixed Allocation to the
extent we, in our sole discretion, deem it is necessary to support our
guarantee under the program. We monitor fluctuations in your Account Value each
Valuation Day, as well as the prevailing interest rates on the Fixed
Allocation, the remaining duration until the applicable maturity date and the
amount of Account Value allocated to the Fixed Allocation relative to a
"reallocation trigger", which determines whether Account Value must be
transferred to or from the Fixed Allocation. While you are not notified when
your Account Value reaches a reallocation trigger, you will receive a
confirmation statement indicating the transfer of a portion of your Account
Value either to or from the Fixed Allocation.
o If your Account Value is greater than or equal to the reallocation trigger,
your Account Value in the variable investment options will remain allocated
according to your
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OPTIMUM PLUS(SM) PROSPECTUS
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most recent instructions. If a portion of Account Value was
previously allocated to the Fixed Allocation to support the guaranteed
amount, all or a portion of those amounts may be transferred from the
Fixed Allocation and re-allocated to the variable investment options
pro-rata according to your most recent allocation instructions (including
the model allocations under any asset allocation program you may have
elected). A Market Value Adjustment will apply when we reallocate Account
Value from the Fixed Allocation to the variable investment options, which
may result in a decrease or increase in your Account Value.
o If your Account Value is less than the reallocation trigger, a portion of
your Account Value in the variable investment options will be transferred
from your variable investment options pro rata according to your
allocations to a new Fixed Allocation to support the guaranteed amount. The
new Fixed Allocation will have a Guarantee Period equal to the time
remaining until the applicable maturity date. The Account Value allocated
to the new Fixed Allocation will be credited with the fixed interest rate
then being credited to a new Fixed Allocation maturing on the applicable
maturity date (rounded to the next highest yearly duration). The Account
Value will remain invested in the Fixed Allocation until the maturity date
unless, at an earlier date, your Account Value is greater than or equal to
the reallocation trigger and, therefore, amounts can be transferred to the
variable investment options while maintaining the guaranteed protection
under the program (as described above).
- --------------------------------------------------------------------------------
If a significant amount of your Account Value is systematically transferred
to the Fixed Allocation to support the Protected Principal Value during
periods of market declines, low interest rates, and/or as the program nears
its maturity date, less of your Account Value may be available to
participate in the investment experience of the variable investment options
if there is a subsequent market recovery. During periods closer to the
maturity date of the guarantee a significant portion of your Account Value
may be allocated to the Fixed Allocation to support any applicable
guaranteed amount. If your Account Value is less than the reallocation
trigger and a new Fixed Allocation must be established during periods where
the interest rate being credited to such Fixed Allocations is low, a larger
portion of your Account Value may need to be transferred to the Fixed
Allocation to support the guaranteed amount, causing less of your Account
Value to be available to participate in the investment experience of the
variable investment options.
- --------------------------------------------------------------------------------
American Skandia uses an allocation mechanism based on assumptions of
expected and maximum market volatility, interest rates and time left to the
maturity of the program to determine the reallocation trigger. The allocation
mechanism is used to determine the allocation of Account Value between Fixed
Allocation and the Sub-accounts you choose. American Skandia reserves the right
to change the allocation mechanism and the reallocation trigger at its
discretion, subject to regulatory approval where required. Changes to the
allocation mechanism and/or the reallocation trigger may be applied to existing
programs where allowed by law.
45
OPTIMUM PLUS(SM) PROSPECTUS
Living Benefit Programs continued
- --------------------------------------------------------------------------------
Election of the Program
The Guaranteed Return Option can be elected at the time that you purchase your
Annuity, or on any Valuation Day thereafter (prior to annuitization). If you
elect the program after the Issue Date of your Annuity, the program will be
effective as of the Valuation Day that we receive the required documentation in
good order at our home office, and the guaranteed amount will be based on your
Account Value as of that date.
Termination of the Program
The Annuity Owner also can terminate the Guaranteed Return Option program. Upon
termination, any Account Value in the Fixed Allocations will be transferred to
the variable investment options pro rata based on the Account Values in such
variable investment options, or in accordance with any effective asset
allocation program. A Market Value Adjustment will apply.
The program will terminate automatically upon: (a) the death of the Owner
or the Annuitant (in an entity owned contract); (b) as of the date Account
Value is applied to begin annuity payments; or (c) upon full surrender of the
Annuity. If you elect to terminate the program, the Guaranteed Return Option
will no longer provide any guarantees. If the surviving spouse assumes the
Annuity, he/she may re-elect the benefit on any anniversary of the Issue Date
of the Annuity or, if the deceased Owner had not previously elected the
benefit, may elect the benefit at any time. The surviving spouse's election
will be effective on the Valuation Day that we receive the required
documentation in good order at our home office, and the Account Value on that
Valuation Day will be the Protected Principal Value.
The charge for the Guaranteed Return Option program will no longer be
deducted from your Account Value upon termination of the program.
Special Considerations under the Guaranteed
Return Option
This program is subject to certain rules and restrictions, including, but not
limited to the following:
o Upon inception of the program, 100% of your Account Value must be allocated
to the variable investment options. The Fixed Allocations may not be in
effect as of the date that you elect to participate in the program.
However, the reallocation trigger may transfer Account Value to the Fixed
Allocation as of the effective date of the program under some
circumstances.
o Annuity Owners cannot allocate any portion of Purchase Payments (including
any Credits applied to such Purchase Payments) or transfer Account Value to
or from the Fixed Allocation while participating in the program; however,
all or a portion of any Purchase Payments (including any Credits applied to
such Purchase Payments) may be allocated by us to the Fixed Allocation to
support the amount guaranteed. You cannot participate in any dollar cost
averaging program that transfers Account Value from the Fixed Allocation to
a variable investment option.
o Transfers from the Fixed Allocation made as a result of the allocation
mechanism under the program will be subject to the Market Value Adjustment
formula under the Annuity; however, the 0.10% liquidity factor in the
formula will not apply. A Market Value Adjustment may be either positive or
negative. Transfer amounts will be taken from the most recently established
Fixed Allocation.
o Transfers from the Sub-accounts to the Fixed Allocation or from the Fixed
Allocation to the Sub-accounts under the program will not count toward the
maximum number of free transfers allowable under the Annuity.
o Any amounts applied to your Account Value by American Skandia on the
maturity date or any anniversary of the maturity date will not be treated
as "investment in the contract" for income tax purposes.
o Low interest rates may require allocation to the Fixed Allocation even when
the current Account Value exceeds the guarantee.
o As the time remaining until the applicable maturity date gradually
decreases the program will become increasingly sensitive to moves to the
Fixed Allocation.
o We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program.
o We reserve the right to transfer any Account Value in a prohibited
investment option to an eligible investment option. Should we prohibit
access to any investment option, any transfers required to move Account
Value to eligible investment options will not be counted in determining the
number of free transfers during an Annuity Year. We may also require that
you allocate your Account Value according to an asset allocation model.
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OPTIMUM PLUS(SM) PROSPECTUS
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Charges under the Program
We deduct a charge equal to 0.25% of the average daily net assets of the
sub-accounts for participation in the Guaranteed Return Option program. The
annual charge is deducted daily. Account Value allocated to Fixed Allocations
under the program is not subject to the charge. The charge is deducted to
compensate American Skandia for: (a) the risk that your Account Value on the
maturity date is less than the amount guaranteed; and (b) administration of the
program.
GUARANTEED MINIMUM WITHDRAWAL
BENEFIT (GMWB)
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The Guaranteed Minimum Withdrawal Benefit program described below is only
being offered in those jurisdictions where we have received regulatory
approval and will be offered subsequently in other jurisdictions when we
receive regulatory approval in those jurisdictions. Certain terms and
conditions may differ between jurisdictions once approved. Currently, the
program can only be elected by new purchasers on the Issue Date of their
Annuity. We may offer the program to existing Annuity Owners in the future,
subject to our eligibility rules and restrictions. The Guaranteed Minimum
Withdrawal Benefit program is not available if you elect the Guaranteed
Return Option, Guaranteed Return Option Plus, the Guaranteed Minimum Income
Benefit rider, or the Lifetime Five Income Benefit rider.
- --------------------------------------------------------------------------------
We offer a program that guarantees your ability to withdraw amounts equal to
an initial principal value (called the "Protected Value"), regardless of the
impact of market performance on your Account Value, subject to our program
rules regarding the timing and amount of withdrawals. The program may be
appropriate if you intend to make periodic withdrawals from your Annuity and
wish to ensure that market performance will not affect your ability to protect
your principal. You are not required to make withdrawals as part of the program
- -- the guarantee is not lost if you withdraw less than the maximum allowable
amount of principal each year under the rules of the program. There is an
additional charge if you elect the GMWB program; however, the charge may be
waived under certain circumstances described below.
KEY FEATURE -- Protected Value
The Protected Value is the total amount that we guarantee will be available to
you through withdrawals from your Annuity and/or benefit payments, regardless
of the impact of market performance on your Account Value. The Protected Value
is reduced with each withdrawal you make until the Protected Value is reduced
to zero. When the Protected Value is reduced to zero due to your withdrawals,
the GMWB program terminates. Additionally, the Protected Value is used to
determine the maximum annual amount that you can withdraw from your Annuity,
called the Protected Annual Withdrawal Amount, without triggering an adjustment
in the Protected Value on a proportional basis. The Protected Value is referred
to as the "Benefit Base" in the rider we issue for this benefit.
The Protected Value is determined as of the date you make your first
withdrawal under the Annuity following your election of the GMWB program. The
initial Protected Value is equal to the greater of (A) the Account Value on the
date you elect the GMWB program, plus any additional Purchase Payments and any
Credits that may be applied to such Purchase Payments before the date of your
first withdrawal; or (B) the Account Value as of the date of the first
withdrawal from your Annuity. The Protected Value may be enhanced by increases
in your Account Value due to market performance during the period between your
election of the GMWB program and the date of your first withdrawal.
o If you elect the GMWB program at the time you purchase your Annuity, the
Account Value will be your initial Purchase Payment plus any Credit applied
to such Purchase Payment.
o If we offer the GMWB program to existing Annuity Owners, the Account Value
on the anniversary of the Issue Date of your Annuity following your
election of the GMWB program will be used to determine the initial
Protected Value.
o If you make additional Purchase Payments after your first withdrawal, the
Protected Value will be increased by the amount of the additional Purchase
Payment and any Credits that we apply to the Purchase Payment.
You may elect to step-up your Protected Value if, due to positive market
performance, your Account Value is greater than the Protected Value. You are
eligible to step-up the Protected Value on or after the 5th contract
anniversary following the first withdrawal under the GMWB program. The
Protected
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OPTIMUM PLUS(SM) PROSPECTUS
Living Benefit Programs continued
- --------------------------------------------------------------------------------
Value can be stepped up again on or after the 5th contract anniversary following
the preceding step-up. If you elect to step-up the Protected Value, you must do
so during the 30-day period prior to your eligibility date. If you elect to
step-up the Protected Value under the program, and on the date you elect to
step-up, the charges under the GMWB program have changed for new purchasers,
your program may be subject to the new charge going forward.
Upon election of the step-up, we reset the Protected Value to be equal to
the then current Account Value. For example, assume your initial Protected
Value was $100,000 and you have made cumulative withdrawals of $40,000,
reducing the Protected Value to $60,000. On the date you are eligible to
step-up the Protected Value, your Account Value is equal to $75,000. You could
elect to step-up the Protected Value to $75,000 on the date you are eligible.
Upon election of the step-up, we also reset the Protected Annual Withdrawal
Amount (discussed immediately below) to be equal to the greater of (A) the
Protected Annual Withdrawal Amount immediately prior to the reset; and (B) 7%
of the Protected Value immediately after the reset.
KEY FEATURE -- Protected Annual
Withdrawal Amount
The initial Protected Annual Withdrawal Amount is equal to 7% of the Protected
Value. Under the GMWB program, if your cumulative withdrawals each Annuity Year
are less than or equal to the Protected Annual Withdrawal Amount, your
Protected Value will be reduced on a "dollar-for-dollar" basis (the Protected
Value is reduced by the actual amount of the withdrawal, including any CDSC or
MVA that may apply). Cumulative withdrawals in any Annuity Year that exceed the
Protected Annual Withdrawal Amount trigger a proportional adjustment to both
the Protected Value and the Protected Annual Withdrawal Amount, as described in
the rider for this benefit (see the examples of this calculation below). The
Protected Annual Withdrawal Amount is referred to as the "Maximum Annual
Benefit" in the rider we issue for this benefit.
The GMWB program does not affect your ability to make withdrawals under
your Annuity or limit your ability to request withdrawals that exceed the
Protected Annual Withdrawal Amount. You are not required to withdraw all or any
portion of the Protected Annual Withdrawal Amount each Annuity Year.
o If, cumulatively, you withdraw an amount less than the Protected Annual
Withdrawal Amount in any Annuity Year, you cannot carry-over the unused
portion of the Protected Annual Withdrawal Amount to subsequent Annuity
Years. However, because the Protected Value is only reduced by the actual
amount of withdrawals you make under these circumstances, any unused
Protected Annual Withdrawal Amount may extend the period of time until the
remaining Protected Value is reduced to zero.
o Additional Purchase Payments will increase the Protected Annual Withdrawal
Amount by 7% of the applicable Purchase Payment (and any Credits we apply
to such Purchase Payment).
o If the Protected Annual Withdrawal Amount after an adjustment exceeds the
Protected Value, the Protected Annual Withdrawal Amount will be set equal
to the Protected Value.
The following examples of dollar-for-dollar and proportional reductions
and the reset of the Maximum Annual Benefit assume that: 1.) the Issue Date and
the effective date of the GMWB program are October 13, 2004; 2.) an initial
Purchase Payment of $250,000 (includes any Credits); 3.) a Protected Value of
$250,000; and 4.) a Protected Annual Withdrawal Amount of $17,500 (7% of
$250,000):
Example 1. Dollar-for-dollar reduction
A $10,000 withdrawal is taken on November 13, 2004 (in the first Annuity Year).
No prior withdrawals have been taken. As the amount withdrawn is less than the
Protected Annual Withdrawal Amount:
o The Protected Value is reduced by the amount withdrawn (i.e., by $10,000,
from $250,000 to $240,000).
o The remaining Protected Annual Withdrawal Amount for the balance of the
first Annuity Year is also reduced by the amount withdrawn (from $17,500 to
$7,500).
Example 2. Dollar-for-dollar and proportional reductions
A second $10,000 withdrawal is taken on December 13, 2004 (still within the
first Annuity Year). The Account Value immediately before the withdrawal is
$220,000. As the amount withdrawn exceeds the remaining Protected Annual
Withdrawal Amount of $7,500 from Example 1:
o the Protected Value is first reduced by the remaining Protected Annual
Withdrawal Amount (from $240,000 to $232,500);
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OPTIMUM PLUS(SM) PROSPECTUS
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o The result is then further reduced by the ratio of A to B,
where:
o A is the amount withdrawn less the remaining Protected Annual Withdrawal
Amount ($10,000 - $7,500, or $2,500).
o B is the Account Value less the remaining Protected Annual Withdrawal
Amount ($220,000 - $7,500, or $212,500). The resulting Protected Value is:
$232,500 x (1 - $2,500 / $212,500), or $229,764.71.
o the Protected Annual Withdrawal Amount is also reduced by the ratio of A to
B: The resulting Protected Annual Withdrawal Amount is: $17,500 x (1 -
$2,500 / $212,500), or $17,294.12.
o The remaining Protected Annual Withdrawal Amount is set to zero (0) for the
balance of the first Annuity Year.
Example 3. Reset of the Maximum Annual Benefit
A $10,000 withdrawal is made on October 13, 2005 (second Annuity Year). The
remaining Protected Annual Withdrawal Amount has been reset to the Protected
Annual Withdrawal Amount of $17,294.12 from Example 2. As the amount withdrawn
is less than the remaining Protected Annual Withdrawal Amount:
o the Protected Value is reduced by the amount withdrawn (i.e., reduced by
$10,000, from $229,764.71 to $219,764.71).
o The remaining Protected Annual Withdrawal Amount for the balance of the
second Annuity Year is also reduced by the amount withdrawn (from
$17,294.12 to $7,294.12).
Benefits Under the GMWB Program
o In addition to any withdrawals you make under the GMWB program, market
performance may reduce your Account Value. If your Account Value is equal
to zero, and you have not received all of your Protected Value in the form
of withdrawals from your Annuity, we will continue to make payments equal
to the remaining Protected Value in the form of fixed, periodic payments
until the remainder of the Protected Value is paid, at which time the rider
terminates. The fixed, periodic payments will each be equal to the
Protected Annual Withdrawal Amount, except for the last payment which may
be equal to the remaining Protected Value. We will determine the duration
for which periodic payments will continue by dividing the Protected Value
by the Protected Annual Withdrawal Amount. You will not have the right to
make additional Purchase Payments or receive the remaining Protected Value
in a lump sum. You can elect the frequency of payments, subject to our
rules then in effect.
o If the death benefit under the Annuity becomes payable before you have
received all of your Protected Value in the form of withdrawals from your
Annuity, your Beneficiary has the option to elect to receive the remaining
Protected Value as an alternate death benefit payout in lieu of the amount
payable under any other death benefit provided under the Annuity. The
remaining Protected Value will be payable in the form of fixed, periodic
payments. Your beneficiary can elect the frequency of payments, subject to
our rules then in effect. We will determine the duration for which periodic
payments will continue by dividing the Protected Value by the Protected
Annual Withdrawal Amount. The Protected Value is not equal to the Account
Value for purposes of the Annuity's other death benefit options. The GMWB
program does not increase or decrease the amount otherwise payable under
the Annuity's other death benefit options. Generally, the GMWB program
would be of value to your Beneficiary only when the Protected Value at
death exceeds any other amount available as a death benefit.
o If you elect to begin receiving annuity payments before you have received
all of your Protected Value in the form of withdrawals from your Annuity,
an additional annuity payment option will be available that makes fixed
annuity payments for a certain period, determined by dividing the Protected
Value by the Protected Annual Withdrawal Amount. If you elect to receive
annuity payments calculated in this manner, the assumed interest rate used
to calculate such payments will be 0%, which is less than the assumed
interest rate on other annuity payment options we offer. This 0% assumed
interest rate results in lower annuity payments than what would have been
paid if the assumed interest rate was higher than 0%. You can also elect to
terminate the GMWB program and begin receiving annuity payments based on
your then current Account Value (not the remaining Protected Value) under
any of the available annuity payment options.
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OPTIMUM PLUS(SM) PROSPECTUS
Living Benefit Programs continued
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Other Important Considerations
o Withdrawals under the GMWB program are subject to all of the terms and
conditions of the Annuity, including any CDSC and MVA that may apply.
o Withdrawals made while the GMWB program is in effect will be treated, for
tax purposes, in the same way as any other withdrawals under the Annuity.
o The GMWB program does not directly affect the Annuity's Account Value or
Surrender Value, but any withdrawal will decrease the Account Value by the
amount of the withdrawal. If you surrender your Annuity, you will receive
the current Surrender Value, not the Protected Value.
o You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the GMWB program. The GMWB program
provides a guarantee that if your Account Value declines due to market
performance, you will be able to receive your Protected Value in the form
of periodic benefit payments.
o We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to an
eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible investment
options will not be counted in determining the number of free transfers
during an Annuity year. We may also require that you allocate your Account
Value according to an asset allocation model.
Election of the Program
Currently, the GMWB program can only be elected at the time that you purchase
your Annuity. In the future, we may offer existing Annuity Owners the option to
elect the GMWB program after the Issue Date of their Annuity, subject to our
eligibility rules and restrictions. If you elect the GMWB program after the
Issue Date of your Annuity, the program will be effective as of the next
anniversary date. Your Account Value as of such anniversary date will be used
to calculate the initial Protected Value and the initial Protected Annual
Withdrawal Amount.
We reserve the right to restrict the maximum amount of Protected Value
that may be covered under the GMWB program under this Annuity or any other
annuities that you own that are issued by American Skandia or its affiliated
companies.
Termination of the Program
The program terminates automatically when your Protected Value reaches zero
based on your withdrawals. You may terminate the program at any time by
notifying us. If you terminate the program, any guarantee provided by the
benefit will terminate as of the date the termination is effective. The program
terminates upon your surrender of the Annuity, upon due proof of death (unless
your surviving spouse elects to continue the Annuity and the GMWB program or
your Beneficiary elects to receive the amounts payable under the GMWB program
in lieu of the death benefit) or upon your election to begin receiving annuity
payments.
The charge for the GMWB program will no longer be deducted from your
Account Value upon termination of the program.
Charges under the Program
Currently, we deduct a charge equal to 0.35% of the average daily net assets of
the Sub-accounts per year to purchase the GMWB program. The annual charge is
deducted daily. Account Value allocated to Fixed Allocations under the program
is not subject to the charge.
o If, during the seven years following the effective date of the program, you
do not make any withdrawals, and do not make any additional Purchase
Payments after a five-year period following the effective date of the
program, the program will remain in effect; however, we will waive the
annual charge going forward. If you make an additional Purchase Payment
following the waiver of the annual charge, we will begin charging for the
program. After year seven (7) following the effective date of the program,
withdrawals will not cause a charge to be re-imposed.
o If you elect to step-up the Protected Value under the program, and on the
date you elect to step-up, the charges under the program have changed for
new purchasers, your program may be subject to the new charge level for the
benefit.
Additional Tax Considerations for Qualified Contracts
If you purchase an Annuity as an investment vehicle for "qualified"
investments, including an IRA, SEP-IRA, Roth IRA or Tax Sheltered Annuity (or
403(b)), the minimum distribution rules under the Code require that you begin
receiving periodic amounts from your Annuity beginning after age 70-1/2. The
amount required under the Code may exceed the Protected
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Annual Withdrawal Amount, which will cause us to recalculate the Protected Value
and the Protected Annual Withdrawal Amount, resulting in a lower amount payable
in future Annuity Years. In addition, the amount and duration of payments under
the annuity payment and death benefit provisions may be adjusted so that the
payments do not trigger any penalty or excise taxes due to tax considerations
such as minimum distribution requirements.
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
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The Guaranteed Minimum Income Benefit program described below is only being
offered in those jurisdictions where we have received regulatory approval,
and will be offered subsequently in other jurisdictions when we receive
regulatory approval in those jurisdictions. Certain terms and conditions may
differ between jurisdictions once approved. Currently, the program can only
be elected by new purchasers on the Issue Date of their Annuity. We may
offer the program to existing Annuity Owners in the future, subject to our
eligibility rules and restrictions. The Guaranteed Minimum Income Benefit
program is not available if you elect the Guaranteed Return Option program,
Guaranteed Return Option Plus program, the Guaranteed Minimum Withdrawal
Benefit rider, or the Lifetime Five Income Benefit rider.
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We offer a program that, after a seven-year waiting period, guarantees
your ability to begin receiving income from your Annuity in the form of annuity
payments based on a guaranteed minimum value (called the "Protected Income
Value") that increases after the waiting period begins, regardless of the
impact of market performance on your Account Value. The program may be
appropriate for you if you anticipate using your Annuity as a future source of
periodic fixed income payments for the remainder of your life and wish to
ensure that the basis upon which your income payments will be calculated will
achieve at least a minimum amount despite fluctuations in market performance.
There is an additional charge if you elect the GMIB program.
KEY FEATURE -- Protected Income Value
The Protected Income Value is the minimum amount that we guarantee will be
available (net of any applicable tax charge), after a waiting period of at
least seven years, as a basis to begin receiving fixed annuity payments. The
Protected Income Value is initially established on the effective date of the
GMIB program and is equal to your Account Value on such date. Currently, since
the GMIB program may only be elected at issue, the effective date is the Issue
Date of the Annuity. The Protected Income Value is increased daily based on an
annual growth rate of 5%, subject to the limitations described below. The
Protected Income Value is referred to as the "Protected Value" in the rider we
issue for this benefit. The 5% annual growth rate is referred to as the
"Roll-Up Percentage" in the rider we issue for this benefit.
The Protected Income Value is subject to a limit of 200% (2X) of the sum
of the Protected Income Value established on the effective date of the GMIB
program, or the effective date of any step-up value, plus any additional
Purchase Payments and any Credits that are applied to such Purchase Payments
made after the waiting period begins ("Maximum Protected Income Value"), minus
the sum of any reductions in the Protected Income Value due to withdrawals you
make from the Annuity after the waiting period begins.
o Subject to the maximum age/durational limits described immediately below,
we will no longer increase the Protected Income Value by the 5% annual
growth rate once you reach the Maximum Protected Income Value. However, we
will increase the Protected Income Value by the amount of any additional
Purchase Payments and any Credits applied to such Purchase Payments after
you reach the Maximum Protected Income Value. Further, if you make
withdrawals after you reach the Maximum Protected Income Value, we will
reduce the Protected Income Value and the Maximum Protected Income Value by
the proportional impact of the withdrawal on your Account Value.
o Subject to the Maximum Protected Income Value, we will no longer increase
the Protected Income Value by the 5% annual growth rate after the later of
the anniversary date on or immediately following the Annuitant's 80th
birthday or the 7th
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Living Benefit Programs continued
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anniversary of the later of the effective date of the GMIB program or the
effective date of the most recent step-up. However, we will increase the
Protected Income Value by the amount of any additional Purchase Payments
and any Credits applied to such Purchase Payments. Further, if you make
withdrawals after the Annuitant reaches the maximum age/ duration limits,
we will reduce the Protected Income Value and the Maximum Protected Income
Value by the proportional impact of the withdrawal on your Account Value.
o Subject to the Maximum Protected Income Value, if you make an additional
Purchase Payment, we will increase the Protected Income Value by the amount
of the Purchase Payment (including any Credits that may be applied to your
Account Value based on such Purchase Payment) and will apply the 5% annual
growth rate on the new amount from the date the Purchase Payment is
applied.
o As described below, after the waiting period begins, cumulative withdrawals
each Annuity Year that are up to 5% of the Protected Income Value on the
prior anniversary of the Annuity will reduce the Protected Income Value by
the amount of the withdrawal. Cumulative withdrawals each Annuity Year in
excess of 5% of the Protected Income Value on the prior anniversary of the
Annuity, will reduce the Protected Income Value proportionately. All
withdrawals after the Maximum Protected Income Value is reached will reduce
the Protected Income Value proportionately. The 5% annual growth rate will
be applied to the reduced Protected Income Value from the date of the
withdrawal.
Stepping-Up the Protected Income Value -- You may elect to "step-up" or
"reset" your Protected Income Value if your Account Value is greater than the
current Protected Income Value. Upon exercise of the step-up provision, your
initial Protected Income Value will be reset equal to your current Account
Value. From the date that you elect to step-up the Protected Income Value, we
will apply the 5% annual growth rate to the stepped-up Protected Income Value,
as described above. You can exercise the step-up provision twice while the GMIB
program is in effect, and only while the Annuitant is less than age 76.
o A new seven-year waiting period will be established upon the effective date
of your election to step-up the Protected Income Value. You cannot exercise
your right to begin receiving annuity payments under the GMIB program until
the end of the new waiting period.
o The Maximum Protected Income Value will be reset as of the effective date
of any step-up. The new Maximum Protected Income Value will be equal to
200% of the sum of the Protected Income Value as of the effective date of
the step-up plus any subsequent Purchase Payments and any Credits applied
to such Purchase Payments, minus the impact of any withdrawals after the
date of the step-up.
o When determining the guaranteed annuity purchase rates for annuity payments
under the GMIB program, we will apply such rates based on the number of
years since the most recent step-up.
o If you elect to step-up the Protected Income Value under the program, and
on the date you elect to step-up, the charges under the GMIB program have
changed for new purchasers, your program may be subject to the new charge
going forward.
o A step-up will increase the dollar for dollar limit on the anniversary of
the Issue Date of the Annuity following such step-up.
Impact of Withdrawals on the Protected Income Value -- Cumulative
withdrawals each Annuity Year up to 5% of the Protected Income Value will
reduce the Protected Income Value on a "dollar-for-dollar" basis (the Protected
Income Value is reduced by the actual amount of the withdrawal). Cumulative
withdrawals in any Annuity Year in excess of 5% of the Protected Income Value
will reduce the Protected Income Value proportionately (see the examples of
this calculation below). The 5% annual withdrawal amount is determined on each
anniversary of the Issue Date (or on the Issue Date for the first Annuity Year)
and applies to any withdrawals during the Annuity Year. This means that the
amount available for withdrawals each Annuity Year on a "dollar-for-dollar"
basis is adjusted on each contract anniversary to reflect changes in the
Protected Income Value during the prior Annuity Year.
The following examples of dollar-for-dollar and proportional reductions
assume that: 1.) the Issue Date and the effective date of the GMIB program are
October 13, 2005; 2.) an initial Purchase Payment of $250,000 (includes any
Credits); 3.) an initial Protected Income Value of $250,000; and 4.) a dollar-
for-dollar limit of $12,500 (5% of $250,000):
Example 1. Dollar-for-dollar reduction
A $10,000 withdrawal is taken on November 13, 2005 (in the first Annuity Year).
No prior withdrawals have been taken. Immediately prior to the withdrawal, the
Protected Income
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Value is $251,038.10 (the initial value accumulated for 31 days
at an annual effective rate of 5%). As the amount withdrawn is less than the
dollar-for-dollar limit:
o the Protected Income Value is reduced by the amount withdrawn (i.e., by
$10,000, from $251,038.10 to $241,038.10).
o The remaining dollar-for-dollar limit ("Remaining Limit") for the balance
of the first Annuity Year is also reduced by the amount withdrawn (from
$12,500 to $2,500).
Example 2. Dollar-for-dollar and proportional reductions
A second $10,000 withdrawal is taken on December 13, 2005 (still within the
first Annuity Year). Immediately before the withdrawal, the Account Value is
$220,000 and the Protected Income Value is $242,006.64. As the amount withdrawn
exceeds the Remaining Limit of $2,500 from Example 1:
o the Protected Income Value is first reduced by the Remaining Limit (from
$242,006.64 to $239,506.64);
o The result is then further reduced by the ratio of A to B, where:
o A is the amount withdrawn less the Remaining Limit ($10,000 - $2,500,
or $7,500).
o B is the Account Value less the Remaining Limit ($220,000 - $2,500, or
$217,500).
The resulting Protected Income Value is: $239,506.64 x (1 - $7,500 /
$217,500), or $231,247.79.
o The Remaining Limit is set to zero (0) for the balance of the first Annuity
Year.
Example 3. Reset of the Dollar-for-dollar Limit
A $10,000 withdrawal is made on the first anniversary of the Issue Date,
October 13, 2006 (second Annuity Year). Prior to the withdrawal, the Protected
Income Value is $240,838.37. The Remaining Limit is reset to 5% of this amount,
or $12,041.92. As the amount withdrawn is less than the dollar-for-dollar
limit:
o the Protected Income Value is reduced by the amount withdrawn (i.e.,
reduced by $10,000, from $240,838.37 to $230,838.37).
o The Remaining Limit for the balance of the second Annuity Year is also
reduced by the amount withdrawn (from $12,041.92 to $2,041.92).
KEY FEATURE -- GMIB Annuity Payments
You can elect to apply the Protected Income Value to one of the available GMIB
Annuity Payment Options on any anniversary date following the initial waiting
period, or any subsequent waiting period established upon your election to
step-up the Protected Income Value. Once you have completed the waiting period,
you will have a 30-day period each year, prior to the contract anniversary,
during which you may elect to begin receiving annuity payments under one of the
available GMIB Annuity Payment Options. You must elect one of the GMIB Annuity
Payment Options by the anniversary of the Annuity's Issue Date on or
immediately following the Annuitant's 95th birthday, except for Annuities used
as a funding vehicle for an IRA, SEP IRA or 403(b), in which case you must
elect one of the GMIB Annuity Payment Options by the anniversary of the
Annuity's Issue Date on or immediately following the Annuitant's 92nd birthday.
The amount of each GMIB Annuity Payment will be determined based on the
age and, where permitted by law, sex of the Annuitant by applying the Protected
Income Value (net of any applicable tax charge that may be due) to the GMIB
Annuity Payment Option you choose. We use special annuity purchase rates to
calculate the amount of each payment due under the GMIB Annuity Payment
Options. These special rates for the GMIB Annuity Payment Options are
calculated using an assumed interest rate factor that provides for lower growth
in the value applied to produce annuity payments than if you elected an annuity
payment option that is not part of the GMIB program. These special rates also
are calculated using other factors such as "age setbacks" (use of an age lower
than the Annuitant's actual age) that result in lower payments than would
result if you elected an annuity payment option that is not part of the GMIB
program. Use of an age setback entails a longer assumed life for the Annuitant
which in turn results in lower annuity payments.
On the date that you elect to begin receiving GMIB Annuity Payments, we
guarantee that your payments will be calculated based on your Account Value and
our then current annuity purchase rates if the payment amount calculated on
this basis would be higher than it would be based on the Protected Income Value
and the special GMIB annuity purchase rates.
GMIB Annuity Payment Option 1 -- Payments for Life with a Certain Period
Under this option, monthly annuity payments will be made until the death of the
Annuitant. If the Annuitant dies before having received 120 monthly annuity
payments, the remainder of the 120 monthly annuity payments will be made to the
Beneficiary.
GMIB Annuity Payment Option 2 -- Payments for Joint Lives with a Certain Period
Under this option, monthly annuity payments will be made until the death of
both the Annuitant and the Joint Annuitant. If the
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Living Benefit Programs continued
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Annuitant and the Joint Annuitant die before having received 120 monthly annuity
payments, the remainder of the 120 monthly annuity payments will be made to the
Beneficiary.
o If the Annuitant dies first, we will continue to make payments until the
later of the death of the Joint Annuitant and the end of the period
certain. However, if the Joint Annuitant is still receiving annuity
payments following the end of the certain period, we will reduce the amount
of each subsequent payment to 50% of the original payment amount.
o If the Joint Annuitant dies first, we will continue to make payments until
the later of the death of the Annuitant and the end of the period certain.
You cannot withdraw your Account Value or the Protected Income Value under
either GMIB Annuity Payment Option once annuity payments have begun. We may
make other payout frequencies available, such as quarterly, semi-annually or
annually.
Other Important Considerations
o You should note that GMIB is designed to provide a type of insurance that
serves as a safety net only in the event your Account Value declines
significantly due to negative investment performance. If your contract
value is not significantly affected by negative investment performance, it
is unlikely that the purchase of the GMIB will result in your receiving
larger annuity payments than if you had not purchased GMIB. This is because
the assumptions that we use in computing the GMIB, such as the annuity
purchase rates, (which include assumptions as to age-setbacks and assumed
interest rates), are more conservative than the assumptions that we use in
computing annuity payout options outside of GMIB. Therefore, you may
generate higher income payments if you were to annuitize a lower Account
Value at the current annuity purchase rates, than if you were to annuitize
under the GMIB with a higher Protected Value than your Account Value but,
at the annuity purchase rates guaranteed under the GMIB. The GMIB program
does not directly affect the Annuity's Account Value, Surrender Value or
the amount payable under either the basic death benefit provision of the
Annuity or any optional death benefit provision. If you surrender your
Annuity, you will receive the current Surrender Value, not the Protected
Income Value. The Protected Income Value is only applicable if you elect to
begin receiving annuity payments under one of the GMIB annuity options
after the waiting period.
o The Annuity offers other annuity payment options that you can elect which
do not impose an additional charge, but which do not offer to guarantee a
minimum value on which to make annuity payments.
o Where allowed by law, we reserve the right to limit subsequent purchase
payments if we determine, at our sole discretion, that based on the timing
of your Purchase Payments and withdrawals, your Protected Income Value is
increasing in ways we did not intend. In determining whether to limit
Purchase Payments, we will look at Purchase Payments which are
disproportionately larger than your initial Purchase Payment and other
actions that may artificially increase the Protected Income Value.
o We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to an
eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible investment
options will not be counted in determining the number of free transfers
during an Annuity Year. We may also require that you allocate your Account
Value according to an asset allocation model.
o If you change the Annuitant after the effective date of the GMIB program,
the period of time during which we will apply the 5% annual growth rate may
be changed based on the age of the new Annuitant. If the new Annuitant
would not be eligible to elect the GMIB program based on his or her age at
the time of the change, then the GMIB program will terminate.
o Annuity payments made under the GMIB program are subject to the same tax
treatment as any other annuity payment.
o At the time you elect to begin receiving annuity payments under the GMIB
program or under any other annuity payment option we make available, the
protection provided by the Annuity's basic death benefit or any optional
death benefit provision you elected will no longer apply.
Election of the Program
Currently, the GMIB program can only be elected at the time that you purchase
your Annuity. The Annuitant must be age 75 or less as of the effective date of
the GMIB program. In the future, we may offer existing Annuity Owners the
option to elect the GMIB program after the Issue Date of their Annuity, subject
to our eligibility rules and restrictions. If you elect the
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OPTIMUM PLUS(SM) PROSPECTUS
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GMIB program after the Issue Date of your Annuity, the pro- gram will be
effective as of the date of election. Your Account Value as of the that date
will be used to calculate the Protected Income Value as of the effective date of
the program.
Termination of the Program
The GMIB program cannot be terminated by the Owner once elected. The GMIB
program automatically terminates as of the date the Annuity is fully
surrendered, on the date the death benefit is payable to your Beneficiary
(unless your surviving spouse elects to continue the Annuity), or on the date
that your Account Value is transferred to begin making annuity payments. The
GMIB program may also be terminated if you designate a new Annuitant who would
not be eligible to elect the GMIB program based on his or her age at the time
of the change.
Upon termination of the GMIB program we will deduct the charge from your
Account Value for the portion of the Annuity Year since the prior anniversary
of the Annuity's Issue Date (or the Issue Date if in the first Annuity Year).
Charges under the Program
Currently, we deduct a charge equal to 0.50% per year of the average Protected
Income Value for the period the charge applies. Because the charge is
calculated based on the average Protected Income Value, it does not increase or
decrease based on changes to the Annuity's Account Value due to market
performance. The dollar amount you pay each year will increase in any year the
Protected Income Value increases, and it will decrease in any year the
Protected Income Value decreases due to withdrawal, irrespective of whether
your Account Value increases or decreases.
The charge is deducted annually in arrears each Annuity Year on the
anniversary of the Issue Date of the Annuity. We deduct the amount of the
charge pro-rata from the Account Value allocated to the variable investment
options and the Fixed Allocations. No MVA will apply to Account Value deducted
from a Fixed Allocation. If you surrender your Annuity, begin receiving annuity
payments under the GMIB program or any other annuity payment option we make
available during an Annuity Year, or the GMIB program terminates, we will
deduct the charge for the portion of the Annuity Year since the prior
anniversary of the Annuity's Issue Date (or the Issue Date if in the first
Annuity Year).
No charge applies after the Annuity Date.
LIFETIME FIVE INCOME BENEFIT (LIFETIME FIVE)
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The Lifetime Five Income Benefit program described below is only being
offered in those jurisdictions where we have received regulatory approval
and will be offered subsequently in other jurisdictions when we receive
regulatory approval in those jurisdictions. Certain terms and conditions may
differ between jurisdictions once approved. Currently, Lifetime Five can be
elected only once each Annuity Year, and only where the Annuitant and the
Owner are the same person or, if the Annuity Owner is an entity, where there
is only one Annuitant. We reserve the right to limit the election frequency
in the future. Before making any such change to the election frequency, we
will provide prior notice to Owners who have an effective Lifetime Five
Income Benefit. The Annuitant must be at least 45 years old when the program
is elected. The Lifetime Five Income Benefit program is not available if you
elect the Guaranteed Return Option, Guaranteed Return Option Plus,
Guaranteed Minimum Withdrawal Benefit or the Guaranteed Minimum Income
Benefit rider. As long as your Lifetime Five Income Benefit is in effect,
you must allocate your Account Value in accordance with an eligible model
under our asset allocation programs, which are generally described in the
"Are Any Asset Allocation Programs Available?" section above.
For further information on asset allocation programs, please consult with
your investment professional or call 1-800-752-6342.
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We offer a program that guarantees your ability to withdraw amounts equal
to a percentage of an initial principal value (called the "Protected Withdrawal
Value"), regardless of the impact of market performance on your Account Value,
subject to our program rules regarding the timing and amount of withdrawals.
There are two options -- one is designed to provide an annual withdrawal amount
for life (the "Life Income Benefit") and the other is designed to provide a
greater annual withdrawal amount as long as there is Protected Withdrawal Value
(adjusted as described below) (the "Withdrawal Benefit"). If there is no
Protected Withdrawal Value, the withdrawal benefit will be zero. You do not
choose between these
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two options; each option will continue to be available as long as the Annuity
has an Account Value and the Lifetime Five is in effect. Certain benefits under
Lifetime Five may remain in effect even if the Account Value of the Annuity is
zero. The program may be appropriate if you intend to make periodic withdrawals
from your Annuity and wish to ensure that market performance will not affect
your ability to receive annual payments. You are not required to make
withdrawals as part of the program -- the guarantees are not lost if you
withdraw less than the maximum allowable amount each year under the rules of the
program.
KEY FEATURE -- Protected Withdrawal Value
The Protected Withdrawal Value is initially used to determine the amount of
each initial annual payment under the Life Income Benefit and the Withdrawal
Benefit. The initial Protected Withdrawal Value is determined as of the date
you make your first withdrawal under the Annuity following your election of
Lifetime Five. The initial Protected Withdrawal Value is equal to the greater
of (A) the Account Value on the date you elect Lifetime Five, plus any
additional Purchase Payments and associated Credits each growing at 5% per year
from the date of your election of the program, or application of the Purchase
Payment and associated Credit to your Annuity, as applicable, until the date of
your first withdrawal or the 10th anniversary of the benefit effective date, if
earlier (B) the Account Value as of the date of the first withdrawal from your
Annuity, prior to the withdrawal, and (C) the highest Account Value on each
Annuity anniversary prior to the first withdrawal or on the first 10 Annuity
anniversaries if earlier than the date of your first withdrawal after the
benefit effective date. Each value is increased by the amount of any subsequent
Purchase Payments and associated Credits.
o If you elect the Lifetime Five program at the time you purchase your
Annuity, the Account Value will be your initial Purchase Payment plus the
amount of any associated Credits.
o For existing Owners who are electing the Lifetime Five benefit, the Account
Value on the date of your election of the Lifetime Five program will be
used to determine the initial Protected Withdrawal Value.
o If you make additional Purchase Payments after your first withdrawal, the
Protected Withdrawal Value will be increased by the amount of each
additional Purchase Payment plus associated Credits.
You may elect to step-up your Protected Withdrawal Value if, due to
positive market performance, your Account Value is greater than the Protected
Withdrawal Value. You are eligible to step-up the Protected Withdrawal Value on
or after the 5th anniversary of the first withdrawal under the Lifetime Five
program. The Protected Withdrawal Value can be stepped up again on or after the
5th anniversary following the preceding step-up. If you elect to step-up the
Protected Withdrawal Value under the program, and on the date you elect to
step-up, the charges under the Lifetime Five program have changed for new
purchasers, your program may be subject to the new charge going forward.
Upon election of the step-up, we increase the Protected Withdrawal Value
to be equal to the then current Account Value. For example, assume your initial
Protected Withdrawal Value was $100,000 and you have made cumulative
withdrawals of $40,000, reducing the Protected Withdrawal Value to $60,000. On
the date you are eligible to step-up the Protected Withdrawal Value, your
Account Value is equal to $75,000. You could elect to step-up the Protected
Withdrawal Value to $75,000 on the date you are eligible. If your current
Annual Income Amount and Annual Withdrawal Amount are less than they would be
if we did not reflect the step-up in Protected Withdrawal Value, then we will
increase these amounts to reflect the step-up as described below.
The Protected Withdrawal Value is reduced each time a withdrawal is made
on a dollar-for-dollar basis up to 7% per Annuity Year of the Protected
Withdrawal Value and on the greater of a dollar-for-dollar basis or a pro rata
basis for withdrawals in an Annuity Year in excess of that amount until the
Protected Withdrawal Value is reduced to zero. At that point the Annual
Withdrawal Amount will be zero until such time (if any) as the Annuity reflects
a Protected Withdrawal Value (for example, due to a step-up or additional
Purchase Payments being made into the Annuity).
KEY FEATURE -- Annual Income Amount under the Life Income Benefit
The initial Annual Income Amount is equal to 5% of the initial Protected
Withdrawal Value. Under the Lifetime Five program, if your cumulative
withdrawals in an Annuity Year are less than or equal to the Annual Income
Amount, they will not reduce your Annual Income Amount in subsequent Annuity
Years. If your cumulative withdrawals are in excess of the Annual Income Amount
("Excess Income"), your Annual Income Amount in subsequent years will be
reduced (except with regard to required minimum distributions) by the result of
the ratio of the Excess Income to the Account Value immediately prior to such
withdrawal (see examples of this calculation below). Reductions include the
actual amount of the withdrawal, including any CDSC that may apply. A
withdrawal can be considered Excess Income under the Life Income Benefit even
though it does not exceed the Annual Withdrawal Amount
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under the Withdrawal Benefit. When you elect a step-up, your Annual Income
Amount increases to equal 5% of your Account Value after the step-up if such
amount is greater than your Annual Income Amount. Your Annual Income Amount also
increases if you make additional Purchase Payments. The amount of the increase
is equal to 5% of any additional Purchase Payments plus any associated Credits.
Any increase will be added to your Annual Income Amount beginning on the day
that the step-up is effective or the Purchase Payment is made. A determination
of whether you have exceeded your Annual Income Amount is made at the time of
each withdrawal; therefore a subsequent increase in the Annual Income Amount
will not offset the effect of a withdrawal that exceeded the Annual Income
Amount at the time the withdrawal was made.
KEY FEATURE -- Annual Withdrawal Amount under the Withdrawal Benefit
The initial Annual Withdrawal Amount is equal to 7% of the initial Protected
Withdrawal Value. Under the Lifetime Five program, if your cumulative
withdrawals each Annuity Year are less than or equal to the Annual Withdrawal
Amount, your Protected Withdrawal Value will be reduced on a dollar-for-dollar
basis. If your cumulative withdrawals are in excess of the Annual Withdrawal
Amount ("Excess Withdrawal"), your Annual Withdrawal Amount will be reduced
(except with regard to required minimum distributions) by the result of the
ratio of the Excess Withdrawal to the Account Value immediately prior to such
withdrawal (see the examples of this calculation below). Reductions include the
actual amount of the withdrawal, including any CDSC that may apply. When you
elect a step-up, your Annual Withdrawal Amount increases to equal 7% of your
Account Value after the step-up if such amount is greater than your Annual
Withdrawal Amount. Your Annual Withdrawal Amount also increases if you make
additional Purchase Payments. The amount of the increase is equal to 7% of any
additional Purchase Payments. A determination of whether you have exceeded your
Annual Withdrawal Amount is made at the time of each withdrawal; therefore, a
subsequent increase in the Annual Withdrawal Amount will not offset the effect
of a withdrawal that exceeded the Annual Withdrawal Amount at the time the
withdrawal was made.
The Lifetime Five program does not affect your ability to make withdrawals
under your Annuity or limit your ability to request withdrawals that exceed the
Annual Income Amount and the Annual Withdrawal Amount. You are not required to
withdraw all or any portion of the Annual Withdrawal Amount or Annual Income
Amount in each Annuity Year.
o If, cumulatively, you withdraw an amount less than the Annual Withdrawal
Amount under the Withdrawal Benefit in any Annuity Year, you cannot
carry-over the unused portion of the Annual Withdrawal Amount to subsequent
Annuity Years. However, because the Protected Withdrawal Value is only
reduced by the actual amount of withdrawals you make under these
circumstances, any unused Annual Withdrawal Amount may extend the period of
time until the remaining Protected Withdrawal Value is reduced to zero.
o If, cumulatively, you withdraw an amount less than the Annual Income Amount
under the Life Income Benefit in any Annuity Year, you cannot carry-over
the unused portion of the Annual Income Amount to subsequent Annuity Years.
However, because the Protected Withdrawal Value is only reduced by the
actual amount of withdrawals you make under these circumstances, any unused
Annual Income Amount may extend the period of time until the remaining
Protected Withdrawal Value is reduced to zero.
The following examples of dollar-for-dollar and proportional reductions
and the step-up of the Protected Withdrawal Value, Annual Withdrawal Amount and
Annual Income Amount assume: 1.) the Issue Date and the Effective Date of the
Lifetime Five program are February 1, 2005; 2.) an initial Purchase Payment of
$250,000 (includes any Credits); 3.) the Account Value on February 1, 2006 is
equal to $265,000; 4.) the first withdrawal occurs on March 1, 2006 when the
Account Value is equal to $263,000; and 5.) the Account Value on March 1, 2011
is equal to $240,000.
The initial Protected Withdrawal Value is calculated as the greatest of
(a), (b) and (c):
(a) Purchase payment accumulated at 5% per year from February 1, 2005
until March 1, 2006 (393 days) = $250,000 x 1.05(393/365) =
$263,484.33
(b) Account Value on March 1, 2006 (the date of the first withdrawal) =
$263,000
(c) Account Value on February 1, 2006 (the first Annuity Anniversary) =
$265,000
Therefore, the initial Protected Withdrawal Value is equal to $265,000.
The Annual Withdrawal Amount is equal to $18,550 under the Withdrawal Benefit
(7% of $265,000). The Annual Income Amount is equal to $13,250 under the Life
Income Benefit (5% of $265,000).
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OPTIMUM PLUS(SM) PROSPECTUS
Living Benefit Programs continued
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Example 1. Dollar-for-dollar reduction
If $10,000 was withdrawn (less than both the Annual Income Amount and the
Annual Withdrawal Amount) on March 1, 2006, then the following values would
result:
o Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 -
$10,000 = $8,550
Annual Withdrawal Amount for future Annuity Years remains at $18, 550
o Remaining Annual Income Amount for current Annuity Year = $13,250 - $10,000
= $3,250
Annual Income Amount for future Annuity Years remains at $13,250
o Protected Withdrawal Value is reduced by $10,000 from $265,000 to $255,000
Example 2. Dollar-for-dollar and proportional reductions
(a) If $15,000 was withdrawn (more than the Annual Income Amount but less
than the Annual Withdrawal Amount) on March 1, 2006, then the
following values would result:
o Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 -
$15,000 = $3,550
Annual Withdrawal Amount for future Annuity Years remains at $18,550
o Remaining Annual Income Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Income Amount ($15,000 - $13,250 =
$1,750) reduces Annual Income Amount for future Annuity Years.
o Reduction to Annual Income Amount = Excess Income/ Account Value before
Excess Income - Annual Income Amount = $1,750 / ($263,000 - $13,250) x
$13,250 = $93
Annual Income Amount for future Annuity Years = $13,250 - $93 = $13,157
o Protected Withdrawal Value is reduced by $15,000 from $265,000 to $250,000
(b) If $25,000 was withdrawn (more than both the Annual Income Amount and
the Annual Withdrawal Amount) on March 1, 2006, then the following
values would result:
o Remaining Annual Withdrawal Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Withdrawal Amount ($25,000 - $18,550 =
$6,450) reduces Annual Withdrawal Amount for future Annuity Years.
o Reduction to Annual Withdrawal Amount = Excess Withdrawal/Account Value
before Excess Withdrawal x Annual Withdrawal Amount = $6,450 / ($263,000 -
$18,550) - $18,550 = $489
Annual Withdrawal Amount for future Annuity Years = $18,550 - $489 =
$18,061
o Remaining Annual Income Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Income Amount ($25,000 - $13,250 =
$11,750) reduces Annual Income Amount for future Annuity Years.
o Reduction to Annual Income Amount = Excess Income/ Account Value before
Excess Income - Annual Income Amount = $11,750 / ($263,000 - $13,250) x
$13,250 = $623 Annual Income Amount for future Annuity Years = $13,250 -
$623 = $12,627
o Protected Withdrawal Value is first reduced by the Annual Withdrawal Amount
($18,550) from $265,000 to $246,450. It is further reduced by the greater
of a dollar-for-dollar reduction or a proportional reduction.
Dollar-for-dollar reduction = $25,000 - $18,550 = $6,450
o Proportional reduction = Excess Withdrawal / Account Value before Excess
Withdrawal - Protected Withdrawal Value = $6,450 / ($263,000 - $18,550) x
$246,450 = $6,503 Protected Withdrawal Value = $246,450 - max {$6,450,
$6,503} = $239,947
Example 3. Step-up of the Protected Withdrawal Value
If the Annual Income Amount ($13,250) is withdrawn each year starting on March
1, 2006 for a period of 5 years, the Protected Withdrawal Value on March 1,
2011 would be reduced to $198,750 {$265,000 - ($13,250 - 5)}. If a step-up is
elected on March 1, 2011, then the following values would result:
o Protected Withdrawal Value = Account Value on March 1, 2011 = $240,000
o Annual Income Amount is equal to the greater of the current Annual Income
Amount or 5% of the stepped up Protected Withdrawal Value. Current Annual
Income Amount is $13,250. 5% of the stepped-up Protected Withdrawal Value
is 5% of $240,000, which is $12,000. Therefore, the Annual Income Amount
remains $13,250.
o Annual Withdrawal Amount is equal to the greater of the current Annual
Withdrawal Amount or 7% of the stepped up Protected Withdrawal Value.
Current Annual Withdrawal Amount is $18,550. 7% of the stepped-up Protected
Withdrawal Value is 7% of $240,000, which is $16,800. Therefore the Annual
Withdrawal Amount remains $18,550.
58
OPTIMUM PLUS(SM) PROSPECTUS
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BENEFITS UNDER THE LIFETIME FIVE PROGRAM
o If your Account Value is equal to zero, and the cumulative withdrawals in
the current Annuity Year are greater than the Annual Withdrawal Amount, the
Lifetime Five program will terminate. To the extent that your Account Value
was reduced to zero as a result of cumulative withdrawals that are equal to
or less than the Annual Income Amount and amounts are still payable under
both the Life Income Benefit and the Withdrawal Benefit, you will be given
the choice of receiving the payments under the Life Income Benefit or under
the Withdrawal Benefit. Once you make this election we will make an
additional payment for that Annuity Year equal to either the remaining
Annual Income Amount or Annual Withdrawal Amount for the Annuity Year, if
any, depending on the option you choose. In subsequent Annuity Years we
make payments that equal either the Annual Income Amount or the Annual
Withdrawal Amount as described in this Prospectus. You will not be able to
change the option after your election and no further Purchase Payments will
be accepted under your Annuity. If you do not make an election, we will pay
you annually under the Life Income Benefit. To the extent that cumulative
withdrawals in the current Annuity Year that reduced your Account Value to
zero are more than the Annual Income Amount but less than or equal to the
Annual Withdrawal Amount and amounts are still payable under the Withdrawal
Benefit, you will receive the payments under the Withdrawal Benefit. In the
year of a withdrawal that reduced your Account Value to zero, we will make
an additional payment to equal any remaining Annual Withdrawal Amount and
make payments equal to the Annual Withdrawal Amount in each subsequent year
(until the Protected Withdrawal Value is depleted). Once your Account Value
equals zero no further Purchase Payments will be accepted under your
Annuity.
o If annuity payments are to begin under the terms of your Annuity or if you
decide to begin receiving annuity payments and there is any Annual Income
Amount due in subsequent Annuity Years or any remaining Protected
Withdrawal Value, you can elect one of the following three options:
(1) apply your Account Value to any annuity option available; or
(2) request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We make
such annuity payments until the Annuitant's death; or
(3) request that, as of the date annuity payments are to begin, we pay out
any remaining Protected Withdrawal Value as annuity payments. Each
year such annuity payments will equal the Annual Withdrawal Amount or
the remaining Protected Withdrawal Value if less. We make such annuity
payments until the earlier of the Annuitant's death or the date the
Protected Withdrawal Value is depleted.
We must receive your request in a form acceptable to us at our office.
o In the absence of an election when mandatory annuity payments are to begin,
we will make annual annuity payments as a single life fixed annuity with
five payments certain using the greater of the annuity rates then currently
available or the annuity rates guaranteed in your Annuity. The amount that
will be applied to provide such annuity payments will be the greater of:
(1) the present value of future Annual Income Amount payments. Such
present value will be calculated using the greater of the single life
fixed annuity rates then currently available or the single life fixed
annuity rates guaranteed in your Annuity; and
(2) the Account Value.
o If no withdrawal was ever taken, we will determine a Protected Withdrawal
Value and calculate an Annual Income Amount and an Annual Withdrawal Amount
as if you made your first withdrawal on the date the annuity payments are
to begin.
Other Important Considerations
o Withdrawals under the Lifetime Five program are subject to all of the terms
and conditions of the Annuity, including any CDSC.
o Withdrawals made while the Lifetime Five program is in effect will be
treated, for tax purposes, in the same way as any other withdrawals under
the Annuity. The Lifetime Five program does not directly affect the
Annuity's Account Value or Surrender Value, but any withdrawal will
decrease the Account Value by the amount of the withdrawal (plus any
applicable CDSC). If you surrender your Annuity, you will receive the
current Surrender Value, not the Protected Withdrawal Value.
o You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the Lifetime Five program. The
Lifetime Five program provides a guarantee that if your Account Value
declines due to market performance, you will be able to receive your
Protected Withdrawal Value or Annual Income Amount in the form of periodic
benefit payments.
59
OPTIMUM PLUS(SM) PROSPECTUS
Living Benefit Programs continued
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o You must allocate your Account Value in accordance with an eligible model
under an available asset allocation program or in accordance with other
options that we may permit in order to elect and maintain the Lifetime Five
program. Asset allocation programs are described generally in the "Are Any
Asset Allocation Programs Available?" section above. For further
information on asset allocation programs, please consult with your
Investment Professional or call 1-800-752-6342.
Election of the Program
The Lifetime Five program can be elected at the time that you purchase your
Annuity. We also offer existing Owners the option to elect the Lifetime Five
program after the Issue Date of their Annuity, subject to our eligibility rules
and restrictions. Your Account Value as the date of election will be used as a
basis to calculate the initial Protected Withdrawal Value, the initial
Protected Annual Withdrawal Amount, and the Annual Income Amount.
Termination of the Program
The program terminates automatically when your Protected Withdrawal Value and
Annual Income Amount equals zero. You may terminate the program at any time by
notifying us. If you terminate the program, any guarantee provided by the
benefit will terminate as of the date the termination is effective. The program
terminates upon your surrender of the Annuity, upon the death of the Annuitant
(but your surviving spouse may elect a new Lifetime Five if your spouse elects
the spousal continuance option and your spouse would then be eligible to elect
the benefit if he or she was a new purchaser), upon a change in ownership of
the Annuity that changes the tax identification number of the Owner, upon
change in the Annuitant or upon your election to begin receiving annuity
payments.
The charge for the Lifetime Five program will no longer be deducted from
your Account Value upon termination of the program.
Additional Tax Considerations for Qualified Contracts
If you purchase an Annuity as an investment vehicle for "qualified"
investments, including an IRA, SEP-IRA, or Tax Sheltered Annuity (or 403(b)),
the minimum distribution rules under the Code require that you begin receiving
periodic amounts from your Annuity beginning after age 70-1/2. The amount
required under the Code may exceed the Annual Withdrawal Amount and the Annual
Income Amount, which will cause us to increase the Annual Income Amount and the
Annual Withdrawal Amount in any Annuity Year that required minimum
distributions due from your Annuity are greater than such amounts. Any such
payments will reduce your Protected Withdrawal Value. In addition, the amount
and duration of payments under the annuity payment and death benefit provisions
may be adjusted so that the payments do not trigger any penalty or excise taxes
due to tax considerations such as minimum distribution requirements.
60
OPTIMUM PLUS(SM) PROSPECTUS
Death Benefit
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WHAT TRIGGERS THE PAYMENT OF A DEATH BENEFIT?
The Annuity provides a Death Benefit during its accumulation period. If the
Annuity is owned by one or more natural persons, the Death Benefit is payable
upon the first death of an Owner. If the Annuity is owned by an entity, the
Death Benefit is payable upon the Annuitant's death, if there is no Contingent
Annuitant. If a Contingent Annuitant was designated before the Annuitant's
death and the Annuitant dies, then the Contingent Annuitant becomes the
Annuitant and a Death Benefit will not be paid at that time. The person upon
whose death the Death Benefit is paid is referred to below as the "decedent."
BASIC DEATH BENEFIT
The Annuity provides a basic Death Benefit at no additional charge. The
Insurance Charge we deduct daily from your Account Value allocated to the
Sub-accounts is used, in part, to pay us for the risk we assume in providing
the basic Death Benefit guarantee under the Annuity. The Annuity also offers
three different optional Death Benefits that can be purchased for an additional
charge. The additional charge is deducted to compensate American Skandia for
providing increased insurance protection under the optional Death Benefits.
Notwithstanding the additional protection provided under the optional Death
Benefits, the additional cost has the impact of reducing the net performance of
the investment options. Under certain circumstances, your Death Benefit may be
reduced by the amount of any Credits we applied to your Purchase Payments. (See
"How are Credits Applied to My Account Value".)
The basic Death Benefit is the greater of:
o The sum of all Purchase Payments less the sum of all proportional
withdrawals.
o The sum of your Account Value in the variable investment options and your
Interim Value in the Fixed Allocations, less the amount of any Credits
applied within 12-months prior to the date of death.
"Proportional withdrawals" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn. For
example, a withdrawal of 50% of Account Value would be considered as a 50%
reduction in Purchase Payments for purposes of calculating the basic Death
Benefit.
OPTIONAL DEATH BENEFITS
Three optional Death Benefits are offered for purchase with your Annuity to
provide an enhanced level of protection for your beneficiaries.
- --------------------------------------------------------------------------------
Currently, these benefits are only offered in those jurisdictions where we
have received regulatory approval and must be elected at the time that you
purchase your Annuity. We may, at a later date, allow existing Annuity
Owners to purchase an optional Death Benefit subject to our rules and any
changes or restrictions in the benefits. Certain terms and conditions may
differ between jurisdictions once approved and if you purchase your Annuity
as part of an exchange, replacement or transfer, in whole or in part, from
any other Annuity we issue. The "Combination 5% Roll-up and Highest
Anniversary Value" Death Benefit may only be elected individually, and
cannot be elected in combination with any other optional death benefit.
Under certain circumstances, each Optional Death Benefit that you elect may
be reduced by the amount of Credits applied to your Purchase Payments.
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Enhanced Beneficiary Protection Optional
Death Benefit
The Enhanced Beneficiary Protection Optional Death Benefit can provide
additional amounts to your Beneficiary that may be used to offset federal and
state taxes payable on any taxable gains in your Annuity at the time of your
death. Whether this benefit is appropriate for you may depend on your
particular circumstances, including other financial resources that may be
available to your Beneficiary to pay taxes on your Annuity should you die
during the accumulation period. No benefit is payable if death occurs on or
after the Annuity Date.
The Enhanced Beneficiary Protection Optional Death Benefit provides a
benefit that is payable in addition to the basic Death Benefit. If the Annuity
has one Owner, the Owner must be age 75 or less at the time the benefit is
purchased. If the Annuity has joint Owners, the oldest Owner must be age 75 or
less. If the Annuity is owned by an entity, the Annuitant must be age 75 or
less.
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OPTIMUM PLUS(SM) PROSPECTUS
Death Benefit continued
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Calculation of Enhanced Beneficiary Protection
Optional Death Benefit
If you purchase the Enhanced Beneficiary Protection Optional Death Benefit, the
Death Benefit is calculated as follows:
1. the basic Death Benefit described above;
PLUS
2. 40% of your "Growth" under the Annuity, as defined below.
"Growth" means the sum of your Account Value in the variable investment
options and your Interim Value in the Fixed Allocations, minus the total of all
Purchase Payments, less the amount of any Credits applied within 12-months
prior to the date of death, reduced by the sum of all proportional withdrawals.
"Proportional withdrawals" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
- --------------------------------------------------------------------------------
The Enhanced Beneficiary Protection Optional Death Benefit is subject to a
maximum of 100% of all Purchase Payments applied to the Annuity at least 12
months prior to the death of the decedent that triggers the payment of the
Death Benefit.
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- --------------------------------------------------------------------------------
The Enhanced Beneficiary Protection Optional Death Benefit described above
is currently being offered in those jurisdictions where we have received
regulatory approval. Certain terms and conditions may differ between
jurisdictions once approved.
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See Appendix B for examples of how the Enhanced Beneficiary Protection
Optional Death Benefit is calculated.
Highest Anniversary Value Death Benefit ("HAV")
If the Annuity has one Owner, the Owner must be age 79 or less at the time
Highest Anniversary Value Optional Death Benefit is purchased. If the Annuity
has joint Owners, the oldest Owner must be age 79 or less. If the Annuity is
owned by an entity, the Annuitant must be age 79 or less.
Certain of the Portfolios offered as Sub-accounts under the Annuity are
not available if you elect the Highest Anniversary Value Death Benefit. In
addition, we reserve the right to require you to use certain asset allocation
model(s) if you elect this death benefit.
Calculation of Highest Anniversary Value Death Benefit
The HAV Death Benefit depends on whether death occurs before or after the Death
Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value as of the Owner's date of death. If the Owner
dies on or after the Death Benefit Target Date, the Death
Benefit equals the greater of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value on the Death Benefit Target Date plus the sum
of all Purchase Payments less the sum of all proportional withdrawals since
the Death Benefit Target Date.
The amount determined by this calculation is increased by any Purchase
Payments received after the Owner's date of death and decreased by any
proportional withdrawals since such date. The amount calculated in Items 1 & 2
above (before, on or after the Death Benefit Target Date) may be reduced by any
Credits under certain circumstances.
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The Highest Anniversary Value Death Benefit described above is currently
being offered in those jurisdictions where we have received regulatory
approval. Certain terms and conditions may differ between jurisdictions once
approved. The Highest Anniversary Value Death Benefit is not available if
you elect the "Combination 5% Roll-up and the Highest Anniversary Value" or
the "Highest Daily Value" Death Benefit.
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See Appendix B for examples of how the Highest Anniversary Value Death
Benefit is calculated.
Please refer to the definition of Death Benefit Target Date below. This
death benefit may not be an appropriate feature where the Owner's age is near
the age specified in the Death Benefit Target Date. This is because the benefit
may not have the same potential for growth as it otherwise would, since there
will be fewer contract anniversaries before the death benefit target date is
reached. The death benefit target date under this death benefit is earlier than
the death benefit target
62
OPTIMUM PLUS(SM) PROSPECTUS
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date under the Combination 5% Roll-up and Highest Anniver- sary Value Death
Benefit for Owners who are age 76 or older when the Annuity is issued, which may
result in a lower value on the death benefit, since there will be fewer contract
anniversaries before the death benefit target date is reached.
Combination 5% Roll-up and Highest Anniversary Value Death Benefit
If the Annuity has one Owner, the Owner must be age 79 or less at the time the
Combination 5% Roll-up and HAV Optional Death Benefit is purchased. If the
Annuity has joint Owners, the oldest Owner must be age 79 or less. If the
Annuity is owned by an entity, the Annuitant must be age 79 or less.
Certain of the Portfolios offered as Sub-accounts under the Annuity are
not available if you elect the Combination 5% Roll-up and HAV Death Benefit. In
addition, we reserve the right to require you to use certain asset allocation
model(s) if you elect this death benefit.
Calculation of the Combination 5% Roll-up and Highest Anniversary Value Death
Benefit
The Combination 5% Roll-up and HAV Death Benefit equals the greatest of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value death benefit described above, and
3. 5% Roll-up described below.
The calculation of the 5% Roll-up depends on whether death occurs before
or after the Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date the 5% Roll up is
equal to:
o all Purchase Payments (including any Credits applied to such Purchase
Payments more than twelve (12) months prior to date of death) increasing at
an annual effective interest rate of 5% starting on the date that each
Purchase Payment is made and ending on the Owner's date of death; MINUS
o the sum of all withdrawals, dollar for dollar up to 5% of the death
benefit's value as of the prior contract anniversary (or issue date if the
withdrawal is in the first contract year). Any withdrawals in excess of the
5% dollar for dollar limit are proportional. If the Owner dies on or after
the Death Benefit Target Date the 5% Roll-up is equal to:
o the 5% Roll-up value as of the Death Benefit Target Date increased by total
Purchase Payments (including any Credits applied to such Purchase Payments
more than twelve (12) months prior to date of death) made after the Death
Benefit Target Date; MINUS
o the sum of all withdrawals which reduce the 5% Roll-up proportionally.
The amounts calculated in Items 1, 2 and 3 above (before, on or after the
Death Benefit Target Date) may be reduced by any Credits under certain
circumstances.
Please refer to the definitions of Death Benefit Target Date below. This
death benefit may not be an appropriate feature where the Owner's age is near
the age specified in the Death Benefit Target Date. This is because the benefit
may not have the same potential for growth as it otherwise would, since there
will be fewer contract anniversaries before the Death Benefit Target Date is
reached.
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The "Combination 5% Roll-up and Highest Anniversary Value" Death Benefit
described above is currently being offered in those jurisdictions where we
have received regulatory approval. Certain terms and conditions may differ
between jurisdictions once approved.
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See Appendix B for examples of how the Combination 5% Roll-up and Highest
Anniversary Value Death Benefit is calculated.
Key Terms Used with the Highest Anniversary Value Death Benefit and the
Combination 5% Roll-up and Highest Anniversary Value Death Benefit:
o The Death Benefit Target Date for the Highest Anniversary Value Death
Benefit is the contract anniversary on or after the 80th birthday of the
current Owner, the oldest of either joint Owner or the Annuitant, if entity
owned.
o The Death Benefit Target Date for the Combination 5% Roll-up and HAV Death
Benefit is the later of the contract anniversary on or after the 80th
birthday of the current Owner, the oldest of either joint Owner or the
Annuitant, if entity owned, or five years after the Issue Date of the
Annuity.
o The Highest Anniversary Value equals the highest of all previous
"Anniversary Values" less proportional withdraw-
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OPTIMUM PLUS(SM) PROSPECTUS
Death Benefit continued
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als since such anniversary and plus any Purchase Payments
since such anniversary.
o The Anniversary Value is the Account Value as of each anniversary of the
Issue Date of the Annuity. The Anniversary Value on the Issue Date is equal
to your Purchase Payment.
o Proportional withdrawals are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
Proportional withdrawals result in a reduction to the Highest Anniversary
Value or 5% Roll-up value by reducing such value in the same proportion as
the Account Value was reduced by the withdrawal as of the date the
withdrawal occurred. For example, if your Highest Anniversary Value or 5%
Roll-up value is $125,000 and you subsequently withdraw $10,000 at a time
when your Account Value is equal to $100,000 (a 10% reduction), when
calculating the optional Death Benefit we will reduce your Highest
Anniversary Value ($125,000) by 10% or $12,500.
Highest Daily Value Death Benefit ("HDV")
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If the Annuity has one Owner, the Owner must be age 79 or less at the time
the Highest Daily Value Death Benefit is elected. If the Annuity has joint
Owners, the older Owner must be age 79 or less. If there are Joint Owners,
death of the Owner refers to the first to die of the Joint Owners. If the
Annuity is owned by an entity, the Annuitant must be age 79 or less and
death of the Owner refers to the death of the Annuitant.
If you elect this benefit, you must allocate your Account Value in
accordance with an eligible model under an available asset allocation
program or in accordance with other options that we may permit. Because this
benefit, once elected, may not be terminated, you must keep your Account
Value allocated to an eligible model throughout the life of the Annuity. You
may, however, switch from one eligible model to another eligible model. Our
asset allocation programs are generally described in the "Are Any Asset
Allocation Programs Available?" section above. For further information on
asset allocation programs, please consult with your Investment Professional
or call 1-800-752-6342.
- --------------------------------------------------------------------------------
The HDV Death Benefit depends on whether death occurs before or after the
Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the basic Death Benefit described above (including any credits applied
to such Purchase Payments more than twelve (12) months prior to the
date of death); and
2. the HDV as of the Owner's date of death. If the Owner dies on or after
the Death Benefit Target Date, the Death
Benefit equals the greater of:
1. the basic Death Benefit described above (including any credits applied
to such Purchase Payments more than twelve (12) months prior to the
date of death); and
2. the HDV on the Death Benefit Target Date plus the sum of all Purchase
Payments less the sum of all proportional withdrawals since the Death
Benefit Target Date.
The amount determined by this calculation is increased by any Purchase
Payments received after the Owner's date of death and decreased by any
proportional withdrawals since such date. The amount may also be increased by
any Credits under certain circumstances.
- --------------------------------------------------------------------------------
The Highest Daily Value Death Benefit described above is currently being
offered in those jurisdictions where we have received regulatory approval.
Certain terms and conditions may differ between jurisdictions once approved.
The Highest Daily Value Death Benefit is not available if you elect the
Guaranteed Return Option, Guarantee Return Option Plus, the "Combination 5%
Roll-up and Highest Anniversary Value" Death Benefit, or the Highest
Anniversary Value Death Benefit.
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Key Terms Used with the Highest Daily Value Death Benefit:
o The Death Benefit Target Date for the Highest Daily Value Death Benefit is
the later of the Annuity anniversary on or after the 80th birthday of the
current Owner, or the older of either the joint Owner or the Annuitant, if
entity owned, or five years after the Issue Date of the Annuity.
o The Highest Daily Value equals the highest of all previous "Daily Values"
less proportional withdrawals since such date and plus any Purchase
Payments (and associated Credits) since such date.
o The Daily Value is the Account Value as of the end of each Valuation Day.
The Daily Value on the Issue Date is equal to your Purchase Payment (plus
any associated Credit).
o Proportional withdrawals are determined by calculating the percentage of
your Account Value that each prior with-
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OPTIMUM PLUS(SM) PROSPECTUS
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drawal represented when withdrawn. Proportional with- drawals result in a
reduction to the Highest Daily Value by reducing such value in the same
proportion as the Account Value was reduced by the withdrawal as of the
date the withdrawal occurred. For example, if your Highest Daily Value is
$125,000 and you subsequently withdraw $10,000 at a time when your Account
Value is equal to $100,000 (a 10% reduction), when calculating the optional
Death Benefit we will reduce your Highest Daily Value ($125,000) by 10% or
$12,500.
Please see Appendix B to this Prospectus for a hypothetical example of how
the HDV Death Benefit is calculated.
Annuities with joint Owners
For Annuities with Joint Owners, the Death Benefits are calculated as shown
above except that the age of the oldest of the Joint Owners is used to
determine the Death Benefit Target Date. NOTE: If you and your spouse own the
Annuity jointly, we will pay the Death Benefit to the Beneficiary. If the sole
primary Beneficiary is the surviving spouse, then the surviving spouse can
elect to assume ownership of the Annuity and continue the Annuity instead of
receiving the Death Benefit.
Annuities owned by entities
For Annuities owned by an entity, the Death Benefits are calculated as shown
above except that the age of the Annuitant is used to determine the Death
Benefit Target Date. Payment of the Death Benefit is based on the death of the
Annuitant (or Contingent Annuitant, if applicable).
Can I terminate the optional Death Benefits? Do the optional Death Benefits
terminate under other circumstances?
You can terminate the Enhanced Beneficiary Protection Death Benefit and Highest
Anniversary Value Death Benefit at any time. The "Combination 5% Roll-up and
HAV Death Benefit" and the HDV Death Benefit may not be terminated once
elected. The optional Death Benefits will terminate automatically on the
Annuity Date. We may also terminate any optional Death Benefit if necessary to
comply with our interpretation of the Code and applicable regulations.
What are the charges for the optional Death Benefits?
We deduct a charge equal to 0.25% per year of the average daily net assets of
the Sub-accounts for each of the Highest Anniversary Value Death Benefit and the
Enhanced Beneficiary Protection Death Benefit and 0.50% per year of the average
daily net assets of the Sub-accounts for the "Combination 5% Roll-up and HAV
Death Benefit" and the HDV Death Benefit. We deduct the charge for each of these
benefits to compensate American Skandia for providing increased insurance
protection under the optional Death Benefits.
Please refer to the section entitled "Tax Considerations" for additional
considerations in relation to the optional Death Benefit.
AMERICAN SKANDIA'S ANNUITY REWARDS
What is the Annuity Rewards benefit?
The Annuity Rewards benefit offers Owners the ability to capture any market
gains since the Issue Date of their Annuity as an enhancement to their current
Death Benefit so their Beneficiaries will not receive less than the Annuity's
value as of the effective date of the benefit. Under the Annuity Rewards
benefit, American Skandia guarantees that the Death Benefit will not be less
than:
o your Account Value in the variable investment options plus the Interim
Value in any Fixed Allocations as of the effective date of the benefit
o MINUS any proportional withdrawals* following the effective date of the
benefit
o PLUS any additional Purchase Payments applied to the Annuity following the
effective date of the benefit.
The Annuity Rewards Death Benefit enhancement does not affect the basic
Death Benefit calculation or any Optional Death Benefits available under the
Annuity. If the Death Benefit amount payable under your Annuity's basic Death
Benefit or any Optional Death Benefits you purchase is greater than the
enhanced Death Benefit under the Annuity Rewards benefit on the date the Death
Benefit is calculated, your Beneficiary will receive the higher amount.
Who is eligible for the Annuity Rewards benefit?
Owners can elect the Annuity Rewards Death Benefit enhancement following the
tenth (10th) anniversary of the Annuity's Issue Date. However, the Account
Value on the date that the Annuity Rewards Benefit is effective must be greater
than the amount that would be payable to the Beneficiary under the Death
Benefit (including any amounts payable under any optional death benefit then in
effect). The effective date must occur before annuity payments begin. There can
only be one effective date for the Annuity Rewards Death Benefit enhance-
* "Proportional withdrawals" are determined by calculating the percentage of the
Account Value that each withdrawal represented when withdrawn. For example, a
withdrawal of 50% of your Account Value would be treated as a 50% reduction in
the amount payable under the Death Benefit.
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OPTIMUM PLUS(SM) PROSPECTUS
Death Benefit continued
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ment. There is no additional charge for electing the Annuity Rewards Death
Benefit enhancement.
PAYMENT OF DEATH BENEFITS
Payment of Death Benefit to Beneficiary
Except in the case of a spousal assumption as described below, in the event of
your death, the death benefit must be distributed:
o as a lump sum amount at any time within five (5) years of the date of
death; or
o as a series of annuity payments not extending beyond the life expectancy of
the Beneficiary or over the life of the Beneficiary. Payments under this
option must begin within one year of the date of death.
Unless you have made an election prior to death benefit proceeds becoming
due, a Beneficiary can elect to receive the Death Benefit proceeds as a
series of fixed annuity payments (annuity payment options 1-4) or as a
series of variable annuity payments (annuity payment options 1-3 or 5 and
6). See the section entitled "What Types of Annuity Options are Available."
Spousal Beneficiary -- Assumption of Annuity
You may name your spouse as your Beneficiary. If you and your spouse own the
Annuity jointly, we assume that the sole primary Beneficiary will be the
surviving spouse unless you elect an alternative Beneficiary designation.
Unless you elect an alternative Beneficiary designation, the spouse Beneficiary
may elect to assume ownership of the Annuity instead of taking the Death
Benefit payment. Any Death Benefit (including any optional Death Benefits) that
would have been payable to the Beneficiary will become the new Account Value as
of the date we receive due proof of death and any required proof of a spousal
relationship. As of the date the assumption is effective, the surviving spouse
will have all the rights and benefits that would be available under the Annuity
to a new purchaser of the same attained age. For purposes of determining any
future Death Benefit for the surviving spouse, the new Account Value will be
considered as the initial Purchase Payment. No CDSC will apply to the new
Account Value. However, any additional Purchase Payments applied after the date
the assumption is effective will be subject to all provisions of the Annuity,
including any CDSC that may apply to the additional Purchase Payments.
See the section entitled "Managing Your Annuity -- Spousal Contingent
Annuitant" for a discussion of the treatment of a spousal Contingent Annuitant
in the case of the death of the Annuitant in an entity owned Annuity.
Qualified Beneficiary Continuation Option
The Code provides for alternative death benefit payment options when an Annuity
is used as an IRA, 403(b) or other "qualified investment" that requires Minimum
Distributions. Upon the Owner's death under an IRA, 403(b) or other "qualified
investment", a Beneficiary may generally elect to continue the Annuity and
receive Minimum Distributions under the Annuity instead of receiving the death
benefit in a single payment. The available payment options will depend on
whether the Owner died on or before the date he or she was required to begin
receiving Minimum Distributions under the Code and whether the Beneficiary is
the surviving spouse.
o If death occurs before the date Minimum Distributions must begin under the
Code, the Death Benefit can be paid out in either a lump sum, within five
years from the date of death, or over the life or life expectancy of the
designated Beneficiary (as long as payments begin by December 31st of the
year following the year of death). However, if the spouse is the
Beneficiary, the Death Benefit can be paid out over the life or life
expectancy of the spouse with such payments beginning no earlier than
December 31st of the year following the year of death or December 31st of
the year in which the deceased would have reached age 70-1/2, which ever is
later.
o If death occurs after the date Minimum Distributions must begin under the
Code, the Death Benefit must be paid out at least as rapidly as under the
method then in effect.
A Beneficiary has the flexibility to take out more each year than required
under the Minimum Distribution rules. Until withdrawn, amounts in an IRA,
403(b) or other "qualified investment" continue to be tax deferred. Amounts
withdrawn each year, including amounts that are required to be withdrawn under
the Minimum Distribution rules, are subject to tax. You may wish to consult a
professional tax advisor for tax advice as to your particular situation. See
the section entitled "How are Distributions From Qualified Contracts Taxed? --
Minimum Distributions after age 70-1/2."
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OPTIMUM PLUS(SM) PROSPECTUS
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Upon election of this Qualified Beneficiary Continuation option:
o the Annuity contract will be continued in the Owner's name, for the benefit
of the Beneficiary.
o the Beneficiary will be charged at an amount equal to 1.40% daily against
the average daily assets allocated to the Sub-accounts.
o the Account Value will be equal to any Death Benefit (including any
optional Death Benefit) that would have been payable to the Beneficiary if
they had taken a lump sum distribution.
o the Beneficiary may request transfers among Sub-accounts, subject to the
same limitations and restrictions that applied to the Owner, except that
the Sub-accounts offered will be those offered under the Qualified
Beneficiary Continuation option at the time the option is elected.
o the Fixed Allocations will be those offered under the Qualified Beneficiary
Continuation option at the time the option is elected.
o no additional Purchase Payments can be applied to the Annuity.
o other optional Benefits will be those offered under the Qualified
Beneficiary Continuation option at the time of election.
o the basic Death Benefit and any optional Death Benefits elected by the
Owner will no longer apply to the Beneficiary.
o the Beneficiary can request a withdrawal of all or a portion of the Account
Value at any time without application of a CDSC.
o upon the death of the Beneficiary, any remaining Account Value will be paid
in a lump sum to the person(s) named by the Beneficiary.
o all amounts in the Annuity must be paid out to the Beneficiary according to
the Minimum Distribution rules described above.
Your Beneficiary will be provided with a prospectus and settlement option
that will describe this option at the time he or she elects this option. Please
contact American Skandia for additional information on the availability,
restrictions and limitations that will apply to a Beneficiary under the
Qualified Beneficiary Continuation option.
Are there any exceptions to these rules for paying the Death Benefit?
Yes, there are exceptions that apply no matter how your Death Benefit is
calculated. There are exceptions to the Death Benefit if the decedent was not
the Owner or Annuitant as of the Issue Date and did not become the Owner or
Annuitant due to the prior Owner's or Annuitant's death. Any Death Benefit
(including any optional Death Benefit) that applies will be suspended for a
two-year period from the date he or she first became Owner or Annuitant. After
the two-year suspension period is completed, the Death Benefit is the same as
if this person had been an Owner or Annuitant on the Issue Date.
When do you determine the Death Benefit?
We determine the amount of the Death Benefit as of the date we receive "due
proof of death", any instructions we require to determine the method of payment
and any other written representations we require to determine the proper
payment of the Death Benefit to all Beneficiaries. "Due proof of death" may
include a certified copy of a death certificate, a certified copy of a decree
of a court of competent jurisdiction as to the finding of death or other
satisfactory proof of death. Upon our receipt of "due proof of death" we
automatically transfer the Death Benefit to the AST Money Market Sub-account
until we further determine the universe of eligible Beneficiaries. Once the
universe of eligible Beneficiaries has been determined each eligible
Beneficiary may allocate his or her eligible share of the Death Benefit to the
Sub-accounts according to our rules.
Each Beneficiary must make an election as to the method they wish to
receive their portion of the Death Benefit. Absent an election of a Death
Benefit payment method, no Death Benefit can be paid to the Beneficiary. We may
require written acknowledgment of all named Beneficiaries before we can pay the
Death Benefit. During the period from the date of death until we receive all
required paper work, the amount of the Death Benefit may be subject to market
fluctuations.
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OPTIMUM PLUS(SM) PROSPECTUS
Valuing Your Investment
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HOW IS MY ACCOUNT VALUE DETERMINED?
During the accumulation period, the Annuity has an Account Value. The Account
Value is determined separately for each Sub-account allocation and for each
Fixed Allocation. The Account Value is the sum of the values of each
Sub-account allocation and the value of each Fixed Allocation. The Account
Value does not reflect any CDSC that may apply to a withdrawal or surrender.
The Account Value includes any Credits we applied to your Purchase Payments
that we are entitled to recover under certain circumstances. When determining
the Account Value on any day other than 30 days prior to a Fixed Allocation's
Maturity Date, the Account Value may include any Market Value Adjustment that
would apply to a Fixed Allocation (if withdrawn or transferred) on that day.
WHAT IS THE SURRENDER VALUE OF
MY ANNUITY?
The Surrender Value of your Annuity is the value available to you on any day
during the accumulation period. The Surrender Value is defined under "Glossary
of Terms" above.
HOW AND WHEN DO YOU VALUE THE
SUB-ACCOUNTS?
When you allocate Account Value to a Sub-account, you are purchasing units of
the Sub-account. Each Sub-account invests exclusively in shares of an
underlying Portfolio. The value of the Units fluctuates with the market
fluctuations of the Portfolios. The value of the Units also reflects the daily
accrual for the Insurance Charge, the Distribution Charge (if applicable), and
if you elected one or more optional benefits whose annual charge is deducted
daily, the additional charge made for such benefits. There may be several
different Unit Prices for each Sub-account to reflect the Insurance Charge,
Distribution Charge and the charges for any optional benefits. The Unit Price
for the Units you purchase will be based on the total charges for the benefits
that apply to your Annuity. See the section entitled "What Happens to My Units
When There is a Change in Daily Asset-Based Charges?" for a detailed discussion
of how Units are purchased and redeemed to reflect changes in the daily charges
that apply to your Annuity.
Each Valuation Day, we determine the price for a Unit of each Sub-account,
called the "Unit Price." The Unit Price is used for determining the value of
transactions involving Units of the Sub-accounts. We determine the number of
Units involved in any transaction by dividing the dollar value of the
transaction by the Unit Price of the Sub-account as of the Valuation Day.
Example
Assume you allocate $5,000 to a Sub-account. On the Valuation Day you make the
allocation, the Unit Price is $14.83. Your $5,000 buys 337.154 Units of the
Sub-account. Assume that later, you wish to transfer $3,000 of your Account
Value out of that Sub-account and into another Sub-account. On the Valuation
Day you request the transfer, the Unit Price of the original Sub-account has
increased to $16.79. To transfer $3,000, we sell 178.677 Units at the current
Unit Price, leaving you 158.477 Units. We then buy $3,000 of Units of the new
Sub-account at the Unit Price of $17.83. You would then have 168.255 Units of
the new Sub-account.
HOW DO YOU VALUE FIXED ALLOCATIONS?
During the Guarantee Period, we use the concept of an Interim Value. The
Interim Value can be calculated on any day and is equal to the initial value
allocated to a Fixed Allocation plus all interest credited to a Fixed
Allocation as of the date calculated. The Interim Value does not include the
impact of any Market Value Adjustment. If you made any transfers or withdrawals
from a Fixed Allocation, the Interim Value will reflect the withdrawal of those
amounts and any interest credited to those amounts before they were withdrawn.
To determine the Account Value of a Fixed Allocation on any day more than 30
days prior to its Maturity Date, we multiply the Account Value of the Fixed
Allocation times the Market Value Adjustment factor.
WHEN DO YOU PROCESS AND VALUE
TRANSACTIONS?
American Skandia is generally open to process financial transactions on those
days that the New York Stock Exchange (NYSE) is open for trading. There may be
circumstances where the NYSE does not open on a regularly scheduled date or
time or closes at an earlier time than scheduled (normally 4:00 p.m. EST).
Financial transactions requested before the close of the NYSE which meet our
requirements will be processed according to the value next determined following
the close of business. Financial transactions requested on a non-business day
or after the close of the NYSE will be processed based on the value next
computed on the next Valuation Day. There may be circumstances when the opening
or closing time of the NYSE is different than other major stock exchanges, such
as NASDAQ or the American Stock Exchange. Under such circumstances, the closing
time of the NYSE will be used when valuing and processing transactions.
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OPTIMUM PLUS(SM) PROSPECTUS
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There may be circumstances where the NYSE is open, how- ever, due to
inclement weather, natural disaster or other circumstances beyond our control,
our offices may be closed or our business processing capabilities may be
restricted. Under those circumstances, your Account Value may fluctuate based on
changes in the Unit Values, but you may not be able to transfer Account Value,
or make a purchase or redemption request.
The NYSE is closed on the following nationally recognized holidays: New
Year's Day, Martin Luther King, Jr. Day, Washington's Birthday, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas. On
those dates, we will not process any financial transactions involving purchase
or redemption orders.
American Skandia will also not process financial transactions involving
purchase or redemption orders or transfers on any day that:
o trading on the NYSE is restricted;
o an emergency exists making redemption or valuation of securities held in
the separate account impractical; or
o the SEC, by order, permits the suspension or postponement for the
protection of security holders.
Initial Purchase Payments: We are required to allocate your initial
Purchase Payment to the Sub-accounts within two (2) business days after we
receive all of our requirements at our office to issue the Annuity. If we do
not have all the required information to allow us to issue your Annuity, we may
retain the Purchase Payment while we try to reach you or your representative to
obtain all of our requirements. If we are unable to obtain all of our required
information within five (5) business days, we are required to return the
Purchase Payment at that time, unless you specifically consent to our retaining
the Purchase Payment while we gather the required information. Once we obtain
the required information, we will invest the Purchase Payment and issue the
Annuity within two (2) business days. During any period that we are trying to
obtain the required information, your money is not invested.
Additional Purchase Payments: We will apply any additional Purchase
Payments on the Valuation Day that we receive the Purchase Payment at our
office with satisfactory allocation instructions. We will allocate any
additional Purchase Payments you make according to your most recent allocation
instructions if none are provided.
Scheduled Transactions: "Scheduled" transactions include transfers under a
Dollar Cost Averaging, rebalancing, or asset allocation program, Systematic
Withdrawals, Minimum Distributions or annuity payments. Scheduled transactions
are processed and valued as of the date they are scheduled, unless the
scheduled day is not a Valuation Day. In that case, the transaction will be
processed and valued on the next Valuation Day, unless the next Valuation Day
falls in the subsequent calendar year, in which case the transaction will be
processed and valued on the prior Valuation Day.
Unscheduled Transactions: "Unscheduled" transactions include any other
non-scheduled transfers and requests for Partial Withdrawals or Free
Withdrawals or Surrenders. Unscheduled transactions are processed and valued as
of the Valuation Day we receive the request at our Office and have all of the
required information.
Medically-related Surrenders & Death Benefits: Medically-related surrender
requests and Death Benefit claims require our review and evaluation before
processing. We price such transactions as of the date we receive at our Office
all supporting documentation we require for such transactions and that are
satisfactory to us.
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OPTIMUM PLUS(SM) PROSPECTUS
Valuing Your Investment continued
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WHAT HAPPENS TO MY UNITS WHEN THERE IS A
CHANGE IN DAILY ASSET-BASED CHARGES?
Termination of Optional Benefits: Except for the Guaranteed Minimum Income
Benefit, the Combination 5% Roll-up and Highest Anniversary Value Death Benefit
and the Highest Daily Value Death Benefit which cannot be terminated by the
owner once elected, if any optional benefit terminates, we will no longer
deduct the charge we apply to purchase the optional benefit. Certain optional
benefits may be added after you have purchased your Annuity. On the date a
charge no longer applies or a charge for an optional benefit begins to be
deducted, your Annuity will become subject to a different daily asset-based
charge. This change may result in the number of Units attributed to your
Annuity and the value of those Units being different than it was before the
change; however, the adjustment in the number of Units and Unit Price will not
affect your Account Value (although the change in charges that are deducted
will affect your Account Value).
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OPTIMUM PLUS(SM) PROSPECTUS
Tax Considerations
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The tax considerations associated with the Annuity vary depending on whether the
contract is (i) owned by an individual and not associated with a tax-favored
retirement plan (including contracts held by a non-natural person, such as a
trust acting as an agent for a natural person), or (ii) held under a tax-favored
retirement plan. We discuss the tax considerations for these categories of
contracts below. The discussion is general in nature and describes only federal
income tax law (not state or other tax laws). It is based on current law and
interpretations, which may change. The discussion includes a description of
certain spousal rights under the contract and under tax-qualified plans. Our
administration of such spousal rights and related tax reporting accords with our
understanding of the Defense of Marriage Act (which defines a "marriage" as a
legal union between a man and a woman and a "spouse" as a person of the opposite
sex). The information provided is not intended as tax advice. You should consult
with a qualified tax advisor for complete information and advice. References to
purchase payments below relates to your cost basis in your contract. Generally,
your cost basis in a contract not associated with a tax-favored retirement plan
is the amount you pay into your contract, or into annuities exchanged for your
contract, on an after-tax basis less any withdrawals of such payments.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA or 403(b) account, which can hold other permissible assets other than the
annuity. The terms and administration of the trust or custodial account in
accordance with the laws and regulations for IRAs or 403(b)s, as applicable,
are the responsibility of the applicable trustee or custodian.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
Taxes Payable by You
We believe the contract is an annuity contract for tax purposes. Accordingly,
as a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates)
to you during the same calendar year must be treated as one annuity contract
for purposes of determining the amount subject to tax under the rules described
below.
It is possible that the Internal Revenue Service (IRS) would assert that
some or all of the charges for the optional benefits under the contract should
be treated for federal income tax purposes as a partial withdrawal from the
contract. If this were the case, the charge for this benefit could be deemed a
withdrawal and treated as taxable to the extent there are earnings in the
contract. Additionally, for owners under age 59-1/2, the taxable income
attributable to the charge for the benefit could be subject to a tax penalty.
If the IRS determines that the charges for one or more benefits under the
contract are taxable withdrawals, then the sole or surviving owner will be
provided with a notice from us describing available alternatives regarding
these benefits.
If you choose to defer the Annuity Date beyond the default date for your
Annuity, the IRS may not consider your contract to be an annuity under the tax
law. For more information, see "How and When Do I Choose the Annuity Payment
Option?".
Taxes on Withdrawals and Surrender
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn. You
will generally be taxed on any withdrawals from the contract while you are
alive even if the withdrawal is paid to someone else.
If you assign or pledge all or part of your contract as collateral for a
loan, the part assigned generally will be treated as a withdrawal.
If you transfer your contract for less than full consideration, such as by
gift, you will trigger tax on any gain in the contract. This rule does not
apply if you transfer the contract to your spouse or under most circumstances
if you transfer the contract incident to divorce.
Taxes on Annuity Payments
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment you receive by a fraction, the
numerator of which is your purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the contract.
After the full amount of your purchase payments have been recovered
tax-free, the full amount of the annuity payments will be taxable. If annuity
payments stop due to the death of the annuitant before the full amount of your
purchase payments have been recovered, a tax deduction may be allowed for the
unrecovered amount.
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OPTIMUM PLUS(SM) PROSPECTUS
Tax Considerations continued
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Tax Penalty on Withdrawals and Annuity Payments
Any taxable amount you receive under your contract may be subject to a 10% tax
penalty. Amounts are not subject to this tax penalty if:
o the amount is paid on or after you reach age 59-1/2 or die;
o the amount received is attributable to your becoming disabled;
o generally the amount paid or received is in the form of substantially equal
payments not less frequently than annually. (Please note that substantially
equal payments must continue until the later of reaching age 59-1/2 or 5
years.) Modification of payments during that time period will result in
retroactive application of the 10% tax penalty.); or
o the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
Special Rules in Relation to Tax-Free Exchanges Under Section 1035
Section 1035 of the Internal Revenue Code of 1986, as amended (Code) permits
certain tax-free exchanges of a life insurance, annuity or endowment contract
for an annuity. If the annuity is purchased through a tax-free exchange of a
life insurance, annuity or endowment contract that was purchased prior to
August 14, 1982, then any purchase payments made to the original contract prior
to August 14, 1982 will be treated as made to the new contract prior to that
date. (See Federal Tax Status section in the Statement of Additional
Information.)
Partial surrenders may be treated in the same way as tax-free 1035
exchanges of entire contracts, therefore avoiding current taxation of any gains
in the contract as well as the 10% tax penalty on pre-age 59-1/2 withdrawals.
The IRS has reserved the right to treat transactions it considers abusive as
ineligible for this favorable partial 1035 exchange treatment. We do not know
what transactions may be considered abusive. For example we do not know how the
IRS may view early withdrawals or annuitizations after a partial exchange. In
addition, it is unclear how the IRS will treat a partial exchange from a life
insurance, endowment, or annuity contract into an immediate annuity. As of the
date of this prospectus, we will accept a partial 1035 exchange from a
non-qualified annuity into an immediate annuity as a "tax-free" exchange for
future tax reporting purposes, except to the extent that we, as a reporting and
withholding agent, believe that we would be expected to deem the transaction to
be abusive. However, some insurance companies may not recognize these partial
surrenders as tax-free exchanges and may report them as taxable distributions
to the extent of any gain distributed as well as subjecting the taxable portion
of the distribution to the 10% tax penalty. We strongly urge you to discuss any
transaction of this type with your tax advisor before proceeding with the
transaction.
Taxes Payable by Beneficiaries
The death benefit options are subject to income tax to the extent the
distribution exceeds the cost basis in the contract. The value of the death
benefit, as determined under federal law, is also included in the owner's
estate.
Generally, the same tax rules described above would also apply to amounts
received by your beneficiary. Choosing any option other than a lump sum death
benefit may defer taxes. Certain minimum distribution requirements apply upon
your death, as discussed further below.
Tax consequences to the beneficiary vary among the death benefit payment
options.
o Choice 1: the beneficiary is taxed on earnings in the contract.
o Choice 2: the beneficiary is taxed as amounts are withdrawn (in this case
earnings are treated as being distributed first).
o Choice 3: the beneficiary is taxed on each payment (part will be treated as
earnings and part as return of premiums).
Considerations for Contingent Annuitants: There may be adverse tax consequences
if a Contingent Annuitant succeeds an Annuitant when the Annuity is owned by a
trust that is neither tax exempt nor qualifies for preferred treatment under
certain sections of the Code. In general, the Code is designed to prevent
indefinite deferral of tax. Continuing the benefit of tax deferral by naming
one or more Contingent Annuitants when the Annuity is owned by a non-qualified
trust might be deemed an attempt to extend the tax deferral for an indefinite
period. Therefore, adverse tax treatment may depend on the terms of the trust,
who is named as Contingent Annuitant, as well as the particular facts and
circumstances. You should consult your tax advisor before naming a Contingent
Annuitant if you expect to use an Annuity in such a fashion.
Reporting and Withholding on Distributions
Taxable amounts distributed from your annuity contracts are subject to federal
and state income tax reporting and withholding. In general, we will withhold
federal income tax from the taxable portion of such distribution based on the
type of distribution. In the case of an annuity or similar periodic payment,
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we will withhold as if you are a married individual with 3 exemptions unless you
designate a different withholding status. In the case of all other
distributions, we will withhold at a 10% rate. You may generally elect not to
have tax withheld from your payments. An election out of withholding must be
made on forms that we provide.
State income tax withholding rules vary and we will withhold based on the
rules of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident aliens
at a 30% rate. A different withholding rate may be applicable to a nonresident
alien based on the terms of an existing income tax treaty between the United
States and the nonresident alien's country. Please refer to the discussion
below regarding withholding rules for tax favored plans (for example, an IRA).
Regardless of the amount withheld by us, you are liable for payment of
federal and state income tax on the taxable portion of annuity distributions.
You should consult with your tax advisor regarding the payment of the correct
amount of these income taxes and potential liability if you fail to pay such
taxes.
Annuity Qualification
Diversification And Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the assets underlying the
variable investment options of the annuity contract must be diversified,
according to certain rules. We believe these diversification rules will be met.
An additional requirement for qualification for the tax treatment
described above is that we, and not you as the contract owner, must have
sufficient control over the underlying assets to be treated as the owner of the
underlying assets for tax purposes. While we also believe these investor
control rules will be met, 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. It is unclear whether such
guidelines, if in fact promulgated, would have retroactive effect. It is also
unclear what effect, if any, such guidelines may have on transfers between the
investment options offered pursuant to this Prospectus. We will take any
action, including modifications to your Annuity or the investment options,
required to comply with such guidelines if promulgated.
Please refer to the Statement of Additional information for further
information on these Diversification and Investor Control issues.
Required Distributions Upon Your Death. Upon your death, certain
distributions must be made under the contract. The required distributions
depend on whether you die before you start taking annuity payments under the
contract or after you start taking annuity payments under the contract.
If you die on or after the annuity date, the remaining portion of the
interest in the contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract
must be distributed within 5 years after the date of death. However, if a
periodic payment option is selected by your designated beneficiary and if such
payments begin within 1 year of your death, the value of the contract may be
distributed over the beneficiary's life or a period not exceeding the
beneficiary's life expectancy. Your designated beneficiary is the person to
whom benefit rights under the contract pass by reason of death, and must be a
natural person in order to elect a periodic payment option based on life
expectancy or a period exceeding five years.
If the contract is payable to (or for the benefit of) your surviving
spouse, that portion of the contract may be continued with your spouse as the
owner.
Changes In The Contract. We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract owners and you will be
given notice to the extent feasible under the circumstances.
Additional Information
You should refer to the Statement of Additional Information if:
o The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
o Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
o You transfer your contract to, or designate, a beneficiary who is either
37-1/2 years younger than you or a grandchild.
o You purchased more than one annuity contract from the same insurer within
the same calendar year (other than contracts held by tax favored plans).
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
Currently, the contract may be purchased for use in connection with
individual retirement accounts and annuities (IRAs)
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Tax Considerations continued
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which are subject to Sections 408(a), 408(b) and 408A of the Code. In addition,
this contract may be purchased for use in connection with a corporate Pension
and Profit-sharing plan (subject to 401(a) of the Code), H.R. 10 plans (also
known as Keogh Plans, subject to 401(a) of the Code), Tax Sheltered Annuities
(subject to 403(b) of the Code, also known as Tax Deferred Annuities or TDAs),
and Section 457 plans (subject to 457 of the Code). This description assumes
that you have satisfied the requirements for eligibility for these products.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA or 403(b) account, which can hold other permissible assets other than the
annuity. The terms and administration of the trust or custodial account in
accordance with the laws and regulations for IRAs or 403(b)s, as applicable,
are the responsibility of the applicable trustee or custodian.
You should be aware that tax favored plans such as IRAs generally provide
income tax deferral regardless of whether they invest in annuity contracts.
This means that when a tax favored plan invests in an annuity contract, it
generally does not result in any additional tax benefits (such as income tax
deferral and income tax free transfers).
Types of Tax Favored Plans
IRAs. If you buy a contract for use as an IRA, we will provide you a copy of
the prospectus and contract. The "IRA Disclosure Statement" contains
information about eligibility, contribution limits, tax particulars, and other
IRA information. In addition to this information (some of which is summarized
below), the IRS requires that you have a "free look" after making an initial
contribution to the contract. During this time, you can cancel the contract by
notifying us in writing, and we will refund all of the purchase payments under
the contract (or, if provided by applicable state law, the amount credited
under the contract, if greater), less any applicable federal and state income
tax withholding.
Contributions Limits/Rollovers. Because of the way the contract is
designed, you may purchase a contract for an IRA in connection with a
"rollover" of amounts from a qualified retirement plan or transfer from another
IRA. In 2005 the limit is $4,000; increasing to $5,000 in 2008. After 2008 the
contribution amount will be indexed for inflation. The tax law also provides
for a catch-up provision for individuals who are age 50 and above. These
taxpayers will be permitted to contribute an additional $500, increasing to
$1,000 in 2006 and years thereafter.
The "rollover" rules under the Code are fairly technical; however, an
individual (or his or her surviving spouse) may generally "roll over" certain
distributions from tax favored retirement plans (either directly or within 60
days from the date of these distributions) if he or she meets the requirements
for distribution. Once you buy the contract, you can make regular IRA
contributions under the contract (to the extent permitted by law). However, if
you make such regular IRA contributions, you should note that you will not be
able to treat the contract as a "conduit IRA," which means that you will not
retain possible favorable tax treatment if you subsequently "roll over" the
contract funds originally derived from a qualified retirement plan or TDA into
another Section 401(a) plan or TDA.
Required Provisions. Contracts that are IRAs (or endorsements that are
part of the contract) must contain certain provisions:
o You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree
of divorce);
o Your rights as owner are non-forfeitable;
o You cannot sell, assign or pledge the contract;
o The annual contribution you pay cannot be greater than the maximum amount
allowed by law, including catch-up contributions if applicable (which does
not include any rollover amounts);
o The date on which annuity payments must begin cannot be later than April
1st of the calendar year after the calendar year you turn age 70-1/2; and
o Death and annuity payments must meet "minimum distribution requirements"
described below.
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
o A 10% "early distribution penalty" described below;
o Liability for "prohibited transactions" if you, for example, borrow against
the value of an IRA; or
o Failure to take a minimum distribution also described below.
SEPs. SEPs are a variation on a standard IRA, and contracts issued to a
SEP must satisfy the same general
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requirements described under IRAs (above). There are, however,
some differences:
o If you participate in a SEP, you generally do not include in income any
employer contributions made to the SEP on your behalf up to the lesser of
(a) $42,000 in 2005 or (b) 25% of the employee's earned income (not
including contribution as "earned income" for these purposes). However,
for these purposes, compensation in excess of certain limits established
by the IRS will not be considered. In 2005, this limit is $210,000;
o SEPs must satisfy certain participation and nondiscrimination requirements
not generally applicable to IRAs; and
o SEPs for small employers permit salary deferrals up to $14,000 in 2005 with
the employer making these contributions to the SEP. However, no new "salary
reduction" or "SAR-SEPs" can be established after 1996. Individuals
participating in a SARSEP who are age 50 or above by the end of the year
will be permitted to contribute an additional $4,000 in 2005, increasing to
$5,000 in 2006. Thereafter, the amount is indexed for inflation.
You will also be provided the same information, and have the same "free
look" period, as you would have if you purchased the contract for a standard
IRA.
ROTH IRAs. Like standard IRAs, income within a Roth IRA accumulates
tax-free, and contributions are subject to specific limits. Roth IRAs have,
however, the following differences:
o Contributions to a Roth IRA cannot be deducted from your gross income;
o "Qualified distributions" from a Roth IRA are excludable from gross income.
A "qualified distribution" is a distribution that satisfies two
requirements: (1) the distribution must be made (a) after the owner of the
IRA attains age 59-1/2; (b) after the owner's death; (c) due to the owner's
disability; or (d) for a qualified first time homebuyer distribution within
the meaning of Section 72(t)(2)(F) of the Code; and (2) the distribution
must be made in the year that is at least five tax years after the first
year for which a contribution was made to any Roth IRA established for the
owner or five years after a rollover, transfer, or conversion was made from
a traditional IRA to a Roth IRA. Distributions from a Roth IRA that are not
qualified distributions will be treated as made first from contributions
and then from earnings, and taxed generally in the same manner as
distributions from a traditional IRA.
o If eligible (including meeting income limitations and earnings
requirements), you may make contributions to a Roth IRA after attaining age
70-1/2, and distributions are not required to begin upon attaining such age
or at any time thereafter.
Because of the way the contract is designed, you may purchase a contract for
a Roth IRA in connection with a "rollover" of amounts of another traditional
IRA, conduit IRA, SEP, SIMPLE-IRA or Roth IRA. The Code permits persons who
meet certain income limitations (generally, adjusted gross income under
$100,000), and who receive certain qualifying distributions from such non-Roth
IRAs, to directly rollover or make, within 60 days, a "rollover" of all or any
part of the amount of such distribution to a Roth IRA which they establish.
This conversion triggers current taxation (but is not subject to a 10% early
distribution penalty). Once the contract has been purchased, regular Roth IRA
contributions will be accepted to the extent permitted by law.
TDAs. You may own a TDA generally if you are either an employer or employee
of a tax-exempt organization (as defined under Code Section 501 (c)(3)) or a
public educational organization, and you may make contributions to a TDA so
long as the employee's rights to the annuity are nonforfeitable. Contributions
to a TDA, and any earnings, are not taxable until distribution. You may also
make contributions to a TDA under a salary reduction agreement, generally up to
a maximum of $14,000 in 2005. Individuals participating in a TDA who are age 50
or above by the end of the year will be permitted to contribute an additional
$4,000 in 2005, increasing to $5,000 in 2006. Thereafter, the amount is indexed
for inflation. Further, you may roll over TDA amounts to another TDA or an IRA.
You may also roll over TDA amounts to a qualified retirement plan, a SEP and a
457 government plan. A contract may only qualify as a TDA if distributions
(other than "grandfathered" amounts held as of December 31, 1988) may be made
only on account of:
o Your attainment of age 59-1/2;
o Your severance of employment;
o Your death;
o Your total and permanent disability; or
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Tax Considerations continued
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o Hardship (under limited circumstances, and only related to salary deferrals
and any earnings attributable to these amounts).
In any event, you must begin receiving distributions from your TDA by
April 1st of the calendar year after the calendar year you turn age 70-1/2 or
retire, whichever is later.
These distribution limits do not apply either to transfers or exchanges of
investments under the contract, or to any "direct transfer" of your interest in
the contract to another TDA or to a mutual fund "custodial account" described
under Code Section 403(b)(7).
Employer contributions to TDAs are subject to the same general
contribution, nondiscrimination, and minimum participation rules applicable to
"qualified" retirement plans.
Minimum Distribution Requirements and
Payment Option
If you hold the contract under an IRA (or other tax-favored plan), IRS minimum
distribution requirements must be satisfied. This means that generally payments
must start by April 1 of the year after the year you reach age 70-1/2 and must
be made for each year thereafter. The amount of the payment must at least equal
the minimum required under the IRS rules. Several choices are available for
calculating the minimum amount. More information on the mechanics of this
calculation is available on request. Please contact us at a reasonable time
before the IRS deadline so that a timely distribution is made. Please note that
there is a 50% tax penalty on the amount of any minimum distribution not made
in a timely manner.
Effective in 2006, in accordance with recent changes in laws and
regulations, required minimum distributions will be calculated based on the sum
of the contract value and the actuarial value of any additional death benefits
and benefits from optional riders that you have purchased under the contract.
As a result, the required minimum distributions may be larger than if the
calculation were based on the contract value only, which may in turn result in
an earlier (but not before the required beginning date) distribution under the
Contract and an increased amount of taxable income distributed to the contract
owner, and a reduction of death benefits and the benefits of any optional
riders.
You can use the Minimum Distribution option to satisfy the IRS minimum
distribution requirements for this contract without either beginning annuity
payments or surrendering the contract. We will distribute to you this minimum
distribution amount, less any other partial withdrawals that you made during
the year.
Although the IRS rules determine the required amount to be distributed
from your IRA each year, certain payment alternatives are still available to
you. If you own more than one IRA, you can choose to satisfy your minimum
distribution requirement for each of your IRAs by withdrawing that amount from
any of your IRAs.
Penalty for Early Withdrawals
You may owe a 10% tax penalty on the taxable part of distributions received
from an IRA, SEP, Roth IRA, TDA or qualified retirement plan before you attain
age 59-1/2. Amounts are not subject to this tax penalty if:
o the amount is paid on or after you reach age 59-1/2 or die;
o the amount received is attributable to your becoming disabled; or
o generally the amount paid or received is in the form of substantially equal
payments not less frequently than annually. (Please note that substantially
equal payments must continue until the later of reaching age 59-1/2 or 5
years.) Modification of payments during that time period will result in
retroactive application of the 10% tax penalty.)
Other exceptions to this tax may apply. You should consult your tax
advisor for further details.
Withholding
Unless a distribution is an eligible rollover distribution that is "directly"
rolled over into another qualified plan, IRA (including the IRA variations
described above), SEP, 457 government plan or TDA, we will withhold federal
income tax at the rate of 20%. This 20% withholding does not apply to
distributions from IRAs and Roth IRAs. For all other distributions, unless you
elect otherwise, we will withhold federal income tax from the taxable portion
of such distribution at an appropriate percentage. The rate of withholding on
annuity payments where no mandatory withholding is required is determined on
the basis of the withholding certificate that you file with us. If you do not
file a certificate, we will automatically withhold federal taxes on the
following basis:
o For any annuity payments not subject to mandatory withholding, you will
have taxes withheld by us as if you are a married individual, with 3
exemptions; and
o For all other distributions, we will withhold at a 10% rate. We will
provide you with forms and instructions concerning the right to elect that
no amount be withheld from payments in the ordinary course. However, you
should know that, in any event, you are liable for payment of federal
income taxes on the taxable portion of the distributions, and you should
consult
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with your tax advisor to find out more information on your potential liability
if you fail to pay such taxes. There may be additional state income tax
withholding requirements.
ERISA Disclosure/Requirements
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevents a fiduciary and other "parties in interest" with respect to a plan
(and, for these purposes, an IRA would also constitute a "plan") from receiving
any benefit from any party dealing with the plan, as a result of the sale of
the contract. Administrative exemptions under ERISA generally permit the sale
of insurance/annuity products to plans, provided that certain information is
disclosed to the person purchasing the contract. This information has to do
primarily with the fees, charges, discounts and other costs related to the
contract, as well as any commissions paid to any agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found in the applicable sections of this Prospectus.
Information about sales representatives and commissions may be found in
the sections of this Prospectus addressing distribution of the Annuity.
Please consult your tax advisor if you have any additional questions.
Spousal Consent Rules for Retirement Plans --
Qualified Contracts
If you are married at the time your payments commence, you may be required by
federal law to choose an income option that provides survivor annuity income to
your spouse, unless your spouse waives that right. Similarly, if you are
married at the time of your death, federal law may require all or a portion of
the death benefit to be paid to your spouse, even if you designated someone
else as your beneficiary. A brief explanation of the applicable rules follows.
For more information, consult the terms of your retirement arrangement.
Defined Benefit Plans and Money Purchase Pension Plans. If you are
married at the time your payments commence, federal law requires that benefits
be paid to you in the form of a "qualified joint and survivor annuity" (QJSA),
unless you and your spouse waive that right, in writing. Generally, this means
that you will receive a reduced payment during your life and, upon your death,
your spouse will receive at least one-half of what you were receiving for life.
You may elect to receive another income option if your spouse consents to the
election and waives his or her right to receive the QJSA. If your spouse
consents to the alternative form of payment, your spouse may not receive any
benefits from the plan upon your death. Federal law also requires that the plan
pay a death benefit to your spouse if you are married and die before you begin
receiving your benefit. This benefit must be available in the form of an
annuity for your spouse's lifetime and is called a "qualified pre-retirement
survivor annuity" (QPSA). If the plan pays death benefits to other
beneficiaries, you may elect to have a beneficiary other than your spouse
receive the death benefit, but only if your spouse consents to the election and
waives his or her right to receive the QPSA. If your spouse consents to the
alternate beneficiary, your spouse will receive no benefits from the plan upon
your death. Any QPSA waiver prior to your attaining age 35 will become null and
void on the first day of the calendar year in which you attain age 35, if still
employed.
Defined Contribution Plans (including 401(k) Plans and ERISA 403(b)
Annuities). Spousal consent to a distribution is generally not required. Upon
your death, your spouse will receive the entire death benefit, even if you
designated someone else as your beneficiary, unless your spouse consents in
writing to waive this right. Also, if you are married and elect an annuity as a
periodic income option, federal law requires that you receive a QJSA (as
described above), unless you and your spouse consent to waive this right.
IRAs, non-ERISA 403(b) Annuities, and 457 Plans. Spousal consent to a
distribution is not required. Upon your death, any death benefit will be paid
to your designated beneficiary.
Additional Information
For additional information about federal tax law requirements applicable to tax
favored plans, see the IRA Disclosure Statement.
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General Information
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HOW WILL I RECEIVE STATEMENTS AND REPORTS?
We send any statements and reports required by applicable law or regulation to
you at your last known address of record. You should therefore give us prompt
notice of any address change. We reserve the right, to the extent permitted by
law and subject to your prior consent, to provide any prospectus, prospectus
supplements, confirmations, statements and reports required by applicable law
or regulation to you through our Internet Website at
http://www.americanskandia.prudential.com or any other electronic means,
including diskettes or CD ROMs. We send a confirmation statement to you each
time a transaction is made affecting Account Value, such as making additional
Purchase Payments, transfers, exchanges or withdrawals. We also send quarterly
statements detailing the activity affecting your Annuity during the calendar
quarter. We may confirm regularly scheduled transactions, such as the Annual
Maintenance Fee, systematic withdrawals (including 72(t) payments and required
minimum distributions), bank drafting, dollar cost averaging, and static
rebalancing, in quarterly statements instead of confirming them immediately.
You should review the information in these statements carefully. You may
request additional reports. We reserve the right to charge up to $50 for each
such additional report. We may also send an annual report and a semi-annual
report containing applicable financial statements for the Separate Account and
the Portfolios, as of December 31 and June 30, respectively, to Owners or, with
your prior consent, make such documents available electronically through our
Internet Website or other electronic means.
WHO IS AMERICAN SKANDIA?
American Skandia Life Assurance Corporation, a Prudential Financial Company
("American Skandia") is a stock life insurance company domiciled in Connecticut
with licenses in all 50 states, the District of Columbia and Puerto Rico.
American Skandia is a wholly-owned subsidiary of American Skandia, Inc.
("ASI"), whose ultimate parent is Prudential Financial, Inc. American Skandia
markets its products to broker-dealers and financial planners through an
internal field marketing staff. In addition, American Skandia markets through
and in conjunction with financial institutions such as banks that are permitted
directly, or through affiliates, to sell annuities.
American Skandia is in the business of issuing annuity and life insurance
products. American Skandia currently offers the following products: (a)
flexible premium deferred annuities and single premium fixed deferred annuities
that are registered with the SEC; (b) certain other fixed deferred annuities
that are not registered with the SEC; and (c) both fixed and variable immediate
adjustable annuities.
Effective May 1, 2003, Skandia U.S. Inc., the sole shareholder of ASI,
which is the parent of American Skandia, was purchased by Prudential Financial,
Inc. Prudential Financial, Inc. is a New Jersey insurance holding company whose
subsidiary companies serve individual and institutional customers worldwide and
include The Prudential Insurance Company of America, one of the largest life
insurance companies in the U.S. These companies offer a variety of products and
services, including life insurance, property and casualty insurance, mutual
funds, annuities, pension and retirement related services and administration,
asset management, securities brokerage, banking and trust services, real estate
brokerage franchises, and relocation services.
No company other than American Skandia has any legal responsibility to pay
amounts that it owes under its annuity and variable life insurance contracts.
However, Prudential Financial exercises significant influence over the
operations and capital structure of American Skandia.
WHAT ARE SEPARATE ACCOUNTS?
The separate accounts are where American Skandia sets aside and invests the
assets of some of our annuities. In the accumulation period, assets supporting
Account Values of the Annuities are held in a separate account established
under the laws of the State of Connecticut. We are the legal owner of assets in
the separate accounts. In the payout period, assets supporting fixed annuity
payments and any adjustable annuity payments we make available are held in our
general account. Assets supporting variable annuity payment options may be
invested in our separate accounts. Income, gains and losses from assets
allocated to these separate accounts are credited to or charged against each
such separate account without regard to other income, gains or losses of
American Skandia or of any other of our separate accounts. These assets may
only be charged with liabilities which arise from the Annuities issued by
American Skandia. The amount of our obligation in relation to allocations to
the Sub-accounts is based on the investment performance of such Sub-accounts.
However, the obligations themselves are our general corporate obligations.
Separate Account B
During the accumulation period, the assets supporting obligations based on
allocations to the variable investment options
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are held in Sub-accounts of American Skandia Life Assurance Corporation Variable
Account B, also referred to as "Separate Account B". Separate Account B was
established by us pursuant to Connecticut law on November 25, 1987. 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.
Separate Account B consists of multiple Sub-accounts. Each Sub-account
invests only in a single mutual fund or mutual fund portfolio. The name of each
Sub-account generally corresponds to the name of the underlying Portfolio. Each
Sub-account in Separate Account B may have several different Unit Prices to
reflect the Insurance Charge, Distribution Charge (when applicable) and the
charges for any optional benefits that are offered under this Annuity and other
annuities issued by us through Separate Account B. Separate Account B is
registered with the SEC under the Investment Company Act of 1940 ("Investment
Company Act") as a unit investment trust, which is a type of investment
company. The SEC does not supervise investment policies, management or
practices of Separate Account B.
Prior to November 18, 2002, Separate Account B was organized as a single
separate account with six different Sub-account classes, each of which was
registered as a distinct unit investment trust under the Investment Company
Act. Effective November 18, 2002, each Sub-account class of Separate Account B
was consolidated into the unit investment trust formerly named American Skandia
Life Assurance Corporation Variable Account B (Class 1 Sub-accounts), which was
subsequently renamed American Skandia Life Assurance Corporation Variable
Account B. Each Sub-account of Separate Account B has multiple Unit Prices to
reflect the daily charge deducted for each combination of the applicable
Insurance Charge, Distribution Charge (when applicable) and the charge for each
optional benefit offered under Annuity contracts funded through Separate
Account B. The consolidation of Separate Account B had no impact on Annuity
Owners.
We reserve the right to make changes to the Sub-accounts available under
the Annuity as we determine appropriate. We may offer new Sub-accounts,
eliminate Sub-accounts, or combine Sub-accounts at our sole discretion. We may
also close Sub-accounts to additional Purchase Payments on existing Annuity
contracts or close Sub-accounts for Annuities purchased on or after specified
dates. We may also substitute an underlying mutual fund or portfolio of an
underlying mutual fund for another underlying mutual fund or portfolio of an
underlying mutual fund, subject to our receipt of any exemptive relief that we
are required to obtain under the Investment Company Act. We will notify Owners
of changes we make to the Sub-accounts available under the Annuity.
Values and benefits based on allocations to the Sub-accounts will vary
with the investment performance of the underlying mutual funds or fund
portfolios, as applicable. We do not guarantee the investment results of any
Sub-account. Your Account Value allocated to the Sub-accounts may increase or
decrease. You bear the entire investment risk. There is no assurance that the
Account Value of your Annuity will equal or be greater than the total of the
Purchase Payments you make to us.
Separate Account D
During the accumulation period, assets supporting our obligations based on
Fixed Allocations are held in American Skandia Life Assurance Corporation
Separate Account D, also referred to as "Separate Account D". Such obligations
are based on the fixed interest rates we credit to Fixed Allocations and the
terms of the Annuities. These obligations do not depend on the investment
performance of the assets in Separate Account D. Separate Account D was
established by us pursuant to Connecticut law.
There are no units in Separate Account D. The Fixed Allocations are
guaranteed by our general account. An Annuity Owner who allocates a portion of
their Account Value to Separate Account D does not participate in the
investment gain or loss on assets maintained in Separate Account D. Such gain
or loss accrues solely to us. We retain the risk that the value of the assets
in Separate Account D may drop below the reserves and other liabilities we must
maintain. Should the value of the assets in Separate Account D drop below the
reserve and other liabilities we must maintain in relation to the annuities
supported by such assets, we will transfer assets from our general account to
Separate Account D to make up the difference. We have the right to transfer to
our general account any assets of Separate Account D in excess of such reserves
and other liabilities. We maintain assets in Separate Account D supporting a
number of annuities we offer.
We currently employ investment managers to manage the assets maintained in
Separate Account D. Each manager we employ is responsible for investment
management of a different portion of Separate Account D. From time to time
addi-
79
OPTIMUM PLUS(SM) PROSPECTUS
General Information continued
- --------------------------------------------------------------------------------
tional 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) and have sole discretion over the investment managers we
retain.
We are not obligated to invest according to specific guidelines or
strategies except as may be required by Connecticut and other state insurance
laws.
WHAT IS THE LEGAL STRUCTURE OF THE
UNDERLYING FUNDS?
Each underlying mutual fund is registered as an open-end management investment
company under the Investment Company Act. Shares of the underlying mutual fund
portfolios are sold to separate accounts of life insurance companies offering
variable annuity and variable life insurance products. The shares may also be
sold directly to qualified pension and retirement plans.
Voting Rights
We are the legal owner of the shares of the underlying mutual funds in which
the Sub-accounts invest. However, under SEC rules, you have voting rights in
relation to Account Value maintained in the Sub-accounts. If an underlying
mutual fund portfolio requests a vote of shareholders, we will vote our shares
based on instructions received from Owners with Account Value allocated to that
Sub-account. Owners have the right to vote an amount equal to the number of
shares attributable to their contracts. If we do not receive voting
instructions in relation to certain shares, we will vote those shares in the
same manner and proportion as the shares for which we have received
instructions. We will furnish those Owners who have Account Value allocated to
a Sub-account whose underlying mutual fund portfolio has requested a "proxy"
vote with proxy materials and the necessary forms to provide us with their
voting instructions. Generally, you will be asked to provide instructions for
us to vote on matters such as changes in a fundamental investment strategy,
adoption of a new investment advisory agreement, or matters relating to the
structure of the underlying mutual fund that require a vote of shareholders.
American Skandia Trust (the "Trust") has obtained an exemption from the
Securities and Exchange Commission that permits its co- investment advisers,
American Skandia Investment Services, Incorporated ("ASISI") and Prudential
Investments LLC, subject to approval by the Board of Trustees of the Trust, to
change sub-advisors for a Portfolio and to enter into new sub-advisory
agreements, without obtaining shareholder approval of the changes. This
exemption (which is similar to exemptions granted to other investment companies
that are organized in a similar manner as the Trust) is intended to facilitate
the efficient supervision and management of the sub-advisors by ASISI,
Prudential Investments LLC and the Trustees. The Trust is required, under the
terms of the exemption, to provide certain information to shareholders
following these types of changes. We may add new Sub-accounts that invest in a
series of underlying funds other than the Trust that is managed by an
affiliate. Such series of funds may have a similar order from the SEC. You also
should review the prospectuses for the other underlying funds in which various
Sub-accounts invest as to whether they have obtained similar orders from the
SEC.
Material Conflicts
It is possible that differences may occur between companies that offer shares
of an underlying mutual fund portfolio to their respective separate accounts
issuing variable annuities and/or variable life insurance products. Differences
may also occur surrounding the offering of an underlying mutual fund portfolio
to variable life insurance policies and variable annuity contracts that we
offer. Under certain circumstances, these differences could be considered
"material conflicts," in which case we would take necessary action to protect
persons with voting rights under our variable annuity contracts and variable
life insurance policies against persons with voting rights under other
insurance companies' variable insurance products. If a "material conflict" were
to arise between owners of variable annuity contracts and variable life
insurance policies issued by us we would take necessary action to treat such
persons equitably in resolving the conflict. "Material conflicts" could arise
due to differences in voting instructions between owners of variable life
insurance and variable annuity contracts of the same or different companies. We
monitor any potential conflicts that may exist.
Service Fees Payable to American Skandia
American Skandia or our affiliates have entered into agreements with the
investment adviser or distributor of many of the underlying Portfolios. Under
the terms of these agreements, American Skandia may provide administrative and
support services to the Portfolios for which it receives a fee of up to 0.75%
(currently) of the average assets allocated to the Portfolios under the Annuity
from the investment adviser, distributor and/or the fund. These agreements may
be different
80
OPTIMUM PLUS(SM) PROSPECTUS
- --------------------------------------------------------------------------------
for each underlying mutual fund whose portfolios are offered as Sub-accounts.
In addition, the investment adviser, sub-advisor or distributor of the
underlying Portfolios may also compensate us by providing reimbursement or
paying directly for, among other things, marketing and/or administrative
services and/or other services they provide in connection with the Annuity.
These services may include, but are not limited to: co-sponsoring various
meetings and seminars attended by broker-dealer firms' registered
representatives and creating marketing material discussing the Annuity and the
available options.
WHO DISTRIBUTES ANNUITIES OFFERED BY AMERICAN SKANDIA?
American Skandia Marketing, Incorporated ("ASM"), a wholly-owned subsidiary of
American Skandia, Inc., is the distributor and principal underwriter of the
securities offered through this prospectus. ASM acts as the distributor of a
number of annuity and life insurance products we offer and co-distributor of
American Skandia Trust and American Skandia Advisor Funds, Inc., a family of
retail mutual funds. ASM also acts as an introducing broker-dealer through
which it receives a portion of brokerage commissions in connection with
purchases and sales of securities held by portfolios of American Skandia Trust
which are offered as underlying investment options under the Annuity.
ASM's principal business address is One Corporate Drive, Shelton,
Connecticut 06484. ASM is registered as broker-dealer under the Securities
Exchange Act of 1934 ("Exchange Act") and is a member of the National
Association of Securities Dealers, Inc. ("NASD").
The Annuity is offered on a continuous basis. ASM enters into distribution
agreements with broker-dealers who are registered under the Exchange Act and
with entities that may offer the Annuity but are exempt from registration
("firms"). Applications for the Annuity are solicited by registered
representatives of those firms. Such representatives will also be our appointed
insurance agents under state insurance law. In addition, ASM may offer the
Annuity directly to potential purchasers.
Commissions are paid to firms on sales of the Annuity according to one or
more schedules. The individual representative will receive a portion of the
compensation, depending on the practice of his or her firm. Commissions are
generally based on a percentage of Purchase Payments made, up to a maximum of
6.0%. Alternative compensation schedules are available that provide a lower
initial commission plus ongoing annual compensation based on all or a portion
of Account Value. We may also provide compensation to the distributing firm for
providing ongoing service to you in relation to the Annuity. Commissions and
other compensation paid in relation to the Annuity do not result in any
additional charge to you or to the Separate Account.
In addition, in an effort to promote the sale of our products (which may
include the placement of American Skandia and/or the Annuity on a preferred or
recommended company or product list and/or access to the firm's registered
representatives), we or ASM may enter into compensation arrangements with
certain broker-dealer firms including Linsco/Private Ledger, Corp. with respect
to certain or all registered representatives of such firms under which such
firms may receive separate compensation or reimbursement for, among other
things, training of sales personnel and/or marketing and/or administrative
services and/or other services they provide. These services may include, but
are not limited to: educating customers of the firm on the Annuity's features;
conducting due diligence and analysis, providing office access, operations and
systems support; holding seminars intended to educate firm's registered
representatives and make them more knowledgeable about the Annuity; providing a
dedicated marketing coordinator; providing priority sales desk support; and
providing expedited marketing compliance approval. To the extent permitted by
NASD rules and other applicable laws and regulations, ASM may pay or allow
other promotional incentives or payments in the form of cash or non-cash
compensation. These arrangements may not be offered to all firms and the terms
of such arrangements may differ between firms. A list of the firms to whom
American Skandia pays an amount of greater than $10,000 for these arrangements
is provided in the Statement of Additional Information, which is available upon
request. You should note that firms and individual registered representatives
and branch managers within some firms participating in one of these compensation
arrangements might receive greater compensation for selling the Annuity than
for selling a different annuity that is not eligible for these compensation
arrangements. While compensation is generally taken into account as an expense
in considering the charges applicable to an annuity product, any such
compensation will be paid by us or ASM and will not result in any additional
charge to you. Overall compensation paid to the distributing firm does not
exceed, based on actuarial assumptions, 8.5% of the total Purchase Payments
made. Your registered representative can provide you with more information
about the compensation arrangements that apply upon the sale of the Annuity.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
American Skandia publishes annual and quarterly reports that are filed with the
SEC. These reports contain financial information about American Skandia that is
annually audited by an independent registered public accounting firm. American
Skandia's annual report for the year ended December 31, 2004, together with
subsequent periodic reports that American Skandia files with the SEC, are
incorporated by reference into this
81
OPTIMUM PLUS(SM) PROSPECTUS
General Information continued
- --------------------------------------------------------------------------------
prospectus. You can obtain copies, at no cost, of any and all of this
information, including the American Skandia annual report that is not ordinarily
mailed to contract owners, the more current reports and any subsequently filed
documents at no cost by contacting us at American Skandia -- Variable Annuities;
P.O. Box 7960, Philadelphia, PA 19176 (Telephone : 203-926-1888). The SEC file
number for American Skandia is 33-44202. You may read and copy any filings made
by American Skandia with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, Washington, D.C. 20549-0102. You can obtain information on the operation
of the Public Reference Room by calling (202) 942-8090. The SEC maintains an
Internet site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC at
http://www.sec.gov.
FINANCIAL STATEMENTS
The financial statements of the separate account and American Skandia Life
Assurance Corporation are included in the Statement of Additional Information.
HOW TO CONTACT US
You can contact us by:
o calling our Customer Service Team at 1-800-752-6342 during our normal
business hours, 8:30 a.m., EST to 8:00 p.m. EST, Monday through Friday, or
American Skandia's telephone automated response system at 1-800-766-4530.
o writing to us via regular mail at American Skandia -- Variable Annuities,
P.O. Box 7960, Philadelphia, PA 19176 OR for express mail American Skandia
-- Variable Annuities, 2101 Welsh Road, Dresher, PA 19025. NOTE: Failure to
send mail to the proper address may result in a delay in our receiving and
processing your request.
o sending an email to service@prudential.com or visiting our Internet Website
at www.americanskandia.prudential.com
o accessing information about your Annuity through our Internet Website at
www.americanskandia.prudential.com
You can obtain account information by calling our automated response
system and at www.americanskandia.prudential.com, our Internet Website. Our
Customer Service representatives are also available during business hours to
provide you with information about your account. You can request certain
transactions through our telephone voice response system, our Internet Website
or through a customer service representative. You can provide authorization for
a third party, including your attorney-in-fact acting pursuant to a power of
attorney, to access your account information and perform certain transactions
on your account. You will need to complete a form provided by us which
identifies those transactions that you wish to authorize via telephonic and
electronic means and whether you wish to authorize a third party to perform any
such transactions. Please note that unless you tell us otherwise, we deem that
all transactions that are directed by your investment professional with respect
to your Annuity have been authorized by you. We require that you or your
representative provide proper identification before performing transactions
over the telephone or through our Internet Website. This may include a Personal
Identification Number (PIN) that will be provided to you upon issue of your
Annuity or you may establish or change your PIN by calling our automated
response system and at www.americanskandia.prudential.com, our Internet
Website. Any third party that you authorize to perform financial transactions
on your account will be assigned a PIN for your account.
Transactions requested via telephone are recorded. To the extent permitted
by law, we will not be responsible for any claims, loss, liability or expense in
connection with a transaction requested by telephone or other electronic means
if we acted on such transaction instructions after following reasonable
procedures to identify those persons authorized to perform transactions on your
Annuity using verification methods which may include a request for your Social
Security number, PIN or other form of electronic identification. We may be
liable for losses due to unauthorized or fraudulent instructions if we did not
follow such procedures.
American Skandia does not guarantee access to telephonic, facsimile,
Internet or any other electronic information or that we will be able to accept
transaction instructions via such means at all times. Regular and/or express
mail will be the only means by which we will accept transaction instructions
when telephonic, facsimile, Internet or any other electronic means are
unavailable or delayed. American Skandia reserves the right to limit, restrict
or terminate telephonic, facsimile, Internet or any other electronic transaction
privileges at any time.
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Securities Act") may be permitted to directors, officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
82
OPTIMUM PLUS(SM) PROSPECTUS
- --------------------------------------------------------------------------------
LEGAL PROCEEDINGS
As of the date of this Prospectus, American Skandia and its affiliates are not
involved in any legal proceedings outside of the ordinary course of business.
American Skandia and its affiliates are involved in pending and threatened legal
proceedings in the normal course of its business, however, we do not anticipate
that the outcome of any such legal proceedings will have a material adverse
affect on the Separate Account, or American Skandia's ability to meet its
obligations under the Annuity, or on the distribution of the Annuity.
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The following are the contents of the Statement of Additional Information:
General Information about American Skandia
o American Skandia Life Assurance Corporation
o American Skandia Life Assurance Corporation Variable Account B
o American Skandia Life Assurance Corporation Separate Account D
Principal Underwriter/Distributor -- American Skandia Marketing, Incorporated
Payments Made to Promote Sale of Our Products
How the Unit Price is Determined
Additional Information on Fixed Allocations
o How We Calculate the Market Value Adjustment
General Information
o Voting Rights
o Modification
o Deferral of Transactions
o Misstatement of Age or Sex
o Ending the Offer
Annuitization
Experts
Legal Experts
Financial Statements
83
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APPENDIX A
OPTIMUM PLUS(SM) PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B
- --------------------------------------------------------------------------------
Separate Account B consists of multiple Sub-accounts. Each Sub-account invests
only in a single mutual fund or mutual fund portfolio. All or some of these
Sub-accounts are available as investment options for other variable annuities
we offer pursuant to different prospectuses.
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 Sub-accounts of Separate
Account B that are being offered pursuant to this Prospectus; and (b) the
number of Units outstanding for each such Sub-account as of the dates shown.
Since November 18, 2002, we have been determining, on a daily basis, multiple
Unit Prices for each Sub-account of Separate Account B. We compute multiple
Unit Prices because several of our variable annuities invest in the same
Sub-accounts, and these annuities deduct varying charges that correspond to
each combination of the applicable Insurance Charge, Distribution Charge (when
applicable) and the charges for each optional benefit. Where an asset-based
charge corresponding to a particular Sub-account within a new annuity product
is identical to that in the same Sub-account within an existing annuity, the
Unit Price for the new annuity will be identical to that of the existing
annuity. In such cases, we will for reference purposes depict, in the condensed
financial information for the new annuity, Unit Prices of the existing annuity.
The year in which operations commenced in each such Sub-account is noted in
parentheses. To the extent a Sub-account commenced operations during a
particular calendar year, the Unit Price as of the end of the period reflects
only the partial year results from the commencement of operations until
December 31st of the applicable year. When a Unit Price was first calculated
for a particular Sub-account, we set the price of that Unit at $10.00 per Unit.
Thereafter, Unit Prices vary based on market performance. Unit Prices and Units
are provided for Sub-accounts that commenced operations prior to January 1,
2005.
A-1
APPENDIX A
OPTIMUM PLUS(SM) PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
--------------------------------------------------
Sub-account 2004 2003 2002
- ---------------------------------------------------------------------------------------------------
AST William Blair International Growth (1997)
With No Optional Benefits
Unit Price $ 15.30 $ 13.39 9.72
Number of Units 11,265,469 5,547,558 835,523
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.21 $ 13.35 9.72
Number of Units 15,481,627 6,498,151 78,368
With GMWB
Unit Value $ 15.18 $ 13.34 --
Number of Units 1,821,923 103,740 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.13 $ 13.32 9.71
Number of Units 2,722,552 1,009,679 5,178
With any one of EBP or HAV and GMWB
Unit Value $ 15.74 $ 13.86 --
Number of Units 545,075 29,434 --
With HAV, EBP and GRO Plus
Unit Price $ 15.05 $ 13.28 --
Number of Units 325,809 32,626 --
With HAV, EBP and GMWB
Unit Price $ 11.94 -- --
Number of Units 135,829 -- --
- ---------------------------------------------------------------------------------------------------
AST LSV International Value (1994)
With No Optional Benefits
Unit Price $ 12.84 $ 10.79 8.19
Number of Units 1,897,469 1,201,268 269,995
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.27 $ 12.86 9.79
Number of Units 810,108 368,945 22,770
With GMWB
Unit Value $ 15.24 $ 12.85 --
Number of Units 69,494 5,504 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.19 $ 12.82 --
Number of Units 119,845 24,374 --
With any one of EBP or HAV and GMWB
Unit Value $ 6.69 $ 5.65 --
Number of Units 122,795 72,406 --
With HAV, EBP and GRO Plus
Unit Price $ 15.11 $ 12.79 --
Number of Units 16,366 1,767 --
With HAV, EBP and GMWB
Unit Value $ 12.70 -- --
Number of Units 5,736 -- --
- ---------------------------------------------------------------------------------------------------
A-2
APPENDIX A
OPTIMUM PLUS(SM) PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------
Sub-account 2004 2003 2002
- ---------------------------------------------------------------------------------------------------
AST State Street Research Small-Cap Growth (1)
With No Optional Benefits
Unit Price $ 9.05 $ 9.89 6.92
Number of Units 2,242,129 3,292,593 1,970,250
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.33 $ 13.50 9.48
Number of Units 1,200,247 1,059,046 47,261
With GMWB
Unit Value $ 12.30 $ 13.49 --
Number of Units 113,913 9,676 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.26 $ 13.46 9.47
Number of Units 136,313 138,936 6,595
With any one of EBP or HAV and GMWB
Unit Value $ 15.30 $ 16.82 --
Number of Units 67,370 64,850 --
With HAV, EBP and GRO Plus
Unit Price $ 12.19 $ 13.43 --
Number of Units 23,253 4,691 --
With HAV, EBP and GMWB
Unit Value $ 9.32 -- --
Number of Units 1,043 -- --
- ---------------------------------------------------------------------------------------------------
AST DeAM Small-Cap Growth (1999)
With No Optional Benefits
Unit Price $ 11.98 $ 11.13 7.67
Number of Units 1,618,719 1,682,193 639,695
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.10 $ 14.06 9.71
Number of Units 779,045 480,221 12,122
With GMWB
Unit Value $ 15.07 $ 14.05 --
Number of Units 56,414 1,850 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.02 $ 14.02 9.71
Number of Units 192,105 89,708 1,728
With any one of EBP or HAV and GMWB
Unit Value $ 7.07 $ 6.61 --
Number of Units 129,475 131,605 --
With HAV, EBP and GRO Plus
Unit Price $ 14.94 $ 13.98 --
Number of Units 18,825 3,753 --
With HAV, EBP and GMWB
Unit Value $ 11.03 -- --
Number of Units 3,398 -- --
- ---------------------------------------------------------------------------------------------------
A-3
APPENDIX A
OPTIMUM PLUS(SM) PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------------
Sub-account 2004 2003 2002
- ---------------------------------------------------------------------------------------------------
AST Federated Aggressive Growth (2000)
With No Optional Benefits
Unit Price $ 15.42 $ 12.74 7.64
Number of Units 4,808,453 3,085,373 1,255,415
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.79 $ 16.40 9.86
Number of Units 5,192,694 2,615,505 63,097
With GMWB
Unit Value $ 19.75 $ 16.38 --
Number of Units 562,771 37,078 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 19.69 $ 16.35 9.86
Number of Units 808,007 362,906 4,107
With any one of EBP or HAV and GM WB
Unit Value $ 9.70 $ 8.06 --
Number of Units 324,340 79,226 --
With HAV, EBP and GRO Plus
Unit Price $ 19.58 $ 16.30 --
Number of Units 95,514 20,181 --
With HAV, EBP and GMWB
Unit Value $ 12.64 -- --
Number of Units 53,866 -- --
- ---------------------------------------------------------------------------------------------------
AST Small-Cap Value (1997)
With No Optional Benefits
Unit Price $ 14.22 $ 12.42 9.30
Number of Units 10,785,030 10,183,346 6,141,523
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.34 $ 13.43 10.08
Number of Units 10,169,483 5,824,200 209,790
With GMWB
Unit Value $ 15.31 $ 13.41 --
Number of Units 1,007,926 100,155 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.26 $ 13.39 10.08
Number of Units 1,690,870 767,455 17,411
With any one of EBP or HAV and GM WB
Unit Value $ 15.87 $ 13.95 --
Number of Units 465,784 275,971 --
With HAV, EBP and GRO Plus
Unit Price $ 15.17 $ 13.35 --
Number of Units 166,852 34,978 --
With HAV, EBP and GMWB
Unit Value $ 12.11 -- --
Number of Units 91,011 -- --
- ---------------------------------------------------------------------------------------------------
A-4
APPENDIX A
OPTIMUM PLUS(SM) PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------
Sub-account 2004 2003 2002
- ---------------------------------------------------------------------------------------------------
AST Goldman Sachs Mid-Cap Growth (2000)
With No Optional Benefits
Unit Price $ 11.80 $ 10.31 7.97
Number of Units 4,375,813 3,027,057 1,273,118
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.55 $ 12.75 9.87
Number of Units 5,139,643 2,379,820 66,279
With GMWB
Unit Value $ 14.52 $ 12.73 --
Number of Units 516,261 37,400 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.47 $ 12.71 9.87
Number of Units 994,493 365,115 2,488
With any one of EBP or HAV and GMWB
Unit Value $ 4.24 $ 3.73 --
Number of Units 457,010 175,708 --
With HAV, EBP and GRO Plus
Unit Price $ 14.39 $ 12.68 --
Number of Units 124,672 12,201 --
With HAV, EBP and GMWB
Unit Value $ 11.91 -- --
Number of Units 33,665 -- --
- ---------------------------------------------------------------------------------------------------
AST Neuberger Berman Mid-Cap Value (1993)
With No Optional Benefits
Unit Price $ 14.51 $ 12.01 8.96
Number of Units 11,461,684 8,530,129 5,118,558
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.08 $ 13.34 9.98
Number of Units 9,335,291 4,786,623 163,415
With GMWB
Unit Value $ 16.04 $ 13.33 --
Number of Units 937,314 87,253 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.99 $ 13.31 9.97
Number of Units 1,457,788 610,598 10,745
With any one of EBP or HAV and GMWB
Unit Value $ 15.99 $ 13.32 --
Number of Units 537,445 370,965 --
With HAV, EBP and GRO Plus
Unit Price $ 15.91 $ 13.27 --
Number of Units 154,749 21,843 --
With HAV, EBP and GMWB
Unit Value $ 12.97 -- --
Number of Units 95,076 -- --
- ---------------------------------------------------------------------------------------------------
A-5
APPENDIX A
OPTIMUM PLUS(SM) PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
--------------------------------------------------------------
Sub-account 2004 2003 2002
- ---------------------------------------------------------------------------------------------------
AST MFS Growth (1999)
With No Optional Benefits
Unit Price $ 9.97 $ 9.16 7.58
Number of Units 4,529,834 4,784,269 2,930,432
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.39 $ 11.41 9.47
Number of Units 2,897,175 2,222,614 134,574
With GMWB
Unit Value $ 12.37 $ 11.40 --
Number of Units 304,760 18,900 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.33 $ 11.38 9.46
Number of Units 442,758 207,063 2,437
With any one of EBP or HAV and GMWB
Unit Value $ 6.72 $ 6.21 --
Number of Units 387,463 262,995 --
With HAV, EBP and GRO Plus
Unit Price $ 12.26 $ 11.35 --
Number of Units 52,718 10,550 --
With HAV, EBP and GMWB
Unit Value $ 11.00 -- --
Number of Units 33,939 -- --
- ---------------------------------------------------------------------------------------------------
AST Marsico Capital Growth (1997)
With No Optional Benefits
Unit Price $ 12.26 $ 10.78 8.32
Number of Units 28,117,310 20,138,164 10,144,317
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.95 $ 12.30 9.51
Number of Units 30,793,077 14,975,841 457,013
With GMWB
Unit Value $ 13.92 $ 12.28 --
Number of Units 3,136,818 215,988 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.88 $ 12.26 9.51
Number of Units 4,692,895 2,031,583 30,465
With any one of EBP or HAV and GMWB
Unit Value $ 9.22 $ 8.16 --
Number of Units 2,016,277 925,591 --
With HAV, EBP and GRO Plus
Unit Price $ 13.80 $ 12.23 --
Number of Units 578,919 70,776 --
With HAV, EBP and GMWB
Unit Value $ 11.61 -- --
Number of Units 263,104 -- --
- ---------------------------------------------------------------------------------------------------
A-6
APPENDIX A
OPTIMUM PLUS(SM) PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
------------------------------------------------------
Sub-account 2004 2003 2002
- ---------------------------------------------------------------------------------------------------
AST Sanford Bernstein Core Value (2) (2001)
With No Optional Benefits
Unit Price $ 12.39 $ 11.06 8.76
Number of Units 4,643,022 3,621,862 6,005,922
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.18 $ 12.69 10.08
Number of Units 3,959,115 2,277,726 386,259
With GMWB
Unit Value $ 14.15 $ 12.67 --
Number of Units 220,419 11,518 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.10 $ 12.65 10.08
Number of Units 534,389 328,567 30,510
With any one of EBP or HAV and GMWB
Unit Value $ 11.83 $ 10.62 --
Number of Units 303,689 216,416 --
With HAV, EBP and GRO Plus
Unit Price $ 14.03 $ 12.62 --
Number of Units 49,912 10,893 --
With HAV, EBP and GMWB
Unit Value $ 11.86 -- --
Number of Units 57,669 -- --
- ---------------------------------------------------------------------------------------------------
AST Hotchkis & Wiley Large-Cap Value
With No Optional Benefits
Unit Price $ 11.17 $ 9.83 8.34
Number of Units 3,717,848 2,647,064 2,110,071
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.19 $ 11.65 9.90
Number of Units 1,916,775 651,074 30,714
With GMWB
Unit Value $ 13.16 $ 11.63 --
Number of Units 173,888 21,961 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.12 $ 11.61 9.90
Number of Units 198,898 90,092 5,934
With any one of EBP or HAV and GMWB
Unit Value $ 9.78 $ 8.66 --
Number of Units 419,818 347,275 --
With HAV, EBP and GRO Plus
Unit Price $ 13.05 $ 11.58 --
Number of Units 37,159 332 --
With HAV, EBP and GMWB
Unit Value $ 11.75 -- --
Number of Units 23,032 -- --
- ---------------------------------------------------------------------------------------------------
A-7
APPENDIX A
OPTIMUM PLUS(SM) PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
----------------------------------------------------------
Sub-account 2004 2003 2002
- ---------------------------------------------------------------------------------------------------
AST Lord Abbett Bond-Debenture (2000)
With No Optional Benefits
Unit Price $ 12.26 $ 11.61 9.94
Number of Units 8,369,008 7,751,236 4,146,530
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.56 $ 11.92 10.23
Number of Units 7,337,467 4,628,945 162,571
With GMWB
Unit Value $ 12.53 $ 11.90 --
Number of Units 904,128 42,593 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.49 $ 11.88 10.23
Number of Units 1,314,641 624,019 7,474
With any one of EBP or HAV and G MWB
Unit Value $ 12.18 $ 11.60 --
Number of Units 732,155 423,485 --
With HAV, EBP and GRO Plus
Unit Price $ 12.42 $ 11.85 --
Number of Units 155,764 28,346 --
With HAV, EBP and GMWB
Unit Value $ 10.88 -- --
Number of Units 85,669 -- --
- ---------------------------------------------------------------------------------------------------
AST PIMCO Total Return Bond (1994)
With No Optional Benefits
Unit Price $ 11.31 $ 10.95 10.57
Number of Units 33,208,757 26,287,388 20,544,075
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.82 $ 10.51 10.17
Number of Units 30,067,867 16,012,778 604,147
With GMWB
Unit Value $ 10.79 $ 10.49 --
Number of Units 3,495,678 378,676 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.76 $ 10.48 10.17
Number of Units 4,319,279 2,192,336 36,236
With any one of EBP or HAV and G MWB
Unit Value $ 13.09 $ 12.76 --
Number of Units 2,344,332 1,558,557 --
With HAV, EBP and GRO Plus
Unit Price $ 10.70 $ 10.45 --
Number of Units 476,033 119,982 --
With HAV, EBP and GMWB
Unit Value $ 10.32 -- --
Number of Units 323,335 -- --
- ---------------------------------------------------------------------------------------------------
A-8
APPENDIX A
OPTIMUM PLUS(SM) PROSPECTUS
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------------
Sub-account 2004 2003 2002
- ---------------------------------------------------------------------------------------------------
AST PIMCO Limited Maturity Bond (1995)
With No Optional Benefits
Unit Price $ 10.55 $ 10.51 10.34
Number of Units 21,299,789 15,242,856 11,274,642
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.23 $ 10.22 10.08
Number of Units 19,103,280 5,152,783 215,314
With GMWB
Unit Value $ 10.21 $ 10.21 --
Number of Units 2,764,809 36,640 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.17 $ 10.19 10.08
Number of Units 2,785,690 636,860 80,547
With any one of EBP or HAV and GM WB
Unit Value $ 11.62 $ 11.65 --
Number of Units 1,143,298 329,629 --
With HAV, EBP and GRO Plus
Unit Price $ 10.12 $ 10.16 --
Number of Units 301,108 35,430 --
With HAV, EBP and GMWB
Unit Value $ 9.96 -- --
Number of Units 240,337 -- --
- ---------------------------------------------------------------------------------------------------
AST Money Market (1992)
With No Optional Benefits
Unit Price $ 9.78 $ 9.86 9.96
Number of Units 29,870,585 32,730,501 36,255,772
With any one of GRO Plus, EBP or HAV
Unit Price $ 9.75 $ 9.86 9.99
Number of Units 8,152,893 7,176,983 999,737
With GMWB
Unit Value $ 9.73 $ 9.85 --
Number of Units 1,312,018 81,304 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 9.70 $ 9.83 9.99
Number of Units 1,742,703 1,118,618 70,899
With any one of EBP or HAV and GM WB
Unit Value $ 9.98 $ 10.13 --
Number of Units 234,402 35,505 --
With HAV, EBP and GRO Plus
Unit Price $ 9.65 $ 9.80 --
Number of Units 432,144 149,705 --
With HAV, EBP and GMWB
Unit Value $ 9.79 -- --
Number of Units 61,321 -- --
- ---------------------------------------------------------------------------------------------------
A-9
APPENDIX A
OPTIMUM PLUS(SM) PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------------------------------------------------------------
Evergreen VA -- International Equity (1999)
With No Optional Benefits
Unit Price $ 13.66 $ 11.65 8.15
Number of Units 414,631 189,143 113,389
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.94 $ 12.78 9.67
Number of Units 195,986 76,749 3,669
With GMWB
Unit Value $ 12.21 $ 10.45 --
Number of Units 32,858 827 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.86 $ 12.74 --
Number of Units 67,201 6,492 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.40 $ 10.64 --
Number of Units 83,727 81,555 --
With HAV, EBP and GRO Plus
Unit Price $ 14.78 $ 12.71 --
Number of Units 7,362 1,395 --
With HAV, EBP and GMWB
Unit Value $ 12.36 -- --
Number of Units 2,878 -- --
- --------------------------------------------------------------------------------------------
Evergreen VA -- Omega (2000)
With No Optional Benefits
Unit Price $ 11.29 $ 10.71 7.78
Number of Units 570,123 404,789 39,943
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.89 $ 13.21 --
Number of Units 387,492 56,002 --
With GMWB
Unit Value $ 13.86 $ 13.19 --
Number of Units 31,153 283 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.81 $ 13.17 --
Number of Units 108,796 25,003 --
With any one of EBP or HAV and GMWB
Unit Value $ 9.40 $ 8.97 --
Number of Units 84,876 19,658 --
With HAV, EBP and GRO Plus
Unit Price $ 13.74 $ 13.13 --
Number of Units 3,028 1,855 --
With HAV, EBP and GMWB
Unit Value $ 10.92 -- --
Number of Units 30,383 -- --
- --------------------------------------------------------------------------------------------
1. Effective May 2, 2005 the name of the AST State Street Research Small-Cap
Growth Portfolio has changed to AST Small-Cap Growth Portfolio.
2. Effective May 2, 2005 the name of the AST Sanford Bernstein Core Value
Portfolio has changed to AST AllianceBernstein Core Value Portfolio.
A-10
APPENDIX B
OPTIMUM PLUS(SM) PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits
- --------------------------------------------------------------------------------
Examples of Enhanced Beneficiary Protection Optional Death Benefit Calculation
The following are examples of how the Enhanced Beneficiary Protection Optional
Death Benefit is calculated. Each example assumes that a $50,000 initial
Purchase Payment is made. Each example assumes that there is one Owner who is
age 50 on the Issue Date and that all Account Value is maintained in the
variable investment options. The formula for determining the Enhanced
Beneficiary Protection Optional Death Benefit is as follows:
- --------------------------------------------------------------------------------
Account Value of variable
investment options plus Interim Purchase Payments -
Growth = Value of Fixed Allocations minus proportional withdrawals
(no MVA applies)
- --------------------------------------------------------------------------------
NOTE: The examples below do not include Credits which may be recovered by
American Skandia under certain circumstances.
Example with market increase
Assume that the Owner has made no withdrawals and that the Account Value has
been increasing due to positive market performance. On the date we receive due
proof of death, the Account Value is $75,000. The basic Death Benefit is
calculated as Purchase Payments minus proportional withdrawals, or Account
Value, less the amount of any Credits applied within 12 months prior to the
date of death, which ever is greater. Therefore, the basic Death Benefit is
equal to $75,000. The Enhanced Beneficiary Protection Optional Death Benefit is
equal to the amount payable under the basic Death Benefit ($75,000) PLUS 40% of
the "Growth" under the Annuity.
- --------------------------------------------------------------------------------
Growth = $75,000 - [$50,000 - $0]
= $25,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit
= 40% of Growth
= $25,000 x 0.40
= $10,000
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $85,000
- --------------------------------------------------------------------------------
Examples with market decline
Assume that the Owner has made no withdrawals and that the Account Value has
been decreasing due to declines in market performance. On the date we receive
due proof of death, the Account Value is $45,000. The basic Death Benefit is
calculated as Purchase Payments minus proportional withdrawals, or Account
Value, less the amount of any Credits applied within 12 months prior to the
date of death, which ever is greater. Therefore, the basic Death Benefit is
equal to $50,000. The Enhanced Beneficiary Protection Optional Death Benefit is
equal to the amount payable under the basic Death Benefit ($50,000) PLUS the
"Growth" under the Annuity.
- --------------------------------------------------------------------------------
Growth = $45,000 - [$50,000 - $0]
= $-5,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit
= 40% of Growth
NO BENEFIT IS PAYABLE
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $50,000
- --------------------------------------------------------------------------------
B-1
APPENDIX B
OPTIMUM PLUS(SM) PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits continued
- --------------------------------------------------------------------------------
In this example you would receive no additional benefit from purchasing the
Enhanced Beneficiary Protection Optional
Death Benefit.
Example with market increase and withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 5 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $90,000. The basic Death Benefit is calculated as Purchase
Payments minus proportional withdrawals, or Account Value, less the amount of
any Credits applied within 12 months prior to the date of death, which ever is
greater. Therefore, the basic Death Benefit is equal to $90,000. The Enhanced
Beneficiary Protection Optional Death Benefit is equal to the amount payable
under the basic Death Benefit ($90,000) PLUS 40% of the "Growth" under the
Annuity.
- --------------------------------------------------------------------------------
Growth = $90,000 - [$50,000 - ($50,000 x $15,000/$75,000)]
= $90,000 - [$50,000 - $10,000]
= $90,000 - $40,000
= $50,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death
Benefit = 40% of Growth
= $50,000 x 0.40
= $20,000
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $110,000
- --------------------------------------------------------------------------------
Examples of Highest Anniversary Value Death Benefit Calculation
The following are examples of how the Highest Anniversary Value Death Benefit
is calculated. Each example assumes an initial Purchase Payment of $50,000.
Each example assumes that there is one Owner who is age 70 on the Issue Date
and that all Account Value is maintained in the variable investment options.
NOTE: The examples below do not include Credits which may be recovered by
American Skandia under certain circumstances.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the date
we receive due proof of death, the Account Value is $75,000; however, the
Anniversary Value on the 5th anniversary of the Issue Date was $90,000. Assume
as well that the Owner has died before the Death Benefit Target Date. The Death
Benefit is equal to the greater of the Highest Anniversary Value or the basic
Death Benefit. The Death Benefit would be the Highest Anniversary Value
($90,000) because it is greater than the amount that would have been payable
under the basic Death Benefit ($75,000).
Example with withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $80,000; however, the Anniversary Value on the 5th anniversary
of the Issue Date was $90,000. Assume as well that the Owner has died before
the Death Benefit Target Date. The Death Benefit is equal to the greater of the
Highest Anniversary Value or the basic Death Benefit.
- --------------------------------------------------------------------------------
Highest Anniversary Value = $90,000 - [$90,000 x $15,000/$75,000]
= $90,000 - $18,000
= $72,000
Basic Death Benefit = max [$80,000, $50,000 -
($50,000 x $15,000/$75,000)]
= max [$80,000, $40,000]
= $80,000
- --------------------------------------------------------------------------------
B-2
APPENDIX B
OPTIMUM PLUS(SM) PROSPECTUS
- --------------------------------------------------------------------------------
Example with death after Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals had been made prior to the
Death Benefit Target Date. Further assume that the Owner dies after the Death
Benefit Target Date, when the Account Value is $75,000. The Highest Anniversary
Value on the Death Benefit Target Date was $80,000; however, following the
Death Benefit Target Date, the Owner made a Purchase Payment of $15,000 and
later had taken a withdrawal of $5,000 when the Account Value was $70,000. The
Death Benefit is equal to the greater of the Highest Anniversary Value plus
Purchase Payments minus proportional withdrawals after the Death Benefit Target
Date or the basic Death Benefit.
- --------------------------------------------------------------------------------
Highest Anniversary Value = $80,000 + $15,000 - [($80,000 + $15,000) x
$5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $88,214
Basic Death Benefit = max [$75,000, ($50,000 + $15,000) -
{($50,000 + $15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $75,000
- --------------------------------------------------------------------------------
Examples of Combination 5% Roll-Up and Highest Anniversary Value Death Benefit
Calculation
The following are examples of how the Combination 5% Roll-Up and Highest
Anniversary Value Death Benefit are calculated. Each example assumes an initial
Purchase Payment of $50,000. Each example assumes that there is one Owner who
is age 70 on the Issue Date and that all Account Value is maintained in the
variable investment options.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the 7th
anniversary of the Issue Date we receive due proof of death, at which time the
Account Value is $75,000; however, the Anniversary Value on the 5th anniversary
of the Issue Date was $90,000. Assume as well that the Owner has died before
the Death Benefit Target Date. The Roll-Up Value is equal to initial Purchase
Payment accumulated at 5% for 6 years, or $67,005. The Death Benefit is equal
to the greatest of the Roll-Up Value, Highest Anniversary Value or the basic
Death Benefit. The Death Benefit would be the Highest Anniversary Value
($90,000) because it is greater than both the Roll-Up Value ($67,005) and the
amount that would have been payable under the basic Death Benefit ($75,000).
Example with withdrawals
Assume that the Owner made a withdrawal of $5,000 on the 6th anniversary of the
Issue Date when the Account Value was $45,000. The Roll-Up Value on the 6th
anniversary of the Issue Date is equal to initial Purchase Payment accumulated
at 5% for 6 years, or $67,005. The 5% Dollar-for-Dollar Withdrawal Limit for
the 7th annuity year is equal to 5% of the Roll-Up Value as of the 6th
anniversary of the Issue Date, or $3,350. Therefore, the remaining $1,650 of
the withdrawal results in a proportional reduction to the Roll-Up Value. On the
7th anniversary of the Issue Date we receive due proof of death, at which time
the Account Value is $43,000; however, the Anniversary Value on the 2nd
anniversary of the Issue Date was $70,000. Assume as well that the Owner has
died before the Death Benefit Target Date. The Death Benefit is equal to the
greatest of the Roll-Up Value, Highest Anniversary Value or the basic Death
Benefit.
B-3
APPENDIX B
OPTIMUM PLUS(SM) PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits continued
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Roll-Up Value = {($67,005 - $3,350) - [($67,005 - $3,350)
x $1,650/($45,000 - $3,350)]} x 1.05
= ($63,655 - $2,522) x 1.05
= $64,190
Highest Anniversary Value = $70,000 - [$70,000 x $5,000/$45,000]
= $70,000 - $7,778
= $62,222
Basic Death Benefit = max [$43,000, $50,000 - ($50,000 x
$5,000/$45,000)]
= max [$43,000, $44,444]
= $44,444
- --------------------------------------------------------------------------------
The Death Benefit therefore is $64,190.
Example with death after Death Benefit Target Date
Assume that the Owner has not made any withdrawals prior to the Death Benefit
Target Date. Further assume that the Owner dies after the Death Benefit Target
Date, when the Account Value is $75,000. The Roll-Up Value on the Death Benefit
Target Date (the contract anniversary on or following the Owner's 80th
birthday) is equal to initial Purchase Payment accumulated at 5% for 10 years,
or $81,445. The Highest Anniversary Value on the Death Benefit Target Date was
$85,000; however, following the Death Benefit Target Date, the Owner made a
Purchase Payment of $15,000 and later had taken a withdrawal of $5,000 when the
Account Value was $70,000. The Death Benefit is equal to the greatest of the
Roll-Up Value, Highest Anniversary Value or the basic Death Benefit as of the
Death Benefit Target Date; each increased by subsequent purchase payments and
reduced proportionally for subsequent withdrawals.
- --------------------------------------------------------------------------------
Roll-Up Value = $81,445 + $15,000 - [($81,445 + $15,000) x
$5,000/$70,000]
= $81,445 + $15,000 - $6,889
= $89,556
Highest Anniversary Value = $85,000 + $15,000 - [($85,000 + $15,000) x
$5,000/$70,000]
= $85,000 + $15,000 - $7,143
= $92,857
Basic Death Benefit = max [$75,000, $50,000 + $15,000 - {($50,000
+ $15,0000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $75,000
- --------------------------------------------------------------------------------
The Death Benefit therefore is $92,857.
Examples of Highest Daily Value Death Benefit Calculation
The following are examples of how the HDV Death Benefit is calculated. Each
example assumes an initial Purchase Payment of $50,000 (includes any Credits).
Each example assumes that there is one Owner who is age 70 on the Issue Date.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the date
we receive due proof of death, the Account Value is $75,000; however, the
Highest Daily Value was $90,000. Assume, as well, that the Owner has died
before the Death Benefit Target Date. The Death Benefit is equal to the greater
of the Highest Daily Value or the basic Death Benefit. The Death Benefit would
be the HDV ($90,000) because it is greater than the amount that would have been
payable under the basic Death Benefit ($75,000).
B-4
APPENDIX B
OPTIMUM PLUS(SM) PROSPECTUS
- --------------------------------------------------------------------------------
Example with withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $80,000; however, the Highest Daily Value ($90,000) was
attained during the fifth Annuity Year. Assume, as well, that the Owner has
died before the Death Benefit Target Date. The Death Benefit is equal to the
greater of the Highest Daily Value (proportionally reduced by the subsequent
withdrawal) or the basic Death Benefit.
- --------------------------------------------------------------------------------
Highest Daily Value = $90,000 - [$90,000 x $15,000/$75,000]
= $90,000 - $18,000
= $72,000
Basic Death Benefit = max [$80,000, $50,000 x ($50,000 -
$15,000/$75,000)]
= max [$80,000, $40,000]
= $80,000
- --------------------------------------------------------------------------------
The Death Benefit therefore is $80,000.
Example with death after Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals had been made prior to the
Death Benefit Target Date. Further assume that the Owner dies after the Death
Benefit Target Date, when the Account Value is $75,000. The Highest Daily Value
on the Death Benefit Target Date was $80,000; however, following the Death
Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had
taken a withdrawal of $5,000 when the Account Value was $70,000. The Death
Benefit is equal to the greater of the Highest Daily Value on the Death Benefit
Target Date plus Purchase Payments minus proportional withdrawals after the
Death Benefit Target Date or the basic Death Benefit.
- --------------------------------------------------------------------------------
Highest Daily Value = $80,000 + $15,000 - [($80,000 + $15,000) x
$5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $88,214
Basic Death Benefit = max [$75,000, ($50,000 + $15,000) - {($50,000 +
$15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $75,000
- --------------------------------------------------------------------------------
The Death Benefit therefore is $88,214.
B-5
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APPENDIX C
OPTIMUM PLUS(SM) PROSPECTUS
Appendix C -- Additional Information on Asset Allocation Programs
- --------------------------------------------------------------------------------
Program Rules
- -------------
o You can elect an asset allocator program where the Sub-accounts for each
asset class in each model portfolio are designated based on an evaluation of
available Sub-accounts. If you elect the Lifetime Five Benefit ("LT5") or
the Highest Daily Value Death Benefit ("HDV"), you must enroll in one of the
eligible model portfolios. Asset allocation is a sophisticated method of
diversification that allocates assets among asset classes in order to manage
investment risk and potentially enhance returns over the long term. However,
asset allocation does not guarantee a profit or protect against a loss.
How the Asset Allocation Program Works
o Amounts will automatically be allocated in accordance with the percentages
and to Sub-accounts indicated for the model portfolio that you choose. If
you allocate your Account Value or transfer your Account Value among any
Sub-accounts that are outside of your model portfolio, we will allocate
these amounts according to the allocation percentages of the applicable
model portfolio upon the next rebalancing. You may only choose one model
portfolio at a time. When you enroll in the asset allocation program and
upon each rebalance thereafter, 100% of your Account Value allocated to the
variable Sub-accounts will be allocated to the asset allocation program. Any
Account Value not invested in the Sub-accounts will not be part of the
program.
o Additional Purchase Payments: Unless otherwise requested, any additional
Purchase Payments applied to the variable Sub-accounts in the Annuity will
be allocated to the Sub-accounts according to the allocation percentages for
the model portfolio you choose. Allocation of additional Purchase Payments
outside of your model portfolio but into a Sub-account, will be reallocated
according to the allocation percentages of the applicable model portfolio
upon the next rebalancing.
o Rebalancing Your Model Portfolio: Changes in the value of the Sub-account
will cause your Account Value allocated to the Sub-accounts to vary from the
percentage allocations of the model portfolio you select. By selecting the
asset allocation program, you have directed us to periodically (e.g.,
quarterly) rebalance your Account Value allocated to the Sub-accounts in
accordance with the percentage allocations assigned to each Sub-account
within your model portfolio at the time you elected the program or as later
modified with your consent. Some asset allocation programs will only require
that a rebalancing occur when the percent of your Account Value allocated to
the Sub-accounts are outside of the acceptable range permitted under such
asset allocation program. Note -- Any Account Value not invested in the
Sub-accounts will not be affected by any rebalance.
o Sub-account Changes Within the Model Portfolios: From time to time you may be
notified of a suggested change in a Sub-account or percentage allocated to a
Sub-account within your model portfolio. If you consent (in the manner that
is then permitted or required) to the suggested change, then it will be
implemented upon the next rebalance. If you do not consent then rebalancing
will continue in accordance with your unchanged model portfolio, unless the
Sub-account is no longer available under your Annuity, in which case your
lack of consent will be deemed a request to terminate the asset allocation
program and the provisions under "Termination or Modification of the Asset
Allocation Program" will apply.
o Owner Changes in Choice of Model Portfolio: You may change from the model
portfolio that you have elected to any other currently available model
portfolio at any time. The change will be implemented on the date we receive
all required information in the manner that is then permitted or required.
Termination or Modification of the Asset Allocation Program:
o You may request to terminate your asset allocation program at any time. Any
termination will be effective on the date that American Skandia receives
your termination request in good order. If you are enrolled in HDV or LT5,
termination of your asset allocation program must coincide with enrollment
in a then currently available and approved asset allocation program or other
approved option. However, if you are enrolled in LT5 you may terminate the
LT5 benefit in order to then terminate your asset allocation program.
American Skandia reserves the right to terminate or modify the asset
allocation program at any time with respect to any programs.
Restrictions on Electing the Asset Allocation:
o You cannot participate in auto-rebalancing or a DCA program while enrolled in
an asset allocation program. Upon election of an asset allocation program,
American Skandia will automatically terminate your enrollment in any
auto-rebalancing or DCA program. Finally, Systematic Withdrawals can only be
made as flat dollar amounts.
C-1
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- --------------------------------------------------------------------------------
PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS FURTHER
DETAILS ABOUT THE AMERICAN SKANDIA ANNUITY DESCRIBED IN PROSPECTUS LPLOP--PROS
(05/2005).
--------------------------------------
(print your name)
--------------------------------------
(address)
--------------------------------------
(city/state/zip code)
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
Variable Annuity Issued by: Variable Annuity Distributed by:
AMERICAN SKANDIA LIFE AMERICAN SKANDIA
ASSURANCE CORPORATION MARKETING, INCORPORATED
A Prudential Financial Company A Prudential Financial Company
One Corporate Drive One Corporate Drive
Shelton, Connecticut 06484 Shelton, Connecticut 06484
Telephone: 1-800-752-6342 Telephone: 203-926-1888
http://www.americanskandia.prudential.com http://www.americanskandia.prudential.com
MAILING ADDRESSES:
------------------
AMERICAN SKANDIA -- VARIABLE ANNUITIES
P.O. Box 7960
Philadelphia, PA 19176
EXPRESS MAIL:
AMERICAN SKANDIA -- VARIABLE ANNUITIES
2101 Welsh Road
Dresher, PA 19025
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
A Prudential Financial Company
One Corporate Drive, Shelton, Connecticut 06484
AMERICAN SKANDIA ADVISOR PLAN(SM) III
Flexible Premium Deferred Annuity
PROSPECTUS: MAY 2, 2005
This Prospectus describes American Skandia Advisor Plan(SM) III, a flexible
premium deferred annuity (the "Annuity") offered by American Skandia Life
Assurance Corporation ("American Skandia", "we", "our" or "us"). The Annuity may
be offered as an individual annuity contract or as an interest in a group
annuity. This Prospectus describes the important features of the Annuity and
what you should consider before purchasing the Annuity. THE ANNUITY OR CERTAIN
OF ITS INVESTMENT OPTIONS AND/OR FEATURES MAY NOT BE AVAILABLE IN ALL STATES.
VARIOUS RIGHTS AND BENEFITS MAY DIFFER BETWEEN STATES TO MEET APPLICABLE LAWS
AND/OR REGULATIONS. For more information about variations applicable to your
state, please refer to your Annuity contract or consult your Investment
Professional. Certain terms are capitalized in this Prospectus. Those terms are
either defined in the Glossary of Terms or in the context of the particular
section.
American Skandia offers several different annuities which your investment
professional may be authorized to offer to you. Each annuity has different
features and benefits that may be appropriate for you based on your
financial situation, your age and how you intend to use the annuity. The
different features and benefits include variations in death benefit
protection and the ability to access your annuity's account value. The
fees and charges you pay and compensation paid to your Investment
Professional may also be different between each annuity.
The Variable Investment Options
The variable investment options, each a Sub-account of American Skandia Life
Assurance Corporation Variable Account B, invest in an underlying mutual fund
portfolio. Currently, portfolios of the following underlying mutual funds are
being offered: American Skandia Trust, Gartmore Variable Investment Trust, Wells
Fargo Variable Trust, A I M Advisors, Inc., Evergreen Variable Annuity Trust,
ProFunds VP, First Defined Portfolio Fund LLC and The Prudential Series Fund,
Inc.
Please Read This Prospectus
PLEASE READ THIS PROSPECTUS AND THE CURRENT PROSPECTUS FOR THE UNDERLYING MUTUAL
FUNDS. KEEP THEM FOR FUTURE REFERENCE. If you are purchasing the Annuity as a
replacement for existing variable annuity or variable life coverage, you should
consider any surrender or penalty charges you may incur when replacing your
existing coverage and that this Annuity may be subject to a contingent deferred
sales charge if you elect to surrender the Annuity or take a partial withdrawal.
You should consider your need to access the Annuity's Account Value and whether
the annuity's liquidity features will satisfy that need.
Available Information
We have also filed a Statement of Additional Information that is available from
us, without charge, upon your request. The contents of the Statement of
Additional Information are described on page 93.
This Prospectus is part of the registration statement we filed with the SEC
regarding this offering. Additional information on us and this offering is
available in the registration statement and the exhibits thereto. You may review
and 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. These
documents, as well as documents incorporated by reference, may also be obtained
through the SEC's Internet Website (http://www.sec.gov) for this registration
statement as well as for other registrants that file electronically with the
SEC.
For Further Information call:
- - 1-800-752-6342
THESE ANNUITIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ISSUED, GUARANTEED OR
ENDORSED BY, ANY BANK, ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC), THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY. AN INVESTMENT IN THIS ANNUITY INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF VALUE, EVEN WITH RESPECT TO AMOUNTS ALLOCATED TO THE AST MONEY
MARKET SUB-ACCOUNT.
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.
AMERICAN SKANDIA ADVISOR PLAN(SM) IS A SERVICE MARK OF THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA.
Prospectus Dated: May 2, 2005 Statement of Additional Information Dated: May
2, 2005
ASAP3PROS505 ASIIIPROS
PLEASE SEE OUR PRIVACY POLICY AND IRA DISCLOSURE STATEMENT ATTACHED TO THE BACK
COVER OF THIS PROSPECTUS.
Contents
Introduction ............................................................................. 1
Why Would I Choose to Purchase This Annuity? ........................................... 1
What Are Some of the Key Features of This Annuity? ..................................... 1
How Do I Purchase This Annuity? ........................................................ 2
Glossary of Terms ........................................................................ 3
Summary of Contract Fees and Charges ..................................................... 4
Expense Examples ......................................................................... 12
Investment Options ....................................................................... 13
What are the Investment Objectives and Policies of the Portfolios? ..................... 13
What are the Fixed Allocations? ........................................................ 27
Fees and Charges ......................................................................... 28
What are the Contract Fees and Charges? ................................................ 28
What Charges Apply Solely to the Variable Investment Options? .......................... 29
What Fees and Expenses are Incurred by the Portfolios? ................................. 30
What Charges Apply to the Fixed Allocations? ........................................... 30
What Charges Apply if I Choose an Annuity Payment Option? .............................. 30
Exceptions/Reductions to Fees and Charges .............................................. 30
Purchasing Your Annuity .................................................................. 31
What are Our Requirements for Purchasing the Annuity? .................................. 31
Managing Your Annuity .................................................................... 32
May I Change the Owner, Annuitant and Beneficiary Designations? ........................ 32
May I Return the Annuity if I Change My Mind? .......................................... 32
May I Make Additional Purchase Payments? ............................................... 32
May I Make Scheduled Payments Directly from My Bank Account? ........................... 32
May I Make Purchase Payments Through a Salary Reduction Program? ....................... 33
Managing Your Account Value .............................................................. 34
How and When are Purchase Payments Invested? ........................................... 34
Are There Restrictions or Charges on Transfers Between Investment Options? ............. 34
Do You Offer Dollar Cost Averaging? .................................................... 36
Do You Offer Any Automatic Rebalancing Programs? ....................................... 36
Are Any Asset Allocation Programs Available? ........................................... 36
Do You Offer Programs Designed to Guarantee a "Return of Premium" at a Future Date? .... 37
May I Give My Investment Professional Permission to Manage My Account Value? ........... 38
May I Authorize My Third Party Investment Advisor to Manage My Account? ................ 38
How Do the Fixed Allocations Work? ..................................................... 39
How Do You Determine Rates for Fixed Allocations? ...................................... 40
How Does the Market Value Adjustment Work? ............................................. 40
What Happens When My Guarantee Period Matures? ......................................... 41
Access To Account Value .................................................................. 42
What Types of Distributions are Available to Me? ....................................... 42
Are There Tax Implications for Distributions? .......................................... 42
Can I Withdraw a Portion of My Annuity? ................................................ 42
How Much Can I Withdraw as a Free Withdrawal? .......................................... 43
Is There a Charge for a Partial Withdrawal? ............................................ 43
Can I Make Periodic Withdrawals from the Annuity During the Accumulation Period? ....... 43
Do You Offer a Program for Withdrawals Under Section 72(t) of the Internal Revenue
Code? .................................................................................. 44
What are Minimum Distributions and When Would I Need to Make Them? ..................... 44
Can I Surrender My Annuity for Its Value? .............................................. 44
What is a Medically-Related Surrender and How Do I Qualify? ............................ 44
What Types of Annuity Options are Available? ........................................... 45
How and When Do I Choose the Annuity Payment Option? ................................... 46
(i)
Contents
How are Annuity Payments Calculated? ............................................... 46
Living Benefit Programs .............................................................. 48
Do You Offer Programs Designed to Provide Investment Protection for Owners While
They are Alive? .................................................................. 48
Guaranteed Return Option Plus(SM) (GRO Plus(SM)) ................................... 49
Guaranteed Return Option (GRO) ..................................................... 54
Guaranteed Minimum Withdrawal Benefit (GMWB) ....................................... 57
Guaranteed Minimum Income Benefit (GMIB) ........................................... 61
Lifetime Five Income Benefit (Lifetime Five) ....................................... 65
Death Benefit ........................................................................ 71
What Triggers the Payment of a Death Benefit? ...................................... 71
Basic Death Benefit ................................................................ 71
Optional Death Benefits ............................................................ 71
American Skandia's Annuity Rewards ................................................. 75
Payment of Death Benefits .......................................................... 75
Valuing Your Investment .............................................................. 78
How is My Account Value Determined? ................................................ 78
What is the Surrender Value of My Annuity? ......................................... 78
How and When Do You Value the Sub-Accounts? ........................................ 78
How Do You Value Fixed Allocations? ................................................ 78
When Do You Process and Value Transactions? ........................................ 78
What Happens to My Units When There is a Change in Daily Asset-Based Charges? ...... 79
Tax Considerations ................................................................... 81
General Information .................................................................. 88
How Will I Receive Statements and Reports? ......................................... 88
Who is American Skandia? ........................................................... 88
What are Separate Accounts? ........................................................ 89
What is the Legal Structure of the Underlying Funds? ............................... 90
Who Distributes Annuities Offered by American Skandia? ............................. 91
Incorporation of Certain Documents by Reference .................................... 92
Financial Statements ............................................................... 92
How to Contact Us .................................................................. 92
Indemnification .................................................................... 93
Legal Proceedings .................................................................. 93
Contents of the Statement of Additional Information ................................ 93
Appendix A -- Condensed Financial Information About Separate Account B ............... A-1
Appendix B -- Calculation of Previously Offered Optional Death Benefits .............. B-1
Appendix C -- Plus40TM Optional Life Insurance Rider ................................. C-1
Appendix D -- Additional Information on Asset Allocation Programs .................... D-1
(ii)
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Introduction
Why Would I Choose to Purchase This Annuity?
This Annuity is frequently used for retirement planning because it allows you to
accumulate retirement savings and also offers annuity payment options when you
are ready to begin receiving income. The Annuity also offers a choice of
different optional benefits, for an additional charge, that can provide
principal protection or guaranteed minimum income protection for Owners while
they are alive and one or more death benefits that can protect your retirement
savings if you die during a period of declining markets. It may be used as an
investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Roth
IRA, Section 401(a) plans (defined benefit plans and defined contribution plans
such as 401(k), profit sharing and money purchase plans) or Tax Sheltered
Annuity (or 403(b)). It may also be used as an investment vehicle for
"non-qualified" investments. The Annuity allows you to invest your money in a
number of variable investment options as well as in one or more fixed
allocations.
When an Annuity is purchased as a "NON-QUALIFIED" investment, you generally are
not taxed on any investment gains the Annuity earns until you make a withdrawal
or begin to receive annuity payments. This feature, referred to as
"tax-deferral", can be beneficial to the growth of your Account Value because
money that would otherwise be needed to pay taxes on investment gains each year
remains invested and can earn additional money. However, because the Annuity is
designed for long-term retirement savings, a 10% penalty tax may be applied on
withdrawals you make before you reach age 59 1/2. Annuities purchased as a
non-qualified investment are not subject to the maximum contribution limits that
may apply to a qualified investment, and are not subject to required minimum
distributions after age 70 1/2.
When an Annuity is purchased as a "QUALIFIED" investment, you should consider
that the Annuity does not provide any tax advantages in addition to the
preferential treatment already available through your retirement plan under the
Internal Revenue Code. An Annuity may offer features and benefits in addition to
providing tax deferral that other investment vehicles may not offer, including
death benefit protection for your beneficiaries, lifetime income options, and
the ability to make transfers between numerous variable investment options
offered under the Annuity. You should consult with your investment professional
as to whether the overall benefits and costs of the Annuity are appropriate
considering your overall financial plan.
What Are Some of the Key Features of This Annuity?
- - This Annuity is a "flexible premium deferred annuity." It is called
"flexible premium" because you have considerable flexibility in the timing
and amount of premium payments. Generally, investors "defer" receiving
annuity payments until after an accumulation period.
- - This Annuity offers both variable investment options and Fixed
Allocations. If you allocate your Account Value to variable investment
options, the value of your Annuity will vary daily to reflect the
investment performance of the underlying investment options. Fixed
Allocations of different durations are offered that are guaranteed by us,
but may have a Market Value Adjustment if you withdraw or transfer your
Account Value before the Maturity Date.
- - The Annuity features two distinct periods -- the accumulation period and
the payout period. During the accumulation period your Account Value is
allocated to one or more investment options.
- - During the payout period, commonly called "annuitization," you can elect
to receive annuity payments (1) for life; (2) for life with a guaranteed
minimum number of payments; (3) based on joint lives; or (4) for a
guaranteed number of payments. We currently make annuity payments
available on a fixed or variable basis.
- - This Annuity offers optional benefits, for an additional charge, that can
provide principal protection or guaranteed minimum income protection for
Owners while they are alive.
- - This Annuity offers a basic Death Benefit. It also offers optional Death
Benefits that provide an enhanced level of protection for your
beneficiary(ies) for an additional charge.
- - You are allowed to withdraw a limited amount of money from your Annuity on
an annual basis without any charges, although any optional guaranteed
benefit you elect may be reduced. Other product features allow you to
access your Account Value as necessary, although a charge may apply. After
Annuity Year 8, you are allowed to make unlimited withdrawals from your
Annuity without any charges.
- - Transfers between investment options are tax-free. Currently, you may make
twenty transfers each year free of charge. We also offer several programs
that enable you to manage your Account Value as your financial needs and
investment performance change.
1
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Introduction continued
How Do I Purchase This Annuity?
We sell the Annuity through licensed, registered investment professionals. You
must complete an application and submit a minimum initial purchase payment of
$1,000. We may allow you to make a lower initial purchase payment provided you
establish a bank drafting program under which purchase payments received in the
first Annuity Year total at least $1,000. If the Annuity is owned by an
individual or individuals, the oldest of those Owners must be age 80 or under,
as of the Issue Date of the Annuity. If the Annuity is owned by an entity, the
annuitant must be age 80 or under, as of the Issue Date of the Annuity. The
availability and level of protection of certain optional benefits may vary based
on the age of the Owner on the Issue Date of the Annuity or the date of the
Owner's death.
2
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Glossary of Terms
Many terms used within this Prospectus are described within the text where they
appear. The description of those terms are not repeated in this Glossary of
Terms.
ACCOUNT VALUE
The value of each allocation to a Sub-account (also referred to as "variable
investment option") or a Fixed Allocation prior to the Annuity Date, plus any
earnings, and/or less any losses, distributions and charges. The Account Value
is calculated before we assess any applicable Contingent Deferred Sales Charge
("CDSC" or "surrender charge") and/or, other than on a contract anniversary, any
fee that is deducted from the contract annually in arrears. The Account Value is
determined separately for each Sub-account and for each Fixed Allocation, and
then totaled to determine the Account Value for your entire Annuity. The Account
Value of each Fixed Allocation on other than its Maturity Date may be calculated
using a market value adjustment.
ANNUITIZATION
The application of Account Value (or Protected Income Value for the Guaranteed
Minimum Income Benefit, if applicable) to one of the available annuity options
for the Annuitant to begin receiving periodic payments for life, for a
guaranteed minimum number of payments or for life with a guaranteed minimum
number of payments.
ANNUITY DATE
The date you choose for annuity payments to commence. A maximum Annuity Date may
apply.
ANNUITY YEAR
A 12-month period commencing on the Issue Date of the Annuity and each
successive 12-month period thereafter.
CODE
The Internal Revenue Code of 1986, as amended from time to time.
FIXED ALLOCATION
An allocation of Account Value that is to be credited a fixed rate of interest
for a specified Guarantee Period during the accumulation period.
GUARANTEE PERIOD
A period of time during the accumulation period where we credit a fixed rate of
interest on a Fixed Allocation.
INTERIM VALUE
The value of a Fixed Allocation on any date other than the Maturity Date. The
Interim Value is equal to the initial value allocated to the Fixed Allocation
plus all interest credited to the Fixed Allocation as of the date calculated,
less any transfers or withdrawals from the Fixed Allocation.
ISSUE DATE
The effective date of your Annuity.
MVA
A market value adjustment used in the determination of Account Value of each
Fixed Allocation on any day more than 30 days prior to the Maturity Date of such
Fixed Allocation.
OWNER
With an Annuity issued as an individual annuity contract, the Owner is either an
eligible entity or person named as having ownership rights in relation to the
Annuity. With an Annuity issued as a certificate under a group annuity contract,
the "Owner" refers to the person or entity who has the rights and benefits
designated as to the "Participant" in the certificate.
SURRENDER VALUE
The value of your Annuity available upon surrender prior to the Annuity Date.
It equals the Account Value as of the date we price the surrender minus any
applicable CDSC, Annual Maintenance Fee, Tax Charge and the charge for any
optional benefits. The surrender value may be calculated using a Market Value
Adjustment with respect to amounts in any Fixed Allocation.
UNIT
A measure used to calculate your Account Value in a Sub-account during the
accumulation period.
VALUATION DAY
Every day the New York Stock Exchange is open for trading or any other day the
Securities and Exchange Commission requires mutual funds or unit investment
trusts to be valued.
3
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Summary of Contract Fees and Charges
Below is a summary of the fees and charges for the Annuity. Some fees and
charges are assessed against your Annuity while others are assessed against
assets allocated to the variable investment options. The fees and charges that
are assessed against the Annuity include the Contingent Deferred Sales Charge,
Transfer Fee, Tax Charge and Annual Maintenance Fee. The charges that are
assessed against the variable investment options are the mortality and expense
risk charge, the charge for administration of the Annuity, the Distribution
Charge and the charge for certain optional benefits you elect, other than the
Guaranteed Minimum Income Benefit, which is assessed against the Protected
Income Value. Each underlying mutual fund portfolio assesses a charge for
investment management, other expenses and with some mutual funds, a 12b-1
charge. The prospectus for each underlying mutual fund provides more detailed
information about the expenses for the underlying mutual funds. The following
table provides a summary of the fees and charges you will pay if you surrender
the Annuity or transfer Account Value among investment options. These fees and
charges are described in more detail within this Prospectus.
YOUR TRANSACTION FEES AND CHARGES
(ASSESSED AGAINST THE ANNUITY)
FEE/CHARGE AMOUNT DEDUCTED
- ------------------------------------ --------------------------------------------------------------------
Contingent Deferred Sales Charge* 7.5%
The charge is a percentage of each applicable Purchase Payment
deducted upon surrender or withdrawal. The period during which
a particular percentage applies is measured from the Issue Date
of the Annuity.
Transfer Fee $10.00 (currently, $15.00 maximum)
(Currently, we deduct the fee after the 20th transfer each Annuity
Year. We guarantee that the number of charge free transfers per
Annuity Year will never be less than 8.)
Tax Charge Up to 3.5% of the value that is annuitized, depending on the
requirements of the applicable jurisdiction. This charge is deducted
generally at the time you annuitize your contract.
* The following are the Contingent Deferred Sales Charges (as a percentage of
each applicable Purchase Payment) upon surrender or withdrawal. For purposes of
calculating this charge we consider the year following the Issue Date of your
Annuity as Year 1.
Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9+
7.5% 7.0% 6.5% 6.0% 5.0% 4.0% 3.0% 2.0% 0.0%
4
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
The following table provides a summary of the periodic fees and charges you will
pay while you own the Annuity, excluding the underlying mutual fund Portfolio
annual expenses. These fees and charges are described in more detail within this
Prospectus.
YOUR PERIODIC FEES AND CHARGES
ANNUAL FEES/CHARGES ASSESSED AGAINST THE ANNUITY
FEE/CHARGE AMOUNT DEDUCTED
- --------------------------------------------------- ------------------------------------------------------------
Annual Maintenance Fee Smaller of $35 or 2% of Account Value
(Only applicable if Account Value is less than $100,000)
(Assessed annually on the Annuity's anniversary date or upon
surrender)
ANNUAL FEES/CHARGES OF THE SUB-ACCOUNT(1)
(AS A PERCENTAGE OF THE AVERAGE DAILY NET ASSETS OF THE SUB-ACCOUNTS)
FEE/CHARGE AMOUNT DEDUCTED
- --------------------------------------------------- ------------------------------------------------------------------
Mortality & Expense Risk Charge(2) 0.50%
Administration Charge(2) 0.15%
Distribution Charge(3) 0.60% in Annuity Years 1-8
Settlement Service Charge(4) 1.40% per year of the value of each Sub-account if the Owner's
beneficiary elects the Qualified Beneficiary
Continuation Option5 ("Qualified BCO")
Total Annual Charges of the Sub-accounts 1.25% per year of the value of each Sub-account in Annuity Years
1-8; 0.65% in Annuity Years 9 and later
(1.40% per year if you are a beneficiary electing the Qualified BCO)
1: These charges are deducted daily and apply to Variable Investment Options
only.
2: The combination of the Mortality and Expense Risk Charge and Administration
Charge is referred to as the "Insurance Charge" elsewhere in this Prospectus.
3: The Distribution Charge in Annuity Years 9+ is 0.00%.
4: The Mortality & Expense Risk Charge, the Administration Charge and the
Distribution Charge do not apply if you are a beneficiary under the Qualified
Beneficiary Continuation Option. The Settlement Service Charge applies only if
your beneficiary elects the Qualified Beneficiary Continuation Option.
5: When an Annuity is used as an IRA, 403(b) or other "qualified investment",
upon the Owner's death a beneficiary may generally elect to continue the Annuity
and receive Minimum Distributions under the Annuity instead of receiving the
death benefit in a single payment. If a beneficiary elects this option, the
beneficiary will incur the Settlement Service Charge. Please refer to the
section of this Prospectus that describes the Qualified Beneficiary Continuation
Option for more detailed information about this option, including certain
restrictions and limitations that may apply.
5
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Summary of Contract Fees and Charges continued
The following table provides a summary of the fees and charges you will pay if
you elect any of the following optional benefits. Not all optional benefits may
be purchased in combination with one another. You may only elect one optional
living benefit. The optional living benefits are the Guaranteed Return Option
Plus program (and where not available, Guaranteed Return Option), the Guaranteed
Minimum Withdrawal Benefit, the Guaranteed Minimum Income Benefit and the
Lifetime Five(SM) Income Benefit. For the optional death benefits, you may elect
the Highest Anniversary Value Death Benefit or the Highest Daily Value Death
Benefit together with the Enhanced Beneficiary Protection Death Benefit, or any
of these three benefits individually, but the Combination 5% Roll-up and HAV
Death Benefit may only be purchased individually. The fees and charges of each
of the optional benefits are described in more detail within this Prospectus.
YOUR OPTIONAL BENEFIT FEES AND CHARGES
OPTIONAL
BENEFIT FEE/ TOTAL ANNUAL
OPTIONAL BENEFIT CHARGE CHARGE*
- ------------------------------------------------------------------------------ ------------------------- --------------------
GUARANTEED RETURN OPTION PLUS(SM) (GRO PLUS(SM))/GUARANTEED RETURN OPTION
We offer a program that guarantees a "return of premium" at a future date, 0.25% of average daily 1.50% in Annuity
while allowing you to allocate all or a portion of your Account Value to net assets of the Sub- Years 1-8; 0.90%
certain Sub-accounts. accounts in Annuity Years
9 and later; 1.65%
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) for Qualified BCO
We offer a program that guarantees your ability to withdraw amounts over 0.35% of average daily 1.60% in Annuity
time equal to an initial principal value, regardless of the impact of market net assets of the Sub- Years 1-8; 1.00%
performance on your Account Value. accounts in Annuity Years 9
and later; 1.75%
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)** for Qualified BCO
We offer a program that, after a seven-year waiting period, guarantees your 0.50% per year of the 1.25% in Annuity
ability to begin receiving income from your Annuity in the form of annuity average Protected Years 1-8; 0.65% in
payments based on your total Purchase Payments and an annual increase of Income Value during Annuity Years 9 and later
5% on such Purchase Payments adjusted for withdrawals (called the each year; deducted PLUS
"Protected Income Value"), regardless of the impact of market performance annually in arrears each 0.50% per year of aver
on your Account Value. Annuity Year Protected Income Value
LIFETIME FIVE INCOME BENEFIT**
We offer a program that guarantees your ability to withdraw amounts equal 0.60% of average daily 1.85% in Annuity Years 1-8;
to a percentage of an initial principal value, regardless of the impact of net assets of the Sub- 1.25% in Annuity Years 9
market performance on your Account Value, subject to our program rules accounts and later
regarding the timing and amount of withdrawals.
ENHANCED BENEFICIARY PROTECTION DEATH BENEFIT**
We offer an Optional Death Benefit that provides an enhanced level of 0.25% of average daily 1.50% in Annuity
protection for your beneficiary(ies) by providing amounts in addition to the net assets of the Sub- Years 1-8; 0.90% in
basic Death Benefit that can be used to offset federal and state taxes accounts Annuity Years 9 and later
payable on any taxable gains in your Annuity at the time of your death.
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
OPTIONAL
BENEFIT FEE/
OPTIONAL BENEFIT CHARGE
- ---------------------------------------------------------------------------------------------------------
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT ("HAV")**
We offer an Optional Death Benefit that provides an enhanced level of 0.25% of average daily 1.50% in Annuity
protection for your beneficiary(ies) by providing a death benefit equal to the net assets of the Sub- Years 1-8; 0.90% in
greater of the basic Death Benefit and the Highest Anniversary Value, less accounts Annuity Years 9 and later
proportional withdrawals.
COMBINATION 5% ROLL-UP AND HAV DEATH BENEFIT**
We offer an Optional Death Benefit that provides an enhanced level of 0.50% of average daily 1.75% in Annuity
protection for your beneficiary(ies) by providing the greater of the Highest net assets of the Sub- Years 1-8; 1.15% in
Anniversary Value Death Benefit and a 5% annual increase on Purchase accounts Annuity Years 9 and later
Payments adjusted for withdrawals.
HIGHEST DAILY VALUE DEATH BENEFIT ("HDV")**
We offer an Optional Death Benefit that provides an enhanced level of 0.50% of average daily 1.75% in Annuity Years 1-8;
protection for your beneficiary(ies) by providing a death benefit equal to the net assets of the Sub- 1.15% in Annuity Years 9
greater of the basic Death Benefit and the Highest Daily Value, less accounts and later
proportional withdrawals.
Please refer to the section of this Prospectus that describes each optional
benefit for a complete description of the benefit, including any restrictions or
limitations that may apply.
* The Total Annual Charge includes the Insurance Charge and Distribution Charge
assessed against the average daily net assets allocated to the Sub-accounts. If
you elect more than one optional benefit, the Total Annual Charge would be
increased to include the charge for each optional benefit.
** These optional benefits are not available under the Qualified BCO.
The following table provides the range (minimum and maximum) of the total annual
expenses for the underlying mutual funds ("Portfolios") as of December 31, 2004.
Each figure is stated as a percentage of the underlying Portfolio's average
daily net assets.
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES
MINIMUM MAXIMUM
------- -------
Total Portfolio Operating Expense 0.63% 3.06%
The following are the investment management fees, other expenses, 12b-1 fees (if
applicable), and the total annual expenses for each underlying mutual fund
("Portfolio") as of December 31, 2004, except as noted. Each figure is stated as
a percentage of the underlying Portfolio's average daily net assets. For certain
of the underlying Portfolios, a portion of the management fee has been waived
and/or other expenses have been partially reimbursed. Any such fee waivers
and/or reimbursements have been reflected in the footnotes. The "Total Annual
Portfolio Operating Expenses" reflect the combination of the underlying
Portfolio's investment management fee, other expenses and any 12b-1 fees. The
following expenses are deducted by the underlying Portfolio before it provides
American Skandia with the daily net asset value. Any footnotes about expenses
appear after the list of all the Portfolios. The underlying Portfolio
information was provided by the underlying mutual funds and has not been
independently verified by us. See the prospectuses or statements of additional
information of the underlying Portfolios for further details. The current
prospectus and statement of additional information for the underlying Portfolios
can be obtained by calling 1-800-752-6342.
7
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Summary of Contract Fees and Charges continued
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS)
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
American Skandia Trust:(2), (3_
AST JPMorgan International Equity 1.00% 0.13% None 1.13%
AST William Blair International Growth 1.00% 0.22% None 1.22%
AST LSV International Value(4) 1.00% 0.37% None 1.37%
AST MFS Global Equity 1.00% 0.35% None 1.35%
AST Small-Cap Growth(5) 0.90% 0.24% None 1.14%
AST DeAM Small-Cap Growth 0.95% 0.22% None 1.17%
AST Federated Aggressive Growth 0.95% 0.24% None 1.19%
AST Small-Cap Value(6) 0.90% 0.18% None 1.08%
AST DeAM Small-Cap Value 0.95% 0.33% None 1.28%
AST Goldman Sachs Mid-Cap Growth 1.00% 0.25% None 1.25%
AST Neuberger Berman Mid-Cap Growth 0.90% 0.22% None 1.12%
AST Neuberger Berman Mid-Cap Value 0.90% 0.15% None 1.05%
AST Alger All-Cap Growth 0.95% 0.22% None 1.17%
AST Gabelli All-Cap Value 0.95% 0.26% None 1.21%
AST T. Rowe Price Natural Resources 0.90% 0.26% None 1.16%
AST AllianceBernstein Large-Cap Growth(7) 0.90% 0.23% None 1.13%
AST MFS Growth 0.90% 0.20% None 1.10%
AST Marsico Capital Growth 0.90% 0.14% None 1.04%
AST Goldman Sachs Concentrated Growth 0.90% 0.17% None 1.07%
AST DeAM Large-Cap Value 0.85% 0.26% None 1.11%
AST AllianceBernstein Growth + Value 0.90% 0.32% None 1.22%
AST AllianceBernstein Core Value(8) 0.75% 0.24% None 0.99%
AST Cohen & Steers Realty 1.00% 0.22% None 1.22%
AST AllianceBernstein Managed Index 500(9) 0.60% 0.17% None 0.77%
AST American Century Income & Growth 0.75% 0.24% None 0.99%
AST AllianceBernstein Growth & Income(10) 0.75% 0.15% None 0.90%
AST Hotchkis & Wiley Large-Cap Value 0.75% 0.19% None 0.94%
AST Global Allocation(11) 0.89% 0.26% None 1.15%
AST American Century Strategic Balanced 0.85% 0.27% None 1.12%
AST T. Rowe Price Asset Allocation 0.85% 0.27% None 1.12%
AST T. Rowe Price Global Bond 0.80% 0.27% None 1.07%
AST Goldman Sachs High Yield 0.75% 0.18% None 0.93%
AST Lord Abbett Bond-Debenture 0.80% 0.22% None 1.02%
AST PIMCO Total Return Bond 0.65% 0.16% None 0.81%
AST PIMCO Limited Maturity Bond 0.65% 0.17% None 0.82%
AST Money Market 0.50% 0.13% None 0.63%
Gartmore Variable Investment Trust:
- -------------------------------------------------------------------------------------------------------
GVIT Developing Markets 1.15% 0.38% 0.25% 1.78%
Wells Fargo Variable Trust Advantage:(12)
- -------------------------------------------------------------------------------------------------------
Advantage Equity Income 0.55% 0.23% 0.25% 1.037%
8
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
AIM Variable Insurance Funds:(13)
AIM V.I. Dynamics Fund -- Series I shares 0.75% 0.39% None 1.14%
AIM V.I. Technology Fund -- Series I shares 0.75% 0.40% None 1.15%
AIM V.I. Health Sciences Fund -- Series I shares(14) 0.75% 0.36% None 1.11%
AIM V.I. Financial Services Fund -- Series I shares 0.75% 0.37% None 1.12%
Evergreen Variable Annuity Trust:
International Equity 0.42% 0.30% None 0.72%
Growth 0.70% 0.26% None 0.96%
Omega 0.52% 0.16% None 0.68%
ProFund VP:(15)
Access High Yield 0.75% 1.02% 0.25% 1.98%
Bull 0.75% 0.78% 0.25% 1.78%
OTC 0.75% 0.87% 0.25% 1.87%
Large-Cap Value 0.75% 1.04% 0.25% 2.04%
Large-Cap Growth 0.75% 2.06% 0.25% 3.06%
Mid-Cap Value 0.75% 0.92% 0.25% 1.92%
Mid-Cap Growth 0.75% 0.94% 0.25% 1.94%
Small-Cap Value 0.75% 0.95% 0.25% 1.95%
Small-Cap Growth 0.75% 0.90% 0.25% 1.90%
Asia 30 0.75% 0.86% 0.25% 1.86%
Europe 30 0.75% 0.78% 0.25% 1.78%
Japan 0.75% 0.85% 0.25% 1.85%
UltraBull 0.75% 0.89% 0.25% 1.89%
UltraMid-Cap 0.75% 0.94% 0.25% 1.94%
UltraSmall-Cap 0.75% 0.94% 0.25% 1.94%
UltraOTC 0.75% 0.88% 0.25% 1.88%
Bear 0.75% 0.90% 0.25% 1.90%
Short Mid-Cap 0.75% 0.90% 0.25% 1.90%
Short Small-Cap 0.75% 1.28% 0.25% 2.28%
Short OTC 0.75% 0.86% 0.25% 1.86%
Banks 0.75% 0.98% 0.25% 1.98%
Basic Materials 0.75% 0.96% 0.25% 1.96%
Biotechnology 0.75% 0.98% 0.25% 1.98%
Consumer Goods 0.75% 0.99% 0.25% 1.99%
Consumer Services 0.75% 1.20% 0.25% 2.20%
Financials 0.75% 0.92% 0.25% 1.92%
Health Care 0.75% 0.91% 0.25% 1.91%
Industrials 0.75% 0.99% 0.25% 1.99%
Internet 0.75% 0.94% 0.25% 1.94%
Oil & Gas 0.75% 0.92% 0.25% 1.92%
Pharmaceuticals 0.75% 0.97% 0.25% 1.97%
Precious Metals 0.75% 0.87% 0.25% 1.87%
Real Estate 0.75% 0.93% 0.25% 1.93%
Semiconductor 0.75% 0.99% 0.25% 1.99%
9
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Summary of Contract Fees and Charges continued
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
ProFund VP:15 continued
Technology 0.75% 0.87% 0.25% 1.87%
Telecommunications 0.75% 0.95% 0.25% 1.95%
Utilities 0.75% 0.95% 0.25% 1.95%
U.S. Government Plus 0.50% 0.86% 0.25% 1.61%
Rising Rates Opportunity 0.75% 0.75% 0.25% 1.75%
First Defined Portfolio Fund, LLC:(16), (17)
First Trust(R) 10 Uncommon Values 0.60% 0.76% 0.25% 1.61%
Target Managed VIP 0.60% 1.25% 0.25% 2.10%
The Dow(SM) DART 10 0.60% 1.53% 0.25% 2.38%
Global Dividend Target 15 0.60% 1.85% 0.25% 2.70%
S&P(R) Target 24 0.60% 1.58% 0.25% 2.43%
NASDAQ(R) Target 15 0.60% 1.75% 0.25% 2.60%
Value Line(R) Target 25 0.60% 1.48% 0.25% 2.33%
The Dow Target Dividend(18) 0.60% 0.62% 0.25% 1.47%
The Prudential Series Fund, Inc.:
SP William Blair International Growth 0.85% 0.45% 0.25% 1.55%
1: As noted above, shares of the Portfolios generally are purchased through
variable insurance products. Many of the Portfolios and/or their investment
advisers and/or distributors have entered into arrangements with us as the
issuer of the Annuity under which they compensate us for providing ongoing
services in lieu of the Trust providing such services. Amounts paid by a
Portfolio under those arrangements are included under "Other Expenses." For more
information see the prospectus for each underlying portfolio and, "Service Fees
payable to American Skandia," later in this prospectus.
2: The Portfolios' total actual annual operating expenses for the year ended
December 31, 2004 were less than the amount shown in the table due to fee
waivers, reimbursement of expenses and expense offset arrangements. These
waivers, reimbursements, and offset arrangements are voluntary and may be
terminated by American Skandia Investment Services, Inc. and Prudential
Investments LLC at any time. After accounting for the waivers, reimbursements
and offset arrangements, the Portfolios' actual annual operating expenses were:
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
AST William Blair International Growth 1.11%
AST LSV International Value 1.22%
AST DeAM Small-Cap Growth 1.02%
AST DeAM Small-Cap Value 1.13%
AST Goldman Sachs Mid-Cap Growth 1.13%
AST Neuberger Berman Mid-Cap Growth 1.11%
AST Neuberger Berman Mid-Cap Value 1.04%
AST AllianceBernstein Large-Cap Growth 1.10%
AST MFS Growth 1.07%
AST Marsico Capital Growth 1.02%
AST Goldman Sachs Concentrated Growth 1.00%
AST DeAM Large-Cap Value 0.99%
AST Cohen & Steers Realty 1.11%
AST AllianceBernstein Growth & Income 0.87%
AST Hotchkis & Wiley Large-Cap Value 0.90%
AST American Century Strategic Balanced 1.09%
AST T. Rowe Price Asset Allocation 1.07%
AST Lord Abbett Bond-Debenture Portfolio 0.97%
AST PIMCO Total Return Bond 0.78%
AST PIMCO Limited Maturity Bond 0.79%
AST Money Market 0.58%
3: Until November 18, 2004, the Trust had a Distribution Plan under Rule
12b-1 to permit an affiliate of the Trust's Investment Managers to receive
brokerage commissions in connection with purchases and sales of securities held
by the Portfolios, and to use these commissions to promote the sale of shares of
the Portfolio. The Distribution Plan was terminated effective November 18, 2004.
The total annual portfolio operating expenses do not reflect any brokerage
commissions paid pursuant to the Distribution Plan prior to the Plan's
termination.
10
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
4: Effective November 18, 2004, LSV Asset Management became the Sub-advisor
of the Portfolio. Prior to November 18, 2004, Deutsche Asset Management, Inc.
served as Sub-advisor of the Portfolio, then named "AST DeAM International
Equity Portfolio."
5: Effective May 1, 2005, Eagle Asset Management and Neuberger Berman
Management, Inc. became Co-Sub-advisors of the Portfolio. Prior to May 1, 2005,
State Street Research and Management Company served as Sub-advisor of the
Portfolio, then named "AST State Street Research Small-Cap Growth Portfolio."
6: Effective November 18, 2004, Integrity Asset Management, Lee Munder
Capital Group, J.P. Morgan Fleming Asset Management became Co-Sub-advisors of
the Portfolio. Prior to November 18, 2004, GAMCO Advisors Inc. served as
Sub-advisor of the Portfolio, then named "AST Gabelli Small-Cap Value
Portfolio."
7: Effective May 1, 2005, the name of the Portfolio was changed from "AST
Alliance Growth Portfolio" to "AST AllianceBernstein Large-Cap Growth
Portfolio."
8: Effective May 1, 2005, the name of the Portfolio was changed from "AST
Sanford Bernstein Core Value Portfolio" to "AST AllianceBernstein Core Value
Portfolio."
9: Effective May 1, 2005, the name of the Portfolio was changed from "AST
Sanford Bernstein Managed Index 500 Portfolio" to "AST AllianceBernstein Managed
Index 500 Portfolio."
10: Effective May 1, 2005, the name of the Portfolio was changed from "AST
Alliance Growth and Income Portfolio" to "AST AllianceBernstein Growth & Income
Portfolio."
11: The AST Global Allocation Portfolio invests primarily in shares of other
AST Portfolios (the "Underlying Portfolios").
a: The only management fee directly paid by the Portfolio is a 0.10% fee
paid to American Skandia Investment Services, Inc. and Prudential
Investments LLC. The management fee shown in the chart for the Portfolio
is (i) that 0.10% management fee paid by the Portfolio plus (ii) an
estimate of the management fees paid by the Underlying Portfolios, which
are borne indirectly by investors in the Portfolio. The estimate was
calculated based on the percentage of the Portfolio invested in each
Underlying Portfolio as of December 31, 2004 using the management fee
rates shown in the chart above.
b: The expense information shown in the chart for the Portfolio reflects
(i) the expenses of the Portfolio itself plus (ii) an estimate of the
expenses paid by the Underlying Portfolios, which are borne indirectly by
investors in the Portfolio. The estimate was calculated based on the
percentage of the Portfolio invested in each Underlying Portfolio as of
December 31, 2004 using the expense rates for the Underlying Portfolios
shown in the above chart.
c: Effective May 1, 2005, Prudential Investment LLC provides day-to-day
management of the Portfolio. Prior to May 1, 2005, Deutsche Asset
Management, Inc. served as Sub-advisor of the Portfolio, then named "AST
DeAM Global Allocation Portfolio."
12: a: The Adviser of Wells Fargo Variable Trust has committed through April
30, 2006 to waive fees and/or reimburse expenses to the extent necessary to
maintain the Fund's net operating expenses as shown.
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
Advantage Equity Income 1.00%
b: In addition, the following name changes were made effective May 1,
2005:
OLD PORTFOLIO NAME NEW PORTFOLIO NAME
Equity Income Advantage Equity Income
13: The Fund's adviser is entitled to receive reimbursement from the Fund for
fees and expenses paid for by the Fund's adviser pursuant to expense limitation
commitments between the Fund's adviser and the Fund if such reimbursement does
not cause the Fund to exceed its then-current expense limitations and the
reimbursement is made within three years after the Fund's adviser incurred the
expense.
14: Effective July 1, 2005, the "AIM V.I. Health Sciences Fund" will be
renamed "AIM V.I. Global Health Care Fund."
15: ProFund Advisors LLC has contractually agreed to waive Investment Advisory
and Management Services Fees and to reimburse other expenses to the extent Total
Annual Portfolio Operating Expenses, as a percentage of average daily net
assets, exceed 1.98% (1.73% for ProFund VP U.S. Government Plus and 1.78% for
ProFund VP Rising Rates Opportunity) through December 31, 2005. After such date,
any of the expense limitations may be terminated or revised. Amounts waived or
reimbursed in a particular fiscal year may be repaid to ProFund Advisors LLC
within three years of the waiver or reimbursement to the extent that recoupment
will not cause the Portfolio's expenses to exceed any expense limitation in
place at that time. A waiver or reimbursement lowers the expense ratio and
increases overall returns to investors.
16: The Funds' Board of Trustees reserve the right to suspend payments under
the 12b-1 Plan at any time. On May 1, 2003, 12b-1 payments were suspended for
all Funds except the First Trust 10 Uncommon Values Portfolio. Payments under
the 12b-1 Plan resumed effective May 1, 2004 for the Target Managed VIP
Portfolio, the Dow Dart 10 Portfolio, the Global Dividend Target 15 Portfolio,
the S&P Target 24 Portfolio, the Nasdaq Target 15 Portfolio and the Value Line
Target 25 Portfolio.
17: For the period September 30, 2004 through December 31, 2007, First Trust
has contractually agreed to waive fees and reimburse expenses of the Portfolios
to limit the total annual fund operating expenses (excluding brokerage expense
and extraordinary expense) to 1.37% for the First Trust 10 Uncommon Values
Portfolio and 1.47% for each of the other Portfolios' average daily net assets.
First Trust has entered into an agreement with First Defined Portfolio Fund, LLC
that will allow First Trust to recover from the Portfolios any fees waived or
reimbursed during the three year period of January 1, 2005 through December 31,
2007. However, First Trust's ability to recover such amounts is limited to the
extent that it would not exceed the amount reimbursed or waived during such
period.
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
First Trust(R) 10 Uncommon Values 1.37%
Target Managed VIP 1.47%
S&P Target 24 1.47%
The Dow(SM) DART 10 1.47%
Value Line(R) Target 25 1.47%
Global Dividend Target 15 1.47%
Nasdaq Target 15 1.47%
Dow Target Dividend 1.47%
18: The Dow(SM) Target Dividend Portfolio is newly organized. Accordingly,
Other Expenses and Total Annual Portfolio Operating Expenses are based on
estimated expenses for the current fiscal year.
11
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Expense Examples
These examples are designed to assist you in understanding the various expenses
you may incur with the Annuity over certain periods of time based on specific
assumptions. The examples reflect the Contingent Deferred Sales Charges (when
applicable), Annual Maintenance Fee, Insurance Charge, Distribution Charge (when
applicable), and the highest total annual portfolio operating expenses for any
underlying Portfolio offered under the product, as well as the maximum charges
for the optional benefits that are offered under the Annuity that can be elected
in combination with one another. Below are examples showing what you would pay
in expenses at the end of the stated time periods had you invested $10,000 in
the Annuity and received a 5% annual return on assets, and elected all optional
benefits available.
The examples shown assume that: (a) you only allocate Account Value to the
Sub-account with the maximum total annual portfolio operating expenses for the
underlying Portfolio (shown above), not to a Fixed Allocation; (b) the Insurance
Charge is assessed as 0.65% per year; (c) the Distribution Charge is assessed as
0.60% per year in Annuity Years 1-8; (d) the Annual Maintenance Fee is reflected
as an asset-based charge based on an assumed average contract size; (e) you make
no withdrawals of Account Value during the period shown; (f) you make no
transfers or other transactions for which we charge a fee during the period
shown; (g) no tax charge applies; (h) the highest total annual portfolio
operating expenses for any underlying Portfolio offered under the product
applies; and (i) the charge for each optional benefit is reflected as an
additional charge equal to 0.60% per year of the average daily net assets of the
Sub-accounts for the Lifetime Five Income Benefit, 0.50% per year of the average
daily net assets of the Sub-accounts for the Highest Daily Value Death Benefit
and 0.25% of the average daily net assets of the Sub-accounts for the Enhanced
Beneficiary Protection Death Benefit. Amounts shown in the examples are rounded
to the nearest dollar.
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 WILL BE LESS THAN THOSE SHOWN IF YOU ELECT A
DIFFERENT COMBINATION OF OPTIONAL BENEFITS THAN INDICATED IN THE EXAMPLES OR IF
YOU ALLOCATE ACCOUNT VALUE TO ANY OTHER AVAILABLE SUB-ACCOUNTS.
Expense Examples are provided as follows: 1.) if you surrender the Annuity at
the end of the stated time period; 2.) if you annuitize at the end of the stated
time period; and 3.) if you do not surrender your Annuity. A table of
accumulation values appears in Appendix A to this prospectus.
IF YOU SURRENDER YOUR ANNUITY AT THE IF YOU ANNUITIZE YOUR ANNUITY AT THE IF YOU DO NOT SURRENDER
END OF THE APPLICABLE TIME PERIOD: END OF THE APPLICABLE TIME PERIOD: YOUR ANNUITY:
- ---------------------------------------- ------------------------------------- -------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,405 $2,724 $3,930 $6,475 $730 $2,139 $3,480 $6,475 $730 $2,139 $3,480 $6,475
12
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Investment Options
WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE PORTFOLIO?
Each variable investment option is a Sub-account of American Skandia Life
Assurance Corporation Variable Account B (see "What are Separate Accounts" for
more detailed information). Each Sub-account invests exclusively in one
Portfolio. You should carefully read the prospectus for any Portfolio in which
you are interested. The following chart classifies each of the Portfolios based
on our assessment of their investment style (as of the date of this Prospectus).
The chart also provides a description of each Portfolio's investment objective
(in italics) and a short, summary description of their key policies to assist
you in determining which Portfolios may be of interest to you. There is no
guarantee that any underlying Portfolio will meet its investment objective.
The name of the advisor/sub-advisor for each Portfolio appears next to the
description. Those Portfolios whose name includes the prefix "AST" are
Portfolios of American Skandia Trust. The investment managers for AST are
American Skandia Investment Services, Incorporated, a Prudential Financial
Company, and Prudential Investments LLC, affiliated companies of American
Skandia. However, a sub-advisor, as noted below, is engaged to conduct
day-to-day investment decisions.
The Portfolios are not publicly traded mutual funds. They are only
available as investment options in variable annuity contracts and variable life
insurance policies issued by insurance companies, or in some cases, to
participants in certain qualified retirement plans. However, some of the
Portfolios available as Sub-accounts under the Annuity are managed by the same
portfolio advisor or sub-advisor as a retail mutual fund of the same or similar
name that the Portfolio may have been modeled after at its inception. Certain
retail mutual funds may also have been modeled after a Portfolio. While the
investment objective and policies of the retail mutual funds and the Portfolios
may be substantially similar, the actual investments will differ to varying
degrees. Differences in the performance of the funds can be expected, and in
some cases could be substantial. You should not compare the performance of a
publicly traded mutual fund with the performance of any similarly named
Portfolio offered as a Sub-account. Details about the investment objectives,
policies, risks, costs and management of the Portfolios are found in the
prospectuses for the underlying mutual funds. The current prospectus and
statement of additional information for the underlying Portfolios can be
obtained by calling 1-800-752-6342.
Effective May 1, 2004, the SP William Blair International Growth
Portfolio (formerly the SP Jennison International Growth Portfolio) is no
longer offered as a Sub-account under the Annuity, except as follows: if
at any time prior to May 1, 2004 you had any portion of your Account Value
allocated to the SP William Blair International Growth Sub-account, you
may continue to allocate Account Value and make transfers into and/or out
of the SP William Blair International Growth Sub-account, including any
bank drafting, dollar cost averaging, asset allocation and rebalancing
programs. If you never had a portion of your Account Value allocated to
the SP William Blair International Growth Sub-account prior to May 1, 2004
or if you purchase your Annuity on or after May 1, 2004, you cannot
allocate Account Value to the SP William Blair International Growth
Sub-account.
This Sub-account may be offered to new Owners at some future date;
however, at the present time, there is no intention to do so. We also
reserve the right to offer or close this Sub-account to all Owners that
owned the Annuity prior to the close date.
13
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL AST JPMORGAN INTERNATIONAL EQUITY: seeks long-term capital growth by J.P. Morgan
EQUITY investing in a diversified portfolio of international equity securities. The Portfolio Fleming Asset
seeks to meet its objective by investing, under normal market conditions, at least Management
80% of its assets in a diversified portfolio of equity securities of companies
located or operating in developed non-U.S. countries and emerging markets of
the world.
INTERNATIONAL AST WILLIAM BLAIR INTERNATIONAL GROWTH: seeks long-term capital William Blair &
EQUITY appreciation. The Portfolio invests primarily in stocks of large and medium-sized Company, L.L.C.
companies located in countries included in the Morgan Stanley Capital
International All Country World Ex-U.S. Index.
INTERNATIONAL AST LSV INTERNATIONAL VALUE (formerly AST DeAM International Equity) seeks Deutsche Asset
EQUITY capital growth. The Portfolio pursues its objective by primarily investing at least Management, Inc.
80% of the value of its assets in the equity securities of companies in
developed non-U.S. countries that are represented in the MSCI EAFE Index.
INTERNATIONAL AST MFS GLOBAL EQUITY: seeks capital growth. Under normal circumstances the Massachusetts
EQUITY Portfolio invests at least 80% of its assets in equity securities of U.S. and Financial Services
foreign issuers (including issuers in developing countries). The Portfolio generally Company
seeks to purchase securities of companies with relatively large market
capitalizations relative to the market in which they are traded.
SMALL CAP AST SMALL-CAP GROWTH (formerly AST State Street Research Small-Cap Eagle Asset
GROWTH Growth): seeks long-term capital growth. The Portfolio pursues its objective by Management,
primarily investing in the common stocks of small-capitalization companies. Neuberger Berman
Management, Inc.
SMALL CAP AST DeAM Small-Cap Growth: seeks maximum growth of investors' capital Deutsche Asset
GROWTH from a portfolio of growth stocks of smaller companies. The Portfolio pursues its Management, Inc.
objective, under normal circumstances, by primarily investing at least 80% of its
total assets in the equity securities of small-sized companies included in the
Russell 2000 Growth(R) Index.
SMALL CAP AST FEDERATED AGGRESSIVE GROWTH: seeks capital growth. The Portfolio Federated Equity
GROWTH pursues its investment objective by investing primarily in the stocks of small Management
companies that are traded on national security exchanges, the NASDAQ stock Company of
exchange and the over-the-counter-market. Pennsylvania/
Federated Global
Investment
Management Corp.
SMALL CAP AST SMALL-CAP VALUE (formerly AST Gabelli Small-Cap Value): seeks to provide Integrity Asset
VALUE long-term capital growth by investing primarily in small-capitalization stocks that Management, Lee
appear to be undervalued. The Portfolio will have a non-fundamental policy to Munder Capital
invest, under normal circumstances, at least 80% of the value of its assets in Group, J.P. Morgan
small capitalization companies. Fleming Asset
Management
14
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------------
SMALL CAP AST DeAM SMALL-CAP VALUE: seeks maximum growth of investors' capital. Deutsche Asset
VALUE The Portfolio pursues its objective, under normal market conditions, by primarily Management, Inc.
investing at least 80% of its total assets in the equity securities of small-sized
companies included in the Russell 2000(R) Value Index.
MID CAP AST GOLDMAN SACHS MID-CAP GROWTH: seeks long-term capital growth. The Goldman Sachs
GROWTH Portfolio pursues its investment objective, by investing primarily in equity Asset Management,
securities selected for their growth potential, and normally invests at least 80% L.P.
of the value of its assets in medium capitalization companies.
MID-CAP AST NEUBERGER BERMAN MID-CAP GROWTH: seeks capital growth. Under Neuberger Berman
GROWTH normal market conditions, the Portfolio primarily invests at least 80% of its net Management Inc.
assets in the common stocks of mid-cap companies. The Sub-advisor looks for
fast-growing companies that are in new or rapidly evolving industries.
MID CAP VALUE AST NEUBERGER BERMAN MID-CAP VALUE: seeks capital growth. Under normal Neuberger Berman
market conditions, the Portfolio primarily invests at least 80% of its net assets Management Inc.
in the common stocks of mid-cap companies. Under the Portfolio's value-oriented
investment approach, the Sub-advisor looks for well-managed companies whose
stock prices are undervalued and that may rise before other investors realize
their worth.
SPECIALTY AST ALGER ALL-CAP GROWTH: seeks long-term capital growth. The Portfolio Fred Alger
invests primarily in equity securities, such as common or preferred stocks that Management, Inc.
are listed on U.S. exchanges or in the over-the-counter market. The Portfolio may
invest in the equity securities of companies of all sizes, and may emphasize
either larger or smaller companies at a given time based on the Sub-advisor's
assessment of particular companies and market conditions.
SPECIALTY AST GABELLI ALL-CAP VALUE: seeks capital growth. The Portfolio pursues its GAMCO Investors,
objective by investing primarily in readily marketable equity securities including Inc.
common stocks, preferred stocks and securities that may be converted at a later
time into common stock. The Portfolio may invest in the securities of companies
of all sizes, and may emphasize either larger or smaller companies at a given
time based on the Sub-advisor's assessment of particular companies and
market conditions.
SPECIALTY AST T. ROWE PRICE NATURAL RESOURCES: seeks long-term capital growth T. Rowe Price
primarily through the common stocks of companies that own or develop natural Associates, Inc.
resources (such as energy products, precious metals and forest products) and
other basic commodities. The Portfolio normally invests primarily (at least 80% of
its total assets) in the common stocks of natural resource companies whose
earnings and tangible assets could benefit from accelerating inflation.
LARGE CAP AST ALLIANCEBERNSTEIN LARGE CAP GROWTH (formerly, AST Alliance Growth): Alliance Capital
GROWTH seeks long-term capital growth. The Portfolio invests at least 80% of its Management, L.P.
total assets in the equity securities of a limited number of large, carefully
selected, high-quality U.S. companies that are judged likely to achieve superior
earnings growth.
15
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------------
LARGE CAP AST MFS GROWTH: seeks long-term capital growth and future income. Under Massachusetts
GROWTH normal market conditions, the Portfolio invests at least 80% of its total assets in Financial Services
common stocks and related securities, such as preferred stocks, convertible Company
securities and depositary receipts, of companies that the Sub-advisor believes
offer better than average prospects for long-term growth.
LARGE CAP AST MARSICO CAPITAL GROWTH: seeks capital growth. Income realization is Marsico Capital
GROWTH not an investment objective and any income realized on the Portfolio's Management, LLC
investments, therefore, will be incidental to the Portfolio's objective. The
Portfolio will pursue its objective by investing primarily in common stocks of
larger, more established companies.
LARGE CAP AST GOLDMAN SACHS CONCENTRATED GROWTH: seeks growth of capital in a Goldman Sachs
GROWTH manner consistent with the preservation of capital. Realization of income is not Asset Management,
a significant investment consideration and any income realized on the Portfolio's L.P.
investments, therefore, will be incidental to the Portfolio's objective. The
Portfolio will pursue its objective by investing primarily in equity securities of
companies that the Sub-advisor believes have potential to achieve capital
appreciation over the long-term.
LARGE CAP AST DeAM LARGE-CAP VALUE: seeks maximum growth of capital by investing Deutsche Asset
VALUE primarily in the value stocks of larger companies. The Portfolio pursues its Management, Inc.
objective, under normal market conditions, by primarily investing at least 80% of
the value of its assets in the equity securities of large-sized companies included
in the Russell 1000(R) Value Index.
LARGE CAP AST ALLIANCEBERNSTEIN GROWTH + VALUE: seeks capital growth by investing Alliance Capital
BLEND approximately 50% of its assets in growth stocks of large companies and Management, L.P.
approximately 50% of its assets in value stocks of large companies. The
Portfolio will invest primarily in common stocks of large U.S. companies included
in the Russell 1000(R) Index.
LARGE CAP AST ALLIANCEBERNSTEIN CORE VALUE (formerly AST Sanford Bernstein Core Alliance Capital
Growth Value Value): seeks long-term capital growth by investing primarily in common Management, L.P.
stocks. The Sub-advisor expects that the majority of the Portfolio's assets
will be invested in the common stocks of large companies that appear to
be undervalued.
SPECIALTY AST COHEN & STEERS REALTY: seeks to maximize total return through Cohen & Steers
investment in real estate securities. The Portfolio pursues its investment Capital
objective by investing, under normal circumstances, at least 80% of its net Management, Inc.
assets in securities of real estate issuers.
LARGE CAP AST ALLIANCEBERNSTEIN MANAGED INDEX 500 (formerly, AST Sanford Bernstein Alliance Capital
BLEND Managed Index 500): seeks to outperform the S&P 500 through stock selection Management, L.P.
resulting in different weightings of common stocks relative to the index. The
Portfolio will invest, under normal circumstances, at least 80% of its net assets
in securities included in the Standard & Poor's 500 Composite Stock Price Index.
16
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------------
LARGE CAP AST AMERICAN CENTURY INCOME & GROWTH: seeks capital growth with current American Century
Value income as a secondary objective. The Portfolio invests primarily in common Investment
stocks that offer potential for capital growth, and may, consistent with its Management, Inc.
investment objective, invest in stocks that offer potential for current income.
LARGE CAP AST ALLIANCEBERNSTEIN GROWTH & INCOME: seeks long-term growth of capital Alliance Capital
VALUE and income while attempting to avoid excessive fluctuations in market value. The Management, L.P.
Portfolio normally will invest in common stocks (and securities convertible into
common stocks).
LARGE CAP AST HOTCHKIS & WILEY LARGE-CAP VALUE: seeks current income and long-term Hotchkis and Wiley
VALUE growth of income, as well as capital appreciation. The Portfolio invests, under Capital
normal circumstances, at least 80% of its net assets plus borrowings for Management, LLC
investment purposes in common stocks, of large cap U.S. companies, that have a
high cash dividend or payout yield relative to the market.
ASSET AST GLOBAL ALLOCATION (formerly AST DeAM Global Allocation): seeks to obtain Prudential
ALLOCATION/ the highest potential total return consistent with a specified level of risk Investments LLC
BALANCED tolerance. The Portfolio seeks to achieve its investment objective by investing in
several other AST Portfolios ("Underlying Portfolios"). The Portfolio intends its
strategy of investing in combinations of Underlying Portfolios to result in
investment diversification that an investor could otherwise achieve only by
holding numerous investments.
ASSET AST AMERICAN CENTURY STRATEGIC BALANCED: seeks capital growth and American Century
ALLOCATION/ current income. The Sub-advisor intends to maintain approximately 60% of the Investment
BALANCED Portfolio's assets in equity securities and the remainder in bonds and other fixed Management, Inc.
income securities.
ASSET AST T. ROWE PRICE ASSET ALLOCATION: seeks a high level of total return by T. Rowe Price
ALLOCATION/ investing primarily in a diversified portfolio of fixed income and equity securities. Associates, Inc.
BALANCED The Portfolio normally invests approximately 60% of its total assets in equity
securities and 40% in fixed income securities. This mix may vary depending on
the Sub-advisor's outlook for the markets.
FIXED INCOME AST T. ROWE PRICE GLOBAL BOND: seeks to provide high current income and T. Rowe Price
capital growth by investing in high quality foreign and U.S. dollar-denominated International, Inc.
bonds. The Portfolio will invest at least 80% of its total assets in fixed income
securities, including high quality bonds issued or guaranteed by U.S. or foreign
governments or their agencies and by foreign authorities, provinces and
municipalities as well as investment grade corporate bonds and mortgage and
asset-backed securities of U.S. and foreign issuers.
FIXED INCOME AST GOLDMAN SACHS HIGH YIELD: seeks a high level of current income and Goldman Sachs
may also consider the potential for capital appreciation. The Portfolio invests, Asset Management,
under normal circumstances, at least 80% of its net assets plus any borrowings L.P.
for investment purposes (measured at time of purchase) ("Net Assets") in high-
yield, fixed-income securities that, at the time of purchase, are non-investment
grade securities.
17
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST LORD ABBETT BOND-DEBENTURE: seeks high current income and the Lord, Abbett & Co.
opportunity for capital appreciation to produce a high total return. To pursue its LLC
objective, the Portfolio will invest, under normal circumstances, at least 80% of
the value of its assets in fixed income securities and normally invests primarily
in high yield and investment grade debt securities, securities convertible into
common stock and preferred stocks.
FIXED INCOME AST PIMCO TOTAL RETURN BOND: seeks to maximize total return consistent with Pacific Investment
preservation of capital and prudent investment management. The Portfolio will Management
invest in a diversified portfolio of fixed-income securities of varying maturities. Company LLC
The average portfolio duration of the Portfolio generally will vary within a three- (PIMCO)
to six-year time frame based on the Sub-advisor's forecast for interest rates.
FIXED INCOME AST PIMCO LIMITED MATURITY BOND: seeks to maximize total return consistent Pacific Investment
with preservation of capital and prudent investment management. The Portfolio Management
will invest in a diversified portfolio of fixed-income securities of varying Company LLC
maturities. The average portfolio duration of the Portfolio generally will vary (PIMCO)
within a one- to three-year time frame based on the Sub-advisor's forecast for
interest rates.
FIXED INCOME AST MONEY MARKET: seeks high current income while maintaining high levels Wells Capital
of liquidity. The Portfolio attempts to accomplish its objective by maintaining a Management, Inc.
dollar-weighted average maturity of not more than 90 days and by investing in
securities which have effective maturities of not more than 397 days.
INTERNATIONAL GVIT DEVELOPING MARKETS: seeks long-term capital appreciation, under normal Gartmore Global
EQUITY conditions by investing at least 80% of its total assets in stocks of companies of Asset Management
any size based in the world's developing economies. Under normal market Trust/Gartmore
conditions, investments are maintained in at least six countries at all times and Global Partners
no more than 35% of total assets in any single one of them.
LARGE CAP ADVANTAGE EQUITY INCOME FUND (formerly Equity Income): Seeks long-term Wells Fargo Funds
VALUE capital appreciation and above-average dividend income. The Portfolio invests in Management, LLC
the common stocks of large U.S. companies with strong return potential and
above-average dividend income. The Portfolio invests principally in securities of
companies with market capitalizations of $3 billion or more.
MID-CAP AIM VARIABLE INSURANCE FUNDS -- AIM V.I. DYNAMICS FUND -- SERIES I A I M Advisors,
GROWTH shares (formerly, an INVESCO fund): seeks long-term capital growth. The Inc.
Portfolio pursues its objective by normally investing at least 65% of its assets in
common stocks of mid-sized companies that are included in the Russell Midcap
Growth(R) Index at the time of purchase.
SPECIALTY AIM VARIABLE INSURANCE FUNDS -- AIM V.I. TECHNOLOGY FUND -- SERIES I A I M Advisors,
shares (formerly, an INVESCO fund): seeks capital growth. The Portfolio normally Inc.
invests at least 80% of its net assets in the equity securities and equity-related
instruments of companies engaged in technology-related industries. These
include, but are not limited to, various applied technologies, hardware, software,
semiconductors, telecommunications equipment and services and service-related
companies in information technology.
18
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------------
SPECIALTY AIM VARIABLE INSURANCE FUNDS -- AIM V.I. HEALTH SCIENCES FUND -- A I M Advisors,
SERIES I SHARES (formerly, an INVESCO fund) (Effective July 1, 2005, AIM V.I. Inc.
Health Sciences Fund will be renamed AIM V.I. Global Health Care Fund): seeks
capital growth. The Portfolio normally invests at least 80% of its net assets in
the equity securities and equity-related instruments of companies related to
health care.
SPECIALTY AIM VARIABLE INSURANCE FUNDS -- AIM V.I. FINANCIAL SERVICES FUND -- A I M Advisors,
SERIES I shares (formerly, an INVESCO fund): seeks capital growth. The Portfolio Inc.
normally invests at least 80% of its net assets in the equity securities and
equity-related instruments of companies involved in the financial services sector.
These companies include, but are not limited to, banks, insurance companies,
investment and miscellaneous industries, and suppliers to financial services
companies.
INTERNATIONAL EVERGREEN VA INTERNATIONAL EQUITY (formerly Evergreen VA International Evergreen
EQUITY Growth): seeks long-term capital growth and secondarily, modest income. The Investment
Portfolio normally invests 80% of its assets in equity securities issued by Management
established, quality, non-U.S. companies located in countries with developed Company, LLC
markets and may purchase across all market capitalizations. The Portfolio
normally invests at least 65% of its assets in securities of companies in at least
three different countries (other than the U.S.).
SMALL CAP EVERGREEN VA GROWTH (formerly Evergreen VA Special Equity): seeks long-term Evergreen
GROWTH capital growth. The Portfolio invests at least 75% of its assets in common stocks Investment
of small- and medium-sized companies (i.e., companies whose market Management
capitalizations fall within the range of the Russell 2000(R) Growth Index, at the Company, LLC
time of purchase).
SPECIALTY EVERGREEN VA OMEGA: seeks long-term capital growth. The Portfolio invests Evergreen
primarily, and under normal conditions, substantially all of its assets in common Investment
stocks and securities convertible into common stocks of U.S. companies across Management
all market capitalizations. Company, LLC
INTERNATIONAL PROFUND VP EUROPE 30: seeks daily investment results, before fees and ProFund Advisors
EQUITY expenses, that correspond to the daily performance of the ProFunds Europe 30 LLC
Index. The ProFunds Europe 30 Index, created by ProFund Advisors, is composed
of 30 companies whose principal offices are located in Europe and whose
securities are traded on U.S. exchanges or on the NASDAQ as depositary
receipts or ordinary shares.
SPECIALTY PROFUND VP ASIA 30: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the ProFunds Asia 30 Index. The LLC
ProFunds Asia 30 Index, created by ProFund Advisors, is composed of 30
companies whose principal offices are located in the Asia/Pacific region,
excluding Japan, and whose securities are traded on U.S. exchanges or on the
NASDAQ as depository receipts or ordinary shares.
19
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP JAPAN: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the Nikkei 225 Stock Average. Since LLC
the Japanese markets are not open when ProFund VP Japan values its shares,
ProFund VP Japan determines its success in meeting this investment objective
by comparing its daily return on a given day with the daily performance of
related futures contracts traded in the United States related to the Nikkei 225
Stock Average.
SPECIALTY PROFUND VP BANKS: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the Dow Jones U.S. Banks Index. LLC
The Dow Jones U.S. Banks Index measures the performance of the banking
industry portion of the U.S. equity market.
SPECIALTY PROFUND VP BASIC MATERIALS: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones U.S. Basic LLC
Materials Sector Index. The Dow Jones U.S. Basic Materials Sector Index
measures the performance of the basic materials economic sector of the U.S.
equity market.
SPECIALTY PROFUND VP BIOTECHNOLOGY: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones U.S. LLC
Biotechnology Index. The Dow Jones U.S. Biotechnology Index measures the
performance of the biotechnology industry portion of the U.S. equity market.
SPECIALTY PROFUND VP CONSUMER SERVICES (formerly, ProFund VP Consumer Cyclical): ProFund Advisors
seeks daily investment results, before fees and expenses, that correspond to the LLC
daily performance of the Dow Jones U.S. Consumer Services Index. The Dow
Jones U.S. Consumer Services Index measures the performance of consumer
spending in the services industry of the U.S. equity market.
SPECIALTY PROFUND VP CONSUMER GOODS (formerly, ProFund VP Consumer Non-cyclical): ProFund Advisors
seeks daily investment results, before fees and expenses, that correspond to the LLC
daily performance of the Dow Jones U.S. Consumer Goods Index. The Dow
Jones U.S. Consumer Goods Index measures the performance of consumer
spending in the goods industry of the U.S. equity market.
SPECIALTY PROFUND VP OIL & GAS (formerly, ProFund VP Energy): seeks daily investment ProFund Advisors
results, before fees and expenses, that correspond to the daily performance of LLC
the Dow Jones U.S. Oil & Gas Index. The Dow Jones U.S. Oil & Gas Sector
Index measures the performance of the energy sector of the U.S. equity market.
SPECIALTY PROFUND VP FINANCIALS: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones LLC
U.S. Financials Sector Index. The Dow Jones U.S. Financials Sector Index
measures the performance of the financial services economic sector of the
U.S. equity market.
SPECIALTY PROFUND VP HEALTH CARE: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones U.S. LLC
Health Care Index. The Dow Jones U.S. Health Care Index measures the
performance of the healthcare economic sector of the U.S. equity market.
20
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP INDUSTRIALS: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones U.S. LLC
Industrials Index. The Dow Jones U.S. Industrials Index measures the
performance of the industrial economic sector of the U.S. equity market.
SPECIALTY PROFUND VP INTERNET: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the Dow Jones Composite Internet LLC
Index. The Dow Jones Composite Internet Index measures the performance of
stocks in the U.S. equity markets that generate the majority of their revenues
from the Internet.
SPECIALTY PROFUND VP PHARMACEUTICALS: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones U.S. LLC
Pharmaceuticals Index. The Dow Jones U.S. Pharmaceuticals Index measures the
performance of the pharmaceuticals industry portion of the U.S. equity market.
SPECIALTY PROFUND VP PRECIOUS METALS: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones Precious LLC
Metals Index. The Dow Jones Precious Metals Index measures the performance
of the precious metals mining industry.
SPECIALTY PROFUND VP REAL ESTATE: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones U.S. Real LLC
Estate Index. The Dow Jones U.S. Real Estate Index measures the performance
of the real estate industry portion of the U.S. equity market.
SPECIALTY PROFUND VP SEMICONDUCTOR: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones U.S. LLC
Semiconductor Index. The Dow Jones U.S. Semiconductor Index measures the
performance of the semiconductor industry portion of the U.S. equity market.
SPECIALTY PROFUND VP TECHNOLOGY: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones U.S. LLC
Technology Sector Index. The Dow Jones U.S. Technology Sector Index measures
the performance of the technology sector of the U.S. equity market.
SPECIALTY PROFUND VP TELECOMMUNICATIONS: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the Dow Jones U.S. LLC
Telecommunications Sector Index. The Dow Jones U.S. Telecommunications
Sector Index measures the performance of the telecommunications economic
sector of the U.S. equity market.
SPECIALTY PROFUND VP UTILITIES: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the Dow Jones U.S. Utilities Sector LLC
Index. The Dow Jones U.S. Utilities Sector Index measures the performance of
the utilities economic sector of the U.S. equity market.
SPECIALTY PROFUND VP BULL: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the S&P 500(R) Index. LLC
21
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP BEAR: seeks daily investment results, before fees and expenses, that ProFund Advisors
correspond to the inverse (opposite) of the daily performance of the S&P 500(R) Index. LLC
If ProFund VP Bear is successful in meeting its objective, its net asset value should
gain approximately the same, on a percentage basis, as any decrease in the S&P
500(R) Index when the Index declines on a given day. Conversely, its net asset value
should lose approximately the same, on a percentage basis, as any increase in the
Index when the Index rises on a given day.
SPECIALTY PROFUND VP ULTRABULL: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to twice (200%) the daily performance of the S&P LLC
500(R) Index. Prior to May 1, 2003, ProFund VP UltraBull was named "ProFund VP
Bull Plus" and sought daily investment results that corresponded to one and
one-half times (150%) the daily performance of the S&P 500(R) Index. If ProFund
VP UltraBull is successful in meeting its objective, its net asset value should
gain approximately twice as much, on a percentage basis, as the S&P 500(R)
Index when the Index rises on a given day. Conversely, its net asset value should
lose approximately twice as much, on a percentage basis, as the Index when the
Index declines on a given day.
SPECIALTY PROFUND VP OTC: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the NASDAQ-100 Index(R). "OTC" in LLC
the name of ProFund VP OTC refers to securities that do not trade on a U.S.
securities exchange registered under the Securities Exchange Act of 1934.
SPECIALTY PROFUND VP SHORT OTC: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the inverse (opposite) of the daily performance of LLC
the NASDAQ-100 Index(R). If ProFund VP Short OTC is successful in meeting its
objective, its net asset value should gain approximately the same, on a
percentage basis, as any decrease in the NASDAQ-100 Index(R) when the Index
declines on a given day. Conversely, its net asset value should lose
approximately the same, on a percentage basis, as any increase in the Index
when the Index rises on a given day. "OTC" in the name of ProFund VP Short
OTC refers to securities that do not trade on a U.S. securities exchange
registered under the Securities Exchange Act of 1934.
SPECIALTY PROFUND VP ULTRAOTC: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to twice (200%) the daily performance of the LLC
NASDAQ-100 Index(R). If ProFund VP UltraOTC is successful in meeting its
objective, its net asset value should gain approximately twice as much, on a
percentage basis, as the NASDAQ-100 Index(R) when the Index rises on a given
day. Conversely, its net asset value should lose approximately twice as much, on
a percentage basis, as the Index when the Index declines on a given day. "OTC"
in the name of ProFund VP UltraOTC refers to securities that do not trade on a
U.S. securities exchange registered under the Securities Exchange Act of 1934.
22
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------------
MID CAP VALUE PROFUND VP MID-CAP VALUE: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the S&P MidCap 400/ LLC
Barra Value Index(R). The S&P MidCap400/Barra Value Index(R) is a float adjusted
market capitalization weighted index comprised of the stocks in the S&P MidCap
400 Index that have comparatively low price-to-book ratios as determined before
each semiannual rebalance date.
MID CAP PROFUND VP MID-CAP GROWTH: seeks daily investment results, before fees and ProFund Advisors
GROWTH expenses, that correspond to the daily performance of the S&P MidCap 400/ LLC
Barra Growth Index(R). The S&P MidCap 400/Barra Growth Index(R) is a float
adjusted market capitalization weighted index comprised of the stocks in the
S&P MidCap 400 Index(R) that have comparatively high price-to-book ratios as
determined before each semiannual rebalance date.
SPECIALTY PROFUND VP ULTRAMID-CAP: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to twice (200%) the daily performance of the S&P LLC
MidCap 400 Index(R). If ProFund VP UltraMid-Cap is successful in meeting its
objective, its net asset value should gain approximately twice as much, on a
percentage basis, as the S&P MidCap 400 Index(R) when the Index rises on a
given day. Conversely, its net asset value should lose approximately twice as
much, on a percentage basis, as the Index when the Index declines on a
given day.
SMALL CAP PROFUND VP SMALL-CAP VALUE: seeks daily investment results, before fees and ProFund Advisors
VALUE expenses, that correspond to the daily performance of the S&P SmallCap 600/ LLC
Barra Value Index(R). The S&P SmallCap 600/Barra Value Index(R) is a float
adjusted market capitalization weighted index comprised of the stocks in the
S&P SmallCap 600/Barra Value Index(R) that have comparatively low price-to-book
ratios as determined before each semiannual rebalance date.
SMALL CAP PROFUND VP SMALL-CAP GROWTH: seeks daily investment results, before fees ProFund Advisors
GROWTH and expenses, that correspond to the daily performance of the S&P SmallCap LLC
600/Barra Growth Index(R). The S&P SmallCap 600/Barra Growth Index(R) is a float
adjusted market capitalization weighted index comprised of the stocks in the
S&P SmallCap 600/Barra Growth Index(R) that have comparatively high price-to-
book ratios as determined before each semiannual rebalance date.
SPECIALTY PROFUND VP ULTRASMALL-CAP: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to twice (200%) the daily performance of the Russell LLC
2000(R) Index. If ProFund VP UltraSmall-Cap is successful in meeting its objective,
its net asset value should gain approximately twice as much, on a percentage
basis, as the Russell 2000 Index(R) when the Index rises on a given day.
Conversely, its net asset value should lose approximately twice as much, on a
percentage basis, as the Index when the Index declines on a given day.
23
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP U.S. GOVERNMENT PLUS: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to one and one-quarter times (125%) the daily LLC
price movement of the most recently issued 30-year U.S. Treasury bond ("Long
Bond"). In accordance with its stated objective, the net asset value of ProFund
VP U.S. Government Plus generally should decrease as interest rates rise. If
ProFund VP U.S. Government Plus is successful in meeting its objective, its net
asset value should gain approximately one and one-quarter times (125%) as
much, on a percentage basis, as any daily increase in the price of the Long Bond
on a given day. Conversely, its net asset value should lose approximately one
and one-quarter as much, on a percentage basis, as any daily decrease in the
price of the Long Bond on a given day.
SPECIALTY PROFUND VP RISING RATES OPPORTUNITY: seeks daily investment results, before ProFund Advisors
fees and expenses, that correspond to one and one-quarter times (125%) the LLC
inverse (opposite) of the daily price movement of the most recently issued
30-year U.S. Treasury bond ("Long Bond"). In accordance with its stated
objective, the net asset value of ProFund VP Rising Rates Opportunity generally
should decrease as interest rates fall. If ProFund VP Rising Rates Opportunity is
successful in meeting its objective, its net asset value should gain approximately
one and one-quarter times as much, on a percentage basis, as any daily
decrease in the Long Bond on a given day. Conversely, its net asset value should
lose approximately one and one-quarter times as much, on a percentage basis,
as any daily increase in the Long Bond on a given day.
LARGE CAP PROFUND VP LARGE-CAP GROWTH: seeks daily investment results, before fees ProFund Advisors
GROWTH and expenses, that correspond to the daily performance of the S&P 500/Barra LLC
Growth Index(R). The S&P 500/Barra Growth Index is a float adjusted market
capitalization weighted index comprised of the stocks in the S&P 500 Index that
have comparatively high price-to-book ratios as determined before each
semiannual rebalance date.
LARGE CAP PROFUND VP LARGE-CAP VALUE: seeks daily investment results, before fees and ProFund Advisors
VALUE expenses, that correspond to the daily performance of the S&P 500/Barra Value LLC
Index(R). The S&P 500/Barra Value Index is a float adjusted market capitalization
weighted index comprised of the stocks in the S&P 500 Index that have
comparatively low price-to-book ratios as determined before each semiannual
rebalance date.
SPECIALTY PROFUND VP SHORT SMALL-CAP: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the inverse (opposite) of the daily performance of LLC
the Russell 2000(R) Index. If ProFund VP Short Small-Cap is successful in meeting
its objective, its net asset value should gain approximately the same amount, on
a percentage basis, as any decrease in the Russell 2000 Index when the Index
declines on a given day. Conversely, its net asset value should lose
approximately the same amount, on a percentage basis, as any increase in the
Index when the Index rises on a given day.
24
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP SHORT MID-CAP: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the inverse (opposite) of the daily performance of LLC
the S&P MidCap 400 Index(R). If ProFund VP Short Mid-Cap is successful in
meeting its objective, its net asset value should gain approximately the same
amount, on a percentage basis, as any decrease in the S&P MidCap 400 Index
when the Index declines on a given day. Conversely, its net asset value should
lose approximately the same amount, on a percentage basis, as any increase in
the Index when the Index rises on a given day.
SPECIALTY ACCESS VP HIGH YIELD: seeks to provide investment results that correspond ProFund Advisors
generally to the total return of the high yield market consistent with maintaining LLC
reasonable liquidity. The Access VP High Yield, created by ProFund Advisors, will
achieve its high yield exposure primarily through CDSs but may invest in high
yield debt instruments ("junk bonds"), Interest rate swap agreements and futures
contracts, and other debt and money market instruments without limitation,
consistent with applicable regulations. Under normal market conditions, the fund
will invest at least 80% of its net assets in credit default swaps and other
financial instruments that in combination have economic characteristics similar to
the high yield debt market and/or in high yield debt securities. The fund seeks to
maintain exposure to the high yield bond markets regardless of market
conditions and without taking defensive positions.
SPECIALTY FIRST TRUST(R) 10 UNCOMMON VALUES: seeks to provide above-average capital First Trust Advisors
appreciation. The Portfolio seeks to achieve its objective by investing primarily in L.P.
the ten common stocks selected by the Investment Policy Committee of Lehman
Brothers Inc. ("Lehman Brothers") with the assistance of the Research
Department of Lehman Brothers which, in their opinion have the greatest
potential for capital appreciation during the next year. The stocks included in the
Portfolio are adjusted annually on or about July 1st in accordance with the
selections of Lehman Brothers.
SPECIALTY TARGET MANAGED VIP: seeks to provide above-average total return. The Portfolio First Trust Advisors
seeks to achieve its objective by investing in common stocks of the most L.P.
attractive companies that are identified by a model based on six uniquely
specialized strategies -- The Dowsm DART 5, the European Target 20, the
Nasdaq(R) Target 15, the S&P Target 24, the Target Small Cap and the Value Line(R)
Target 25.
SPECIALTY THE DOW(SM) DART 10: seeks to provide above-average total return. The First Trust Advisors
Portfolio seeks to achieve its objective by investing in common stocks issued by L.P.
companies that are expected to provide income and to have the potential for
capital appreciation. The Portfolio invests primarily in the common stocks of the
ten companies in the DJIA that have the highest combined dividend yields and
buyback ratios on or about the applicable stock selection date.
25
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------------
SPECIALTY GLOBAL DIVIDEND TARGET 15 (formerly, Global Target 15): seeks to provide First Trust Advisors
above-average total return. The Portfolio seeks to achieve its objective by L.P.
investing in common stocks issued by companies that are expected to provide
income and to have the potential for capital appreciation. The Portfolio invests
primarily in the common stocks of the companies which are components of the
DJIA, the Financial Times Industrial Ordinary Share Index ("FT Index") and the
Hang Seng Index. The Portfolio primarily consists of common stocks of the five
companies with the lowest per share stock prices of the ten companies in each
of the DJIA, FT Index and Hang Seng Index, respectively, that have the highest
dividend yield in the respective index on or about the applicable stock selection
date.
SPECIALTY S&P(R) Target 24: seeks to provide above-average total return. The Portfolio First Trust Advisors
seeks to achieve its objective by investing in common stocks issued by L.P.
companies that have the potential for capital appreciation. The Portfolio invests
primarily in the common stocks of twenty-four companies selected from a
subset of the stocks included in the Standard & Poor's 500 Composite Stock
Price Index(R). The subset of stocks will be taken from each of the eight
largest economic sectors of the S&P 500 Index(R) based on the sector's
market capitalization.
SPECIALTY THE DOW(SM) TARGET DIVIDEND: seeks to provide above-average total return. First Trust Advisors
The Portfolio seeks to achieve its objective by investing in common stocks issued L.P.
by companies that are expected to provide income and to have the potential for
capital appreciation. The Portfolio invests primarily in the 20 common stocks
from the Dow Jones Select Dividend Index(SM) with the best overall ranking on
both the change in return on assets over the last 12 months and price-to-book
ratio as of the close of business on or about the applicable stock selection date.
SPECIALTY VALUE LINE(R) TARGET 25: seeks to provide above-average capital appreciation. First Trust Advisors
The Portfolio seeks to achieve its objective by investing in 25 of the 100 L.P.
common stocks that Value Line(R) gives a #1 ranking for Timeliness(TM) which have
recently exhibited certain positive financial attributes as of the close of business
on the applicable stock selection date through a multi-step process.
SPECIALTY NASDAQ(R) TARGET 15: seeks to provide above-average total return. The Portfolio First Trust Advisors
seeks to achieve its objective by investing in common stocks issued by L.P.
companies that are expected to have the potential for capital appreciation. The
Portfolio invests primarily in the common stocks of fifteen companies selected
from a pre-screened subset of the stocks included in the Nasdaq-100 Index(R) on
or about the applicable stock selection date through a multi-step process.
INTERNATIONAL THE PRUDENTIAL SERIES FUND, INC. -- SP William Blair International Prudential
EQUITY Growth: Seeks long-term capital appreciation. The Portfolio invests primarily in Investments LLC/
stocks of large and medium-sized companies located in countries included in the William Blair &
Morgan Stanley Capital International All Country World Ex-U.S. Index. Under Company, LLC
normal market conditions, the portfolio invests at least 80% of its net assets in
equity securities. The Portfolio's assets normally will be allocated among not
fewer than six different countries and will not concentrate investments in any
particular industry.
26
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
"Standard & Poor's(R), "S&P(R)," "S&P 500(R)," "Standard & Poor's
500," and "500" are trademarks of the McGraw-Hill Companies, Inc. and have been
licensed for use by American Skandia Investment Services, Incorporated. The
Portfolio is not sponsored, endorsed, sold or promoted by Standard & Poor's and
Standard & Poor's makes no representation regarding the advisability of
investing in the Portfolio.
"Dow Jones Industrial Average(SM)", "DJIA(SM)", "Dow Industrials(SM)", "Dow
Jones Select Dividend Index(SM)", and "The Dow 10(SM)", are service marks of Dow
Jones & Company, Inc. ("Dow Jones") and have been licensed for use for certain
purposes by First Trust Advisors L.P. ("First Trust"). The portfolios,
including, and in particular the Target Managed VIP portfolio The Dow(SM) DART
10 portfolio, and The Dow(SM) Target Dividend Portfolio are not endorsed, sold
or promoted by Dow Jones, and Dow Jones makes no representation regarding the
advisability of investing in such products.
"Standard & Poor's," "S&P," "S&P 500," "Standard & Poor's 500," and "500" are
trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by
First Trust on behalf of the S&P Target 24 Portfolio and the Target Managed VIP
Portfolio. The Portfolios are not sponsored, endorsed, managed, sold or promoted
by Standard & Poor's and Standard & Poor's makes no representation regarding the
advisability of investing in the Portfolio.
"The Nasdaq 100(R)", "Nasdaq-100 Index(R)", "Nasdaq Stock Market(R)", and
"Nasdaq(R)" are trade or service marks of The Nasdaq Stock Market, Inc.
(which with its affiliates are the "Corporations") and have been licensed for
use by First Trust. The Nasdaq Target 15 Portfolio and Target Managed VIP
Portfolio have not been passed on by the Corporations as to its legality or
suitability. The Nasdaq Target 15 Portfolio and Target Managed VIP Portfolio are
not issued, endorsed, sponsored, managed, sold or promoted by the Corporations.
The Corporations make no warranties and bear no liability with respect to the
Nasdaq Target 15 Portfolio or the Target Managed VIP Portfolio.
"Value Line(R)," "The Value Line Investment Survey," and "Value Line
TimelinessTM Ranking System" are registered trademarks of Value Line Securities,
Inc. or Value Line Publishing, Inc. The Target Managed VIP(R) Portfolio is
not sponsored, recommended, sold or promoted by Value Line Publishing, Inc.,
Value Line, Inc. or Value Line Securities, Inc. ("Value Line"). Value Line makes
no representation regarding the advisability of investing in the Portfolio.
The First Trust(R) 10 Uncommon Values portfolio is not sponsored or created by
Lehman Brothers, Inc. ("Lehman Brothers"). Lehman Brothers' only relationship to
First Trust is the licensing of certain trademarks and trade names of Lehman
Brothers and of the "10 Uncommon Values" which is determined, composed and
calculated by Lehman Brothers without regard to First Trust or the First
Trust(R) 10 Uncommon Values portfolio.
Dow Jones has no relationship to the ProFunds VP, other than the licensing of
the Dow Jones sector indices and its service marks for use in connection with
the ProFunds VP. The ProFunds VP are not sponsored, endorsed, sold, or promoted
by Standard & Poor's or NASDAQ, and neither Standard & Poor's nor NASDAQ makes
any representations regarding the advisability of investing in the ProFunds VP.
WHAT ARE THE FIXED ALLOCATIONS?
We offer Fixed Allocations of different durations during the accumulation
period. These "Fixed Allocations" earn a guaranteed fixed rate of interest for a
specified period of time, called the "Guarantee Period." In most states, we
offer Fixed Allocations with Guarantee Periods from 1 to 10 years. We may also
offer special purpose Fixed Allocations for use with certain optional investment
programs. We guarantee the fixed rate for the entire Guarantee Period. However,
if you withdraw or transfer Account Value before the end of the Guarantee
Period, we will adjust the value of your withdrawal or transfer based on a
formula, called a "Market Value Adjustment." The Market Value Adjustment can
either be positive or negative, depending on the movement of applicable interest
rates payable on Strips of the appropriate duration. Please refer to the section
entitled "How does the Market Value Adjustment Work?" for a description of the
formula along with examples of how it is calculated. You may allocate Account
Value to more than one Fixed Allocation at a time.
Fixed Allocations may not be available in all states. Availability of
Fixed Allocations is subject to change and may differ by state and by the
annuity product you purchase. Please call American Skandia at 1-800-752-6342 to
determine availability of Fixed Allocations in your state and for your annuity
product.
27
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Fees and Charges
The charges under the contracts are designed to cover, in the aggregate, our
direct and indirect costs of selling, administering and providing benefits under
the contracts. They are also designed, in the aggregate, to compensate us for
the risks of loss we assume pursuant to the contracts. If, as we expect, the
charges that we collect from the contracts exceed our total costs in connection
with the contracts, we will earn a profit. Otherwise we will incur a loss. For
example, American Skandia may make a profit on the Insurance Charge if, over
time, the actual costs of providing the guaranteed insurance obligations under
the Annuity are less than the amount we deduct for the Insurance Charge. To the
extent we make a profit on the Insurance Charge, such profit may be used for any
other corporate purpose, including payment of other expenses that American
Skandia incurs in promoting, distributing, issuing and administering the
Annuity.
The rates of certain of our charges have been set with reference to
estimates of the amount of specific types of expenses or risks that we will
incur. In most cases, this prospectus identifies such expenses or risks in the
name of the charge; however, the fact that any charge bears the name of, or is
designed primarily to defray a particular expense or risk does not mean that the
amount we collect from that charge will never be more than the amount of such
expense or risk, nor does it mean that we may not also be compensated for such
expense or risk out of any other charges we are permitted to deduct by the terms
of the contract. A portion of the proceeds that American Skandia receives from
charges that apply solely to the variable investment options may include amounts
based on market appreciation of the variable investment option values.
WHAT ARE THE CONTRACT FEES AND CHARGES?
Contingent Deferred Sales Charge: We do not deduct a sales charge from Purchase
Payments you make to your Annuity. However, we may deduct a CDSC if you
surrender your Annuity or when you make a partial withdrawal. The CDSC
reimburses us for expenses related to sales and distribution of the Annuity,
including commissions, marketing materials and other promotional expenses. The
CDSC is calculated as a percentage of your Purchase Payment being surrendered
or withdrawn during the applicable Annuity Year. For purposes of calculating
the CDSC, we consider the year following the Issue Date of your Annuity as Year
1. The amount of the CDSC decreases over time, measured from the Issue Date of
the Annuity. The CDSC percentages are shown below.
YEARS 1 2 3 4 5 6 7 8 9+
- ----------- - - - - - - - - -
CHARGE (%) 7.5% 7.0% 6.5% 6.0% 5.0% 4.0% 3.0% 2.0% 0.0%
THE CDSC PERIOD IS BASED ON THE ISSUE DATE OF THE ANNUITY, NOT ON THE DATE
EACH PURCHASE PAYMENT IS APPLIED TO THE ANNUITY. Purchase Payments applied to
the Annuity after the Issue Date do not have their own CDSC period. During the
first eight (8) Annuity Years, under certain circumstances you can withdraw a
limited amount of Account Value without paying a CDSC. This is referred to as a
"Free Withdrawal." After eight (8) complete Annuity Years, you can surrender
your Annuity or make a partial withdrawal without a CDSC being deducted from
the amount being withdrawn. Free Withdrawals are not treated as a withdrawal of
Purchase Payments for purposes of calculating the CDSC on a subsequent
withdrawal or surrender. Withdrawals of amounts greater than the maximum Free
Withdrawal amount are treated as a withdrawal of Purchase Payments and will be
assessed a CDSC during Annuity Years 1 through 8. For purposes of calculating
the CDSC on a surrender, the Purchase Payments being withdrawn may be greater
than your remaining Account Value or the amount of your withdrawal request.
This is most likely to occur if you have made prior withdrawals under the Free
Withdrawal provision or if your Account Value has declined in value due to
negative market performance.
We may waive the CDSC under certain medically-related circumstances or
when taking a Minimum Distribution from an Annuity purchased as a "qualified"
investment. Free Withdrawals, Medically-Related Surrenders and Minimum
Distributions are each explained more fully in the section entitled "Access to
Your Account Value".
TRANSFER FEE: Currently, you may make twenty (20) free transfers between
investment options each Annuity Year. We will charge $10.00 for each transfer
after the twentieth in each Annuity Year. We do not consider transfers made as
part of a dollar cost averaging, automatic rebalancing or asset allocation
program when we count the twenty free transfers. All transfers made on the same
day will be treated as one (1) transfer. Renewals or transfers of Account Value
from a Fixed Allocation at the end of its Guarantee Period are not subject to
the Transfer Fee and are not counted toward the twenty free transfers. We may
reduce the number of free transfers allowable each Annuity Year (subject to a
minimum of eight) without charging a Transfer Fee unless you make use of
electronic means to
28
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
transmit your transfer requests. We may eliminate the Transfer Fee for transfer
requests transmitted electronically or through other means that reduce our
processing costs. If enrolled in any program that does not permit transfer
requests to be transmitted electronically, the Transfer Fee will not be waived.
ANNUAL MAINTENANCE FEE: During the accumulation period we deduct an Annual
Maintenance Fee. The Annual Maintenance Fee is $35.00 or 2% of your Account
Value invested in the variable investment options, whichever is less. This fee
will be deducted annually on the anniversary of the Issue Date of your Annuity
or, if you surrender your Annuity during the Annuity Year, the fee is deducted
at the time of surrender. Currently, the Annual Maintenance Fee is only
deducted if your Account Value is less than $100,000 on the anniversary of the
Issue Date or at the time of surrender. We may increase the Annual Maintenance
Fee. However, any increase will only apply to Annuities issued after the date
of the increase.
TAX CHARGE: Several states and some municipalities charge premium taxes or
similar taxes on annuities that we are required to pay. The amount of tax will
vary from jurisdiction to jurisdiction and is subject to change. The tax charge
currently ranges up to 31/2% of your premium and is designed to approximate the
taxes that we are required to pay. We generally will deduct the charge at the
time the tax is imposed, but may also decide to deduct the charge from each
Purchase Payment at the time of a withdrawal or surrender of your Annuity or at
the time you elect to begin receiving annuity payments. We may assess a charge
against the Sub-accounts and the Fixed Allocations equal to any taxes which may
be imposed upon the separate accounts.
We will pay company income taxes on the taxable corporate earnings created
by this separate account product. While we may consider company income taxes
when pricing our products, we do not currently include such income taxes in the
tax charges you pay under the contract. We will periodically review the issue of
charging for these taxes and may impose a charge in the future.
In calculating our corporate income tax liability, we derive certain
corporate income tax benefits associated with the investment of company assets,
including separate account assets, which are treated as company assets under
applicable income tax law. These benefits reduce our overall corporate income
tax liability. Under current law, such benefits may include foreign tax credits
and corporate dividends received deductions. We do not pass these tax benefits
through to holders of the separate account annuity contracts because (i) the
contract owners are not the owners of the assets generating these benefits under
applicable income tax law and (ii) we do not currently include company income
taxes in the tax charges you pay under the contract.
WHAT CHARGES APPLY SOLELY TO THE VARIABLE INVESTMENT OPTIONS?
Insurance Charge: We deduct an Insurance Charge daily. The charge is assessed
against the average daily assets allocated to the Sub-accounts and is equal to
0.65% on an annual basis. The Insurance Charge is the combination of the
Mortality & Expense Risk Charge (0.50%) and the Administration Charge (0.15%).
The Insurance Charge is intended to compensate American Skandia for providing
the insurance benefits under the Annuity, including the Annuity's basic death
benefit that provides guaranteed benefits to your beneficiaries even if the
market declines and the risk that persons we guarantee annuity payments to will
live longer than our assumptions. The charge also covers administrative costs
associated with providing the Annuity benefits, including preparation of the
contract, confirmation statements, annual account statements and annual reports,
legal and accounting fees as well as various related expenses. Finally, the
charge covers the risk that our assumptions about the mortality risks and
expenses under this Annuity are incorrect and that we have agreed not to
increase these charges over time despite our actual costs. We may increase the
portion of the total Insurance Charge that is deducted for administrative costs;
however, any increase will only apply to Annuities issued after the date of the
increase.
The Insurance Charge is not deducted against assets allocated to a Fixed
Allocation. However, the amount we credit to Fixed Allocations may also reflect
similar assumptions about the insurance guarantees provided under the Annuity.
Distribution Charge: We deduct a Distribution Charge daily. The charge is
assessed against the average assets allocated to the Sub-accounts and is equal
to 0.60% on an annual basis in Annuity Years 1 through 8. After the end of the
first eight Annuity Years, the 0.60% charge for distribution will no longer be
assessed. The Distribution Charge is intended to compensate us for a portion of
our acquisition expenses under the Annuity, including promotion and distribution
of the Annuity. The Distribution Charge is deducted against your Annuity's
Account Value and any increases or decreases in your Account Value based on
market fluctuations of the Sub-accounts will affect the charge.
29
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Fees and Charges continued
OPTIONAL BENEFITS FOR WHICH WE ASSESS A CHARGE SOLELY AGAINST THE VARIABLE
INVESTMENT OPTIONS: If you elect to purchase certain optional benefits, we will
deduct an additional charge on a daily basis solely from your Account Value
allocated to the Sub-accounts. The additional charge is included in the daily
calculation of the Unit Price for each Sub-account. We may assess charges for
other optional benefits on a different basis as described elsewhere in the
prospectus. Please refer to the sections entitled "Living Benefit Programs" and
"Death Benefit" for a description of the charge for each Optional Benefit.
WHAT FEES AND EXPENSES ARE INCURRED BY THE PORTFOLIOS?
Each Portfolio incurs total annual operating expenses comprised of an investment
management fee, other expenses and any distribution and service (12b-1) fees
that may apply. These fees and expenses are reflected daily by each Portfolio
before it provides American Skandia with the net asset value as of the close of
business each day. More detailed information about fees and expenses can be
found in the prospectuses for the Portfolios.
WHAT CHARGES APPLY TO THE FIXED ALLOCATIONS?
No specific fee or expenses are deducted when determining the rate we credit to
a Fixed Allocation. However, for some of the same reasons that we deduct the
Insurance Charge against Account Value allocated to the Sub-accounts, we also
take into consideration mortality, expense, administration, profit and other
factors in determining the interest rates we credit to Fixed Allocations. Any
CDSC or Tax Charge applies to amounts that are taken from the variable
investment options or the Fixed Allocations. A Market Value Adjustment may also
apply to transfers, certain withdrawals, surrender or annuitization from a Fixed
Allocation.
WHAT CHARGES APPLY IF I CHOOSE AN ANNUITY PAYMENT OPTION?
If you select a fixed payment option, the amount of each fixed payment will
depend on the Account Value of your Annuity when you elected to annuitize. There
is no specific charge deducted from these payments; however, the amount of each
annuity payment reflects assumptions about our insurance expenses. If you select
a variable payment option that we may offer, then the amount of your benefits
will reflect changes in the value of your Annuity and will be subject to charges
that apply under the variable immediate annuity option. Also, a tax charge may
apply (see "Tax Charge" above).
EXCEPTIONS/REDUCTIONS TO FEES AND CHARGES
We may reduce or eliminate certain fees and charges or alter the manner in which
the particular fee or charge is deducted. For example, we may reduce the amount
of the CDSC or the length of time it applies, reduce or eliminate the amount of
the Annual Maintenance Fee or reduce the portion of the total Insurance Charge
that is deducted as an Administration Charge. Generally, these types of changes
will be based on a reduction to our sales, maintenance or administrative
expenses due to the nature of the individual or group purchasing the Annuity.
Some of the factors we might consider in making such a decision are: (a) the
size and type of group; (b) the number of Annuities purchased by an Owner; (c)
the amount of Purchase Payments or likelihood of additional Purchase Payments;
and/or (d) other transactions where sales, maintenance or administrative
expenses are likely to be reduced. We will not discriminate unfairly between
Annuity purchasers if and when we reduce any fees and charges.
30
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Purchasing Your Annuity
WHAT ARE OUR REQUIREMENTS FOR PURCHASING THE ANNUITY?
INITIAL PURCHASE PAYMENT: You must make a minimum initial Purchase Payment of
$1,000. However, if you decide to make payments under a systematic investment or
"bank drafting" program, we will accept a lower initial Purchase Payment
provided that, within the first Annuity Year, you make at least $1,000 in total
Purchase Payments.
Where allowed by law, we must approve any initial and additional Purchase
Payments of $1,000,000 or more. We may apply certain limitations and/or
restrictions on the Annuity as a condition of our acceptance, including limiting
the liquidity features or the Death Benefit protection provided under the
Annuity, limiting the right to make additional Purchase Payments, changing the
number of transfers allowable under the Annuity or restricting the Sub-accounts
or Fixed Allocations that are available. Other limitations and/or restrictions
may apply.
Except as noted below, Purchase Payments must be submitted by check drawn
on a U.S. bank, in U.S. dollars, and made payable to American Skandia. Purchase
Payments may also be submitted via 1035 exchange or direct transfer of funds.
Under certain circumstances, Purchase Payments may be transmitted to American
Skandia via wiring funds through your investment professional's broker-dealer
firm. Additional Purchase Payments may also be applied to your Annuity under an
arrangement called "bank drafting" where you authorize us to deduct money
directly from your bank account. We may reject any payment if it is received in
an unacceptable form. Our acceptance of a check is subject to our ability to
collect funds.
AGE RESTRICTIONS: The Owner must be age 80 or under as of the
Issue Date of the Annuity. If the Annuity is owned jointly, the oldest of the
Owners must be age 80 or under on the Issue Date. If the Annuity is owned by an
entity, the Annuitant must be age 80 or under as of the Issue Date. You should
consider your need to access your Account Value and whether the Annuity's
liquidity features will satisfy that need. If you take a distribution prior to
age 59 1/2, you may be subject to a 10% penalty in addition to ordinary income
taxes on any gain.
The availability and level of protection of certain optional benefits may vary
based on the age of the Owner on the Issue Date of the Annuity or the date of
the Owner's death.
OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS: We will ask you to name the
Owner(s), Annuitant and one or more Beneficiaries for your Annuity.
- - Owner: the Owner(s) holds all rights under the Annuity. You may name up to
two Owners in which case all ownership rights are held jointly. Generally,
joint owners are required to act jointly; however, if each owner provides
us with an instruction that we find acceptable, we will permit each owner
to act separately. All information and documents that we are required to
send you will be sent to the first named owner. This Annuity does not
provide a right of survivorship. Refer to the Glossary of Terms for a
complete description of the term "Owner."
- - Annuitant: The Annuitant is the person we agree to make annuity payments
to and upon whose life we continue to make such payments. You must name an
Annuitant who is a natural person. We do not accept a designation of joint
Annuitants during the accumulation period. Where allowed by law, you may
name one or more Contingent Annuitants. A Contingent Annuitant will become
the Annuitant if the Annuitant dies before the Annuity Date. Please refer
to the discussion of "Considerations for Contingent Annuitants" in the Tax
Considerations section of the Prospectus.
- - Beneficiary: The Beneficiary is the person(s) or entity you name to
receive the death benefit. Your beneficiary designation must be the exact
name of your beneficiary, not only a reference to the beneficiary's
relationship to you. For example, a designation of "surviving spouse"
would not be acceptable. If no beneficiary is named the death benefit will
be paid to you or your estate.
Your right to make certain designations may be limited if your Annuity is
to be used as an IRA or other "qualified" investment that is given beneficial
tax treatment under the Code. You should seek competent tax advice on the
income, estate and gift tax implications of your designations.
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Managing Your Annuity
MAY I CHANGE THE OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS?
You may change the Owner, Annuitant and Beneficiary designations by sending us
a request in writing. Upon an ownership change, any automated investment or
withdrawal programs will be canceled. The new owner must submit the applicable
program enrollment if they wish to participate in such a program. Where allowed
by law, such changes will be subject to our acceptance. Some of the changes we
will not accept include, but are not limited to:
- - a new Owner subsequent to the death of the Owner or the first of any joint
Owners to die, except where a spouse-Beneficiary has become the Owner as a
result of an Owner's death;
- - a new Annuitant subsequent to the Annuity Date;
- - for "non-qualified" investments, a new Annuitant prior to the Annuity Date
if the Annuity is owned by an entity; and
- - a change in Beneficiary if the Owner had previously made the designation
irrevocable.
SPOUSAL OWNERS/SPOUSAL BENEFICIARIES
If an Annuity is co-owned by spouses, we will assume that the sole primary
Beneficiary is the surviving spouse that was named as the co-owner unless you
elect an alternative Beneficiary designation. Unless you elect an alternative
Beneficiary designation, upon the death of either spousal Owner, the surviving
spouse may elect to assume ownership of the Annuity instead of taking the Death
Benefit payment. The Death Benefit that would have been payable will be the new
Account Value of the Annuity as of the date of due proof of death and any
required proof of a spousal relationship. As of the date the assumption is
effective, the surviving spouse will have all the rights and benefits that would
be available under the Annuity to a new purchaser of the same attained age. For
purposes of determining any future Death Benefit for the beneficiary of the
surviving spouse, the new Account Value will be considered as the initial
Purchase Payment. No CDSC will apply to the new Account Value. However, any
additional Purchase Payments applied after the date the assumption is effective
will be subject to all provisions of the Annuity, including the CDSC when
applicable.
SPOUSAL CONTINGENT ANNUITANT
If the Annuity is owned by an entity and the surviving spouse is named as a
Contingent Annuitant, upon the death of the Annuitant, the surviving spouse that
was named as the Contingent Annuitant will become the Annuitant. No Death
Benefit is payable upon the death of the Annuitant. However, the Account Value
of the Annuity as of the date of due proof of death of the Annuitant (and any
required proof of the spousal relationship) will reflect the amount that would
have been payable had a Death Benefit been paid.
MAY I RETURN THE ANNUITY IF I CHANGE MY MIND?
If after purchasing your Annuity you change your mind and decide that you do not
want it, you may return it to us within a certain period of time known as a
right to cancel period. This is often referred to as a "free-look." Depending on
the state in which you purchased your Annuity and, in some states, if you
purchased the Annuity as a replacement for a prior contract, the right to cancel
period may be ten (10) days, twenty-one (21) days or longer, measured from the
time that you received your Annuity. If you return your Annuity during the
applicable period, we will refund your current Account Value plus any tax charge
deducted, and depending on your state's requirements, any applicable insurance
charges deducted. The amount may be higher or lower than, the Purchase
Payment(s) applied during the right to cancel period. Where required by law, we
will return your Purchase Payment(s), or the greater of your current Account
Value and the amount of your Purchase Payment(s) applied during the right to
cancel period.
MAY I MAKE ADDITIONAL PURCHASE PAYMENTS?
The minimum amount that we accept as an additional Purchase Payment is $100
unless you participate in American Skandia's Systematic Investment Plan or a
periodic purchase payment program. Unless you participate in an asset allocation
program, or unless you have provided us with other specific allocation
instructions for one, more than one, or all subsequent purchase payments, we
will allocate any additional Purchase Payments you make according to your
initial purchase payment allocation instructions. If you so instruct us, we will
allocate subsequent purchase payments according to any new allocation
instructions. Purchase payments made while you participate in an asset
allocation program will be allocated in accordance with such program. Additional
Purchase Payments may be paid at any time before the Annuity Date.
MAY I MAKE SCHEDULED PAYMENTS DIRECTLY FROM MY BANK ACCOUNT?
You can make additional Purchase Payments to your Annuity by authorizing us to
deduct money directly from your bank account and applying it to your Annuity.
This type of program is often called "bank drafting". We call our bank drafting
program "American Skandia's Systematic Investment Plan." Purchase Payments made
through bank drafting may only be allocated to the variable investment options
when applied. Bank drafting allows you to invest in your Annuity with a lower
initial Purchase
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Payment, as long as you authorize payments that will equal at least $1,000
during the first 12 months of your Annuity. We may suspend or cancel bank
drafting privileges if sufficient funds are not available from the applicable
financial institution on any date that a transaction is scheduled to occur.
MAY I MAKE PURCHASE PAYMENTS THROUGH A SALARY REDUCTION PROGRAM?
These types of programs are only available with certain types of qualified
investments. If your employer sponsors such a program, we may agree to accept
periodic Purchase Payments through a salary reduction program as long as the
allocations are made only to variable investment options and the periodic
Purchase Payments received in the first year total at least $1,000.
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Managing Your Account Value
HOW AND WHEN ARE PURCHASE PAYMENTS INVESTED?
(See "Valuing Your Investment" for a description of our procedure for pricing
initial and subsequent Purchase Payments.)
Initial Purchase Payment: Once we accept your application, we invest your
net Purchase Payment in the Annuity. The net Purchase Payment is your initial
Purchase Payment minus any tax charges that may apply. On your application we
ask you to provide us with instructions for allocating your Account Value. You
can allocate Account Value to one or more variable investment options or Fixed
Allocations.
Subsequent Purchase Payments: Unless you participate in an asset
allocation program, or unless you have provided us with other specific
allocation instructions for one, more than one, or all subsequent Purchase
Payments, we will allocate any additional Purchase Payments you make according
to your initial Purchase Payment allocation instructions. If you so instruct us,
we will allocate subsequent Purchase Payments according to any new allocation
instructions. Unless you tell us otherwise, Purchase Payments made while you
participate in an asset allocation program will be allocated in accordance with
such program.
ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?
During the accumulation period you may transfer Account Value between investment
options. Transfers are not subject to taxation on any gain. We may require a
minimum of $500 in each Sub-account you allocate Account Value to at the time of
any allocation or transfer. If you request a transfer and, as a result of the
transfer, there would be less than $500 in the Sub-account, we may transfer the
remaining Account Value in the Sub-account pro- rata to the other investment
options to which you transferred.
We may impose specific restrictions on financial transactions (including
transfer requests) for certain Portfolios based on the Portfolio's investment
and/or transfer restrictions. We may do so to conform to any present or future
restriction that is imposed by any portfolio available under this Annuity.
Currently, any purchase, redemption or transfer involving the ProFunds VP
Sub-accounts must be received by us no later than one hour prior to any
announced closing of the applicable securities exchange (generally, 3:00 p.m.
Eastern time) to be processed on the current Valuation Day. The "cut-off" time
for such financial transactions involving a ProFunds VP Sub-account will be
extended to 1/2 hour prior to any announced closing (generally, 3:30 p.m.
Eastern time) for transactions submitted electronically through American
Skandia's Internet website (www.americanskandia.prudential.com).
Currently, we charge $10.00 for each transfer after the twentieth (20th)
in each Annuity Year. Transfers made as part of a dollar cost averaging,
automatic rebalancing or asset allocation program do not count toward the twenty
free transfer limit. Renewals or transfers of Account Value from a Fixed
Allocation at the end of its Guarantee Period are not subject to the transfer
charge. We may reduce the number of free transfers allowable each Annuity Year
(subject to a minimum of eight) without charging a Transfer Fee unless you make
use of electronic means to transmit your transfer requests. We may also increase
the Transfer Fee that we charge to $15.00 for each transfer after the number of
free transfers has been used up. We may eliminate the Transfer Fee for transfer
requests transmitted electronically or through other means that reduce our
processing costs. If enrolled in any program that does not permit transfer
requests to be transmitted electronically, the Transfer Fee will not be waived.
Once you have made 20 transfers among the Sub-accounts during an Annuity
Year, we will accept any additional transfer request during that year only if
the request is submitted to us in writing with an original signature and
otherwise is in good order. For purposes of this 20 transfer limit, we (i) do
not view a facsimile transmission as a "writing", (ii) will treat multiple
transfer requests submitted on the same business day as a single transfer, and
(iii) do not count any transfer that solely involves Sub-accounts corresponding
to any ProFund Portfolio and/or the AST Money Market Portfolio, or any transfer
that involves one of our systematic programs, such as asset allocation and
automated withdrawals.
Frequent transfers among Sub-accounts in response to short-term
fluctuations in markets, sometimes called "market timing," can make it very
difficult for a Portfolio manager to manage a Portfolio's investments. Frequent
transfers may cause the Portfolio to hold more cash than otherwise necessary,
disrupt management strategies, increase transaction costs, or affect
performance. The Annuity offers Sub-accounts designed for Owners who wish to
engage in frequent transfers (i.e., one or more of the Sub-accounts
corresponding to the ProFund Portfolios and the AST Money Market Portfolio),
and we encourage Owners seeking frequent transfers to utilize those
Sub-accounts.
In light of the risks posed to Owners and other investors by frequent
transfers, we reserve the right to limit the number of
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
transfers in any Annuity Year for all existing or new Owners and to take the
other actions discussed below. We also reserve the right to limit the number of
transfers in any Annuity Year or to refuse any transfer request for an Owner or
certain Owners if: (a) we believe that excessive transfer activity (as we define
it) or a specific transfer request or group of transfer requests may have a
detrimental effect on Unit Values or the share prices of the Portfolios; or (b)
we are informed by a Portfolio (e.g., by the Portfolio's portfolio manager) that
the purchase or redemption of shares in the Portfolio must be restricted because
the Portfolio believes the transfer activity to which such purchase and
redemption relates would have a detrimental effect on the share prices of the
affected Portfolio. Without limiting the above, the most likely scenario where
either of the above could occur would be if the aggregate amount of a trade or
trades represented a relatively large proportion of the total assets of a
particular Portfolio. In furtherance of our general authority to restrict
transfers as described above, and without limiting other actions we may take in
the future, we have adopted the following specific restrictions:
- - With respect to each Sub-account (other than the AST Money Market
Sub-account, or a Sub-account corresponding to a ProFund Portfolio), we
track amounts exceeding a certain dollar threshold that were transferred
into the Sub-account. If you transfer such amount into a particular
Sub-account, and within 30 calendar days thereafter transfer (the
"Transfer Out") all or a portion of that amount into another Sub-account,
then upon the Transfer Out, the former Sub-account becomes restricted (the
"Restricted Sub-account"). Specifically, we will not permit subsequent
transfers into the Restricted Sub-account for 90 calendar days after the
Transfer Out if the Restricted Sub-account invests in a non-international
Portfolio, or 180 calendar days after the Transfer Out if the Restricted
Sub-account invests in an international Portfolio. For purposes of this
rule, we (i) do not count transfers made in connection with one of our
systematic programs, such as asset allocation and automated withdrawals;
(ii) do not count any transfer that solely involves Sub-accounts
corresponding to any ProFund Portfolio and/or the AST Money Market
Portfolio; and (iii) do not categorize as a transfer the first transfer
that you make after the Issue Date, if you make that transfer within 30
calendar days after the Issue Date. Even if an amount becomes restricted
under the foregoing rules, you are still free to redeem the amount from
your Annuity at any time.
- - We reserve the right to effect exchanges on a delayed basis for all
contracts. That is, we may price an exchange involving the Sub-accounts on
the Valuation Day subsequent to the Valuation Day on which the exchange
request was received. Before implementing such a practice, we would issue
a separate written notice to Owners that explains the practice in detail.
- - If we deny one or more transfer requests under the foregoing rules, we
will inform you or your investment professional promptly of the
circumstances concerning the denial.
- - Contract owners in New York who purchased their contracts prior to March
15, 2004 are not subject to the specific restrictions outlined in bulleted
paragraphs immediately above. In addition, there are contract owners of
different variable annuity contracts that are funded through the same
Separate Account that are not subject to the above-referenced transfer
restrictions and, therefore, might make more numerous and frequent
transfers than contract owners who are subject to such limitations.
Finally, there are contract owners of other variable annuity contracts or
variable life contracts that are issued by American Skandia as well as
other insurance companies that have the same underlying mutual fund
portfolios available to them. Since some contract owners are not subject
to the same transfer restrictions, unfavorable consequences associated
with such frequent trading within the underlying mutual fund (e.g.,
greater portfolio turnover, higher transaction costs, or performance or
tax issues) may affect all contract owners. Similarly, while contracts
managed by an investment professional or third party investment advisor
are subject to the restrictions on transfers between investment options
that are discussed above, if the advisor manages a number of contracts in
the same fashion unfavorable consequences may be associated with
management activity since it may involve the movement of a substantial
portion of an underlying mutual fund's assets which may affect all
contract owners invested in the affected options. Apart from
jurisdiction-specific and contract differences in transfer restrictions,
we will apply these rules uniformly (including contracts managed by an
investment professional or third party investment advisor), and will not
waive a transfer restriction for any contract owner.
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Managing Your Account Value continued
ALTHOUGH OUR TRANSFER RESTRICTIONS ARE DESIGNED TO PRE- VENT EXCESSIVE
TRANSFERS, THEY ARE NOT CAPABLE OF PREVENTING EVERY POTENTIAL OCCURRENCE OF
EXCESSIVE TRANSFER ACTIVITY.
DO YOU OFFER DOLLAR COST AVERAGING?
Yes. We offer Dollar Cost Averaging during the accumulation period. Dollar Cost
Averaging allows you to systematically transfer an amount periodically from one
investment option to one or more other investment options. You can choose to
transfer earnings only, principal plus earnings or a flat dollar amount. You may
elect a Dollar Cost Averaging program that transfers amounts monthly, quarterly,
semi-annually, or annually from variable investment options, or a program that
transfers amounts monthly from Fixed Allocations. By investing amounts on a
regular basis instead of investing the total amount at one time, Dollar Cost
Averaging may decrease the effect of market fluctuation on the investment of
your purchase payment. This may result in a lower average cost of units over
time. However, there is no guarantee that Dollar Cost Averaging will result in a
profit or protect against a loss in a declining market. There is no minimum
Account Value required to enroll in a Dollar Cost Averaging program and we do
not deduct a charge for participating in a Dollar Cost Averaging program.
You can Dollar Cost Average from variable investment options or Fixed
Allocations. Dollar Cost Averaging from Fixed Allocations is subject to a number
of rules that include, but are not limited to the following:
- - You may only use Fixed Allocations with Guarantee Periods of 1, 2 or 3
years.
- - You may only Dollar Cost Average earnings or principal plus earnings. If
transferring principal plus earnings, the program must be designed to last
the entire Guarantee Period for the Fixed Allocation.
- - Dollar Cost Averaging transfers from Fixed Allocations are not subject to
a Market Value Adjustment.
NOTE: When a Dollar Cost Averaging program is established from a Fixed
Allocation, the fixed rate of interest we credit to your Account Value is
applied to a declining balance due to the transfers of Account Value to the
Sub-accounts during the Guarantee Period. This will reduce the effective rate of
return on the Fixed Allocation over the Guarantee Period.
The Dollar Cost Averaging program is not available if you elect the
Guaranteed Return Option Plus(SM), the Guaranteed Return Option or the automatic
rebalancing programs when it involves transfers out of the Fixed Allocations and
is also is not available when you have elected an asset allocation program.
DO YOU OFFER ANY AUTOMATIC REBALANCING PROGRAMS?
Yes. During the accumulation period, we offer automatic rebalancing among the
variable investment options you choose. You can choose to have your Account
Value rebalanced monthly, quarterly, semi-annually, or annually. On the
appropriate date, the variable investment options you chose are rebalanced to
the allocation percentages you requested. With automatic rebalancing, we
transfer the appropriate amount from the "overweighted" Sub-accounts to the
"underweighted" Sub-accounts to return your allocations to the percentages you
request. For example, over time the performance of the variable investment
options will differ, causing your percentage allocations to shift. Any transfer
to or from any variable investment option that is not part of your automatic
rebalancing program, will be made; however, that variable investment option will
not become part of your rebalancing program unless we receive instructions from
you indicating that you would like such option to become part of the program.
There is no minimum Account Value required to enroll in automatic rebalancing.
All rebalancing transfers as part of an automatic rebalancing program are not
included when counting the number of transfers each year toward the maximum
number of free transfers. We do not deduct a charge for participating in an
automatic rebalancing program. Participation in the Automatic Rebalancing
program may be restricted if you are enrolled in certain other optional
programs.
ARE ANY ASSET ALLOCATION PROGRAMS AVAILABLE?
Yes. Certain "static asset allocation programs" are available for use with the
Annuity. These programs are considered static because once you have selected a
model portfolio, the Sub-accounts and the percentage of contract value allocated
to each sub-account cannot be changed without your consent. The programs are
available at no additional charge. Under these programs, the Sub-account for
each asset class in each model portfolio is designated for you. Under the
programs, the values in the Sub-accounts will be rebalanced periodically back to
the indicated percentages for the applicable asset class within the model
portfolio that you have selected. For more information on the asset allocation
programs, see the Appendix entitled "Additional Information on the Asset
Allocation Programs".
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Asset allocation is a sophisticated method of diversifica- tion, which
allocates assets among asset classes in order to manage investment risk and
enhance returns over the long term. However, asset allocation does not guarantee
a profit or protect against a loss. NO PERSONALIZED INVESTMENT ADVICE IS
PROVIDED IN CONNECTION WITH THE ASSET ALLOCATION PROGRAMS AND YOU SHOULD NOT
RELY ON THESE PROGRAMS AS PROVIDING INDIVIDUALIZED INVESTMENT RECOMMENDATIONS TO
YOU. THE ASSET ALLOCATION PROGRAMS DO NOT GUARANTEE BETTER INVESTMENT RESULTS.
WE RESERVE THE RIGHT TO TERMINATE OR CHANGE THE ASSET ALLOCATION PROGRAMS AT ANY
TIME. YOU SHOULD CONSULT WITH YOUR INVESTMENT PROFESSIONAL BEFORE ELECTING ANY
ASSET ALLOCATION PROGRAM.
DO YOU OFFER PROGRAMS DESIGNED TO GUARANTEE A "RETURN OF PREMIUM" AT A FUTURE
DATE?
Yes. We offer two different programs for investors who wish to invest in the
variable investment options but also wish to protect their principal, as of a
specific date in the future. They are the Balanced Investment Program and the
Guaranteed Return Option Plus(SM). (The Guaranteed Return Option Plus (GRO
Plus(SM) is not available in all states. In some states where GRO Plus is not
available we offer the Guaranteed Return Option (GRO).) Both the Balanced
Investment Program and GRO Plus allow you to allocate a portion of your Account
Value to the available variable investment options while ensuring that your
Account Value will at least equal your contributions adjusted for withdrawals
and transfers on a specified date. Under GRO Plus, Account Value is allocated to
and maintained in Fixed Allocations to the extent we, in our sole discretion,
deem it is necessary to support our guarantee under the program. This differs
from the Balanced Investment Program where a set amount is allocated to a Fixed
Allocation regardless of the performance of the underlying Sub-accounts or the
interest rate environment after the amount is allocated to a Fixed Allocation.
Generally, more of your Account Value will be allocated to the variable
investment options under the GRO Plus program than under the Balanced Investment
Program (although in periods of poor market performance, low interest rates
and/or as the option progresses to its maturity date, this may not be the case).
You may not want to use either of these programs if you expect to begin taking
annuity payments before the program would be completed. In addition, as with
most return of premium programs, amounts that are available to allocate to the
variable investment options may be substantially less than they would be if you
did not elect a return of premium program. This means that, if invest ment
experience in the variable investment options were positive, your Account Value
would grow at a slower rate than if you did not elect a return of premium
program and allocated all of your Account Value to the variable investment
options.
BALANCED INVESTMENT PROGRAM
We offer a balanced investment program where a portion of your Account Value is
allocated to a Fixed Allocation and the remaining Account Value is allocated to
the variable investment options that you select. When you enroll in the
Balanced Investment Program, you choose the duration that you wish the program
to last. This determines the duration of the Guarantee Period for the Fixed
Allocation. Based on the fixed rate for the Guarantee Period chosen, we
calculate the portion of your Account Value that must be allocated to the Fixed
Allocation to grow to a specific "principal amount" (such as your initial
Purchase Payment). We determine the amount based on the rates then in effect
for the Guarantee Period you choose. If you continue the program until the end
of the Guarantee Period and make no withdrawals or transfers, at the end of the
Guarantee Period, the Fixed Allocation will have grown to equal the "principal
amount". Withdrawals or transfers from the Fixed Allocation before the end of
the Guarantee Period will terminate the program and may be subject to a Market
Value Adjustment. You can transfer the Account Value that is not allocated to
the Fixed Allocation between any of the Sub-accounts available under the
Annuity. Account Value you allocate to the variable investment options is
subject to market fluctuations and may increase or decrease in value. We do not
deduct a charge for participating in the Balanced Investment Program.
Example
Assume you invest $100,000. You choose a 10-year program and allocate a
portion of your Account Value to a Fixed Allocation with a 10-year
Guarantee Period. The rate for the 10-year Guarantee Period is 2.50%*.
Based on the fixed interest rate for the Guarantee Period chosen, the
factor is 0.781198 for determining how much of your Account Value will be
allocated to the Fixed Allocation. That means that $78,120 will be
allocated to the Fixed Allocation and the remaining Account Value
($21,880) will be allocated to the variable investment options. Assuming
that you do not make any withdrawals or transfers from the Fixed
Allocation, it will grow to $100,000 at the end of the Guarantee Period.
Of
* The rate in this example is hypothetical and may not reflect the current rate
for Guarantee Periods of this duration.
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Managing Your Account Value continued
course we cannot predict the value of the remaining Account Value that was
allocated to the variable investment options.
The GUARANTEED RETURN OPTION PLUS (GRO PLUS) guarantees that, after a
seven-year period following commencement of the program ("maturity date") and on
each anniversary of the maturity date thereafter, your Account Value will not be
less than the Account Value on the effective date of the program. The program
also offers you the option to elect a second, enhanced guarantee amount at a
higher Account Value subject to a separate maturity period (and its
anniversaries). The GRO Plus program may be appropriate if you wish to protect a
principal amount (called the "Protected Principal Value") against market
downturns as of a specific date in the future, but also wish to exercise control
of your available Account Value among the variable investment options to
participate in market experience. Under the GRO Plus program, you give us the
right to allocate amounts to Fixed Allocations as needed to support the
guarantees provided. The available Account Value is the amount not allocated to
the Fixed Allocations to support the guarantees provided. There is a fee
associated with this program. See "Living Benefit Programs," later in this
Prospectus, for more information about this program.
MAY I GIVE MY INVESTMENT PROFESSIONAL PERMISSION TO MANAGE MY ACCOUNT VALUE?
Yes. Your Investment Professional may direct the allocation of your Account
Value and request financial transactions between investment options while you
are living, subject to our rules and unless you tell us otherwise. IF YOUR
INVESTMENT PROFESSIONAL HAS THIS AUTHORITY, WE DEEM THAT ALL TRANSACTIONS THAT
ARE DIRECTED BY YOUR INVESTMENT PROFESSIONAL WITH RESPECT TO YOUR ANNUITY HAVE
BEEN AUTHORIZED BY YOU. You must contact us immediately if and when you revoke
such authority. We will not be responsible for acting on instructions from your
Investment Professional until we receive notification of the revocation of such
person's authority. We may also suspend, cancel or limit these privileges at
any time. We will notify you if we do.
MAY I AUTHORIZE MY THIRD PARTY INVESTMENT ADVISOR TO MANAGE MY ACCOUNT?
Yes. You may engage your own investment advisor to manage your account. These
investment advisors may be firms or persons who also are appointed by us, or
whose affiliated broker-dealers are appointed by us, as authorized sellers of
the Annuity. EVEN IF THIS IS THE CASE, HOWEVER, PLEASE NOTE THAT THE INVESTMENT
ADVISOR YOU ENGAGE TO PROVIDE ADVICE AND/OR MAKE TRANSFERS FOR YOU, IS NOT
ACTING ON OUR BEHALF, BUT RATHER IS ACTING ON YOUR BEHALF. We do not offer
advice about how to allocate your Account Value under any circumstance. As
such, we are not responsible for any recommendations such investment advisors
make, any investment models or asset allocation programs they choose to follow
or any specific transfers they make on your behalf.
Any fee that is charged by your investment advisor is in addition to the
fees and expenses that apply under your Annuity. If you authorize your
investment advisor to withdraw amounts from your Annuity (to the extent
permitted) to pay for the investment advisor's fee, as with any other withdrawal
from your Annuity, you may incur adverse tax consequences, a CDSC and/or a
market value adjustment. Withdrawals to pay your investment advisor generally
will also reduce the level of various living and death benefit guarantees
provided (e.g. the withdrawals will reduce proportionately the Annuity's
guaranteed minimum death benefit.)
WE ARE NOT A PARTY TO THE AGREEMENT YOU HAVE WITH YOUR INVESTMENT ADVISOR AND DO
NOT VERIFY THAT AMOUNTS WITHDRAWN FROM YOUR ANNUITY, INCLUDING AMOUNTS WITHDRAWN
TO PAY FOR THE INVESTMENT ADVISOR'S FEE, ARE WITHIN THE TERMS OF YOUR AGREEMENT
WITH YOUR INVESTMENT ADVISOR. You will, however, receive confirmations of
transactions that affect your Annuity. If your investment advisor has also acted
as your Investment Professional with respect to the sale of your Annuity, he or
she may be receiving compensation for services provided both as an Investment
Professional and investment advisor. Alternatively, the investment advisor may
compensate the Investment Professional from whom you purchased your Annuity for
the referral that led you to enter into your investment advisory relationship
with the investment advisor. If you are interested in the details about the
compensation that your investment advisor and/or your Investment Professional
receive in connection with your Annuity, you should ask them for more details.
We or an affiliate of ours may provide administrative support to licensed,
registered investment Professionals or Investment advisors who you authorize to
make financial transactions on your behalf. We may require Investment
Professionals or investment advisors, who are authorized by multiple contract
owners to make financial transactions, to enter into an administrative agreement
with American Skandia as a condition of our accepting transactions on your
behalf. The administrative agreement may impose limitations on the Investment
Professional's or investment advisor's ability to request financial
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
transactions on your behalf. These limitations are intended to minimize the
detrimental impact of an investment professional who is in a position to
transfer large amounts of money for multiple clients in a particular Portfolio
or type of portfolio or to comply with specific restrictions or limitations
imposed by a Portfolio(s) of American Skandia. Contracts managed by your
investment professional also are subject to the restrictions on transfers
between investment options that are discussed in the section entitled "ARE THERE
RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?" Since transfer
activity under contracts managed by an investment professional or third party
investment adviser may result in unfavorable consequences to all contract owners
invested in the affected options we reserve the right to limit the investment
options available to a particular Owner whose contract is managed by the advisor
or impose other transfer restrictions we deem necessary. The administrative
agreement may limit the available investment options, require advance notice of
large transactions, or impose other trading limitations on your investment
professional. Your investment professional will be informed of all such
restrictions on an ongoing basis. We may also require that your investment
professional transmit all financial transactions using the electronic trading
functionality available through our Internet website
(www.americanskandia.prudential.com). LIMITATIONS THAT WE MAY IMPOSE ON YOUR
INVESTMENT PROFESSIONAL OR INVESTMENT ADVISOR UNDER THE TERMS OF THE
ADMINISTRATIVE AGREEMENT DO NOT APPLY TO FINANCIAL TRANSACTIONS REQUESTED BY AN
OWNER ON THEIR OWN BEHALF, EXCEPT AS OTHERWISE DESCRIBED IN THIS PROSPECTUS.
HOW DO THE FIXED ALLOCATIONS WORK?
We credit the fixed interest rate to the Fixed Allocation throughout a set
period of time called a "Guarantee Period." Fixed Allocations currently are
offered with Guarantee Periods from 1 to 10 years. We may make Fixed Allocations
of different durations available in the future, including Fixed Allocations
offered exclusively for use with certain optional investment programs. Fixed
Allocations may not be available in all states and may not always be available
for all Guarantee Periods depending on market factors and other considerations.
The interest rate credited to a Fixed Allocation is the rate in effect
when the Guarantee Period begins and does not change during the Guarantee
Period. The rates are an effective annual rate of interest. We determine the
interest rates for the various Guarantee Periods. At the time that we confirm
your Fixed Allocation, we will advise you of the interest rate in effect and the
date your Fixed Allocation matures. We may change the rates we credit new Fixed
Allocations at any time. Any change in interest rate does not affect Fixed
Allocations that were in effect before the date of the change. To inquire as to
the current rates for Fixed Allocations, please call 1-800-752-6342.
A Guarantee Period for a Fixed Allocation begins:
- - when all or part of a net Purchase Payment is allocated to that particular
Guarantee Period;
- - upon transfer of any of your Account Value to a Fixed Allocation for that
particular Guarantee Period; or
- - when you "renew" a Fixed Allocation by electing a new Guarantee Period.
To the extent permitted by law, we may establish different interest rates
for Fixed Allocations offered to a class of Owners who choose to participate in
various optional investment programs we make available. This may include, but is
not limited to, Owners who elect to use Fixed Allocations under a dollar cost
averaging program (see "Do You Offer Dollar Cost Averaging?") or a balanced
investment program (see "Do you offer programs designed to guarantee a "Return
of Premium" at a future date?"). The interest rate credited to Fixed Allocations
offered to this class of purchasers may be different than those offered to other
purchasers who choose the same Guarantee Period but who do not participate in an
optional investment program. Any such program is at our sole discretion.
AMERICAN SKANDIA MAY OFFER FIXED ALLOCATIONS WITH GUARANTEE PERIODS OF 3 MONTHS
OR 6 MONTHS EXCLUSIVELY FOR USE AS A SHORT-TERM FIXED ALLOCATION ("SHORT-TERM
FIXED ALLOCATIONS"). SHORT-TERM FIXED ALLOCATIONS MAY ONLY BE ESTABLISHED WITH
YOUR INITIAL PURCHASE PAYMENT OR ADDITIONAL PURCHASE PAYMENTS. YOU MAY NOT
TRANSFER EXISTING ACCOUNT VALUE TO A SHORT-TERM FIXED ALLOCATION. WE RESERVE THE
RIGHT TO TERMINATE OFFERING THESE SPECIAL PURPOSE FIXED ALLOCATIONS AT ANY TIME.
On the Maturity Date of the Short-term Fixed Allocation, the Account Value
will be transfered to the Sub-account(s) you choose at the inception of the
program. If no instructions are provided, such Account Value will be transfered
to the AST Money Market Sub-account. Short-term Fixed Allocations may not be
renewed on the Maturity Date. If you surrender the
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Managing Your Account Value continued
Annuity or transfer any Account Value from the Short-term Fixed Allocation to
any other investment option before the end of the Guarantee Period, a Market
Value Adjustment will apply.
HOW DO YOU DETERMINE RATES FOR FIXED ALLOCATIONS?
We do not have a specific formula for determining the fixed interest rates for
Fixed Allocations. Generally the interest rates we offer for Fixed Allocations
will reflect the investment returns available on the types of investments we
make to support our fixed rate guarantees. These investment types may include
cash, debt securities guaranteed by the United States government and its
agencies and instrumentalities, money market instruments, corporate debt
obligations of different durations, private placements, asset-backed obligations
and municipal bonds. In determining rates we also consider factors such as the
length of the Guarantee Period for the Fixed Allocation, regulatory and tax
requirements, liquidity of the markets for the type of investments we make,
commissions, administrative and investment expenses, our insurance risks in
relation to the Fixed Allocations, general economic trends and competition. Some
of these considerations are similar to those we consider in determining the
Insurance Charge that we deduct from Account Value allocated to the
Sub-accounts.
We will credit interest on a new Fixed Allocation in an existing Annuity
at a rate not less than the rate we are then crediting to Fixed Allocations for
the same Guarantee Period selected by new Annuity purchasers in the same class.
The interest rate we credit for a Fixed Allocation is subject to a
minimum. Please refer to the Statement of Additional Information. In certain
states the interest rate may be subject to a minimum under state law or
regulation.
HOW DOES THE MARKET VALUE ADJUSTMENT WORK?
If you transfer or withdraw Account Value from a Fixed Allocation more than 30
days before the end of its Guarantee Period, we will adjust the value of your
investment based on a formula, called a "Market Value Adjustment" or "MVA". The
amount of any Market Value Adjustment can be either positive or negative,
depending on the movement of a combination of Strip Yields on Strips and an
Option-adjusted Spread (each as defined below) between the time that you
purchase the Fixed Allocation and the time you make a transfer or withdrawal.
The Market Value Adjustment formula compares the combination of Strip Yields for
Strips and the Option-adjusted Spreads as of the date the Guarantee Period began
with the combination of Strip Yields for Strips and the Option-adjusted Spreads
as of the date the MVA is being calculated. In certain states the amount of any
Market Value Adjustment may be limited under state law or regulation. If your
Annuity is governed by the laws of that state, any Market Value Adjustment that
applies will be subject to our rules for complying with such law or regulation.
o "Strips" are a form of security where ownership of the interest portion of
United States Treasury securities are separated from ownership of the
underlying principal amount or corpus.
o "Strip Yields" are the yields payable on coupon Strips of United States
Treasury securities.
- - "Option-adjusted Spread" is the difference between the yields on corporate
debt securities (adjusted to disregard options on such securities) and
government debt securities of comparable duration. We currently use the
Merrill Lynch 1 to 10 year Investment Grade Corporate Bond Index of
Option-adjusted Spreads.
MVA FORMULA
The MVA formula is applied separately to each Fixed Allocation to determine the
Account Value of the Fixed Allocation on a particular date. The formula is as
follows:
[(1+I) / (1+J+0.0010)]N/365
where:
I is the Strip Yield as of the start date of the Guarantee Period for
coupon Strips maturing at the end of the applicable Guarantee Period plus
the Option-adjusted Spread. If there are no Strips maturing at that time,
we will 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 being applied for
coupon Strips maturing at the end of the applicable Guarantee Period plus
the Option-adjusted Spread. If there are no Strips maturing at that time,
we will 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 the original Guarantee Period.
If you surrender your Annuity under the right to cancel provision, the MVA
formula is
[(1 + I)/(1 + J)]N/365.
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
MVA Examples
The following hypothetical examples show the effect of the MVA in determining
Account Value. Assume the following:
- - You allocate $50,000 into a Fixed Allocation (we refer to this as the
"Allocation Date" in these examples) with a Guarantee Period of 5 years
(we refer to this as the "Maturity Date" in these examples).
- - The Strip Yields for coupon Strips beginning on Allocation Date and
maturing on Maturity Date plus the Option-adjusted Spread is 5.50% (I =
5.50%).
- - You make no withdrawals or transfers until you decide to withdraw the
entire Fixed Allocation after exactly three (3) years, at which point 730
days remain before the Maturity Date (N = 730).
Example of Positive MVA
Assume that at the time you request the withdrawal, the Strip Yields for Strips
maturing on the Maturity Date plus the Option-adjusted Spread is 4.00% (J =
4.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0010)]N/365 =
[1.055/1.041]2 = 1.027078
Interim Value = $57,881.25
Account Value after MVA = Interim Value x MVA
Factor = $59,448.56
EXAMPLE OF NEGATIVE MVA
Assume that at the time you request the withdrawal, the Strip Yields for Strips
maturing on the Maturity Date plus the Option-adjusted Spread is 7.00% (J =
7.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0010)]N/365 =
[1.055/1.071)]2 = 0.970345
Interim Value = $57,881.25
Account Value after MVA = Interim Value x MVA
Factor = $56,164.78.
WHAT HAPPENS WHEN MY GUARANTEE PERIOD MATURES?
The "Maturity Date" for a Fixed Allocation is the last day of the Guarantee
Period. Before the Maturity Date, you may choose to renew the Fixed Allocation
for a new Guarantee Period of the same or different length or you may transfer
all or part of that Fixed Allocation's Account Value to another Fixed Allocation
or to one or more Sub-accounts. We will not charge a MVA if you choose to renew
a Fixed Allocation on its Maturity Date or transfer the Account Value to one or
more variable investment options. We will notify you before the end of the
Guarantee Period about the fixed interest rates that we are currently crediting
to all Fixed Allocations that are being offered. The rates being credited to
Fixed Allocations may change before the Maturity Date.
IF YOU DO NOT SPECIFY HOW YOU WANT A FIXED ALLOCATION TO BE ALLOCATED ON
ITS MATURITY DATE, WE WILL THEN TRANSFER THE ACCOUNT VALUE OF THE FIXED
ALLOCATION TO THE AST MONEY MARKET SUB-ACCOUNT. YOU CAN THEN ELECT TO ALLOCATE
THE ACCOUNT VALUE TO ANY OF THE SUB-ACCOUNTS OR TO A NEW FIXED ALLOCATION.
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Access To Account Value
WHAT TYPES OF DISTRIBUTIONS ARE AVAILABLE TO ME?
During the accumulation period you can access your Account Value through partial
withdrawals, Systematic Withdrawals, and where required for tax purposes,
Minimum Distributions. You can also surrender your Annuity at any time. We may
deduct a portion of the Account Value being withdrawn or surrendered as a CDSC.
The CDSC will be assessed on the amount of Purchase Payments, not on the Account
Value at the time of the withdrawal or surrender. If you surrender your Annuity,
in addition to any CDSC, we may deduct the Annual Maintenance Fee, any Tax
Charge that applies and the charge for any optional benefits. We may also apply
a Market Value Adjustment to any Fixed Allocations being withdrawn or
surrendered. Certain amounts may be available to you each Annuity Year that are
not subject to a CDSC. These are called "Free Withdrawals." In addition, under
certain circumstances, we may waive the CDSC for surrenders made for qualified
medical reasons or for withdrawals made to satisfy Minimum Distribution
requirements. Unless you notify us differently, withdrawals are taken pro-rata
based on the Account Value in the investment options at the time we receive your
withdrawal request. Each of these types of distributions is described more fully
below.
ARE THERE TAX IMPLICATIONS FOR DISTRIBUTIONS?
(For more information, see "Tax Considerations.")
DURING THE ACCUMULATION PERIOD
A distribution during the accumulation period is deemed to come first from any
"gain" in your Annuity and second as a return of your "tax basis", if any.
Distributions from your Annuity are generally subject to ordinary income
taxation on the amount of any investment gain unless the distribution qualifies
as a non-taxable exchange or transfer. If you take a distribution prior to the
taxpayer's age 59 1/2, you may be subject to a 10% penalty in addition to
ordinary income taxes on any gain. You may wish to consult a professional tax
advisor for advice before requesting a distribution.
DURING THE ANNUITIZATION PERIOD
During the annuitization period, a portion of each annuity payment is taxed as
ordinary income at the tax rate you are subject to at the time of the payment.
The Code and regulations have "exclusionary rules" that we use to determine what
portion of each annuity payment should be treated as a return of any tax basis
you have in the Annuity. Once the tax basis in the Annuity has been distributed,
the remaining annuity payments are taxable as ordinary income. The tax basis in
the Annuity may be based on the tax-basis from a prior contract in the case of a
1035 exchange or other qualifying transfer.
CAN I WITHDRAW A PORTION OF MY ANNUITY?
Yes, you can make a withdrawal during the accumulation period.
- - To meet liquidity needs, you can withdraw a limited amount from your
Annuity during each of Annuity Years 1-8 without a CDSC being applied. We
call this the "Free Withdrawal" amount. The Free Withdrawal amount is not
available if you choose to surrender your Annuity. Amounts withdrawn as a
Free Withdrawal do not reduce the amount of CDSC that may apply upon a
subsequent withdrawal or surrender of the Annuity. The minimum Free
Withdrawal you may request is $100.
- - You can also make withdrawals in excess of the Free Withdrawal amount. The
maximum amount that you may withdraw will depend on the Annuity's
Surrender Value as of the date we process the withdrawal request. After
any partial withdrawal, your Annuity must have a Surrender Value of at
least $1,000, or we may treat the partial withdrawal request as a request
to fully surrender your Annuity. The minimum partial withdrawal you may
request is $100.
When we determine if a CDSC applies to partial withdrawals and Systematic
Withdrawals, we will first determine what, if any, amounts qualify as a Free
Withdrawal. Those amounts are not subject to the CDSC. Partial withdrawals or
Systematic Withdrawals of amounts greater than the maximum Free Withdrawal
amount will be subject to a CDSC.
You may request a withdrawal for an exact dollar amount after deduction of
any CDSC that applies (called a "net withdrawal") or request a gross withdrawal
from which we will deduct any CDSC that applies, resulting in less money being
payable to you than the amount you requested. If you request a net withdrawal,
the amount deducted from your Account Value to pay the CDSC may also be subject
to a CDSC.
Partial withdrawals may also be available following annuitization but only
if you choose certain annuity payment options.
To request the forms necessary to make a withdrawal from your Annuity,
call 1-800-752-6342 or visit our Internet Website at
www.americanskandia.prudential.com.
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
HOW MUCH CAN I WITHDRAW AS A FREE WITHDRAWAL?
ANNUITY YEARS 1-8
The maximum Free Withdrawal amount during each of Annuity Years 1 through 8
(when a CDSC would otherwise apply to a partial withdrawal or surrender of your
initial Purchase Payments) is 10% of all Purchase Payments. We may apply a
Market Value Adjustment to any Fixed Allocations. Withdrawals of amounts greater
than the maximum Free Withdrawal amount are treated as a withdrawal of Purchase
Payments and will be assessed a CDSC during Annuity Years 1 through 8. If,
during Annuity Years 1 through 8, all Purchase Payments withdrawn are subject to
a CDSC, then any subsequent withdrawals will be withdrawn from any gain in the
Annuity. If you do not make a Free Withdrawal during an Annuity Year, you are
not allowed to carry over the Free Withdrawal amount to the next Annuity Year.
ANNUITY YEARS 9+
After Annuity Year 8, you can surrender your Annuity or make a partial
withdrawal without a CDSC being deducted from the amount being withdrawn.
NOTE: Amounts that you have withdrawn as a Free Withdrawal will not reduce
the amount of any CDSC that we deduct if, during the first eight (8) Annuity
Years, you make a partial withdrawal or choose to surrender the Annuity.
EXAMPLES
1. Assume you make an initial Purchase Payment of $10,000 and make no
additional Purchase Payments. The maximum Free Withdrawal amount during
each of the first eight Annuity Years would be 10% of $10,000, or $1,000.
2. Assume you make an initial Purchase Payment of $10,000 and make an
additional Purchase Payment of $5,000 in Annuity Year 6. The maximum Free
Withdrawal amount during Annuity Years 7 and 8 would be 10% of $15,000, or
$1,500. Beginning in Annuity Year 9 and thereafter, you can surrender your
Annuity or make a partial withdrawal without a CDSC being deducted from
the amount being withdrawn.
3. Assume you make an initial Purchase Payment of $10,000 and take a Free
Withdrawal of $500 in Annuity Year 6 and $1,000 in Annuity Year 7. If you
surrender your Annuity in Annuity Year 8, the CDSC will be assessed
against the initial Purchase Payment amount ($10,000), not the amount of
Purchase Payments reduced by the amounts that were withdrawn under the
Free Withdrawal provision.
IS THERE A CHARGE FOR A PARTIAL WITHDRAWAL?
A CDSC may be assessed against a partial withdrawal during the first eight (8)
Annuity Years. Whether a CDSC applies and the amount to be charged depends on
whether the partial withdrawal exceeds any Free Withdrawal amount and, if so,
the number of years that have elapsed since the Issue Date of the Annuity.
1. If you request a partial withdrawal, we determine if the amount you
requested is available as a Free Withdrawal (in which case it would not be
subject to a CDSC);
2. If the amount requested exceeds the available Free Withdrawal amount, we
determine if a CDSC will apply to the partial withdrawal based on the
number of years that have elapsed since the Annuity was issued. The
maximum Free Withdrawal amount during each of Annuity Years 1 through 8 is
10% of all Purchase Payments. Withdrawals of amounts greater than the
maximum Free Withdrawal amount are treated as a withdrawal of Purchase
Payments and will be assessed a CDSC. If, during Annuity Years 1 through
8, all Purchase Payments are withdrawn subject to a CDSC, then any
subsequent withdrawals will be withdrawn from any gain in the Annuity.
CAN I MAKE PERIODIC WITHDRAWALS FROM THE ANNUITY DURING THE ACCUMULATION PERIOD?
Yes. We call these "Systematic Withdrawals." You can receive Systematic
Withdrawals of earnings only, principal plus earnings or a flat dollar amount.
Systematic Withdrawals during the first eight (8) Annuity Years may be subject
to a CDSC. We will determine whether a CDSC applies and the amount in the same
way as we would for a partial withdrawal.
Systematic Withdrawals can be made from Account Value allocated to the
variable investment options or Fixed Allocations. Generally, Systematic
Withdrawals from Fixed Allocations are limited to earnings accrued after the
program of Systematic Withdrawals begins, or payments of fixed dollar amounts
that do not exceed such earnings. Systematic Withdrawals are available on a
monthly, quarterly, semi-annual or annual basis. The Surrender Value of your
Annuity must be at least $20,000 before we will allow you to begin a program of
Systematic Withdrawals.
The minimum amount for each Systematic Withdrawal is $100. If any
scheduled Systematic Withdrawal is for less than $100 (which may occur under a
program that provides payment of an amount equal to the earnings in the Annuity
for the period requested), we may postpone the withdrawal and add
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Access To Account Value continued
the expected amount to the amount that is to be withdrawn on the next scheduled
Systematic Withdrawal.
DO YOU OFFER A PROGRAM FOR WITHDRAWALS UNDER SECTION 72(t) OF THE INTERNAL
REVENUE CODE?
Yes. If your Annuity is used as a funding vehicle for certain retirement plans
that receive special tax treatment under Sections 401, 403(b) or 408 of the
Code, Section 72(t) of the Code may provide an exception to the 10% penalty tax
on distributions made prior to age 59 1/2 if you elect to receive distributions
as a series of "substantially equal periodic payments". Distributions received
under this provision in any Annuity Year that exceed the maximum amount
available as a free withdrawal will be subject to a CDSC. We may apply a Market
Value Adjustment to any Fixed Allocations. To request a program that complies
with Section 72(t), you must provide us with certain required information in
writing on a form acceptable to us. We may require advance notice to allow us to
calculate the amount of 72(t) withdrawals. The Surrender Value of your Annuity
must be at least $20,000 before we will allow you to begin a program for
withdrawals under Section 72(t). The minimum amount for any such withdrawal is
$100.
You may also annuitize your contract and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments before age 59 1/2 that are not subject to the 10% penalty.
WHAT ARE MINIMUM DISTRIBUTIONS AND WHEN WOULD I NEED TO MAKE THEM?
(See "Tax Considerations" for a further discussion of Minimum Distributions.)
Minimum Distributions are a type of Systematic Withdrawal we allow to meet
distribution requirements under Sections 401, 403(b) or 408 of the Code. Under
the Code, you may be required to begin receiving periodic amounts from your
Annuity. In such case, we will allow you to make Systematic Withdrawals in
amounts that satisfy the minimum distribution rules under the Code. We do not
assess a CDSC on Minimum Distributions from your Annuity if you are required by
law to take such Minimum Distributions from your Annuity at the time it is
taken. However, a CDSC may be assessed on that portion of a Systematic
Withdrawal that is taken to satisfy the minimum distribution requirements in
relation to other savings or investment plans under other qualified retirement
plans not maintained with American Skandia.
The amount of the required Minimum Distribution for your particular
situation may depend on other annuities, savings or investments. We will only
calculate the amount of your required Minimum Distribution based on the value of
your Annuity. We require three (3) days advance written notice to calculate and
process the amount of your payments. You may elect to have Minimum Distributions
paid out monthly, quarterly, semi-annually or annually. The $100 minimum amount
that applies to Systematic Withdrawals applies to monthly minimum distributions
but does not apply to minimum distributions taken out on a quarterly,
semi-annual or annual basis.
You may also annuitize your contract and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments and satisfying the Minimum Distribution requirements under the Code.
CAN I SURRENDER MY ANNUITY FOR ITS VALUE?
Yes. During the accumulation period you can surrender your Annuity at any time.
Upon surrender, you will receive the Surrender Value. Upon surrender of your
Annuity, you will no longer have any rights under the Annuity.
For purposes of calculating the CDSC on surrender, the Purchase Payments
being withdrawn may be greater than your remaining Account Value or the amount
of your withdrawal request. This is most likely to occur if you have made prior
withdrawals under the Free Withdrawal provision or if your Account Value has
declined in value due to negative market performance. We may apply a Market
Value Adjustment to any Fixed Allocations.
Under certain annuity payment options, you may be allowed to surrender
your Annuity for its then current value.
To request the forms necessary to surrender your Annuity, call
1-800-752-6342 or visit our Internet Website at
www.americanskandia.prudential.com.
WHAT IS A MEDICALLY-RELATED SURRENDER AND HOW DO I QUALIFY?
Where permitted by law, you may request to surrender your Annuity prior to the
Annuity Date without application of any CDSC upon occurrence of a
medically-related "Contingency Event". We may apply a Market Value Adjustment
to any Fixed Allocations. The amount payable will be your Account Value.
This waiver of any applicable CDSC is subject to our rules, including but
not limited to the following:
- - The Annuitant must have been named or any change of Annuitant must have
been accepted by us, prior to the
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
"Contingency Event" described below in order to qualify for a
medically-related surrender.
- - the Annuitant must be alive as of the date we pay the proceeds of such
surrender request;
- - if the Owner is one or more natural persons, all such Owners must also be
alive at such time;
- - we must receive satisfactory proof of the Annuitant's confinement in a
Medical Care Facility or Fatal Illness in writing on a form satisfactory
to us; and
- - this benefit is not available if the total Purchase Payments received
exceed $500,000 for all annuities issued by us with this benefit where the
same person is named as Annuitant.
A "Contingency Event" occurs if the Annuitant is:
- - first confined in a "Medical Care Facility" while your Annuity is in force
and remains confined for at least 90 days in a row; or
- - first diagnosed as having a "Fatal Illness" while your Annuity is in
force.
The definitions of "Medical Care Facility" and "Fatal Illness," as well as
additional terms and conditions, are provided in your Annuity. Specific details
and definitions in relation to this benefit may differ in certain jurisdictions.
WHAT TYPES OF ANNUITY OPTIONS ARE AVAILABLE?
We currently make annuity options available that provide fixed annuity payments,
variable payments or adjustable payments. Fixed options provide the same amount
with each payment. Variable options generally provide a payment which may
increase or decrease depending on the investment performance of the
Sub-accounts. However, currently, we also make a variable payment option that
has a guarantee feature. Adjustable options provide a fixed payment that is
periodically adjusted based on current interest rates. WE DO NOT GUARANTEE TO
MAKE ANY ANNUITY PAYMENT OPTIONS AVAILABLE IN THE FUTURE OTHER THAN THOSE FIXED
ANNUITIZATION OPTIONS GUARANTEED IN YOUR ANNUITY. Please refer to the
"Guaranteed Minimum Income Benefit" and the "Lifetime Five Income Benefit" under
"Living Benefits" below for a description of annuity options that are available
when you elect these benefits. For additional information on annuity payment
options you may request a Statement of Additional Information.
When you purchase an Annuity, or at a later date, you may choose an
Annuity Date, an annuity option and the frequency of annuity payments. You may
change your choices before the Annuity Date under the terms of your contract. A
maximum Annuity Date may be required by law. The Annuity Date may depend on the
annuity option you choose. Certain annuity options may not be available
depending on the age of the Annuitant.
Certain of these annuity options may be available to Beneficiaries who
choose to receive the Death Benefit proceeds as a series of payments instead of
a lump sum payment.
OPTION 1
PAYMENTS FOR LIFE: Under this option, income is payable periodically until the
death of the "key life". The "key life" (as used in this section) is the person
or persons upon whose life annuity payments are based. No additional annuity
payments are made after the death of the key life. Since no minimum number of
payments is guaranteed, this option offers the largest amount of periodic
payments of the life contingent annuity options. It is possible that only one
payment will be payable if the death of the key life occurs before the date the
second payment was due, and no other payments nor death benefits would be
payable. This Option is currently available on a fixed or variable basis. Under
this option, you cannot make a partial or full surrender of the annuity.
OPTION 2
PAYMENTS BASED ON JOINT LIVES: Under this option, income is payable periodically
during the joint lifetime of two key lives, and thereafter during the remaining
lifetime of the survivor, ceasing with the last payment prior to the survivor's
death. No minimum number of payments is guaranteed under this option. It is
possible that only one payment will be payable if the death of all the key lives
occurs before the date the second payment was due, and no other payments or
death benefits would be payable. This Option is currently available on a fixed
or variable basis. Under this option, you cannot make a partial or full
surrender of the annuity.
OPTION 3
PAYMENTS FOR LIFE WITH A CERTAIN PERIOD: Under this option, income is payable
until the death of the key life. However, if the key life dies before the end of
the period selected (5, 10 or 15 years), the remaining payments are paid to the
Beneficiary until the end of such period. This Option is currently available on
a fixed or variable basis. If you elect to receive payments on a variable basis
under this option, you can request partial or full surrender of the annuity and
receive its then current cash value (if any) subject to our rules.
OPTION 4
FIXED PAYMENTS FOR A CERTAIN PERIOD: Under this option, income is payable
periodically for a specified number of years. If the payee dies before the end
of the specified number of
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Access To Account Value continued
years, the remaining payments are paid to the Beneficiary until the end of such
period. Note that under this option, payments are not based on any assumptions
of life expectancy. Therefore, that portion of the Insurance Charge assessed to
cover the risk that key lives outlive our expectations provides no benefit to an
Owner selecting this option. Under this option, you cannot make a partial or
full surrender of the annuity.
OPTION 5
VARIABLE PAYMENTS FOR LIFE WITH A CASH VALUE: Under this option, benefits are
payable periodically until the death of the key life. Benefits may increase or
decrease depending on the investment performance of the Sub-accounts. This
option has a cash value that also varies with the investment performance of the
Sub-account. The cash value provides a "cushion" from volatile investment
performance so that negative investment performance does not automatically
result in a decrease in the annuity payment each month, and positive investment
performance does not automatically result in an increase in the annuity payment
each month. The cushion generally "stabilizes" monthly annuity payments. Any
cash value remaining on the death of the key life is paid to the Beneficiary in
a lump sum or as periodic payments. Under this option, you can request partial
or full surrender of the Annuity and receive its then current cash value (if
any) subject to our rules.
OPTION 6
VARIABLE PAYMENTS FOR LIFE WITH A CASH VALUE AND GUARANTEE: Under this option,
benefits are payable as described in Option 5; except that, while the key life
is alive, the annuity payment will not be less than a guaranteed amount, which
generally is equal to the first annuity payment. WE CHARGE AN ADDITIONAL AMOUNT
FOR THIS GUARANTEE. Under this option, any cash value remaining on the death of
the key life is paid to the Beneficiary in a lump sum or as periodic payments.
Under this option, you can request partial or full surrender of the Annuity and
receive its then current cash value (if any) subject to our rules.
We may make additional annuity payment options available in the future.
HOW AND WHEN DO I CHOOSE THE ANNUITY PAYMENT OPTION?
Unless prohibited by law, we require that you elect either a life annuity or an
annuity with a certain period of at least 5 years if any CDSC would apply were
you to surrender your Annuity on the Annuity Date. Therefore, choosing an
Annuity Date within eight (8) years of the Issue Date of the Annuity may limit
the available annuity payment options. Certain annuity payment options may not
be available if your Annuity Date occurs during the period that a CDSC would
apply.
You have a right to choose your annuity start date. If you have not
provided us with your Annuity Date or annuity payment option in writing, then:
- - a default date for the Annuity Date will be the first day of the calendar
month following the later of the Annuitant's 85th birthday or the fifth
anniversary of our receipt of your request to purchase an Annuity; and
- - the annuity payments, where allowed by law, will be calculated on a fixed
basis under Option 3, Payments for Life with 10 years certain.
If you choose to defer the Annuity Date beyond the default date, the IRS
may not consider your Annuity to be an annuity under the tax law. If that should
occur, all gain in your Annuity at that time will become immediately taxable to
you. Further, each subsequent year's increase in Account Value would be taxable
in that year. By choosing to continue to defer after the default date, you will
assume the risk that your Annuity will not be considered an annuity for federal
income tax purposes.
HOW ARE ANNUITY PAYMENTS CALCULATED?
FIXED ANNUITY PAYMENTS (OPTIONS 1-4)
If you choose to receive fixed annuity payments, you will receive equal
fixed-dollar payments throughout the period you select. The amount of the fixed
payment will vary depending on the annuity payment option and payment frequency
you select. Generally, the first annuity payment is determined by multiplying
the Account Value, minus any state premium taxes that may apply, by the factor
determined from our table of annuity rates. The table of annuity rates differs
based on the type of annuity chosen and the frequency of payment selected. Our
rates will not be less than our guaranteed minimum rates. These guaranteed
minimum rates are derived from the a2000 Individual Annuity Mortality Table 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.
VARIABLE ANNUITY PAYMENTS
Generally, we offer three different types of variable annuity payment options.
The first annuity payment will be calculated based upon the assumed investment
return ("AIR"). You select the AIR before we start to make annuity payments. You
will not receive annuity payments until you choose an AIR. The remaining annuity
payments will fluctuate based on the performance of the
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Sub-accounts relative to the AIR, as well as other factors described below. The
greater the AIR, the greater the first annuity payment. A higher AIR may result
in smaller potential growth in the annuity payments. A lower AIR results in a
lower initial annuity payment. Within payment options 1-3, if the Sub-accounts
you choose perform exactly the same as the AIR, then subsequent annuity payments
will be the same as the first annuity payment. If the Sub-accounts you choose
perform better than the AIR, then subsequent annuity payments will be higher
than the first annuity payment. If the Sub-accounts you choose perform worse
than the AIR, then subsequent annuity payments will be lower than the first.
Within payment options 5 and 6, the cash value for the Annuitant (while alive)
and a variable period of time during which annuity payments will be made whether
or not the Annuitant is still alive are adjusted based on the performance of the
Sub-accounts relative to the AIR; however, subsequent annuity payments do not
always increase or decrease based on the performance of the Sub-accounts
relative to the AIR.
- VARIABLE PAYMENTS (OPTIONS 1-3)
We calculate each annuity payment amount by multiplying the number
of units scheduled to be redeemed under a schedule of units for each
Sub-account by the Unit Value of each Sub-account on the annuity
payment date. We determine the schedule of units based on your
Account Value (minus any premium tax that applies) at the time you
elect to begin receiving annuity payments. The schedule of units
will vary based on the annuity payment option selected, the length
of any certain period (if applicable), the Annuitant's age and
gender (if annuity payments are due for the life of the Annuitant)
and the Unit Value of the Sub-accounts you initially selected on the
Issue Date. The calculation is performed for each Sub-account, and
the sum of the Sub-account calculations equals the amount of your
annuity payment. Other than to fund annuity payments, the number of
units allocated to each Sub-account will not change unless you
transfer among the Sub-accounts or make a withdrawal (if allowed).
You can select one of three AIRs for these options: 3%, 5% or 7%.
- STABILIZED VARIABLE PAYMENTS (OPTION 5)
This option provides guaranteed payments for life, a cash value for
the Annuitant (while alive) and a variable period of time during
which annuity payments will be made whether or not the Annuitant is
still alive. We calculate the initial annuity payment amount by
multiplying the number of units scheduled to be redeemed under a
schedule of units by the Unit Values determined on the annuitization
date. The schedule of units is established for each Sub-account you
choose on the annuitization date based on the applicable benchmark
rate, meaning the AIR, and the annuity factors. The annuity factors
reflect our assumptions regarding the costs we expect to bear in
guaranteeing payments for the lives of the Annuitant and will depend
on the benchmark rate, the annuitant's attained age and gender
(where permitted). Unlike variable payments (described above) where
each payment can vary based on Sub-account performance, this payment
option cushions the immediate impact of Sub-account performance by
adjusting the length of the time during which annuity payments will
be made whether or not the Annuitant is alive while generally
maintaining a level annuity payment amount. Sub-account performance
that exceeds a benchmark rate will generally extend this time
period, while Sub-account performance that is less than a benchmark
rate will generally shorten the period. If the period reaches zero
and the Annuitant is still alive, Annuity Payments continue,
however, the annuity payment amount will vary depending on
Sub-account performance, similar to conventional variable payments.
The AIR for this option is 4%.
- STABILIZED VARIABLE PAYMENTS WITH A GUARANTEED MINIMUM (OPTION 6)
This option provides guaranteed payments for life in the same manner
as Stabilized Variable Payments (described above). In addition to
the stabilization feature, this option also guarantees that variable
annuity payments will not be less than the initial annuity payment
amount regardless of Sub-account performance. The AIR for this
option is 3%.
The variable annuity payment options are described in greater detail in a
separate prospectus which will be provided to you at the time you elect one of
the variable annuity payment options.
ADJUSTABLE ANNUITY PAYMENTS
We may make an adjustable annuity payment option available. Adjustable annuity
payments are calculated similarly to fixed annuity payments except that on every
fifth (5th) anniversary of receiving annuity payments, the annuity payment
amount is adjusted upward or downward depending on the rate we are currently
crediting to annuity payments. The adjustment in the annuity payment amount does
not affect the duration of remaining annuity payments, only the amount of each
payment.
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Living Benefit Programs
DO YOU OFFER PROGRAMS DESIGNED TO PROVIDE INVESTMENT PROTECTION FOR OWNERS WHILE
THEY ARE ALIVE?
American Skandia offers different optional benefits, for an additional charge,
that can provide investment protection for Owners while they are alive.
Notwithstanding the additional protection provided under the optional Living
Benefit Programs, the additional cost has the impact of reducing net
performance of the investment options. Each optional benefit offers a distinct
type of guarantee, regardless of the performance of variable investment
options, that may be appropriate for you depending on the manner in which you
intend to make use of your annuity while you are alive. Depending on which
optional benefit you choose, you can have substantial flexibility to invest in
variable investment options while:
- - protecting a principal amount from decreases in value as of specified
future dates due to investment performance;
- - taking withdrawals with a guarantee that you will be able to withdraw not
less than a principal amount over time; or
- - guaranteeing a minimum amount of growth will be applied to your principal,
if it is to be used as the basis for lifetime income payments beginning
after a waiting period.
Below is a brief summary of the "living benefits" that American Skandia
offers. Please refer to the benefit description for a complete description of
the terms, conditions and limitations of each optional benefit. You should
consult with your investment professional to determine if any of these optional
benefits may be appropriate for you based on your financial needs. There are
many factors to consider, but we note that among them you may want to evaluate
the tax implications of these different approaches to meeting your needs, both
between these benefits and in comparison to other potential solutions to your
needs (e.g., comparing the tax implications of the withdrawal benefit and
annuity payments).
I. The GUARANTEED RETURN OPTION PLUS(SM) (GRO PLUS(SM)) guarantees that,
after a seven-year period following commencement of the program ("maturity
date") and on each anniversary of the maturity date thereafter, your
Account Value will not be less than the Account Value on the effective
date of the program. The program also offers you the option to elect a
second, enhanced guarantee amount at a higher Account Value subject to a
separate maturity period (and its anniversaries). The GRO Plus(SM) program
may be appropriate if you wish to protect a principal amount (called the
"Protected Principal Value") against market downturns as of a specific
date in the future, but also wish to exercise control of your available
Account Value among the variable investment options to participate in
market experience. Under the GRO Plus(SM) program, you give us the right
to allocate amounts to Fixed Allocations as needed to support the
guarantees provided. The available Account Value that may be allocated
among your variable investment options are those amounts not allocated to
the Fixed Allocations to support the guarantees provided.
II. The GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) guarantees your ability
to make cumulative withdrawals over time equal to an initial principal
value (called the "Protected Value"), regardless of decreases in your
Account Value due to market losses. The GMWB program may be appropriate if
you intend to make periodic withdrawals from your Annuity and wish to
ensure that market performance will not affect your ability to receive
guaranteed minimum withdrawals. Taking income as withdrawals, rather than
annuity payments, may be less tax efficient for non-qualified uses of the
Annuity, but provides greater control over the timing and amount of
withdrawals during the accumulation period, as well as continuing the
Annuity's other benefits, such as the death benefit.
III. The GUARANTEED MINIMUM INCOME BENEFIT (GMIB) guarantees your ability,
after a minimum seven-year waiting period, to begin receiving income from
the Annuity in the form of annuity payments based on your total purchase
payments under the Annuity and an annual increase of 5% on such Purchase
Payments, adjusted for withdrawals, regardless of the impact of market
performance on your Account Value. The GMIB program may be appropriate if
you anticipate using your Annuity as a future source of periodic fixed
income payments for the remainder of your life and wish to ensure that the
basis upon which your income payments will be calculated will achieve at
least a minimum amount despite fluctuations in market performance.
IV. The LIFETIME FIVE INCOME BENEFIT guarantees your ability to withdraw
amounts equal to a percentage of a "Protected Withdrawal Value" regardless
of decreases in your Account Value due to market losses. The Lifetime Five
Benefit may be appropriate if you intend to make periodic withdrawals from
your Annuity and wish to ensure that market performance will not affect
your ability to receive guaranteed minimum withdrawals. Taking income as
withdrawals, rather than
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
annuity payments, may be less tax efficient for non-qualified uses of the
Annuity, but provides greater control over the timing and amount of
withdrawals during the accumulation period, as well as continuing the
Annuity's other benefits, such as the death benefit.
GUARANTEED RETURN OPTION Plus(SM) (GRO Plus(SM))
THE GUARANTEED RETURN OPTION PLUS DESCRIBED BELOW IS ONLY BEING OFFERED IN THOSE
JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL, AND WILL BE OFFERED
SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY APPROVAL IN THOSE
JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS
ONCE APPROVED. THE PROGRAM CAN BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF
THEIR ANNUITY, AND CAN BE ELECTED BY EXISTING ANNUITY OWNERS ON EITHER THE
ANNIVERSARY OF THE ISSUE DATE OF THEIR ANNUITY OR ON A DATE OTHER THAN THAT
ANNIVERSARY, AS DESCRIBED BELOW UNDER "ELECTION OF THE PROGRAM". THE GUARANTEED
RETURN OPTION PLUS IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION
PROGRAM (AND IT IS CURRENTLY ACTIVE), THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT
RIDER, THE GUARANTEED MINIMUM INCOME BENEFIT RIDER, THE LIFETIME FIVE INCOME
BENEFIT RIDER, THE HIGHEST DAILY VALUE DEATH BENEFIT, OR THE DOLLAR COST
AVERAGING PROGRAM IF IT INVOLVES TRANSFERS OUT OF THE FIXED ALLOCATIONS.
We offer a program that, after a seven-year period following commencement
of the program (we refer to the end of that period and any applicable subsequent
period as the "maturity date") and on each anniversary of the maturity date
thereafter while the program remains in effect, guarantees your Account Value
will not be less than your Account Value on the effective date of your program
(called the "Protected Principal Value"). The program also offers you the
opportunity to elect a second, enhanced guaranteed amount at a later date if
your Account Value has increased, while preserving the guaranteed amount
established on the effective date of your program. The enhanced guaranteed
amount (called the "Enhanced Protected Principal Value") guarantees that, after
a separate period following election of the enhanced guarantee and on each
anniversary thereafter while this enhanced guarantee amount remains in effect,
your Account Value will not be less than your Account Value on the effective
date of your election of the enhanced guarantee. The program monitors your
Account Value daily and, if necessary, systematically transfers amounts between
variable investment options you choose and Fixed Allocations used to support the
Protected Principal Value(s). The program may be appropriate if you wish to
protect a principal amount against market downturns as of a specific date in the
future, but also wish to invest in the variable investment options to
participate in market performance. There is an additional charge if you elect
the Guaranteed Return Option Plus program.
The guarantees provided by the program exist only on the applicable
maturity date(s) and on each anniversary of the maturity date(s) thereafter.
However, due to the ongoing monitoring of your Account Value and the transfer of
Account Value between the variable investment options and the Fixed Allocations
to support our future guarantees, the program may provide some protection from
significant market losses if you choose to surrender the Annuity or begin
receiving annuity payments prior to a maturity date. For this same reason, the
program may limit your ability to benefit from market increases while it is in
effect.
KEY FEATURE -- PROTECTED PRINCIPAL VALUE/ENHANCED PROTECTED PRINCIPAL VALUE
The Guaranteed Return Option Plus offers a base guarantee as well as the option
of electing an enhanced guarantee at a later date.
- - BASE GUARANTEE: Under the base guarantee, American Skandia guarantees that
on the maturity date and on each anniversary of the maturity date
thereafter that the program remains in effect, your Account Value will be
no less than the Protected Principal Value. On the maturity date and on
each anniversary after the maturity date that the program remains in
effect, if your Account Value is below the Protected Principal Value,
American Skandia will apply additional amounts to your Annuity from its
general account to increase your Account Value to be equal to the
Protected Principal Value.
- - ENHANCED GUARANTEE: On any anniversary following commencement of the
program, you can establish an enhanced guaranteed amount based on your
current Account Value. Under the enhanced guarantee, American Skandia
guarantees that at the end of a specified period following the election of
the enhanced guarantee (also referred to as its "maturity
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Living Benefit Programs continued
date"), and on each anniversary of the maturity date thereafter that the
enhanced guaranteed amount remains in effect, your Account Value will be
no less than the Enhanced Protected Principal Value. YOU CAN ELECT AN
ENHANCED GUARANTEE MORE THAN ONCE; HOWEVER, A SUBSEQUENT ELECTION
SUPERSEDES THE PRIOR ELECTION OF AN ENHANCED GUARANTEE. ELECTION OF AN
ENHANCED GUARANTEE DOES NOT IMPACT THE BASE GUARANTEE. IN ADDITION, YOU
MAY ELECT AN "AUTO STEP-UP" FEATURE THAT WILL AUTOMATICALLY CREATE AN
ENHANCED GUARANTEE (OR INCREASE YOUR ENHANCED GUARANTEE, IF PREVIOUSLY
ELECTED) ON EACH ANNIVERSARY OF THE PROGRAM (AND CREATE A NEW MATURITY
PERIOD FOR THE NEW ENHANCED GUARANTEE) IF THE ACCOUNT VALUE AS OF THAT
ANNIVERSARY EXCEEDS THE PROTECTED PRINCIPAL VALUE OR ENHANCED PROTECTED
PRINCIPAL VALUE BY 7% OR MORE. YOU MAY ALSO ELECT TO TERMINATE AN ENHANCED
GUARANTEE. IF YOU ELECT TO TERMINATE THE ENHANCED GUARANTEE, THE BASE
GUARANTEE WILL REMAIN IN EFFECT. If you have elected the enhanced
guarantee, on the guarantee's maturity date and on each anniversary of the
maturity date thereafter that the enhanced guarantee amount remains in
effect, if your Account Value is below the Enhanced Protected Principal
Value, American Skandia will apply additional amounts to your Annuity from
its general account to increase your Account Value to be equal to the
Enhanced Protected Principal Value.
Any amounts added to your Annuity to support our guarantees under the
program will be applied to any Fixed Allocations first and then to the
sub-accounts pro rata, based on your most recent allocation instructions in
accordance with the allocation mechanism we use under the program. We will
notify you of any amounts added to your Annuity under the program. If our
assumptions are correct and the operations relating to the administration of the
program work properly, we do not expect that we will need to add additional
amounts to the Annuity. The Protected Principal Value is referred to as the
"Base Guarantee" and the Enhanced Protected Principal Value is referred to as
the "Step-up Guarantee" in the rider we issue for this benefit.
WITHDRAWALS UNDER YOUR ANNUITY
Withdrawals from your Annuity, while the program is in effect, will reduce the
base guarantee under the program as well as any enhanced guarantee. Cumulative
annual withdrawals up to 5% of the Protected Principal Value as of the effective
date of the program (adjusted for any subsequent Purchase Payments) will reduce
the applicable guaranteed amount by the actual amount of the withdrawal
(referred to as the "dollar-for-dollar limit"). If the amount withdrawn is
greater than the dollar-for-dollar limit, the portion of the withdrawal equal to
the dollar-for-dollar limit will be treated as described above, and the portion
of the withdrawal in excess of the dollar-for-dollar limit will reduce the base
guarantee and the enhanced guarantee proportionally, according to the formula as
described in the rider for this benefit (see the examples of this calculation
below). Withdrawals other than Systematic Withdrawals will be taken pro-rata
from the variable investment options and any Fixed Allocations. Systematic
Withdrawals will be taken pro-rata from the variable investment options and any
Fixed Allocations up to growth attributable to the Fixed Allocations and
thereafter pro-rata solely from the variable investment options. Withdrawals
will be subject to all other provisions of the Annuity, including any Contingent
Deferred Sales Charge and Market Value Adjustment that would apply.
Charges for other optional benefits under the Annuity that are deducted as
an annual charge in arrears will not reduce the applicable guaranteed amount
under the Guaranteed Return Option Plus program, however, any partial
withdrawals in payment of charges for the Plus40TM Optional Life Insurance Rider
(not currently offered for sale) and any third party investment advisory service
will be treated as withdrawals and will reduce the applicable guaranteed amount.
The following examples of dollar-for-dollar and proportional reductions
assume that: 1.) the Issue Date and the effective date of the GRO Plus(SM)
program are October 13, 2004; 2.) an initial Purchase Payment of $250,000; 3.) a
base guarantee amount of $250,000; and 4.) a dollar-for-dollar limit of $12,500
(5% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 29, 2004 (in the first Annuity Year).
No prior withdrawals have been taken. As the amount withdrawn is less than the
Dollar-for-dollar Limit:
- - The base guarantee amount is reduced by the amount withdrawn (i.e., by
$10,000, from $250,000 to $240,000).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance
of the first Annuity Year is also reduced by the amount withdrawn (from
$12,500 to $2,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on December 18, 2004 (still within the
first Annuity Year). The Account Value immediately before the withdrawal is
$180,000. As the amount withdrawn exceeds the Remaining Limit of $2,500 from
Example 1:
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
- - the base guarantee amount is first reduced by the Remaining Limit (from
$240,000 to $237,500);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the Remaining Limit ($10,000 -
$2,500, or $7,500).
- B is the Account Value less the Remaining Limit ($180,000 - $2,500,
or $177,500).
The resulting base guarantee amount is: $237,500 x (1 - $7,500 /
$177,500), or $227,464.79.
- - The Remaining Limit is set to zero (0) for the balance of the first
Annuity Year.
EXAMPLE 3. RESET OF THE DOLLAR-FOR-DOLLAR LIMIT
A $10,000 withdrawal is made on December 19, 2005 (second Annuity Year). The
Remaining Limit has been reset to the dollar-for-dollar limit of $12,500. As the
amount withdrawn is less than the dollar-for-dollar limit:
- - The base guarantee amount is reduced by the amount withdrawn (i.e.,
reduced by $10,000, from $227,464.79 to $217,464.79).
- - The Remaining Limit for the balance of the second Annuity Year is also
reduced by the amount withdrawn (from $12,500 to $2,500).
KEY FEATURE -- ALLOCATION OF ACCOUNT VALUE
Account Value is transferred to and maintained in Fixed Allocations to the
extent we, in our sole discretion, deem it is necessary to support our
guarantee(s) under the program. We monitor fluctuations in your Account Value
each Valuation Day, as well as the prevailing interest rates on Fixed
Allocations, the remaining duration(s) until the applicable maturity date(s) and
the amount of Account Value allocated to Fixed Allocation(s) relative to a
"reallocation trigger", which determines whether Account Value must be
transferred to or from Fixed Allocation(s). While you are not notified when your
Account Value reaches a reallocation trigger, you will receive a confirmation
statement indicating the transfer of a portion of your Account Value either to
or from Fixed Allocation(s).
- - IF YOUR ACCOUNT VALUE IS GREATER THAN OR EQUAL TO THE REALLOCATION
TRIGGER, your Account Value in the variable investment options will remain
allocated according to your most recent instructions. If a portion of
Account Value was previously allocated to a Fixed Allocation to support
the applicable guaranteed amount, all or a portion of those amounts may be
transferred from the Fixed Allocation and re-allocated to the variable
investment options pro-rata according to your most recent allocation
instructions (including the model allocations under any asset allocation
program you may have elected). A Market Value Adjustment will apply when
we reallocate Account Value from a Fixed Allocation to the variable
investment options, which may result in a decrease or increase in your
Account Value.
- - IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER, a portion of
your Account Value in the variable investment options will be transferred
from your variable investment options pro rata according to your
allocations to a new Fixed Allocation(s) to support the applicable
guaranteed amount. The new Fixed Allocation(s) will have a Guarantee
Period equal to the time remaining until the applicable maturity date(s).
The Account Value allocated to the new Fixed Allocation(s) will be
credited with the fixed interest rate(s) then being credited to a new
Fixed Allocation(s) maturing on the applicable maturity date(s) (rounded
to the next highest yearly duration). The Account Value will remain
invested in each applicable Fixed Allocation until the applicable maturity
date unless, at an earlier date, your Account Value is greater than or
equal to the reallocation trigger and, therefore, amounts can be
transferred to the variable investment options while maintaining the
guaranteed protection under the program (as described above).
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Living Benefit Programs continued
IF A SIGNIFICANT AMOUNT OF YOUR ACCOUNT VALUE IS SYSTEMATICALLY TRANSFERRED TO
FIXED ALLOCATIONS TO SUPPORT THE PROTECTED PRINCIPAL VALUE AND/OR THE ENHANCED
PROTECTED PRINCIPAL VALUE DURING PERIODS OF MARKET DECLINES, LOW INTEREST RATES,
AND/OR AS THE PROGRAM NEARS ITS MATURITY DATE, LESS OF YOUR ACCOUNT VALUE MAY BE
AVAILABLE TO PARTICIPATE IN THE INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT
OPTIONS IF THERE IS A SUBSEQUENT MARKET RECOVERY. DURING PERIODS CLOSER TO THE
MATURITY DATE OF THE BASE GUARANTEE OR ANY ENHANCED GUARANTEE, OR ANY
ANNIVERSARY OF SUCH MATURITY DATE(S), A SIGNIFICANT PORTION OF YOUR ACCOUNT
VALUE MAY BE ALLOCATED TO FIXED ALLOCATIONS TO SUPPORT ANY APPLICABLE GUARANTEED
AMOUNT(S). IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER AND NEW
FIXED ALLOCATIONS MUST BE ESTABLISHED DURING PERIODS WHERE THE INTEREST RATE(S)
BEING CREDITED TO SUCH FIXED ALLOCATIONS IS LOW, A LARGER PORTION OF YOUR
ACCOUNT VALUE MAY NEED TO BE TRANSFERRED TO FIXED ALLOCATIONS TO SUPPORT THE
APPLICABLE GUARANTEED AMOUNT(S), CAUSING LESS OF YOUR ACCOUNT VALUE TO BE
AVAILABLE TO PARTICIPATE IN THE INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT
OPTIONS.
Separate Fixed Allocations may be established in support of the Protected
Principal Value and the Enhanced Protected Principal Value (if elected). There
may also be circumstances when a Fixed Allocation will be established only in
support of the Protected Principal Value or the Enhanced Protected Principal
Value. If you elect an enhanced guarantee, it is more likely that a portion of
your Account Value may be allocated to Fixed Allocations and will remain
allocated for a longer period of time to support the Enhanced Protected
Principal Value, even during a period of positive market performance and/or
under circumstances where Fixed Allocations would not be necessary to support
the Protected Principal Value. Further, there may be circumstances where Fixed
Allocations in support of the Protected Principal Value or Enhanced Protected
Principal Value are transferred to the variable investment options differently
than each other because of the different guarantees they support.
American Skandia uses an allocation mechanism based on assumptions of
expected and maximum market volatility, interest rates and time left to the
maturity of the program to determine the reallocation trigger. The allocation
mechanism is used to determine the allocation of Account Value between Fixed
Allocations and the Sub-accounts you choose. American Skandia reserves the right
to change the allocation mechanism and the reallocation trigger at its
discretion, subject to regulatory approval where required. Changes to the
allocation mechanism and/or the reallocation trigger may be applied to existing
programs where allowed by law.
ELECTION OF THE PROGRAM
The Guaranteed Return Option Plus program can be elected at the time that you
purchase your Annuity, or on any Valuation Day thereafter (prior to
annuitization). If you elect the program after the Issue Date of your Annuity,
the program will be effective as of the Valuation Day that we receive the
required documentation in good order at our home office, and the guaranteed
amount will be based on your Account Value as of that date. If you previously
elected the Guaranteed Return Option program and wish to elect the Guaranteed
Return Option Plus program, your prior Guaranteed Return Option program will be
terminated. Termination of the Guaranteed Return Option for the purpose of
electing the Guaranteed Return Option Plus will be treated as any other
termination of the Guaranteed Return Option (see below), including the
termination of any guaranteed amount, and application of any applicable Market
Value Adjustment when amounts are transferred to the variable investment options
as a result of the termination. The Guaranteed Return Option Plus program will
then be added to your Annuity BASED ON THE CURRENT ACCOUNT VALUE.
TERMINATION OF THE PROGRAM
You can elect to terminate the enhanced guarantee but maintain the protection
provided by the base guarantee. You also can terminate the Guaranteed Return
Option Plus program entirely. If you terminate the program entirely, you can
subsequently elect to participate in the program again (based on the Account
Value on that date) by furnishing the documentation we require. In a rising
market, you could, for example, terminate the program on a given Valuation Day
and two weeks later reinstate the program with a higher base guarantee (and a
new maturity date). However, your ability to reinstate the program is limited by
the following: (A) in any Annuity Year, we do not permit more than two program
elections (including any election made effective on the Annuity issue date and
any election made by a surviving spouse) and (B) a program reinstatement cannot
be effected on the same business day on which a program termination was
effected. Upon termination, any Account Value in the Fixed Allocations will be
transferred to the variable investment options pro-rata based on the Account
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Values in such variable investment options, or in accordance with any effective
asset allocation program. A Market Value Adjustment will apply.
The program will terminate automatically upon: (a) the death of the Owner
or the Annuitant (in an entity owned contract); (b) as of the date Account Value
is applied to begin annuity payments; or (c) upon full surrender of the Annuity.
If you elect to terminate the program, the Guaranteed Return Option Plus will no
longer provide any guarantees. The surviving spouse may elect the benefit at any
time, subject to the limitations described above, after the death of the Annuity
Owner. The surviving spouse's election will be effective on the Valuation Day
that we receive the required documentation in good order at our home office, and
the Account Value on that Valuation Day will be the Protected Principal Value.
The charge for the Guaranteed Return Option Plus program will no longer be
deducted from your Account Value upon termination of the program.
Special Considerations under the Guaranteed Return Option Plus
This program is subject to certain rules and restrictions, including, but not
limited to the following:
- - Upon inception of the program, 100% of your Account Value must be
allocated to the variable investment options. No Fixed Allocations may be
in effect as of the date that you elect to participate in the program.
However, the reallocation trigger may transfer Account Value to Fixed
Allocations as of the effective date of the program under some
circumstances.
- - You cannot allocate any portion of Purchase Payments or transfer Account
Value to or from a Fixed Allocation while participating in the program;
however, all or a portion of any Purchase Payments may be allocated by us
to Fixed Allocations to support the amount guaranteed. You cannot
participate in any dollar cost averaging program that transfers Account
Value from a Fixed Allocation to a variable investment option.
- - Transfers from Fixed Allocations made as a result of the allocation
mechanism under the program will be subject to the Market Value Adjustment
formula under the Annuity; however, the 0.10% liquidity factor in the
formula will not apply. A Market Value Adjustment may be either positive
or negative. Transfer amounts will be taken from the most recently
established Fixed Allocation.
- - Transfers from the Sub-accounts to Fixed Allocations or from Fixed
Allocations to the Sub-accounts under the program will not count toward
the maximum number of free transfers allowable under the Annuity.
- - Any amounts applied to your Account Value by American Skandia on the
maturity date or any anniversary of the maturity date will not be treated
as "investment in the contract" for income tax purposes.
- - Low interest rates may require allocation to Fixed Allocations even when
the current Account Value exceeds the guarantee.
- - As the time remaining until the applicable maturity date gradually
decreases the program will become increasingly sensitive to moves to Fixed
Allocations.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
CHARGES UNDER THE PROGRAM
We deduct a charge equal to 0.25% of the average daily net assets of the
Sub-accounts for participation in the Guaranteed Return Option Plus program. The
annual charge is deducted daily. Account Value allocated to Fixed Allocations
under the program is not subject to the charge. The charge is deducted to
compensate American Skandia for: (a) the risk that your Account Value on the
maturity date is less than the amount guaranteed; and (b) administration of the
program.
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Living Benefit Programs continued
GUARANTEED RETURN OPTION (GRO)
THE GUARANTEED RETURN OPTION DESCRIBED BELOW IS OFFERED ONLY IN THOSE
JURISDICTIONS WHERE WE HAVE NOT YET RECEIVED REGULATORY APPROVAL FOR THE
GUARANTEED RETURN OPTION PLUS AS OF THE DATE THE ELECTION OF THE OPTION IS MADE.
CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS. THE PROGRAM CAN
BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY, AND CAN BE
ELECTED BY EXISTING ANNUITY OWNERS ON EITHER THE ANNIVERSARY OF THE ISSUE DATE
OF THEIR ANNUITY OR ON A DATE OTHER THAN THAT ANNIVERSARY, AS DESCRIBED BELOW
UNDER "ELECTION OF THE PROGRAM". THE GUARANTEED RETURN OPTION IS NOT AVAILABLE
IF YOU ELECT THE GRO PLUS RIDER, THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT
RIDER, THE GUARANTEED MINIMUM INCOME BENEFIT RIDER, THE LIFETIME FIVE INCOME
BENEFIT RIDER, THE HIGHEST DAILY VALUE DEATH BENEFIT, OR THE DOLLAR COST
AVERAGING PROGRAM IF IT INVOLVES TRANSFERS OUT OF THE FIXED ALLOCATIONS.
We offer a program that, after a seven-year period following commencement
of the program (we refer to the end of that period as the "maturity date")
guarantees your Account Value will not be less than your Account Value on the
effective date of your program (called the "Protected Principal Value").
The program monitors your Account Value daily and, if necessary,
systematically transfers amounts between variable investment options you choose
and the Fixed Allocation used to support the Protected Principal Value. The
program may be appropriate if you wish to protect a principal amount against
market downturns as of a specific date in the future, but also wish to invest in
the variable investment options to participate in market performance. There is
an additional charge if you elect the Guaranteed Return Option program.
The guarantee provided by the program exists only on the applicable
maturity date. However, due to the ongoing monitoring of your Account Value and
the transfer of Account Value between the variable investment options and the
Fixed Allocation to support our future guarantee, the program may provide some
protection from significant market losses if you choose to surrender the Annuity
or begin receiving annuity payments prior to a maturity date. For this same
reason, the program may limit your ability to benefit from market increases
while it is in effect.
KEY FEATURE -- PROTECTED PRINCIPAL VALUE
- - Under the GRO option, American Skandia guarantees that on the maturity
date, your Account Value will be no less than the Protected Principal
Value. On the maturity date if your Account Value is below the Protected
Principal Value, American Skandia will apply additional amounts to your
Annuity from its general account to increase your Account Value to be
equal to the Protected Principal Value.
Any amounts added to your Annuity to support our guarantee under the
program will be applied to the Fixed Allocation first and then to the
Sub-accounts pro rata, based on your most recent allocation instructions in
accordance with the allocation mechanism we use under the program. We will
notify you of any amounts added to your Annuity under the program. If our
assumptions are correct and the operations relating to the administration of the
program work properly, we do not expect that we will need to add additional
amounts to the Annuity. The Protected Principal Value is generally referred to
as the "Guaranteed Amount" in the rider we issue for this benefit.
KEY FEATURE -- ALLOCATION OF ACCOUNT VALUE
Account Value is transferred to and maintained in a Fixed Allocation to the
extent we, in our sole discretion, deem it is necessary to support our
guarantee under the program. We monitor fluctuations in your Account Value each
Valuation Day, as well as the prevailing interest rate on the Fixed Allocation,
the remaining duration until the applicable maturity date and the amount of
Account Value allocated to the Fixed Allocation relative to a "reallocation
trigger", which determines whether Account Value must be transferred to or from
the Fixed Allocation. While you are not notified when your Account Value
reaches a reallocation trigger, you will receive a confirmation statement
indicating the transfer of a portion of your Account Value either to or from
the Fixed Allocation.
- - IF YOUR ACCOUNT VALUE IS GREATER THAN OR EQUAL TO THE REALLOCATION
TRIGGER, your Account Value in the variable investment options will remain
allocated according to your most recent instructions. If a portion of
Account Value was previously allocated to the Fixed Allocation to support
the guaranteed amount, all or a portion of those amounts may be
transferred from the Fixed Allocation and re-allocated to the variable
investment options pro-rata according to your most recent allocation
instructions (including the model
54
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
allocations under any asset allocation program you may have elected). A
Market Value Adjustment will apply when we reallocate Account Value from
the Fixed Allocation to the variable investment options, which may result
in a decrease or increase in your Account Value.
- - IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER, a portion of
your Account Value in the variable investment options will be transferred
from your variable investment options pro rata according to your
allocations to a new Fixed Allocation to support the guaranteed amount.
The new Fixed Allocation will have a Guarantee Period equal to the time
remaining until the applicable maturity date. The Account Value allocated
to the new Fixed Allocation will be credited with the fixed interest rate
then being credited to a new Fixed Allocation maturing on the applicable
maturity date (rounded to the next highest yearly duration). The Account
Value will remain invested in the Fixed Allocation until the maturity date
unless, at an earlier date, your Account Value is greater than or equal to
the reallocation trigger and, therefore, amounts can be transferred to the
variable investment options while maintaining the guaranteed protection
under the program (as described above).
IF A SIGNIFICANT AMOUNT OF YOUR ACCOUNT VALUE IS SYSTEMATICALLY TRANSFERRED TO
THE FIXED ALLOCATION TO SUPPORT THE PROTECTED PRINCIPAL VALUE DURING PERIODS OF
MARKET DECLINES, LOW INTEREST RATES, AND/OR AS THE PROGRAM NEARS ITS MATURITY
DATE, LESS OF YOUR ACCOUNT VALUE MAY BE AVAILABLE TO PARTICIPATE IN THE
INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS IF THERE IS A
SUBSEQUENT MARKET RECOVERY. DURING PERIODS CLOSER TO THE MATURITY DATE OF THE
GUARANTEE A SIGNIFICANT PORTION OF YOUR ACCOUNT VALUE MAY BE ALLOCATED TO THE
FIXED ALLOCATION TO SUPPORT ANY APPLICABLE GUARANTEED AMOUNT. IF YOUR ACCOUNT
VALUE IS LESS THAN THE REALLOCATION TRIGGER AND A NEW FIXED ALLOCATION MUST BE
ESTABLISHED DURING PERIODS WHERE THE INTEREST RATE BEING CREDITED TO SUCH FIXED
ALLOCATION IS LOW, A LARGER PORTION OF YOUR ACCOUNT VALUE MAY NEED TO BE
TRANSFERRED TO THE FIXED ALLOCATION TO SUPPORT THE GUARANTEED AMOUNT, CAUSING
LESS OF YOUR ACCOUNT VALUE TO BE AVAILABLE TO PARTICIPATE IN THE INVESTMENT
EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS.
American Skandia uses an allocation mechanism based on assumptions of
expected and maximum market volatility, interest rates and time left to the
maturity of the program to determine the reallocation trigger. The allocation
mechanism is used to determine the allocation of Account Value between the Fixed
Allocation and the Sub-accounts you choose. American Skandia reserves the right
to change the allocation mechanism and the reallocation trigger at its
discretion, subject to regulatory approval where required. Changes to the
allocation mechanism and/or the reallocation trigger may be applied to existing
programs where allowed by law.
ELECTION OF THE PROGRAM
The Guaranteed Return Option can be elected at the time that you purchase your
Annuity, or on any Valuation Day thereafter (prior to annuitization). If you
elect the program after the Issue Date of your Annuity, the program will be
effective as of the business day that we receive the required documentation in
good order at our home office, and the guaranteed amount will be based on your
Account Value as of that date.
TERMINATION OF THE PROGRAM
The Annuity Owner also can terminate the Guaranteed Return Option program. Upon
termination, any Account Value in the Fixed Allocation will be transferred to
the variable investment options pro rata based on the Account Values in such
variable investment options, or in accordance with any effective asset
allocation program. A Market Value Adjustment will apply.
The program will terminate automatically upon: (a) the death of the Owner
or the Annuitant (in an entity owned contract); (b) as of the date Account Value
is applied to begin annuity payments; or (c) upon full surrender of the Annuity.
If you elect to terminate the program, the Guaranteed Return Option will no
longer provide any guarantees. If the surviving spouse assumes the Annuity,
he/she may re-elect the benefit on any anniversary of the Issue Date of the
Annuity or, if the deceased Owner had not previously elected the benefit, may
elect the benefit at any time. The surviving spouse's election will be effective
on the Valuation Day that we receive the required documentation in good order at
our home office, and the Account Value on that Valuation Day will be the
Protected Principal Value. The charge for the Guaranteed Return Option program
will no longer be deducted from your Account Value upon termination of the
program.
55
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Living Benefit Programs continued
SPECIAL CONSIDERATIONS UNDER THE GUARANTEED RETURN OPTION
This program is subject to certain rules and restrictions, including, but not
limited to the following:
- - Upon inception of the program, 100% of your Account Value must be
allocated to the variable investment options. The Fixed Allocation may not
be in effect as of the date that you elect to participate in the program.
However, the reallocation trigger may transfer Account Value to the Fixed
Allocation as of the effective date of the program under some
circumstances.
- - Annuity Owners cannot allocate any portion of Purchase Payments or
transfer Account Value to or from the Fixed Allocation while participating
in the program; however, all or a portion of any Purchase Payments may be
allocated by us to the Fixed Allocation to support the amount guaranteed.
You cannot participate in any dollar cost averaging program that transfers
Account Value from a Fixed Allocation to a variable investment option.
- - Transfers from the Fixed Allocation made as a result of the allocation
mechanism under the program will be subject to the Market Value Adjustment
formula under the Annuity; however, the 0.10% liquidity factor in the
formula will not apply. A Market Value Adjustment may be either positive
or negative. Transfer amounts will be taken from the most recently
established Fixed Allocation.
- - Transfers from the Sub-accounts to the Fixed Allocation or from the Fixed
Allocation to the Sub-accounts under the program will not count toward the
maximum number of free transfers allowable under the Annuity.
- - Any amounts applied to your Account Value by American Skandia on the
maturity date or any anniversary of the maturity date will not be treated
as "investment in the contract" for income tax purposes.
- - Low interest rates may require allocation to the Fixed Allocation even
when the current Account Value exceeds the guarantee.
- - As the time remaining until the applicable maturity date gradually
decreases the program will become increasingly sensitive to moves to the
Fixed Allocation.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
CHARGES UNDER THE PROGRAM
We deduct a charge equal to 0.25% of the average daily net assets of the
Sub-accounts for participation in the Guaranteed Return Option program. The
annual charge is deducted daily. In those states where the daily deduction of
the charge has not yet been approved, the annual charge is deducted annually, in
arrears. Account Value allocated to the Fixed Allocation under the program is
not subject to the charge. The charge is deducted to compensate American Skandia
for: (a) the risk that your Account Value on the maturity date is less than the
amount guaranteed; and (b) administration of the program.
56
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Owners who purchased the Annuity between April 1, 2003 and September 30, 2003
(the "Promotional Period") will not be charged the 0.25% annual fee for the
Guaranteed Return Option program (or GRO Plus if we are no longer offering GRO)
if elected at any time while their Annuity is in effect.
- - American Skandia will not charge the 0.25% annual fee for the entire
period that the program remains in effect, including any extension of the
program's maturity date resulting from the Owner's election to restart the
7-year program duration, regardless of when the Owner elects to
participate in the Guaranteed Return Option program (or GRO Plus if we are
no longer offering GRO).
- - Owners who complete the initial 7-year program duration OR terminate the
program before the program's maturity date, will not be charged the 0.25%
annual fee for participating in the program if they re-elect the
Guaranteed Return Option program (or GRO Plus if we are no longer offering
GRO) at a later date.
- - All other terms and conditions of the Annuity and the Guaranteed Return
Option program (or GRO plus if we are no longer offering GRO) apply to
Owners who qualify for the waiver of the 0.25% annual fee.
- - Owners who purchase the Annuity after the completion of the Promotional
Period do not qualify for the 0.25% annual fee waiver.
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT PROGRAM DESCRIBED BELOW IS ONLY
BEING OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY
APPROVAL AND WILL BE OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE
RECEIVE REGULATORY APPROVAL IN THOSE JURISDICTIONS. CERTAIN TERMS AND
CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. CURRENTLY, THE
PROGRAM CAN ONLY BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF THEIR
ANNUITY. WE MAY OFFER THE PROGRAM TO EXISTING ANNUITY OWNERS IN THE FUTURE,
SUBJECT TO OUR ELIGIBILITY RULES AND RESTRICTIONS. THE GUARANTEED MINIMUM
WITHDRAWAL BENEFIT PROGRAM IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED
RETURN OPTION, GUARANTEED RETURN OPTION PLUS, THE GUARANTEED MINIMUM INCOME
BENEFIT RIDER OR THE LIFETIME FIVE INCOME BENEFIT RIDER.
We offer a program that guarantees your ability to withdraw amounts equal to an
initial principal value (called the "Protected Value"), regardless of the impact
of market performance on your Account Value, subject to our program rules
regarding the timing and amount of withdrawals. The program may be appropriate
if you intend to make periodic withdrawals from your Annuity and wish to ensure
that market performance will not affect your ability to protect your principal.
You are not required to make withdrawals as part of the program -- the guarantee
is not lost if you withdraw less than the maximum allowable amount of principal
each year under the rules of the program. There is an additional charge if you
elect the GMWB program; however, the charge may be waived under certain
circumstances described below.
KEY FEATURE -- PROTECTED VALUE
The Protected Value is the total amount that we guarantee will be available to
you through withdrawals from your Annuity and/or benefit payments, regardless of
the impact of market performance on your Account Value. The Protected Value is
reduced with each withdrawal you make until the Protected Value is reduced to
zero. When the Protected Value is reduced to zero due to your withdrawals, the
GMWB program terminates. Additionally, the Protected Value is used to determine
the maximum annual amount that you can withdraw from your Annuity, called the
Protected Annual Withdrawal Amount, without triggering an adjustment in the
Protected Value on a proportional basis. The Protected Value is referred to as
the "Benefit Base" in the rider we issue for this benefit.
The Protected Value is determined as of the date you make your first
withdrawal under the Annuity following your election of the GMWB program. The
initial Protected Value is equal to the greater of (A) the Account Value on the
date you elect the GMWB program, plus any additional Purchase Payments before
the date of your first withdrawal; or (B) the Account Value as of the date of
the first withdrawal from your Annuity. The Protected Value may be enhanced by
increases in your Account Value due to market performance during the period
between your election of the GMWB program and the date of your first withdrawal.
- - If you elect the GMWB program at the time you purchase your Annuity, the
Account Value will be your initial Purchase Payment.
57
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
- - IF WE OFFER THE GMWB PROGRAM TO EXISTING ANNUITY OWNERS, the Account Value
on the anniversary of the Issue Date of your Annuity following your
election of the GMWB program will be used to determine the initial
Protected Value.
- - If you make additional Purchase Payments after your first withdrawal, the
Protected Value will be increased by the amount of the additional Purchase
Payment.
You may elect to step-up your Protected Value if, due to positive market
performance, your Account Value is greater than the Protected Value. You are
eligible to step-up the Protected Value on or after the 5th contract anniversary
following the first withdrawal under the GMWB program. The Protected Value can
be stepped up again on or after the 5th contract anniversary following the
preceding step-up. If you elect to step-up the Protected Value, you must do so
during the 30-day period prior to your eligibility date. If you elect to step-up
the Protected Value under the program, and on the date you elect to step-up, the
charges under the GMWB program have changed for new purchasers, your program may
be subject to the new charge going forward.
Upon election of the step-up, we reset the Protected Value to be equal to
the then current Account Value. For example, assume your initial Protected Value
was $100,000 and you have made cumulative withdrawals of $40,000, reducing the
Protected Value to $60,000. On the date you are eligible to step-up the
Protected Value, your Account Value is equal to $75,000. You could elect to
step-up the Protected Value to $75,000 on the date you are eligible. Upon
election of the step-up, we also reset the Protected Annual Withdrawal Amount
(discussed immediately below) to be equal to the greater of (A) the Protected
Annual Withdrawal Amount immediately prior to the reset; and (B) 7% of the
Protected Value immediately after the reset.
KEY FEATURE -- Protected Annual Withdrawal Amount
The initial Protected Annual Withdrawal Amount is equal to 7% of the Protected
Value. Under the GMWB program, if your cumulative withdrawals each Annuity Year
are less than or equal to the Protected Annual Withdrawal Amount, your Protected
Value will be reduced on a "dollar-for-dollar" basis (the Protected Value is
reduced by the actual amount of the withdrawal, including any CDSC or MVA that
may apply). Cumulative withdrawals in any Annuity Year that exceed the Protected
Annual Withdrawal Amount trigger a proportional adjustment to both the Protected
Value and the Protected Annual Withdrawal Amount, as described in the rider for
this benefit (see the examples of this calculation below). The Protected Annual
Withdrawal Amount is referred to as the "Maximum Annual Benefit" in the rider we
issue for this benefit.
THE GMWB PROGRAM DOES NOT AFFECT YOUR ABILITY TO MAKE WITHDRAWALS UNDER
YOUR ANNUITY OR LIMIT YOUR ABILITY TO REQUEST WITHDRAWALS THAT EXCEED THE
PROTECTED ANNUAL WITHDRAWAL AMOUNT. You are not required to withdraw all or any
portion of the Protected Annual Withdrawal Amount each Annuity Year.
- - If, cumulatively, you withdraw an amount less than the Protected Annual
Withdrawal Amount in any Annuity Year, you cannot carry-over the unused
portion of the Protected Annual Withdrawal Amount to subsequent Annuity
Years. However, because the Protected Value is only reduced by the actual
amount of withdrawals you make under these circumstances, any unused
Protected Annual Withdrawal Amount may extend the period of time until the
remaining Protected Value is reduced to zero.
- - Additional Purchase Payments will increase the Protected Annual Withdrawal
Amount by 7% of the applicable Purchase Payment.
- - If the Protected Annual Withdrawal Amount after an adjustment exceeds the
Protected Value, the Protected Annual Withdrawal Amount will be set equal
to the Protected Value.
The following examples of dollar-for dollar and proportional reductions
and the reset of the Maximum Annual Benefit assume that: 1.) the Issue Date and
the effective date of the GMWB program are October 13, 2004; 2.) an initial
Purchase Payment of $250,000; 3.) a Protected Value of $250,000; and 4.) a
Protected Annual Withdrawal Amount of $17,500 (7% of $250,000):
Example 1. Dollar-for-dollar reduction
A $10,000 withdrawal is taken on November 13, 2004 (in the first Annuity Year).
No prior withdrawals have been taken. As the amount withdrawn is less than the
Protected Annual Withdrawal Amount:
- - The Protected Value is reduced by the amount withdrawn (i.e., by $10,000,
from $250,000 to $240,000).
- - The remaining Protected Annual Withdrawal Amount for the balance of the
first Annuity Year is also reduced by the amount withdrawn (from $17,500
to $7,500).
58
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Example 2. Dollar-for-dollar and proportional reductions
A second $10,000 withdrawal is taken on December 13, 2004 (still within the
first Annuity Year). The Account Value immediately before the withdrawal is
$220,000. As the amount withdrawn exceeds the remaining Protected Annual
Withdrawal Amount of $7,500 from Example 1:
- - the Protected Value is first reduced by the remaining Protected Annual
Withdrawal Amount (from $240,000 to $232,500);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the remaining Protected Annual
Withdrawal Amount ($10,000 - $7,500, or $2,500).
- B is the Account Value less the remaining Protected Annual
Withdrawal Amount ($220,000 - $7,500, or $212,500).
The resulting Protected Value is: $232,500 x (1 - $2,500 / $212,500), or
$229,764.71.
- - the Protected Annual Withdrawal Amount is also reduced by the ratio of A
to B: The resulting Protected Annual Withdrawal Amount is: $17,500 x (1 -
$2,500 / $212,500), or $17,294.12.
- - The remaining Protected Annual Withdrawal Amount is set to zero (0) for
the balance of the first Annuity Year.
Example 3. Reset of the Maximum Annual Benefit
A $10,000 withdrawal is made on October 13, 2005 (second Annuity Year). The
remaining Protected Annual Withdrawal Amount has been reset to the Protected
Annual Withdrawal Amount of $17,294.12 from Example 2. As the amount withdrawn
is less than the remaining Protected Annual Withdrawal Amount:
- - the Protected Value is reduced by the amount withdrawn (i.e., reduced by
$10,000, from $229,764.71 to $219,764.71).
- - The remaining Protected Annual Withdrawal Amount for the balance of the
second Annuity Year is also reduced by the amount withdrawn (from
$17,294.12 to $7,294.12).
BENEFITS UNDER THE GMWB PROGRAM
- - In addition to any withdrawals you make under the GMWB program, market
performance may reduce your Account Value. If your Account Value is equal
to zero, and you have not received all of your Protected Value in the form
of withdrawals from your Annuity, we will continue to make payments equal
to the remaining Protected Value in the form of fixed, periodic payments
until the remainder of the Protected Value is paid, at which time the
rider terminates. The fixed, periodic payments will each be equal to the
Protected Annual Withdrawal Amount, except for the last payment which may
be equal to the remaining Protected Value. We will determine the duration
for which periodic payments will continue by dividing the Protected Value
by the Protected Annual Withdrawal Amount. You will not have the right to
make additional Purchase Payments or receive the remaining Protected Value
in a lump sum. You can elect the frequency of payments, subject to our
rules then in effect.
- - If the death benefit under the Annuity becomes payable before you have
received all of your Protected Value in the form of withdrawals from your
Annuity, your Beneficiary has the option to elect to receive the remaining
Protected Value as an alternate death benefit payout in lieu of the amount
payable under any other death benefit provided under the Annuity. The
remaining Protected Value will be payable in the form of fixed, periodic
payments. Your beneficiary can elect the frequency of payments, subject to
our rules then in effect. We will determine the duration for which
periodic payments will continue by dividing the Protected Value by the
Protected Annual Withdrawal Amount. THE PROTECTED VALUE IS NOT EQUAL TO
THE ACCOUNT VALUE FOR PURPOSES OF THE ANNUITY'S OTHER DEATH BENEFIT
OPTIONS. THE GMWB PROGRAM DOES NOT INCREASE OR DECREASE THE AMOUNT
OTHERWISE PAYABLE UNDER THE ANNUITY'S OTHER DEATH BENEFIT OPTIONS.
GENERALLY, THE GMWB PROGRAM WOULD BE OF VALUE TO YOUR BENEFICIARY ONLY
WHEN THE PROTECTED VALUE AT DEATH EXCEEDS ANY OTHER AMOUNT AVAILABLE AS A
DEATH BENEFIT.
- - If you elect to begin receiving annuity payments before you have received
all of your Protected Value in the form of withdrawals from your Annuity,
an additional annuity payment option will be available that makes fixed
annuity payments for a certain period, determined by dividing the
Protected Value by the Protected Annual Withdrawal Amount. If you elect to
receive annuity payments calculated in this
59
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Living Benefit Programs continued
manner, the assumed interest rate used to calculate such payments will be
0%, which is less than the assumed interest rate on other annuity payment
options we offer. This 0% assumed interest rate results in lower annuity
payments than what would have been paid if the assumed interest rate was
higher than 0%. YOU CAN ALSO ELECT TO TERMINATE THE GMWB PROGRAM AND BEGIN
RECEIVING ANNUITY PAYMENTS BASED ON YOUR THEN CURRENT ACCOUNT VALUE (NOT
THE REMAINING PROTECTED VALUE) UNDER ANY OF THE AVAILABLE ANNUITY PAYMENT
OPTIONS.
Other Important Considerations
- - Withdrawals under the GMWB program are subject to all of the terms and
conditions of the Annuity, including any CDSC and MVA that may apply.
- - Withdrawals made while the GMWB program is in effect will be treated, for
tax purposes, in the same way as any other withdrawals under the Annuity.
- - The GMWB program does not directly affect the Annuity's Account Value or
Surrender Value, but any withdrawal will decrease the Account Value by the
amount of the withdrawal. If you surrender your Annuity, you will receive
the current Surrender Value, not the Protected Value.
- - You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the GMWB program. The GMWB program
provides a guarantee that if your Account Value declines due to market
performance, you will be able to receive your Protected Value in the form
of periodic benefit payments.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
Election of the Program
Currently, the GMWB program can only be elected at the time that you purchase
your Annuity. In the future, we may offer existing Annuity Owners the option to
elect the GMWB program after the Issue Date of their Annuity, subject to our
eligibility rules and restrictions. If you elect the GMWB program after the
Issue Date of your Annuity, the program will be effective as of the next
anniversary date. Your Account Value as of such anniversary date will be used to
calculate the initial Protected Value and the initial Protected Annual
Withdrawal Amount.
We reserve the right to restrict the maximum amount of Protected Value
that may be covered under the GMWB program under this Annuity or any other
annuities that you own that are issued by American Skandia or its affiliated
companies.
Termination of the Program
The program terminates automatically when your Protected Value reaches zero
based on your withdrawals. You may terminate the program at any time by
notifying us. If you terminate the program, any guarantee provided by the
benefit will terminate as of the date the termination is effective. The program
terminates upon your surrender of the Annuity, upon due proof of death (unless
your surviving spouse elects to continue the Annuity and the GMWB program or
your Beneficiary elects to receive the amounts payable under the GMWB program in
lieu of the death benefit) or upon your election to begin receiving annuity
payments.
The charge for the GMWB program will no longer be deducted from your
Account Value upon termination of the program.
Charges under the Program
Currently, we deduct a charge equal to 0.35% of the average daily net assets of
the Sub-accounts per year to purchase the GMWB program. The annual charge is
deducted daily. Account Value allocated to Fixed Allocations under the program
is not subject to the charge.
- - If, during the seven years following the effective date of the program,
you do not make any withdrawals, and do not make any additional Purchase
Payments after a five-year period following the effective date of the
program, the program will remain in effect; however, we will waive the
annual charge going forward. If you make an additional Purchase Payment
following the waiver of the annual charge, we will begin charging for the
program. After year seven (7) following the effective date of the program,
withdrawals will not cause a charge to be re-imposed.
- - If you elect to step-up the Protected Value under the program, and on the
date you elect to step-up, the charges under the program have changed for
new purchasers, your
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
program may be subject to the new charge level for the benefit.
Additional Tax Considerations for Qualified Contracts
If you purchase an Annuity as an investment vehicle for "qualified" investments,
including an IRA, SEP-IRA, Roth IRA or Tax Sheltered Annuity (or 403(b)), the
minimum distribution rules under the Code require that you begin receiving
periodic amounts from your Annuity beginning after age 70 1/2. The amount
required under the Code may exceed the Protected Annual Withdrawal Amount, which
will cause us to recalculate the Protected Value and the Protected Annual
Withdrawal Amount, resulting in a lower amount payable in future Annuity Years.
In addition, the amount and duration of payments under the annuity payment and
death benefit provisions may be adjusted so that the payments do not trigger any
penalty or excise taxes due to tax considerations such as minimum distribution
requirements.
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
The Guaranteed Minimum Income Benefit program described below is only
being offered in those jurisdictions where we have received regulatory
approval, and will be offered subsequently in other jurisdictions when we
receive regulatory approval in those jurisdictions. Certain terms and
conditions may differ between jurisdictions once approved. Currently, the
program can only be elected by new purchasers on the Issue Date of their
Annuity. We may offer the program to existing Annuity Owners in the
future, subject to our eligibility rules and restrictions. The Guaranteed
Minimum Income Benefit program is not available if you elect the
Guaranteed Return Option program, Guaranteed Return Option Plus program,
the Guaranteed Minimum Withdrawal Benefit rider or the Lifetime Five
Income Benefit rider.
We offer a program that, after a seven-year waiting period, guarantees
your ability to begin receiving income from your Annuity in the form of annuity
payments based on a guaranteed minimum value (called the "Protected Income
Value") that increases after the waiting period begins, regardless of the impact
of market performance on your Account Value. The program may be appropriate for
you if you anticipate using your Annuity as a future source of periodic fixed
income payments for the remainder of your life and wish to ensure that the basis
upon which your income payments will be calculated will achieve at least a
minimum amount despite fluctuations in market performance. There is an
additional charge if you elect the GMIB program.
KEY FEATURE -- Protected Income Value
The Protected Income Value is the minimum amount that we guarantee will be
available (net of any applicable tax charge), after a waiting period of at least
seven years, as a basis to begin receiving fixed annuity payments. The Protected
Income Value is initially established on the effective date of the GMIB program
and is equal to your Account Value on such date. Currently, since the GMIB
program may only be elected at issue, the effective date is the Issue Date of
the Annuity. The Protected Income Value is increased daily based on an annual
growth rate of 5%, subject to the limitations described below. The Protected
Income Value is referred to as the "Protected Value" in the rider we issue for
this benefit. The 5% annual growth rate is referred to as the "Roll-Up
Percentage" in the rider we issue for this benefit.
The Protected Income Value is subject to a limit of 200% (2X) of the sum
of the Protected Income Value established on the effective date of the GMIB
program, or the effective date of any step-up value, plus any additional
Purchase Payments made after the waiting period begins ("Maximum Protected
Income Value"), minus the sum of any reductions in the Protected Income Value
due to withdrawals you make from the Annuity after the waiting period begins.
- - Subject to the maximum age/durational limits described immediately below,
we will no longer increase the Protected Income Value by the 5% annual
growth rate once you reach the Maximum Protected Income Value. However, we
will increase the Protected Income Value by the amount of any additional
Purchase Payments after you reach the Maximum Protected Income Value.
Further, if you make withdrawals after you reach the Maximum Protected
Income Value, we will reduce the Protected Income Value and the Maximum
Protected Income Value by the proportional impact of the withdrawal on
your Account Value.
- - Subject to the Maximum Protected Income Value, we will no longer increase
the Protected Income Value by the 5% annual growth rate after the later of
the anniversary date on or immediately following the Annuitant's 80th
birthday or the 7th anniversary of the later of the effective date of the
GMIB program or the effective date of the most recent
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Living Benefit Programs continued
step-up. However, we will increase the Protected Income Value by the
amount of any additional Purchase Payments. Further, if you make
withdrawals after the Annuitant reaches the maximum age/duration limits,
we will reduce the Protected Income Value and the Maximum Protected Income
Value by the proportional impact of the withdrawal on your Account Value.
- - Subject to the Maximum Protected Income Value, if you make an additional
Purchase Payment, we will increase the Protected Income Value by the
amount of the Purchase Payment and will apply the 5% annual growth rate on
the new amount from the date the Purchase Payment is applied.
- - As described below, after the waiting period begins, cumulative
withdrawals each Annuity Year that are up to 5% of the Protected Income
Value on the prior anniversary of the Annuity will reduce the Protected
Income Value by the amount of the withdrawal. Cumulative withdrawals each
Annuity Year in excess of 5% of the Protected Income Value on the prior
anniversary of the Annuity, will reduce the Protected Income Value
proportionately. All withdrawals after the Maximum Protected Income Value
is reached will reduce the Protected Income Value proportionately. The 5%
annual growth rate will be applied to the reduced Protected Income Value
from the date of the withdrawal.
Stepping-Up the Protected Income Value -- You may elect to "step-up" or
"reset" your Protected Income Value if your Account Value is greater than the
current Protected Income Value. Upon exercise of the step-up provision, your
initial Protected Income Value will be reset equal to your current Account
Value. From the date that you elect to step-up the Protected Income Value, we
will apply the 5% annual growth rate to the stepped-up Protected Income Value,
as described above. You can exercise the step-up provision twice while the GMIB
program is in effect, and only while the Annuitant is less than age 76.
- - A new seven-year waiting period will be established upon the effective
date of your election to step-up the Protected Income Value. You cannot
exercise your right to begin receiving annuity payments under the GMIB
program until the end of the new waiting period.
- - The Maximum Protected Income Value will be reset as of the effective date
of any step-up. The new Maximum Protected Income Value will be equal to
200% of the sum of the Protected Income Value as of the effective date of
the step-up plus any subsequent Purchase Payments, minus the impact of any
withdrawals after the date of the step-up.
- - When determining the guaranteed annuity purchase rates for annuity
payments under the GMIB program, we will apply such rates based on the
number of years since the most recent step-up.
o If you elect to step-up the Protected Income Value under the program, and
on the date you elect to step-up, the charges under the GMIB program have
changed for new purchasers, your program may be subject to the new charge
going forward.
o A step-up will increase the dollar for dollar limit on the anniversary of
the Issue Date of the Annuity following such step-up.
Impact of Withdrawals on the Protected Income Value -- Cumulative
withdrawals each Annuity Year up to 5% of the Protected Income Value will reduce
the Protected Income Value on a "dollar-for-dollar" basis (the Protected Income
Value is reduced by the actual amount of the withdrawal). Cumulative withdrawals
in any Annuity Year in excess of 5% of the Protected Income Value will reduce
the Protected Income Value proportionately (see the examples of this calculation
below). The 5% annual withdrawal amount is determined on each anniversary of the
Issue Date (or on the Issue Date for the first Annuity Year) and applies to any
withdrawals during the Annuity Year. This means that the amount available for
withdrawals each Annuity Year on a "dollar-for-dollar" basis is adjusted on each
Annuity anniversary to reflect changes in the Protected Income Value during the
prior Annuity Year.
The following examples of dollar-for-dollar and proportional reductions
assume that: 1.) the Issue Date and the effective date of the GMIB program are
October 13, 2005; 2.) an initial Purchase Payment of $250,000; 3.) an initial
Protected Income Value of $250,000; and 4.) a dollar-for-dollar limit of $12,500
(5% of $250,000):
Example 1. Dollar-for-dollar reduction
A $10,000 withdrawal is taken on November 13, 2005 (in the first Annuity Year).
No prior withdrawals have been taken. Immediately prior to the withdrawal, the
Protected Income Value is $251,038.10 (the initial value accumulated for 31 days
at an annual effective rate of 5%). As the amount withdrawn is less than the
dollar-for-dollar limit:
- - the Protected Income Value is reduced by the amount withdrawn (i.e., by
$10,000, from $251,038.10 to $241,038.10).
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- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance
of the first Annuity Year is also reduced by the amount withdrawn (from
$12,500 to $2,500).
Example 2. Dollar-for-dollar and proportional reductions
A second $10,000 withdrawal is taken on December 13, 2005 (still within the
first Annuity Year). Immediately before the withdrawal, the Account Value is
$220,000 and the Protected Income Value is $242,006.64. As the amount withdrawn
exceeds the Remaining Limit of $2,500 from Example 1:
- - the Protected Income Value is first reduced by the Remaining Limit (from
$242,006.64 to $239,506.64);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the Remaining Limit ($10,000 -
$2,500, or $7,500).
- B is the Account Value less the Remaining Limit ($220,000 - $2,500,
or $217,500).
The resulting Protected Income Value is: $239,506.64 x (1 - $7,500 /
$217,500), or $231,247.79.
- - The Remaining Limit is set to zero (0) for the balance of the first
Annuity Year.
Example 3. Reset of the Dollar-for-dollar Limit
A $10,000 withdrawal is made on the first anniversary of the Issue Date, October
13, 2006 (second Annuity Year). Prior to the withdrawal, the Protected Income
Value is $240,838.37. The Remaining Limit is reset to 5% of this amount, or
$2,041.92. As the amount withdrawn is less than the dollar-for-dollar limit:
- - the Protected Income Value is reduced by the amount withdrawn (i.e.,
reduced by $10,000, from $240,838.37 to $230,838.37).
- - The Remaining Limit for the balance of the second Annuity Year is also
reduced by the amount withdrawn (from $12,041.92 to $2,041.92).
KEY FEATURE -- GMIB Annuity Payments
You can elect to apply the Protected Income Value to one of the available GMIB
Annuity Payment Options on any anniversary date following the initial waiting
period, or any subsequent waiting period established upon your election to
step-up the Protected Income Value. Once you have completed the waiting period,
you will have a 30-day period each year, prior to the Annuity anniversary,
during which you may elect to begin receiving annuity payments under one of the
available GMIB Annuity Payment Options. You must elect one of the GMIB Annuity
Payment Options by the anniversary of the Annuity's Issue Date on or immediately
following the Annuitant's 95th birthday, except for Annuities used as a funding
vehicle for an IRA, SEP IRA or 403(b), in which case you must elect one of the
GMIB Annuity Payment Options by the anniversary of the Annuity's Issue Date on
or immediately following the Annuitant's 92nd birthday.
The amount of each GMIB Annuity Payment will be determined based on the
age and, where permitted by law, sex of the Annuitant by applying the Protected
Income Value (net of any applicable tax charge that may be due) to the GMIB
Annuity Payment Option you choose. We use special annuity purchase rates to
calculate the amount of each payment due under the GMIB Annuity Payment Options.
These special rates for the GMIB Annuity Payment Options are calculated using an
assumed interest rate factor that provides for lower growth in the value applied
to produce annuity payments than if you elected an annuity payment option that
is not part of the GMIB program. These special rates also are calculated using
other factors such as "age setbacks" (use of an age lower than the Annuitant's
actual age) that result in lower payments than would result if you elected an
annuity payment option that is not part of the GMIB program. Use of an age
setback entails a longer assumed life for the Annuitant which in turn results in
lower annuity payments.
ON THE DATE THAT YOU ELECT TO BEGIN RECEIVING GMIB ANNUITY PAYMENTS, WE
GUARANTEE THAT YOUR PAYMENTS WILL BE CALCULATED BASED ON YOUR ACCOUNT VALUE AND
OUR THEN CURRENT ANNUITY PURCHASE RATES IF THE PAYMENT AMOUNT CALCULATED ON THIS
BASIS WOULD BE HIGHER THAN IT WOULD BE BASED ON THE PROTECTED INCOME VALUE AND
THE SPECIAL GMIB ANNUITY PURCHASE RATES.
GMIB Annuity Payment Option 1 -- Payments for Life with a Certain Period
Under this option, monthly annuity payments will be made until the death of the
Annuitant. If the Annuitant dies before having received 120 monthly annuity
payments, the remainder of the 120 monthly annuity payments will be made to the
Beneficiary.
GMIB Annuity Payment Option 2 -- Payments for Joint Lives with a Certain Period
Under this option, monthly annuity payments will be made until the death of both
the Annuitant and the Joint Annuitant. If the Annuitant and the Joint Annuitant
die before having received 120 monthly annuity payments, the remainder of the
120 monthly annuity payments will be made to the Beneficiary.
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Living Benefit Programs continued
- - If the Annuitant dies first, we will continue to make payments until the
later of the death of the Joint Annuitant and the end of the period
certain. However, if the Joint Annuitant is still receiving annuity
payments following the end of the certain period, we will reduce the
amount of each subsequent payment to 50% of the original payment amount.
- - If the Joint Annuitant dies first, we will continue to make payments until
the later of the death of the Annuitant and the end of the period certain.
You cannot withdraw your Account Value or the Protected Income Value under
either GMIB Annuity Payment Option once annuity payments have begun. We may make
other payout frequencies available, such as quarterly, semi-annually or
annually.
Other Important Considerations
- - YOU SHOULD NOTE THAT GMIB IS DESIGNED TO PROVIDE A TYPE OF INSURANCE THAT
SERVES AS A SAFETY NET ONLY IN THE EVENT YOUR ACCOUNT VALUE DECLINES
SIGNIFICANTLY DUE TO NEGATIVE INVESTMENT PERFORMANCE. IF YOUR CONTRACT
VALUE IS NOT SIGNIFICANTLY AFFECTED BY NEGATIVE INVESTMENT PERFORMANCE, IT
IS UNLIKELY THAT THE PURCHASE OF THE GMIB WILL RESULT IN YOUR RECEIVING
LARGER ANNUITY PAYMENTS THAN IF YOU HAD NOT PURCHASED GMIB. This is
because the assumptions that we use in computing the GMIB, such as the
annuity purchase rates, (which include assumptions as to age-setbacks and
assumed interest rates), are more conservative than the assumptions that
we use in computing annuity payout options outside of GMIB. Therefore, you
may generate higher income payments if you were to annuitize a lower
Account Value at the current annuity purchase rates, than if you were to
annuitize under the GMIB with a higher Protected Value than your Account
Value but, at the annuity purchase rates guaranteed under the GMIB. The
GMIB program does not directly affect the Annuity's Account Value,
Surrender Value or the amount payable under either the basic death benefit
provision of the Annuity or any optional death benefit provision. If you
surrender your Annuity, you will receive the current Surrender Value, not
the Protected Income Value. The Protected Income Value is only applicable
if you elect to begin receiving annuity payments under one of the GMIB
annuity options after the waiting period.
- - The Annuity offers other annuity payment options that you can elect which
do not impose an additional charge, but which do not offer to guarantee a
minimum value on which to make annuity payments.
- - Where allowed by law, we reserve the right to limit subsequent purchase
payments if we determine, at our sole discretion, that based on the timing
of your Purchase Payments and withdrawals, your Protected Income Value is
increasing in ways we did not intend. In determining whether to limit
Purchase Payments, we will look at Purchase Payments which are
disproportionately larger than your initial Purchase Payment and other
actions that may artificially increase the Protected Income Value.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
- - If you change the Annuitant after the effective date of the GMIB program,
the period of time during which we will apply the 5% annual growth rate
may be changed based on the age of the new Annuitant. If the new Annuitant
would not be eligible to elect the GMIB program based on his or her age at
the time of the change, then the GMIB program will terminate.
- - Annuity payments made under the GMIB program are subject to the same tax
treatment as any other annuity payment.
- - At the time you elect to begin receiving annuity payments under the GMIB
program or under any other annuity payment option we make available, the
protection provided by the Annuity's basic death benefit or any optional
death benefit provision you elected will no longer apply.
Election of the Program
Currently, the GMIB program can only be elected at the time that you purchase
your Annuity. The Annuitant must be age 75 or less as of the effective date of
the GMIB program. In the future, we may offer existing Annuity Owners the option
to elect the GMIB program after the Issue Date of their Annuity, subject to our
eligibility rules and restrictions. If you elect the GMIB program after the
Issue Date of your Annuity, the program will be effective as of the date of
election. Your Account Value as of that date will be
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
used to calculate the Protected Income Value as of the effective date of the
program.
Termination of the Program
The GMIB program cannot be terminated by the Owner once elected. The GMIB
program automatically terminates as of the date the Annuity is fully
surrendered, on the date the death benefit is payable to your Beneficiary
(unless your surviving spouse elects to continue the Annuity), or on the date
that your Account Value is transferred to begin making annuity payments. The
GMIB program may also be terminated if you designate a new Annuitant who would
not be eligible to elect the GMIB program based on his or her age at the time of
the change.
Upon termination of the GMIB program we will deduct the charge from your
Account Value for the portion of the Annuity Year since the prior anniversary of
the Annuity's Issue Date (or the Issue Date if in the first Annuity Year).
Charges under the Program
Currently, we deduct a charge equal to 0.50% per year of the average Protected
Income Value for the period the charge applies. Because the charge is calculated
based on the average Protected Income Value, it does not increase or decrease
based on changes to the Annuity's Account Value due to market performance. The
dollar amount you pay each year will increase in any year the Protected Income
Value increases, and it will decrease in any year the Protected Income Value
decreases due to withdrawal, irrespective of whether your Account Value
increases or decreases.
The charge is deducted annually in arrears each Annuity Year on the
anniversary of the Issue Date of the Annuity. We deduct the amount of the charge
pro-rata from the Account Value allocated to the variable investment options and
the Fixed Allocations. No MVA will apply to Account Value deducted from a Fixed
Allocation. If you surrender your Annuity, begin receiving annuity payments
under the GMIB program or any other annuity payment option we make available
during an Annuity Year, or the GMIB program terminates, we will deduct the
charge for the portion of the Annuity Year since the prior anniversary of the
Annuity's Issue Date (or the Issue Date if in the first Annuity Year).
No charge applies after the Annuity Date.
LIFETIME FIVE INCOME BENEFIT (LIFETIME FIVE)
THE LIFETIME FIVE INCOME BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL AND
WILL BE OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE
REGULATORY APPROVAL IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY
DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. CURRENTLY, LIFETIME FIVE CAN BE
ELECTED ONLY ONCE EACH ANNUITY YEAR, AND ONLY WHERE THE ANNUITANT AND THE
OWNER ARE THE SAME PERSON OR, IF THE ANNUITY OWNER IS AN ENTITY, WHERE THERE
IS ONLY ONE ANNUITANT. WE RESERVE THE RIGHT TO LIMIT THE ELECTION FREQUENCY
IN THE FUTURE. BEFORE MAKING ANY SUCH CHANGE TO THE ELECTION FREQUENCY, WE
WILL PROVIDE PRIOR NOTICE TO OWNERS WHO HAVE AN EFFECTIVE LIFETIME FIVE
INCOME BENEFIT. THE ANNUITANT MUST BE AT LEAST 45 YEARS OLD WHEN THE PROGRAM
IS ELECTED. THE LIFETIME FIVE INCOME BENEFIT PROGRAM IS NOT AVAILABLE IF YOU
ELECT THE GUARANTEED RETURN OPTION, GUARANTEED RETURN OPTION PLUS, GUARANTEED
MINIMUM WITHDRAWAL BENEFIT OR THE GUARANTEED MINIMUM INCOME BENEFIT RIDER. AS
LONG AS YOUR LIFETIME FIVE INCOME BENEFIT IS IN EFFECT, YOU MUST ALLOCATE
YOUR ACCOUNT VALUE IN ACCORDANCE WITH AN ELIGIBLE MODEL UNDER OUR ASSET
ALLOCATION PROGRAMS, WHICH ARE GENERALLY DESCRIBED IN THE "ARE ANY ASSET
ALLOCATION PROGRAMS AVAILABLE?" SECTION ABOVE. FOR FURTHER INFORMATION ON
ASSET ALLOCATION PROGRAMS, PLEASE CONSULT WITH YOUR INVESTMENT PROFESSIONAL
OR CALL 1-800-752-6342.
We offer a program that guarantees your ability to withdraw amounts equal
to a percentage of an initial principal value (called the "Protected Withdrawal
Value"), regardless of the impact of market performance on your Account Value,
subject to our program rules regarding the timing and amount of withdrawals.
There are two options -- one is designed to provide an annual withdrawal amount
for life (the "Life Income Benefit") and the other is designed to provide a
greater annual withdrawal amount as long as there is Protected Withdrawal Value
(adjusted as described below) (the "Withdrawal Benefit"). If there is no
Protected Withdrawal Value, the withdrawal benefit will be zero. You do not
choose between these two
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Living Benefit Programs continued
options; each option will continue to be available as long as the Annuity has an
Account Value and the Lifetime Five is in effect. Certain benefits under
Lifetime Five may remain in effect even if the Account Value of the Annuity is
zero. The program may be appropriate if you intend to make periodic withdrawals
from your Annuity and wish to ensure that market performance will not affect
your ability to receive annual payments. You are not required to make
withdrawals as part of the program -- the guarantees are not lost if you
withdraw less than the maximum allowable amount each year under the rules of the
program.
KEY FEATURE -- Protected Withdrawal Value
The Protected Withdrawal Value is initially used to determine the amount of each
initial annual payment under the Life Income Benefit and the Withdrawal Benefit.
The initial Protected Withdrawal Value is determined as of the date you make
your first withdrawal under the Annuity following your election of Lifetime
Five. The initial Protected Withdrawal Value is equal to the greater of (A) the
Account Value on the date you elect Lifetime Five, plus any additional Purchase
Payments each growing at 5% per year from the date of your election of the
program, or application of the Purchase Payment to your Annuity, as applicable,
until the date of your first withdrawal or the 10th anniversary of the benefit
effective date, if earlier (B) the Account Value as of the date of the first
withdrawal from your Annuity, prior to the withdrawal, and (C) the highest
Account Value on each Annuity anniversary prior to the first withdrawal or on
the first 10 Annuity anniversaries if earlier than the date of your first
withdrawal after the benefit effective date. Each value is increased by the
amount of any subsequent Purchase Payments.
- - If you elect the Lifetime Five program at the time you purchase your
Annuity, the Account Value will be your initial Purchase Payment.
- - For existing Owners who are electing the Lifetime Five benefit, the
Account Value on the date of your election of the Lifetime Five program
will be used to determine the initial Protected Withdrawal Value.
- - If you make additional Purchase Payments after your first withdrawal, the
Protected Withdrawal Value will be increased by the amount of each
additional Purchase Payment.
You may elect to step-up your Protected Withdrawal Value if, due to
positive market performance, your Account Value is greater than the Protected
Withdrawal Value. You are eligible to step-up the Protected Withdrawal Value on
or after the 5th anniversary of the first withdrawal under the Lifetime Five
program. The Protected Withdrawal Value can be stepped up again on or after the
5th anniversary following the preceding step-up. If you elect to step-up the
Protected Withdrawal Value under the program, and on the date you elect to
step-up, the charges under the Lifetime Five program have changed for new
purchasers, your program may be subject to the new charge going forward.
Upon election of the step-up, we increase the Protected Withdrawal Value
to be equal to the then current Account Value. For example, assume your initial
Protected Withdrawal Value was $100,000 and you have made cumulative withdrawals
of $40,000, reducing the Protected Withdrawal Value to $60,000. On the date you
are eligible to step-up the Protected Withdrawal Value, your Account Value is
equal to $75,000. You could elect to step-up the Protected Withdrawal Value to
$75,000 on the date you are eligible. If your current Annual Income Amount and
Annual Withdrawal Amount are less than they would be if we did not reflect the
step-up in Protected Withdrawal Value, then we will increase these amounts to
reflect the step-up as described below.
The Protected Withdrawal Value is reduced each time a withdrawal is made
on a dollar-for-dollar basis up to 7% per Annuity Year of the Protected
Withdrawal Value and on the greater of a dollar-for-dollar basis or a pro rata
basis for withdrawals in an Annuity Year in excess of that amount until the
Protected Withdrawal Value is reduced to zero. At that point the Annual
Withdrawal Amount will be zero until such time (if any) as the Annuity reflects
a Protected Withdrawal Value (for example, due to a step-up or additional
Purchase Payments being made into the Annuity).
KEY FEATURE -- Annual Income Amount under the Life Income Benefit
The initial Annual Income Amount is equal to 5% of the initial Protected
Withdrawal Value. Under the Lifetime Five program, if your cumulative
withdrawals in an Annuity Year are less than or equal to the Annual Income
Amount, they will not reduce your Annual Income Amount in subsequent Annuity
Years. If your cumulative withdrawals are in excess of the Annual Income Amount
("Excess Income"), your Annual Income Amount in subsequent years will be reduced
(except with regard to required minimum distributions) by the result of the
ratio of the Excess Income to the Account Value immediately prior to such
withdrawal (see examples of this calculation below).
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Reductions include the actual amount of the withdrawal, including any CDSC that
may apply. A withdrawal can be considered Excess Income under the Life Income
Benefit even though it does not exceed the Annual Withdrawal Amount under the
Withdrawal Benefit. When you elect a step-up, your Annual Income Amount
increases to equal 5% of your Account Value after the step-up if such amount is
greater than your Annual Income Amount. Your Annual Income Amount also increases
if you make additional Purchase Payments. The amount of the increase is equal to
5% of any additional Purchase Payments. Any increase will be added to your
Annual Income Amount beginning on the day that the step-up is effective or the
Purchase Payment is made. A determination of whether you have exceeded your
Annual Income Amount is made at the time of each withdrawal; therefore a
subsequent increase in the Annual Income Amount will not offset the effect of a
withdrawal that exceeded the Annual Income Amount at the time the withdrawal was
made.
KEY FEATURE -- Annual Withdrawal Amount under the Withdrawal Benefit
The initial Annual Withdrawal Amount is equal to 7% of the initial Protected
Withdrawal Value. Under the Lifetime Five program, if your cumulative
withdrawals each Annuity Year are less than or equal to the Annual Withdrawal
Amount, your Protected Withdrawal Value will be reduced on a dollar-for-dollar
basis. If your cumulative withdrawals are in excess of the Annual Withdrawal
Amount ("Excess Withdrawal"), your Annual Withdrawal Amount will be reduced
(except with regard to required minimum distributions) by the result of the
ratio of the Excess Withdrawal to the Account Value immediately prior to such
withdrawal (see the examples of this calculation below). Reductions include the
actual amount of the withdrawal, including any CDSC that may apply. When you
elect a step-up, your Annual Withdrawal Amount increases to equal 7% of your
Account Value after the step-up if such amount is greater than your Annual
Withdrawal Amount. Your Annual Withdrawal Amount also increases if you make
additional Purchase Payments. The amount of the increase is equal to 7% of any
additional Purchase Payments. A determination of whether you have exceeded your
Annual Withdrawal Amount is made at the time of each withdrawal; therefore, a
subsequent increase in the Annual Withdrawal Amount will not offset the effect
of a withdrawal that exceeded the Annual Withdrawal Amount at the time the
withdrawal was made.
The Lifetime Five program does not affect your ability to make withdrawals
under your Annuity or limit your ability to request withdrawals that exceed the
Annual Income Amount and the Annual Withdrawal Amount. You are not required to
withdraw all or any portion of the Annual Withdrawal Amount or Annual Income
Amount in each Annuity Year.
- - If, cumulatively, you withdraw an amount less than the Annual Withdrawal
Amount under the Withdrawal Benefit in any Annuity Year, you cannot
carry-over the unused portion of the Annual Withdrawal Amount to
subsequent Annuity Years. However, because the Protected Withdrawal Value
is only reduced by the actual amount of withdrawals you make under these
circumstances, any unused Annual Withdrawal Amount may extend the period
of time until the remaining Protected Withdrawal Value is reduced to zero.
- - If, cumulatively, you withdraw an amount less than the Annual Income
Amount under the Life Income Benefit in any Annuity Year, you cannot
carry-over the unused portion of the Annual Income Amount to subsequent
Annuity Years. However, because the Protected Withdrawal Value is only
reduced by the actual amount of withdrawals you make under these
circumstances, any unused Annual Income Amount may extend the period of
time until the remaining Protected Withdrawal Value is reduced to zero.
The following examples of dollar-for-dollar and proportional reductions
and the step-up of the Protected Withdrawal Value, Annual Withdrawal Amount and
Annual Income Amount assume: 1.) the Issue Date and the Effective Date of the
Lifetime Five program are February 1, 2005; 2.) an initial Purchase Payment of
$250,000; 3.) the Account Value on February 1, 2006 is equal to $265,000; 4.)
the first withdrawal occurs on March 1, 2006 when the Account Value is equal to
$263,000; and 5.) the Account Value on March 1, 2011 is equal to $240,000.
The initial Protected Withdrawal Value is calculated as the greatest of
(a), (b) and (c):
(a) Purchase payment accumulated at 5% per year from February 1, 2005
until March 1, 2006 (393 days) = $250,000 x 1.05(393/365) =
$263,484.33
(b) Account Value on March 1, 2006 (the date of the first withdrawal) =
$263,000
(c) Account Value on February 1, 2006 (the first Annuity Anniversary) =
$265,000
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Living Benefit Programs continued
Therefore, the initial Protected Withdrawal Value is equal to $265,000.
The Annual Withdrawal Amount is equal to $18,550 under the Withdrawal Benefit
(7% of $265,000). The Annual Income Amount is equal to $13,250 under the Life
Income Benefit (5% of $265,000).
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
If $10,000 was withdrawn (less than both the Annual Income Amount and the Annual
Withdrawal Amount) on March 1, 2006, then the following values would result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 -
$10,000 = $8,550
Annual Withdrawal Amount for future Annuity Years remains at $18,550
- - Remaining Annual Income Amount for current Annuity Year = $13,250 -
$10,000 = $3,250
Annual Income Amount for future Annuity Years remains at $13,250
- - Protected Withdrawal Value is reduced by $10,000 from $265,000 to $255,000
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
(a) If $15,000 was withdrawn (more than the Annual Income Amount but
less than the Annual Withdrawal Amount) on March 1, 2006, then the
following values would result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 -
$15,000 = $3,550
Annual Withdrawal Amount for future Annuity Years remains at $18,550
- - Remaining Annual Income Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Income Amount ($15,000 - $13,250 =
$1,750) reduces Annual Income Amount for future Annuity Years.
- - Reduction to Annual Income Amount = Excess Income/ Account Value before
Excess Income x Annual Income Amount = $1,750 / ($263,000 - $13,250) x
$13,250 = $93 Annual Income Amount for future Annuity Years = $13,250 -
$93 = $13,157
- - Protected Withdrawal Value is reduced by $15,000 from $265,000 to $250,000
(b) If $25,000 was withdrawn (more than both the Annual Income Amount
and the Annual Withdrawal Amount) on March 1, 2006, then the
following values would result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Withdrawal Amount ($25,000 - $18,550
= $6,450) reduces Annual Withdrawal Amount for future Annuity Years.
- - Reduction to Annual Withdrawal Amount = Excess Withdrawal/Account Value
before Excess Withdrawal x Annual Withdrawal Amount = $6,450 / ($263,000 -
$18,550) x $18,550 = $489 Annual Withdrawal Amount for future Annuity
Years = $18,550 - $489 = $18,061
- - Remaining Annual Income Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Income Amount ($25,000 - $13,250 =
$11,750) reduces Annual Income Amount for future Annuity Years.
- - Reduction to Annual Income Amount = Excess Income/ Account Value before
Excess Income x Annual Income Amount = $11,750 / ($263,000 - $13,250) x
$13,250 = $623 Annual Income Amount for future Annuity Years = $13,250 -
$623 = $12,627
- - Protected Withdrawal Value is first reduced by the Annual Withdrawal
Amount ($18,550) from $265,000 to $246,450. It is further reduced by the
greater of a dollar-for-dollar reduction or a proportional reduction.
Dollar-for-dollar reduction = $25,000 - $18,550 = $6,450
- - Proportional reduction = Excess Withdrawal / Account Value before Excess
Withdrawal x Protected Withdrawal Value = $6,450 / ($263,000 - $18,550) x
$246,450 = $6,503 Protected Withdrawal Value = $246,450 - max {$6,450,
$6,503} = $239,947
EXAMPLE 3. STEP-UP OF THE PROTECTED
Withdrawal Value
If the Annual Income Amount ($13,250) is withdrawn each year starting on March
1, 2006 for a period of 5 years, the Protected Withdrawal Value on March 1, 2011
would be reduced to $198,750 ($265,000 - ($13,250 x 5)}. If a step-up is elected
on March 1, 2011, then the following values would result:
- - Protected Withdrawal Value = Account Value on March 1, 2011 = $240,000
- - Annual Income Amount is equal to the greater of the current Annual Income
Amount or 5% of the stepped up Protected Withdrawal Value. Current Annual
Income Amount is $13,250. 5% of the stepped-up Protected Withdrawal Value
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
is 5% of $240,000, which is $12,000. Therefore, the Annual Income Amount
remains $13,250.
- - Annual Withdrawal Amount is equal to the greater of the current Annual
Withdrawal Amount or 7% of the stepped up Protected Withdrawal Value.
Current Annual Withdrawal Amount is $18,550. 7% of the stepped-up
Protected Withdrawal Value is 7% of $240,000, which is $16,800. Therefore
the Annual Withdrawal Amount remains $18,550.
BENEFITS UNDER THE LIFETIME FIVE PROGRAM
- - If your Account Value is equal to zero, and the cumulative withdrawals in
the current Annuity Year are greater than the Annual Withdrawal Amount,
the Lifetime Five program will terminate. To the extent that your Account
Value was reduced to zero as a result of cumulative withdrawals that are
equal to or less than the Annual Income Amount and amounts are still
payable under both the Life Income Benefit and the Withdrawal Benefit, you
will be given the choice of receiving the payments under the Life Income
Benefit or under the Withdrawal Benefit. Once you make this election we
will make an additional payment for that Annuity Year equal to either the
remaining Annual Income Amount or Annual Withdrawal Amount for the Annuity
Year, if any, depending on the option you choose. In subsequent Annuity
Years we make payments that equal either the Annual Income Amount or the
Annual Withdrawal Amount as described in this Prospectus. You will not be
able to change the option after your election and no further Purchase
Payments will be accepted under your Annuity. If you do not make an
election, we will pay you annually under the Life Income Benefit. To the
extent that cumulative withdrawals in the current Annuity Year that
reduced your Account Value to zero are more than the Annual Income Amount
but less than or equal to the Annual Withdrawal Amount and amounts are
still payable under the Withdrawal Benefit, you will receive the payments
under the Withdrawal Benefit. In the year of a withdrawal that reduced
your Account Value to zero, we will make an additional payment to equal
any remaining Annual Withdrawal Amount and make payments equal to the
Annual Withdrawal Amount in each subsequent year (until the Protected
Withdrawal Value is depleted). Once your Account Value equals zero no
further Purchase Payments will be accepted under your Annuity.
- - If annuity payments are to begin under the terms of your Annuity or if you
decide to begin receiving annuity payments and there is any Annual Income
Amount due in subsequent Annuity Years or any remaining Protected
Withdrawal Value, you can elect one of the following three options:
(1) apply your Account Value to any annuity option available; or
(2) request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We
make such annuity payments until the Annuitant's death; or
(3) request that, as of the date annuity payments are to begin, we pay
out any remaining Protected Withdrawal Value as annuity payments.
Each year such annuity payments will equal the Annual Withdrawal
Amount or the remaining Protected Withdrawal Value if less. We make
such annuity payments until the earlier of the Annuitant's death or
the date the Protected Withdrawal Value is depleted.
We must receive your request in a form acceptable to us at our office.
- - In the absence of an election when mandatory annuity payments are to
begin, we will make annual annuity payments as a single life fixed annuity
with five payments certain using the greater of the annuity rates then
currently available or the annuity rates guaranteed in your Annuity. The
amount that will be applied to provide such annuity payments will be the
greater of:
(1) the present value of future Annual Income Amount payments. Such
present value will be calculated using the greater of the single
life fixed annuity rates then currently available or the single life
fixed annuity rates guaranteed in your Annuity; and
(2) the Account Value.
- - If no withdrawal was ever taken, we will determine a Protected Withdrawal
Value and calculate an Annual Income Amount and an Annual Withdrawal
Amount as if you made your first withdrawal on the date the annuity
payments are to begin.
Other Important Considerations
- - Withdrawals under the Lifetime Five program are subject to all of the
terms and conditions of the Annuity, including any CDSC.
- - Withdrawals made while the Lifetime Five program is in effect will be
treated, for tax purposes, in the same way as any other withdrawals under
the Annuity. The Lifetime Five program does not directly affect the
Annuity's Account Value or Surrender Value, but any withdrawal will
decrease the Account Value by the amount of the withdrawal (plus any
applicable CDSC). If you
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Living Benefit Programs continued
surrender your Annuity, you will receive the current Surrender Value, not
the Protected Withdrawal Value.
- - You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the Lifetime Five program. The
Lifetime Five program provides a guarantee that if your Account Value
declines due to market performance, you will be able to receive your
Protected Withdrawal Value or Annual Income Amount in the form of periodic
benefit payments.
- - You must allocate your Account Value in accordance with an eligible model
under an available asset allocation program or in accordance with other
options that we may permit in order to elect and maintain the Lifetime
Five program. Asset allocation programs are described generally in the
"Are Any Asset Allocation Programs Available?" section above. For further
information on asset allocation programs, please consult with your
Investment Professional or call 1-800-752-6342.
Election of the Program
The Lifetime Five program can be elected at the time that you purchase your
Annuity. We also offer existing Owners the option to elect the Lifetime Five
program after the Issue Date of their Annuity, subject to our eligibility rules
and restrictions. Your Account Value as the date of election will be used as a
basis to calculate the initial Protected Withdrawal Value, the initial
Protected Annual Withdrawal Amount, and the Annual Income Amount.
Termination of the Program
The program terminates automatically when your Protected Withdrawal Value and
Annual Income Amount equals zero. You may terminate the program at any time by
notifying us. If you terminate the program, any guarantee provided by the
benefit will terminate as of the date the termination is effective. The program
terminates upon your surrender of the Annuity, upon the death of the Annuitant
(but your surviving spouse may elect a new Lifetime Five if your spouse elects
the spousal continuance option and your spouse would then be eligible to elect
the benefit if he or she was a new purchaser), upon a change in ownership of the
Annuity that changes the tax identification number of the Owner, upon change in
the Annuitant or upon your election to begin receiving annuity payments.
The charge for the Lifetime Five program will no longer be deducted from
your Account Value upon termination of the program.
Additional Tax Considerations for Qualified Contracts
If you purchase an Annuity as an investment vehicle for "qualified" investments,
including an IRA, SEP-IRA, or Tax Sheltered Annuity (or 403(b)), the minimum
distribution rules under the Code require that you begin receiving periodic
amounts from your Annuity beginning after age 70 1/2. The amount required under
the Code may exceed the Annual Withdrawal Amount and the Annual Income Amount,
which will cause us to increase the Annual Income Amount and the Annual
Withdrawal Amount in any Annuity Year that required minimum distributions due
from your Annuity are greater than such amounts. Any such payments will reduce
your Protected Withdrawal Value. In addition, the amount and duration of
payments under the annuity payment and death benefit provisions may be adjusted
so that the payments do not trigger any penalty or excise taxes due to tax
considerations such as minimum distribution requirements.
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Death Benefit
WHAT TRIGGERS THE PAYMENT OF A DEATH BENEFIT?
The Annuity provides a Death Benefit during its accumulation period. If the
Annuity is owned by one or more natural persons, the Death Benefit is payable
upon the first death of an Owner. IF THE ANNUITY IS OWNED BY AN ENTITY, THE
DEATH BENEFIT IS PAYABLE UPON THE ANNUITANT'S DEATH, IF THERE IS NO CONTINGENT
ANNUITANT. If a Contingent Annuitant was designated before the Annuitant's death
and the Annuitant dies, then the Contingent Annuitant becomes the Annuitant and
a Death Benefit will not be paid at that time. The person upon whose death the
Death Benefit is paid is referred to below as the "decedent."
BASIC DEATH BENEFIT
The Annuity provides a basic Death Benefit at no additional charge. The
Insurance Charge we deduct daily from your Account Value allocated to the
Sub-accounts is used, in part, to pay us for the risk we assume in providing the
basic Death Benefit guarantee under the Annuity. The Annuity also offers three
different optional Death Benefits that can be purchased for an additional
charge. The additional charge is deducted to compensate American Skandia for
providing increased insurance protection under the optional Death Benefits.
NOTWITHSTANDING THE ADDITIONAL PROTECTION PROVIDED UNDER THE OPTIONAL DEATH
BENEFITS, THE ADDITIONAL COST HAS THE IMPACT OF REDUCING THE NET PERFORMANCE OF
THE INVESTMENT OPTIONS.
The BASIC DEATH BENEFIT is the greater of:
- - The sum of all Purchase Payments less the sum of all proportional
withdrawals.
- - The sum of your Account Value in the variable investment options and your
Interim Value in the Fixed Allocations.
"PROPORTIONAL WITHDRAWALS" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn. For
example, a withdrawal of 50% of Account Value would be considered as a 50%
reduction in Purchase Payments for purposes of calculating the basic Death
Benefit.
OPTIONAL DEATH BENEFITS
Three optional Death Benefits are offered for purchase with your Annuity to
provide an enhanced level of protection for your beneficiaries.
CURRENTLY, THESE BENEFITS ARE ONLY OFFERED IN THOSE JURISDICTIONS WHERE WE
HAVE RECEIVED REGULATORY APPROVAL AND MUST BE ELECTED AT THE TIME THAT YOU
PURCHASE YOUR ANNUITY. WE MAY, AT A LATER DATE, ALLOW EXISTING ANNUITY OWNERS
TO PURCHASE AN OPTIONAL DEATH BENEFIT SUBJECT TO OUR RULES AND ANY CHANGES OR
RESTRICTIONS IN THE BENEFITS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED AND IF YOU PURCHASE YOUR ANNUITY AS PART OF AN
EXCHANGE, REPLACEMENT OR TRANSFER, IN WHOLE OR IN PART, FROM ANY OTHER
ANNUITY WE ISSUE. THE "COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE"
DEATH BENEFIT MAY ONLY BE ELECTED INDIVIDUALLY, AND CANNOT BE ELECTED IN
COMBINATION WITH ANY OTHER OPTIONAL DEATH BENEFIT.
Enhanced Beneficiary Protection Optional Death Benefit
The Enhanced Beneficiary Protection Optional Death Benefit can provide
additional amounts to your Beneficiary that may be used to offset federal and
state taxes payable on any taxable gains in your Annuity at the time of your
death. Whether this benefit is appropriate for you may depend on your particular
circumstances, including other financial resources that may be available to your
Beneficiary to pay taxes on your Annuity should you die during the accumulation
period. No benefit is payable if death occurs on or after the Annuity Date.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT PROVIDES A
BENEFIT THAT IS PAYABLE IN ADDITION TO THE BASIC DEATH BENEFIT. If the Annuity
has one Owner, the Owner must be age 75 or less at the time the benefit is
purchased. If the Annuity has joint Owners, the oldest Owner must be age 75 or
less. If the Annuity is owned by an entity, the Annuitant must be age 75 or
less.
Calculation of Enhanced Beneficiary Protection
Optional Death Benefit
If you purchase the Enhanced Beneficiary Protection Optional Death Benefit, the
Death Benefit is calculated as follows:
1. the BASIC DEATH BENEFIT described above;
PLUS
2. 40% of your "GROWTH" under the Annuity, as defined below.
"GROWTH" means the sum of your Account Value in the variable investment
options and your Interim Value in the Fixed
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Death Benefit continued
Allocations, minus the total of all Purchase Payments reduced by the sum of all
proportional withdrawals.
"PROPORTIONAL WITHDRAWALS" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT IS SUBJECT TO A
MAXIMUM OF 100% OF ALL PURCHASE PAYMENTS APPLIED TO THE ANNUITY AT LEAST 12
MONTHS PRIOR TO THE DEATH OF THE DECEDENT THAT TRIGGERS THE PAYMENT OF THE
DEATH BENEFIT.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT IS BEING OFFERED
IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL. CERTAIN
TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. PLEASE
REFER TO THE SECTION ENTITLED "TAX CONSIDERATIONS" FOR A DISCUSSION OF
SPECIAL TAX CONSIDERATIONS FOR PURCHASERS OF THIS BENEFIT. THE ENHANCED
BENEFICIARY PROTECTION DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT THE
"COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE" DEATH BENEFIT.
See Appendix B for examples of how the Enhanced Beneficiary Protection
Optional Death Benefit is calculated.
Highest Anniversary Value Death Benefit ("HAV")
If the Annuity has one Owner, the Owner must be age 79 or less at the time the
Highest Anniversary Value Optional Death Benefit is purchased. If the Annuity
has joint Owners, the oldest Owner must be age 79 or less. If the Annuity is
owned by an entity, the Annuitant must be age 79 or less.
Certain of the Portfolios offered as Sub-accounts under the Annuity are
not available if you elect the Highest Anniversary Value Death Benefit. In
addition, we reserve the right to require you to use certain asset allocation
model(s) if you elect this death benefit.
Calculation of Highest Anniversary Value Death Benefit
The HAV Death Benefit depends on whether death occurs before or after the Death
Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value as of the Owner's date of death.
If the Owner dies on or after the Death Benefit Target Date, the Death
Benefit equals the greater of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value on the Death Benefit Target Date plus
the sum of all Purchase Payments less the sum of all proportional
withdrawals since the Death Benefit Target Date.
THE AMOUNT DETERMINED BY THIS CALCULATION IS INCREASED BY ANY PURCHASE
PAYMENTS RECEIVED AFTER THE OWNER'S DATE OF DEATH AND DECREASED BY ANY
PROPORTIONAL WITHDRAWALS SINCE SUCH DATE.
THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT DESCRIBED ABOVE IS CURRENTLY
BEING OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY
APPROVAL. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE
APPROVED. THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT IS NOT AVAILABLE IF YOU
ELECT THE "COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE" OR THE
"HIGHEST DAILY VALUE " DEATH BENEFIT.
Please refer to the definition of Death Benefit Target Date below. This
death benefit may not be an appropriate feature where the Owner's age is near
the age specified in the Death Benefit Target Date. This is because the benefit
may not have the same potential for growth as it otherwise would, since there
will be fewer contract anniversaries before the death benefit target date is
reached. The death benefit target date under this death benefit is earlier than
the death benefit target date under the Combination 5% Roll-up and Highest
Anniversary Value Death Benefit for Owners who are age 76 or older when the
Annuity is issued, which may result in a lower value on the death benefit, since
there will be fewer contract anniversaries before the death benefit target date
is reached.
See Appendix B for examples of how the Highest Anniversary Value Death
Benefit is calculated.
Combination 5% Roll-up and Highest Anniversary Value Death Benefit
If the Annuity has one Owner, the Owner must be age 79 or less at the time the
Combination 5% Roll-up and HAV Optional Death Benefit is purchased. If the
Annuity has joint Owners,
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
the oldest Owner must be age 79 or less. If the Annuity is owned by an entity,
the Annuitant must be age 79 or less.
CERTAIN OF THE PORTFOLIOS OFFERED AS SUB-ACCOUNTS UNDER THE ANNUITY ARE
NOT AVAILABLE IF YOU ELECT THE COMBINATION 5% ROLL-UP AND HAV DEATH BENEFIT. IN
ADDITION, WE RESERVE THE RIGHT TO REQUIRE YOU TO USE CERTAIN ASSET ALLOCATION
MODEL(S) IF YOU ELECT THIS DEATH BENEFIT.
Calculation of the Combination 5% Roll-up and Highest Anniversary Value Death
Benefit
The Combination 5% Roll-up and HAV Death Benefit equals the greatest of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value death benefit described above, and
3. 5% Roll-up described below.
The calculation of the 5% Roll-up depends on whether death occurs before
or after the Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date the 5% Roll up is
equal to:
- - all Purchase Payments increasing at an annual effective interest rate of
5% starting on the date that each Purchase Payment is made and ending on
the Owner's date of death;
MINUS
- - the sum of all withdrawals, dollar for dollar up to 5% of the death
benefit's value as of the prior contract anniversary (or issue date if the
withdrawal is in the first contract year). Any withdrawals in excess of
the 5% dollar for dollar limit are proportional.
If the Owner dies on or after the Death Benefit Target Date the 5% Roll-up
is equal to:
- - the 5% Roll-up value as of the Death Benefit Target Date increased by
total Purchase Payments made after the Death Benefit Target Date;
MINUS
- - the sum of all withdrawals which reduce the 5% Roll-up proportionally.
PLEASE REFER TO THE DEFINITIONS OF DEATH BENEFIT TARGET DATE BELOW. THIS
DEATH BENEFIT MAY NOT BE AN APPROPRIATE FEATURE WHERE THE OWNER'S AGE IS NEAR
THE AGE SPECIFIED IN THE DEATH BENEFIT TARGET DATE. THIS IS BECAUSE THE BENEFIT
MAY NOT HAVE THE SAME POTENTIAL FOR GROWTH AS IT OTHERWISE WOULD, SINCE THERE
WILL BE FEWER ANNUITY ANNIVERSARIES BEFORE THE DEATH BENEFIT TARGET DATE IS
REACHED.
THE "COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE" DEATH BENEFIT
DESCRIBED ABOVE IS CURRENTLY BEING OFFERED IN THOSE JURISDICTIONS WHERE WE
HAVE RECEIVED REGULATORY APPROVAL. CERTAIN TERMS AND CONDITIONS MAY DIFFER
BETWEEN JURISDICTIONS ONCE APPROVED. THE "COMBINATION 5% ROLL-UP AND HIGHEST
ANNIVERSARY VALUE" DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT ANY OTHER
OPTIONAL DEATH BENEFIT.
See Appendix B for examples of how the Combination 5% Roll-up and Highest
Anniversary Value Death Benefit is calculated.
Key Terms Used with the Highest Anniversary Value Death Benefit and the
Combination 5% Roll-up and Highest Anniversary Value Death Benefit:
- - The Death Benefit Target Date for the Highest Anniversary Value Death
Benefit is the contract anniversary on or after the 80th birthday of the
current Owner, the oldest of either joint Owner or the Annuitant, if
entity owned.
- - The Death Benefit Target Date for the Combination 5% Roll-up and HAV Death
Benefit is the later of the contract anniversary on or after the 80th
birthday of the current Owner, the oldest of either joint Owner or the
Annuitant, if entity owned, or five years after the Issue Date of the
Annuity.
- - The Highest Anniversary Value equals the highest of all previous
"Anniversary Values" less proportional withdrawals since such anniversary
and plus any Purchase Payments since such anniversary.
- - The Anniversary Value is the Account Value as of each anniversary of the
Issue Date of the Annuity. The Anniversary Value on the Issue Date is
equal to your Purchase Payment.
- - Proportional withdrawals are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
Proportional withdrawals result in a reduction to the Highest Anniversary
Value or 5% Roll-up value by reducing such value in the same proportion as
the Account Value was reduced by the withdrawal as of the date the
withdrawal occurred. For example, if your Highest Anniversary Value or 5%
Roll-up value is $125,000 and you subsequently withdraw $10,000 at a time
when your Account Value is equal to $100,000 (a 10% reduction), when
calculating the optional Death Benefit we will reduce your Highest
Anniversary Value ($125,000) by 10% or $12,500.
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Death Benefit continued
Highest Daily Value Death Benefit ("HDV")
If the Annuity has one Owner, the Owner must be age 79 or less at the time
the Highest Daily Value Death Benefit is elected. If the Annuity has joint
Owners, the older Owner must be age 79 or less. If there are Joint Owners,
death of the Owner refers to the first to die of the Joint Owners. If the
Annuity is owned by an entity, the Annuitant must be age 79 or less and death
of the Owner refers to the death of the Annuitant.
IF YOU ELECT THIS BENEFIT, YOU MUST ALLOCATE YOUR ACCOUNT VALUE IN
ACCORDANCE WITH AN ELIGIBLE MODEL UNDER AN AVAILABLE ASSET ALLOCATION PROGRAM
OR IN ACCORDANCE WITH OTHER OPTIONS THAT WE MAY PERMIT. Because this benefit,
once elected, may not be terminated, you must keep your Account Value
allocated to an eligible model throughout the life of the Annuity. You may,
however, switch from one eligible model to another eligible model. Our asset
allocation programs are generally described in the "Are Any Asset Allocation
Programs Available?" section above. For further information on asset
allocation programs, please consult with your Investment Professional or call
1-800-752-6342.
The HDV Death Benefit depends on whether death occurs before or after the
Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the basic Death Benefit described above; and
2. the HDV as of the Owner's date of death.
If the Owner dies on or after the Death Benefit Target Date, the Death
Benefit equals the greater of:
1. the basic Death Benefit described above; and
2. the HDV on the Death Benefit Target Date plus the sum of all
Purchase Payments less the sum of all proportional withdrawals since
the Death Benefit Target Date.
The amount determined by this calculation is increased by any Purchase
Payments received after the Owner's date of death and decreased by any
proportional withdrawals since such date.
THE HIGHEST DAILY VALUE DEATH BENEFIT DESCRIBED ABOVE IS CURRENTLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL.
CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE APPROVED.
THE HIGHEST DAILY VALUE DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT THE
GUARANTEED RETURN OPTION, GUARANTEED RETURN OPTION PLUS, THE "COMBINATION 5%
ROLL-UP AND HIGHEST ANNIVERSARY VALUE" DEATH BENEFIT, OR THE HIGHEST
ANNIVERSARY VALUE DEATH BENEFIT.
Key Terms Used with the Highest Daily Value
Death Benefit:
- - The Death Benefit Target Date for the Highest Daily Value Death Benefit is
the later of the Annuity anniversary on or after the 80th birthday of the
current Owner, or the older of either the joint Owner or the Annuitant, if
entity owned, or five years after the Issue Date of the Annuity.
- - The Highest Daily Value equals the highest of all previous "Daily Values"
less proportional withdrawals since such date and plus any Purchase
Payments since such date.
- - The Daily Value is the Account Value as of the end of each Valuation Day.
The Daily Value on the Issue Date is equal to your Purchase Payment.
- - Proportional withdrawals are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
Proportional withdrawals result in a reduction to the Highest Daily Value
by reducing such value in the same proportion as the Account Value was
reduced by the withdrawal as of the date the withdrawal occurred. For
example, if your Highest Daily Value is $125,000 and you subsequently
withdraw $10,000 at a time when your Account Value is equal to $100,000 (a
10% reduction), when calculating the optional Death Benefit we will reduce
your Highest Daily Value ($125,000) by 10% or $12,500.
Please see Appendix B to this prospectus for a hypothetical example of how the
HDV Death Benefit is calculated.
Annuities with Joint Owners
For Annuities with Joint Owners, the Death Benefits are calculated as shown
above except that the age of the oldest of the
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Joint Owners is used to determine the Death Benefit Target Date. NOTE: If you
and your spouse own the Annuity jointly, we will pay the Death Benefit to the
Beneficiary. If the sole primary Beneficiary is the surviving spouse, then the
surviving spouse can elect to assume ownership of the Annuity and continue the
Annuity instead of receiving the Death Benefit.
Annuities owned by entities
For Annuities owned by an entity, the Death Benefits are calculated as shown
above except that the age of the Annuitant is used to determine the Death
Benefit Target Date. Payment of the Death Benefit is based on the death of the
Annuitant (or Contingent Annuitant, if applicable).
Can I terminate the optional Death Benefits? Do the optional Death Benefits
terminate under other circumstances?
You can terminate the Enhanced Beneficiary Protection Death Benefit and the
Highest Anniversary Value Death Benefit at any time. The "Combination 5% Roll-up
and HAV Death Benefit" and the HDV Death Benefit may not be terminated once
elected. The optional Death Benefits will terminate automatically on the Annuity
Date. We may also terminate any optional Death Benefit if necessary to comply
with our interpretation of the Code and applicable regulations.
What are the charges for the optional Death Benefits?
We deduct a charge equal to 0.25% per year of the average daily net assets of
the Sub-accounts for each of the Highest Anniversary Value Death Benefit and the
Enhanced Beneficiary Protection Death Benefit and 0.50% per year of the average
daily net assets of the Sub-accounts for the "Combination 5% Roll-up and HAV
Death Benefit" and the HDV Death Benefit. We deduct the charge for each of these
benefits to compensate American Skandia for providing increased insurance
protection under the optional Death Benefits. The additional annual charge is
deducted daily against your Account Value allocated to the Sub-accounts.
Please refer to the section entitled "Tax Considerations" for additional
considerations in relation to the optional Death Benefit.
AMERICAN SKANDIA'S ANNUITY REWARDS
What is the Annuity Rewards Benefit?
The Annuity Rewards Benefit offers Owners the ability to capture any market
gains since the Issue Date of their Annuity as an enhancement to their current
Death Benefit so their Beneficiaries will not receive less than the Annuity's
value as of the effective date of the benefit. Under the Annuity Rewards
Benefit, American Skandia guarantees that the Death Benefit will not be less
than:
- - your Account Value in the variable investment options plus the Interim
Value in any Fixed Allocations as of the effective date of the benefit
- - MINUS any proportional withdrawals* following the effective date of the
benefit
- - PLUS any additional Purchase Payments applied to the Annuity following the
effective date of the benefit.
The Annuity Rewards Death Benefit enhancement does not affect the
calculation of the basic Death Benefit or any Optional Death Benefits available
under the Annuity to the extent such benefit provides for a change in the method
of calculation based on the age of the decedent as of the date of death. If the
Death Benefit amount payable under your Annuity's basic Death Benefit or any
Optional Death Benefits you purchase is greater than the enhanced Death Benefit
under the Annuity Rewards Benefit on the date the Death Benefit is calculated,
your Beneficiary will receive the higher amount.
Who is eligible for the Annuity Rewards benefit?
Owners can elect the Annuity Rewards Death Benefit enhancement following the
eighth (8th) anniversary of the Annuity's Issue Date. However, the Account Value
on the date that the Annuity Rewards benefit is effective, must be greater than
the amount that would be payable to the Beneficiary under the Death Benefit
(including any amounts payable under any Optional Death Benefit then in effect).
The effective date must occur before annuity payments begin. There can only be
one effective date for the Annuity Rewards Death Benefit enhancement. There is
no additional charge for electing the Annuity Rewards Death Benefit enhancement.
PAYMENT OF DEATH BENEFITS
Payment of Death Benefit to Beneficiary
Except in the case of a spousal assumption as described below, in the event of
your death, the death benefit must be distributed:
- - as a lump sum amount at any time within five (5) years of the date of
death; or
* "Proportional withdrawals" are determined by calculating the percentage of the
Account Value that each withdrawal represented when withdrawn. For example, a
withdrawal of 50% of your Account Value would be treated as a 50% reduction in
the amount payable under the Death Benefit.
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Death Benefit continued
- - as a series of annuity payments not extending beyond the life expectancy
of the Beneficiary or over the life of the Beneficiary. Payments under
this option must begin within one year of the date of death.
Unless you have made an election prior to death benefit proceeds becoming
due, a Beneficiary can elect to receive the Death Benefit proceeds as a series
of fixed annuity payments (annuity payment options 1-4) or as a series of
variable annuity payments (annuity payment options 1-3 or 5 and 6). See the
section entitled "What Types of Annuity Options are Available."
SPOUSAL BENEFICIARY -- ASSUMPTION OF ANNUITY
You may name your spouse as your Beneficiary. If you and your spouse own the
Annuity jointly, we assume that the sole primary Beneficiary will be the
surviving spouse unless you elect an alternative Beneficiary designation. Unless
you elect an alternative Beneficiary designation, the spouse Beneficiary may
elect to assume ownership of the Annuity instead of taking the Death Benefit
payment. Any Death Benefit (including any optional Death Benefits) that would
have been payable to the Beneficiary will become the new Account Value as of the
date we receive due proof of death and any required proof of a spousal
relationship. As of the date the assumption is effective, the surviving spouse
will have all the rights and benefits that would be available under the Annuity
to a new purchaser of the same attained age. For purposes of determining any
future Death Benefit for the surviving spouse, the new Account Value will be
considered as the initial Purchase Payment. No CDSC will apply to the new
Account Value. However, any additional Purchase Payments applied after the date
the assumption is effective will be subject to all provisions of the Annuity,
including any CDSC that may apply to the additional Purchase Payments.
See the section entitled "Managing Your Annuity -- Spousal Contingent
Annuitant" for a discussion of the treatment of a spousal Contingent Annuitant
in the case of the death of the Annuitant in an entity owned Annuity.
QUALIFIED BENEFICIARY CONTINUATION OPTION
The Code provides for alternative death benefit payment options when an Annuity
is used as an IRA, 403(b) or other "qualified investment" that requires Minimum
Distributions. Upon the Owner's death under an IRA, 403(b) or other "qualified
investment", a Beneficiary may generally elect to continue the Annuity and
receive Minimum Distributions under the Annuity instead of receiving the death
benefit in a single payment. The available payment options will depend on
whether the Owner died on or before the date he or she was required to begin
receiving Minimum Distributions under the Code and whether the Beneficiary is
the surviving spouse.
- - If death occurs BEFORE the date Minimum Distributions must begin under the
Code, the Death Benefit can be paid out in either a lump sum, within five
years from the date of death, or over the life or life expectancy of the
designated Beneficiary (as long as payments begin by December 31st of the
year following the year of death). However, if the spouse is the
Beneficiary, the Death Benefit can be paid out over the life or life
expectancy of the spouse with such payments beginning no earlier than
December 31st of the year following the year of death or December 31st of
the year in which the deceased would have reached age 70 1/2, which ever
is later.
- - If death occurs AFTER the date Minimum Distributions must begin under the
Code, the Death Benefit must be paid out at least as rapidly as under the
method then in effect.
A Beneficiary has the flexibility to take out more each year than required
under the Minimum Distribution rules. Until withdrawn, amounts in an IRA, 403(b)
or other "qualified investment" continue to be tax deferred. Amounts withdrawn
each year, including amounts that are required to be withdrawn under the Minimum
Distribution rules, are subject to tax. You may wish to consult a professional
tax advisor for tax advice as to your particular situation.
Upon election of this Qualified Beneficiary Continuation option:
- - the Annuity contract will be continued in the Owner's name, for the
benefit of the Beneficiary.
- - the Beneficiary will be charged at an amount equal to 1.40% daily against
the average daily assets allocated to the Sub-accounts.
- - the Account Value will be equal to any Death Benefit (including any
optional Death Benefit) that would have been payable to the Beneficiary if
they had taken a lump sum distribution.
- - the Beneficiary may request transfers among Sub-accounts, subject to the
same limitations and restrictions that applied to the Owner, except that
the Sub-accounts offered will be
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
those offered under the Qualified Beneficiary Continuation option at the
time the option is elected.
- - the Fixed Allocations will be those offered under the Qualified
Beneficiary Continuation option at the time the option is elected.
- - no additional Purchase Payments can be applied to the Annuity.
- - other optional Benefits will be those offered under the Qualified
Beneficiary Continuation option at the time of election.
- - the basic Death Benefit and any optional Death Benefits elected by the
Owner will no longer apply to the Beneficiary.
- - the Beneficiary can request a withdrawal of all or a portion of the
Account Value at any time without application of a CDSC.
- - upon the death of the Beneficiary, any remaining Account Value will be
paid in a lump sum to the person(s) named by the Beneficiary.
- - all amounts in the Annuity must be paid out to the Beneficiary according
to the Minimum Distribution rules described above.
Your Beneficiary will be provided with a prospectus and settlement option
that will describe this option at the time he or she elects this option. Please
contact American Skandia for additional information on the availability,
restrictions and limitations that will apply to a Beneficiary under the
Qualified Beneficiary Continuation option.
Are there any exceptions to these rules for paying the Death Benefit?
Yes, there are exceptions that apply no matter how your Death Benefit is
calculated. There are exceptions to the Death Benefit if the decedent was not
the Owner or Annuitant as of the Issue Date and did not become the Owner or
Annuitant due to the prior Owner's or Annuitant's death. Any Death Benefit
(including any optional Death Benefit) that applies will be suspended for a
two-year period from the date he or she first became Owner or Annuitant. After
the two-year suspension period is completed, the Death Benefit is the same as if
this person had been an Owner or Annuitant on the Issue Date.
When do you determine the Death Benefit?
We determine the amount of the Death Benefit as of the date we receive "due
proof of death", any instructions we require to determine the method of payment
and any other written representations we require to determine the proper payment
of the Death Benefit to all Beneficiaries. "Due proof of death" may include a
certified copy of a death certificate, a certified copy of a decree of a court
of competent jurisdiction as to the finding of death or other satisfactory proof
of death. Upon our receipt of "due proof of death" we automatically transfer the
Death Benefit to the AST Money Market Sub-account until we further determine the
universe of eligible Beneficiaries. Once the universe of eligible Beneficiaries
has been determined each eligible Beneficiary may allocate his or her eligible
share of the Death Benefit to the Sub-accounts according to our rules.
Each Beneficiary must make an election as to the method they wish to
receive their portion of the Death Benefit. Absent an election of a Death
Benefit payment method, no Death Benefit can be paid to the Beneficiary. We may
require written acknowledgment of all named Beneficiaries before we can pay the
Death Benefit. DURING THE PERIOD FROM THE DATE OF DEATH UNTIL WE RECEIVE ALL
REQUIRED PAPER WORK, THE AMOUNT OF THE DEATH BENEFIT MAY BE SUBJECT TO MARKET
FLUCTUATIONS.
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Valuing Your Investment
HOW IS MY ACCOUNT VALUE DETERMINED?
During the accumulation period, the Annuity has an Account Value. The Account
Value is determined separately for each Sub-account allocation and for each
Fixed Allocation. The Account Value is the sum of the values of each Sub-account
allocation and the value of each Fixed Allocation. The Account Value does not
reflect any CDSC that may apply to a withdrawal or surrender. When determining
the Account Value on a day more than 30 days prior to a Fixed Allocation's
Maturity Date, the Account Value may include any Market Value Adjustment that
would apply to a Fixed Allocation (if withdrawn or transferred) on that day.
WHAT IS THE SURRENDER VALUE OF MY ANNUITY?
The Surrender Value of your Annuity is the value available to you on any day
during the accumulation period. The Surrender Value is defined under "Glossary
of Terms" above.
HOW AND WHEN DO YOU VALUE THE SUB-ACCOUNTS?
When you allocate Account Value to a Sub-account, you are purchasing units of
the Sub-account. Each Sub-account invests exclusively in shares of an underlying
Portfolio. The value of the Units fluctuates with the market fluctuations of the
Portfolios. The value of the Units also reflects the daily accrual for the
Insurance Charge, the Distribution Charge (if applicable), and if you elected
one or more optional benefits whose annual charge is deducted daily, the
additional charge made for such benefits. There may be several different Unit
Prices for each Sub-account to reflect the Insurance Charge, Distribution Charge
and the charges for any optional benefits. The Unit Price for the Units you
purchase will be based on the total charges for the benefits that apply to your
Annuity. See the section entitled "What Happens to My Units When There is a
Change in Daily Asset-Based Charges?" for a detailed discussion of how Units are
purchased and redeemed to reflect changes in the daily charges that apply to
your Annuity.
Each Valuation Day, we determine the price for a Unit of each Sub-account,
called the "Unit Price." The Unit Price is used for determining the value of
transactions involving Units of the Sub-accounts. We determine the number of
Units involved in any transaction by dividing the dollar value of the
transaction by the Unit Price of the Sub-account as of the Valuation Day.
Example
Assume you allocate $5,000 to a Sub-account. On the Valuation Day you make the
allocation, the Unit Price is $14.83. Your $5,000 buys 337.154 Units of the
Sub-account. Assume that later, you wish to transfer $3,000 of your Account
Value out of that Sub-account and into another Sub-account. On the Valuation Day
you request the transfer, the Unit Price of the original Sub-account has
increased to $16.79. To transfer $3,000, we sell 178.677 Units at the current
Unit Price, leaving you 158.477 Units. We then buy $3,000 of Units of the new
Sub-account at the Unit Price of $17.83. You would then have 168.255 Units of
the new Sub-account.
HOW DO YOU VALUE FIXED ALLOCATIONS?
During the Guarantee Period, we use the concept of an Interim Value. The Interim
Value can be calculated on any day and is equal to the initial value allocated
to a Fixed Allocation plus all interest credited to a Fixed Allocation as of the
date calculated. The Interim Value does not include the impact of any Market
Value Adjustment. If you made any transfers or withdrawals from a Fixed
Allocation, the Interim Value will reflect the withdrawal of those amounts and
any interest credited to those amounts before they were withdrawn. To determine
the Account Value of a Fixed Allocation on any day more than 30 days prior to
its Maturity Date, we multiply the Account Value of the Fixed Allocation times
the Market Value Adjustment factor.
WHEN DO YOU PROCESS AND VALUE TRANSACTIONS?
American Skandia is generally open to process financial transactions on those
days that the New York Stock Exchange (NYSE) is open for trading. There may be
circumstances where the NYSE does not open on a regularly scheduled date or time
or closes at an earlier time than scheduled (normally 4:00 p.m. EST). Financial
transactions requested before the close of the NYSE which meet our requirements
will be processed according to the value next determined following the close of
business. Financial transactions requested on a non-business day or after the
close of the NYSE will be processed based on the value next computed on the next
Valuation Day. There may be circumstances when the opening or closing time of
the NYSE is different than other major stock exchanges, such as NASDAQ or the
American Stock Exchange. Under such circumstances, the closing time of the NYSE
will be used when valuing and processing transactions.
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
There may be circumstances where the NYSE is open, how- ever, due to
inclement weather, natural disaster or other circumstances beyond our control,
our offices may be closed or our business processing capabilities may be
restricted. Under those circumstances, your Account Value may fluctuate based on
changes in the Unit Values, but you may not be able to transfer Account Value,
or make a purchase or redemption request.
The NYSE is closed on the following nationally recognized holidays: New
Year's Day, Martin Luther King, Jr. Day, Washington's Birthday, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas. On those
dates, we will not process any financial transactions involving purchase or
redemption orders.
American Skandia will also not process financial transactions involving
purchase or redemption orders or transfers on any day that:
- - trading on the NYSE is restricted;
- - an emergency exists making redemption or valuation of securities held in
the separate account impractical; or
- - the SEC, by order, permits the suspension or postponement for the
protection of security holders.
INITIAL PURCHASE PAYMENTS: We are required to allocate your initial
Purchase Payment to the Sub-accounts within two (2) business days after we
receive all of our requirements at our office to issue the Annuity. If we do not
have all the required information to allow us to issue your Annuity, we may
retain the Purchase Payment while we try to reach you or your representative to
obtain all of our requirements. If we are unable to obtain all of our required
information within five (5) business days, we are required to return the
Purchase Payment to you at that time, unless you specifically consent to our
retaining the Purchase Payment while we gather the required information. Once we
obtain the required information, we will invest the Purchase Payment and issue
the Annuity within two (2) business days. During any period that we are trying
to obtain the required information, your money is not invested.
ADDITIONAL PURCHASE PAYMENTS: We will apply any additional Purchase
Payments on the Valuation Day that we receive the Purchase Payment at our office
with satisfactory allocation instructions. We will allocate any additional
Purchase Payments you make according to your most recent allocation instructions
if none are provided.
SCHEDULED TRANSACTIONS: "Scheduled" transactions include transfers under a
Dollar Cost Averaging, rebalancing, or asset allocation program, Systematic
Withdrawals, Minimum Distributions or annuity payments. Scheduled transactions
are processed and valued as of the date they are scheduled, unless the scheduled
day is not a Valuation Day. In that case, the transaction will be processed and
valued on the next Valuation Day, unless the next Valuation Day falls in the
subsequent calendar year, in which case the transaction will be processed and
valued on the prior Valuation Day.
UNSCHEDULED TRANSACTIONS: "Unscheduled" transactions include any other
non-scheduled transfers and requests for Partial Withdrawals or Free Withdrawals
or Surrenders. Unscheduled transactions are processed and valued as of the
Valuation Day we receive the request at our Office and have all of the required
information.
MEDICALLY-RELATED SURRENDERS & DEATH BENEFITS: Medically-related surrender
requests and Death Benefit claims require our review and evaluation before
processing. We price such transactions as of the date we receive at our Office
all supporting documentation we require for such transactions and that are
satisfactory to us.
TRANSACTIONS IN PROFUNDS VP SUB-ACCOUNTS: Generally, purchase or
redemption orders or transfer requests must be received by us by no later than
the close of the NYSE to be processed on the current Valuation Day. However, any
purchase or redemption order or transfer request involving the ProFunds VP
Sub-accounts must be received by us no later than one hour prior to any
announced closing of the applicable securities exchange (generally, 3:00 p.m.
Eastern time) to be processed on the current Valuation Day. The "cut-off" time
for such financial transactions involving a ProFunds VP Sub-account will be
extended to 1/2 hour prior to any announced closing (generally, 3:30 p.m.
Eastern time) for transactions submitted electronically through American
Skandia's Internet website (www.americanskandia.prudential.com). You cannot
request a transaction involving the purchase, redemption or transfer of units in
one of the ProFunds VP Sub-accounts between the applicable "cut-off" time and
4:00 p.m. Transactions received after 4:00 p.m. will be treated as received by
us on the next Valuation Day.
WHAT HAPPENS TO MY UNITS WHEN THERE IS A CHANGE IN DAILY ASSET-BASED CHARGES?
DISTRIBUTION CHARGE: The Distribution Charge is deducted under your Annuity
during Annuity Years 1-8. At the end of the 8th Annuity Year, we will no longer
deduct the Distribution Charge. On the date the charge no longer applies, your
Annuity will become subject to a different daily asset-based charge. We will
process a transaction where your Account Value
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Valuing Your Investment continued
allocated to the Sub-accounts will be used to purchase new Units of the
Sub-accounts that reflect the Insurance Charge (and the charge for any optional
benefits you have elected) but not the Distribution Charge. The number of Units
attributed to your Annuity will be decreased and the Unit Price of each unit of
the Sub-accounts in which you invested will be increased. THE ADJUSTMENT IN THE
NUMBER OF UNITS AND UNIT PRICE WILL NOT AFFECT YOUR ACCOUNT VALUE. Beginning on
that date, your Account Value will be determined based on the change in the
value of Units that reflect the Insurance Charge and any other optional benefits
that you have elected.
TERMINATION OF OPTIONAL BENEFITS: Except for the Guaranteed Minimum Income
Benefit, the Combination 5% Roll-up and Highest Anniversary Value Death Benefit
and the Highest Daily Value Death Benefit, which cannot be terminated by the
owner once elected, if any optional benefit terminates, we will no longer deduct
the charge we apply to purchase the optional benefit. Certain optional benefits
may be added after you have purchased your Contract. On the date a charge no
longer applies or a charge for an optional benefit begins to be deducted, your
Annuity will become subject to a different daily asset-based charge. This change
may result in the number of Units attributed to your Annuity and the value of
those Units being different than it was before the change, however, the
adjustment in the number of Units and Unit Price will not affect your Account
Value (although the change in charges that are deducted will affect your Account
Value).
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Tax Considerations
The tax considerations associated with the Annuity vary depending on whether the
contract is (i) owned by an individual and not associated with a tax-favored
retirement plan (including contracts held by a non-natural person, such as a
trust acting as an agent for a natural person), or (ii) held under a tax-favored
retirement plan. We discuss the tax considerations for these categories of
contracts below. The discussion is general in nature and describes only federal
income tax law (not state or other tax laws). It is based on current law and
interpretations, which may change. The discussion includes a description of
certain spousal rights under the contract and under tax-qualified plans. Our
administration of such spousal rights and related tax reporting accords with our
understanding of the Defense of Marriage Act (which defines a "marriage" as a
legal union between a man and a woman and a "spouse" as a person of the opposite
sex). The information provided is not intended as tax advice. You should consult
with a qualified tax advisor for complete information and advice. References to
purchase payments below relates to your cost basis in your contract. Generally,
your cost basis in a contract not associated with a tax-favored retirement plan
is the amount you pay into your contract, or into annuities exchanged for your
contract, on an after-tax basis less any withdrawals of such payments.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA or 403(b) account, which can hold other permissible assets other than the
annuity. The terms and administration of the trust or custodial account in
accordance with the laws and regulations for IRAs or 403(b)s, as applicable, are
the responsibility of the applicable trustee or custodian.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
TAXES PAYABLE BY YOU
We believe the contract is an annuity contract for tax purposes. Accordingly, as
a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates)
to you during the same calendar year must be treated as one annuity contract for
purposes of determining the amount subject to tax under the rules described
below.
It is possible that the Internal Revenue Service (IRS) would assert that
some or all of the charges for the optional benefits under the contract should
be treated for federal income tax purposes as a partial withdrawal from the
contract. If this were the case, the charge for this benefit could be deemed a
withdrawal and treated as taxable to the extent there are earnings in the
contract. Additionally, for owners under age 59 1/2, the taxable income
attributable to the charge for the benefit could be subject to a tax penalty.
If the IRS determines that the charges for one or more benefits under the
contract are taxable withdrawals, then the sole or surviving owner will be
provided with a notice from us describing available alternatives regarding these
benefits.
If you choose to defer the Annuity Date beyond the default date for your
Annuity, the IRS may not consider your contract to be an annuity under the tax
law. For more information, see "How and When Do I Choose the Annuity Payment
Option?".
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn. You will
generally be taxed on any withdrawals from the contract while you are alive even
if the withdrawal is paid to someone else.
If you assign or pledge all or part of your contract as collateral for a
loan, the part assigned generally will be treated as a withdrawal.
If you transfer your contract for less than full consideration, such as by
gift, you will trigger tax on any gain in the contract. This rule does not apply
if you transfer the contract to your spouse or under most circumstances if you
transfer the contract incident to divorce.
TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment you receive by a fraction, the
numerator of which is your purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the contract.
After the full amount of your purchase payments have been recovered
tax-free, the full amount of the annuity payments will be taxable. If annuity
payments stop due to the death of the annuitant before the full amount of your
purchase payments have been recovered, a tax deduction may be allowed for the
unrecovered amount.
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Tax Considerations continued
Tax Penalty on Withdrawals and Annuity Payments
Any taxable amount you receive under your contract may be subject to a 10% tax
penalty. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled;
- - generally the amount paid or received is in the form of substantially
equal payments not less frequently than annually (Please note that
substantially equal payments must continue until the later of reaching age
59 1/2 or 5 years. Modification of payments during that time period will
result in retroactive application of the 10% tax penalty); or
- - the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
Special Rules in Relation to Tax-Free Exchanges Under Section 1035
Section 1035 of the Internal Revenue Code of 1986, as amended (Code)
permits certain tax-free exchanges of a life insurance, annuity or endowment
contract for an annuity. If the annuity is purchased through a tax-free exchange
of a life insurance, annuity or endowment contract that was purchased prior to
August 14, 1982, then any purchase payments made to the original contract prior
to August 14, 1982 will be treated as made to the new contract prior to that
date. (See Federal Tax Status section in the Statement of Additional
Information.)
Partial surrenders may be treated in the same way as tax-free 1035
exchanges of entire contracts, therefore avoiding current taxation of any gains
in the contract as well as the 10% tax penalty on pre-age 59 1/2 withdrawals.
The IRS has reserved the right to treat transactions it considers abusive as
ineligible for this favorable partial 1035 exchange treatment. We do not know
what transactions may be considered abusive. For example we do not know how the
IRS may view early withdrawals or annuitizations after a partial exchange. In
addition, it is unclear how the IRS will treat a partial exchange from a life
insurance, endowment, or annuity contract into an immediate annuity. As of the
date of this prospectus, we will accept a partial 1035 exchange from a
non-qualified annuity into an immediate annuity as a "tax-free" exchange for
future tax reporting purposes, except to the extent that we, as a reporting and
withholding agent, believe that we would be expected to deem the transaction to
be abusive. However, some insurance companies may not recognize these partial
surrenders as tax-free exchanges and may report them as taxable distributions to
the extent of any gain distributed as well as subjecting the taxable portion of
the distribution to the 10% tax penalty. We strongly urge you to discuss any
transaction of this type with your tax advisor before proceeding with the
transaction.
Taxes Payable by Beneficiaries
The death benefit options are subject to income tax to the extent the
distribution exceeds the cost basis in the contract. The value of the death
benefit, as determined under federal law, is also included in the owner's
estate.
Generally, the same tax rules described above would also apply to amounts
received by your beneficiary. Choosing any option other than a lump sum death
benefit may defer taxes. Certain minimum distribution requirements apply upon
your death, as discussed further below.
Tax consequences to the beneficiary vary among the death benefit payment
options.
- - Choice 1: the beneficiary is taxed on earnings in the contract.
- - Choice 2: the beneficiary is taxed as amounts are withdrawn (in this case
earnings are treated as being distributed first).
- - Choice 3: the beneficiary is taxed on each payment (part will be treated
as earnings and part as return of premiums).
CONSIDERATIONS FOR CONTINGENT ANNUITANTS: There may be adverse tax consequences
if a Contingent Annuitant succeeds an Annuitant when the Annuity is owned by a
trust that is neither tax exempt nor qualifies for preferred treatment under
certain sections of the Code. In general, the Code is designed to prevent
indefinite deferral of tax. Continuing the benefit of tax deferral by naming one
or more Contingent Annuitants when the Annuity is owned by a non-qualified trust
might be deemed an attempt to extend the tax deferral for an indefinite period.
Therefore, adverse tax treatment may depend on the terms of the trust, who is
named as Contingent Annuitant, as well as the particular facts and
circumstances. You should consult your tax advisor before naming a Contingent
Annuitant if you expect to use an Annuity in such a fashion.
Reporting and Withholding on Distributions
Taxable amounts distributed from your annuity contracts are subject to federal
and state income tax reporting and withholding. In general, we will withhold
federal income tax from the taxable portion of such distribution based on the
type of distribution. In the case of an annuity or similar periodic payment, we
will withhold as if you are a married individual with 3 exemptions unless you
designate a different withholding status.
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In the case of all other distributions, we will withhold at a 10% rate. You may
generally elect not to have tax withheld from your payments. An election out of
withholding must be made on forms that we provide.
State income tax withholding rules vary and we will withhold based on the
rules of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident aliens
at a 30% rate. A different withholding rate may be applicable to a nonresident
alien based on the terms of an existing income tax treaty between the United
States and the nonresident alien's country. Please refer to the discussion below
regarding withholding rules for tax favored plans (for example, an IRA).
Regardless of the amount withheld by us, you are liable for payment of
federal and state income tax on the taxable portion of annuity distributions.
You should consult with your tax advisor regarding the payment of the correct
amount of these income taxes and potential liability if you fail to pay such
taxes.
ANNUITY QUALIFICATION
Diversification And Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the assets underlying the
variable investment options of the annuity contract must be diversified,
according to certain rules. We believe these diversification rules will be met.
An additional requirement for qualification for the tax treatment
described above is that we, and not you as the contract owner, must have
sufficient control over the underlying assets to be treated as the owner of the
underlying assets for tax purposes. While we also believe these investor control
rules will be met, 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. It is unclear whether such guidelines, if in fact
promulgated, would have retroactive effect. It is also unclear what effect, if
any, such guidelines may have on transfers between the investment options
offered pursuant to this Prospectus. We will take any action, including
modifications to your Annuity or the investment options, required to comply with
such guidelines if promulgated.
Please refer to the Statement of Additional information for further
information on these Diversification and Investor Control issues.
Required Distributions Upon Your Death. Upon your death, certain
distributions must be made under the contract. The required distributions depend
on whether you die before you start taking annuity payments under the contract
or after you start taking annuity payments under the contract.
If you die on or after the annuity date, the remaining portion of the
interest in the contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract
must be distributed within 5 years after the date of death. However, if a
periodic payment option is selected by your designated beneficiary and if such
payments begin within 1 year of your death, the value of the contract may be
distributed over the beneficiary's life or a period not exceeding the
beneficiary's life expectancy. Your designated beneficiary is the person to whom
benefit rights under the contract pass by reason of death, and must be a natural
person in order to elect a periodic payment option based on life expectancy or a
period exceeding five years.
If the contract is payable to (or for the benefit of) your surviving
spouse, that portion of the contract may be continued with your spouse as the
owner.
Changes In The Contract. We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract owners and you will be
given notice to the extent feasible under the circumstances.
ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
- - The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
- - Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
- - You transfer your contract to, or designate, a beneficiary who is either
37 1/2 years younger than you or a grandchild.
- - You purchased more than one annuity contract from the same insurer within
the same calendar year (other than contracts held by tax favored plans).
CONTRACTS HELD BY TAX-FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
Currently, the contract may be purchased for use in connection with
individual retirement accounts and annuities (IRAs) which are subject to
Sections 408(a), 408(b) and 408A of the Code. In addition, this contract may be
purchased for use in
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Tax Considerations continued
connection with a corporate Pension and Profit-sharing plan (subject to 401(a)
of the Code), H.R. 10 plans (also known as Keogh Plans, subject to 401(a) of the
Code), Tax Sheltered Annuities (subject to 403(b) of the Code, also known as Tax
Deferred Annuities or TDAs), and Section 457 plans (subject to 457 of the Code).
This description assumes that you have satisfied the requirements for
eligibility for these products.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA or 403(b) account, which can hold other permissible assets other than the
annuity. The terms and administration of the trust or custodial account in
accordance with the laws and regulations for IRAs or 403(b)s, as applicable, are
the responsibility of the applicable trustee or custodian.
You should be aware that tax favored plans such as IRAs generally provide
income tax deferral regardless of whether they invest in annuity contracts. This
means that when a tax favored plan invests in an annuity contract, it generally
does not result in any additional tax benefits (such as income tax deferral and
income tax free transfers).
Types of Tax-Favored Plans
IRAs. If you buy a contract for use as an IRA, we will provide you a copy of the
prospectus and contract. The "IRA Disclosure Statement" contains information
about eligibility, contribution limits, tax particulars, and other IRA
information. In addition to this information (some of which is summarized
below), the IRS requires that you have a "free look" after making an initial
contribution to the contract. During this time, you can cancel the contract by
notifying us in writing, and we will refund all of the purchase payments under
the contract (or, if provided by applicable state law, the amount credited under
the contract, if greater), less any applicable federal and state income tax
withholding.
Contributions Limits/Rollovers. Because of the way the contract is
designed, you may purchase a contract for an IRA in connection with a "rollover"
of amounts from a qualified retirement plan, as a transfer from another IRA or
as a current contribution. In 2005 the limit is $4,000; increasing to $5,000 in
2008. After 2008 the contribution amount will be indexed for inflation. The tax
law also provides for a catch-up provision for individuals who are age 50 and
above. These taxpayers will be permitted to contribute an additional $500,
increasing to $1,000 in 2006 and years thereafter.
The "rollover" rules under the Code are fairly technical; however, an
individual (or his or her surviving spouse) may generally "roll over" certain
distributions from tax favored retirement plans (either directly or within 60
days from the date of these distributions) if he or she meets the requirements
for distribution. Once you buy the contract, you can make regular IRA
contributions under the contract (to the extent permitted by law). However, if
you make such regular IRA contributions, you should note that you will not be
able to treat the contract as a "conduit IRA," which means that you will not
retain possible favorable tax treatment if you subsequently "roll over" the
contract funds originally derived from a qualified retirement plan or TDA into
another Section 401(a) plan or TDA.
Required Provisions. Contracts that are IRAs (or endorsements that are
part of the contract) must contain certain provisions:
- - You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree
of divorce);
- - Your rights as owner are non-forfeitable;
- - You cannot sell, assign or pledge the contract;
- - The annual contribution you pay cannot be greater than the maximum amount
allowed by law, including catch-up contributions if applicable (which does
not include any rollover amounts);
- - The date on which annuity payments must begin cannot be later than April
1st of the calendar year after the calendar year you turn age 70 1/2; and
- - Death and annuity payments must meet "minimum distribution requirements"
described below.
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
- - A 10% "early distribution penalty" described below;
- - Liability for "prohibited transactions" if you, for example, borrow
against the value of an IRA; or
- - Failure to take a minimum distribution also described below.
SEPs. SEPs are a variation on a standard IRA, and contracts issued to a
SEP must satisfy the same general requirements described under IRAs (above).
There are, however, some differences:
- - If you participate in a SEP, you generally do not include in income any
employer contributions made to the SEP on your behalf up to the lesser of
(a) $42,000 in 2005 or (b) 25% of the employee's earned income (not
including contri-
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bution as "earned income" for these purposes). However, for these
purposes, compensation in excess of certain limits established by the IRS
will not be considered. In 2005, this limit is $210,000;
- - SEPs must satisfy certain participation and nondiscrimination requirements
not generally applicable to IRAs; and
- - SEPs for small employers permit salary deferrals up to $14,000 in 2005
with the employer making these contributions to the SEP. However, no new
"salary reduction" or "SARSEPs" can be established after 1996. Individuals
participating in a SARSEP who are age 50 or above by the end of the year
will be permitted to contribute an additional $4,000 in 2005, increasing
to $5,000 in 2006. Thereafter, the amount is indexed for inflation.
You will also be provided the same information, and have the same "free
look" period, as you would have if you purchased the contract for a standard
IRA.
ROTH IRAs. Like standard IRAs, income within a Roth IRA accumulates
tax-free, and contributions are subject to specific limits. Roth IRAs have,
however, the following differences:
- - Contributions to a Roth IRA cannot be deducted from your gross income;
- - "Qualified distributions" from a Roth IRA are excludable from gross income.
A "qualified distribution" is a distribution that satisfies two
requirements: (1) the distribution must be made (a) after the owner of the
IRA attains age 59 1/2; (b) after the owner's death; (c) due to the owner's
disability; or (d) for a qualified first time homebuyer distribution
within the meaning of Section 72(t)(2)(F) of the Code; and (2) the
distribution must be made in the year that is at least five tax years
after the first year for which a contribution was made to any Roth IRA
established for the owner or five years after a rollover, transfer, or
conversion was made from a traditional IRA to a Roth IRA. Distributions
from a Roth IRA that are not qualified distributions will be treated as
made first from contributions and then from earnings, and taxed generally
in the same manner as distributions from a traditional IRA.
- - If eligible (including meeting income limitations and earnings
requirements), you may make contributions to a Roth IRA after attaining
age 70 1/2, and distributions are not required to begin upon attaining
such age or at any time thereafter.
Because of the way the contract is designed, you may purchase a contract
for a Roth IRA in connection with a "rollover" of amounts of another traditional
IRA, conduit IRA, SEP, SIMPLE-IRA, a Roth IRA or with a current contribution.
The Code permits persons who meet certain income limitations (generally,
adjusted gross income under $100,000), and who receive certain qualifying
distributions from such non-Roth IRAs, to directly rollover or make, within 60
days, a "rollover" of all or any part of the amount of such distribution to a
Roth IRA which they establish. This conversion triggers current taxation (but is
not subject to a 10% early distribution penalty). Once the contract has been
purchased, regular Roth IRA contributions will be accepted to the extent
permitted by law.
TDAs. You may own a TDA generally if you are either an employer or
employee of a tax-exempt organization (as defined under Code Section 501 (c)(3))
or a public educational organization, and you may make contributions to a TDA so
long as the employee's rights to the annuity are nonforfeitable. Contributions
to a TDA, and any earnings, are not taxable until distribution. You may also
make contributions to a TDA under a salary reduction agreement, generally up to
a maximum of $14,000 in 2005. Individuals participating in a TDA who are age 50
or above by the end of the year will be permitted to contribute an additional
$4,000 in 2005, increasing to $5,000 in 2006. Thereafter, the amount is indexed
for inflation. Further, you may roll over TDA amounts to another TDA or an IRA.
You may also roll over TDA amounts to a qualified retirement plan, a SEP and a
457 government plan. A contract may only qualify as a TDA if distributions
(other than "grandfathered" amounts held as of December 31, 1988) may be made
only on account of:
- - Your attainment of age 59 1/2;
- - Your severance of employment;
- - Your death;
- - Your total and permanent disability; or
- - Hardship (under limited circumstances, and only related to salary
deferrals and any earnings attributable to these amounts).
In any event, you must begin receiving distributions from your TDA by
April 1st of the calendar year after the calendar year you turn age 70 1/2 or
retire, whichever is later.
These distribution limits do not apply either to transfers or exchanges of
investments under the contract, or to any "direct transfer" of your interest in
the contract to another TDA or to a
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Tax Considerations continued
mutual fund "custodial account" described under Code Section 403(b)(7).
Employer contributions to TDAs are subject to the same general
contribution, nondiscrimination, and minimum participation rules applicable to
"qualified" retirement plans.
Minimum Distribution Requirements and Payment Option
If you hold the contract under an IRA (or other tax-favored plan), IRS minimum
distribution requirements must be satisfied. This means that generally payments
must start by April 1 of the year after the year you reach age 70 1/2 and must
be made for each year thereafter. The amount of the payment must at least equal
the minimum required under the IRS rules. Several choices are available for
calculating the minimum amount. More information on the mechanics of this
calculation is available on request. Please contact us at a reasonable time
before the IRS deadline so that a timely distribution is made. Please note that
there is a 50% tax penalty on the amount of any minimum distribution not made in
a timely manner.
Effective in 2006, in accordance with recent changes in laws and
regulations, required minimum distributions will be calculated based on the sum
of the contract value and the actuarial value of any additional death benefits
and benefits from optional riders that you have purchased under the contract.
As a result, the required minimum distributions may be larger than if the
calculation were based on the contract value only, which may in turn result in
an earlier (but not before the required beginning date) distribution under the
Contract and an increased amount of taxable income distributed to the contract
owner, and a reduction of death benefits and the benefits of any optional
riders.
You can use the Minimum Distribution option to satisfy the IRS minimum
distribution requirements for this contract without either beginning annuity
payments or surrendering the contract. We will distribute to you this minimum
distribution amount, less any other partial withdrawals that you made during the
year.
Although the IRS rules determine the required amount to be distributed
from your IRA each year, certain payment alternatives are still available to
you. If you own more than one IRA, you can choose to satisfy your minimum
distribution requirement for each of your IRAs by withdrawing that amount from
any of your IRAs.
Penalty for Early Withdrawals
You may owe a 10% tax penalty on the taxable part of distributions received from
an IRA, SEP, Roth IRA, TDA or qualified retirement plan before you attain age
59 1/2. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled; or
- - generally the amount paid or received is in the form of substantially
equal payments not less frequently than annually (Please note that
substantially equal payments must continue until the later of reaching age
59 1/2 or 5 years. Modification of payments during that time period will
result in retroactive application of the 10% tax penalty.). Other
exceptions to this tax may apply. You should consult your tax advisor for
further details.
Withholding
Unless a distribution is an eligible rollover distribution that is "directly"
rolled over into another qualified plan, IRA (including the IRA variations
described above), SEP, 457 government plan or TDA, we will withhold federal
income tax at the rate of 20%. This 20% withholding does not apply to
distributions from IRAs and Roth IRAs. For all other distributions, unless you
elect otherwise, we will withhold federal income tax from the taxable portion of
such distribution at an appropriate percentage. The rate of withholding on
annuity payments where no mandatory withholding is required is determined on the
basis of the withholding certificate that you file with us. If you do not file a
certificate, we will automatically withhold federal taxes on the following
basis:
- - For any annuity payments not subject to mandatory withholding, you will
have taxes withheld by us as if you are a married individual, with 3
exemptions; and
- - For all other distributions, we will withhold at a 10% rate.
We will provide you with forms and instructions concerning the right to
elect that no amount be withheld from payments in the ordinary course. However,
you should know that, in any event, you are liable for payment of federal
income taxes on the taxable portion of the distributions, and you should
consult with your tax advisor to find out more information on your potential
liability if you fail to pay such taxes. There may be additional state income
tax withholding requirements.
ERISA Disclosure/Requirements
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevents a fiduciary and other "parties in interest" with respect to a plan
(and, for these purposes, an IRA would also constitute a "plan") from receiving
any benefit
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from any party dealing with the plan, as a result of the sale of the contract.
Administrative exemptions under ERISA generally permit the sale of
insurance/annuity products to plans, provided that certain information is
disclosed to the person purchasing the contract. This information has to do
primarily with the fees, charges, discounts and other costs related to the
contract, as well as any commissions paid to any agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found in the applicable sections of this Prospectus.
Information about sales representatives and commissions may be found in
the sections of this Prospectus addressing distribution of the Annuity.
Please consult your tax advisor if you have any additional questions.
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General Information
Spousal Consent Rules for Retirement Plans --
Qualified Contracts
If you are married at the time your payments commence, you may be required by
federal law to choose an income option that provides survivor annuity income to
your spouse, unless your spouse waives that right. Similarly, if you are married
at the time of your death, federal law may require all or a portion of the death
benefit to be paid to your spouse, even if you designated someone else as your
beneficiary. A brief explanation of the applicable rules follows. For more
information, consult the terms of your retirement arrangement.
Defined Benefit Plans and Money Purchase Pension Plans. If you are married
at the time your payments commence, federal law requires that benefits be paid
to you in the form of a "qualified joint and survivor annuity" (QJSA), unless
you and your spouse waive that right, in writing. Generally, this means that you
will receive a reduced payment during your life and, upon your death, your
spouse will receive at least one-half of what you were receiving for life. You
may elect to receive another income option if your spouse consents to the
election and waives his or her right to receive the QJSA. If your spouse
consents to the alternative form of payment, your spouse may not receive any
benefits from the plan upon your death. Federal law also requires that the plan
pay a death benefit to your spouse if you are married and die before you begin
receiving your benefit. This benefit must be available in the form of an annuity
for your spouse's lifetime and is called a "qualified pre-retirement survivor
annuity" (QPSA). If the plan pays death benefits to other beneficiaries, you may
elect to have a beneficiary other than your spouse receive the death benefit,
but only if your spouse consents to the election and waives his or her right to
receive the QPSA. If your spouse consents to the alternate beneficiary, your
spouse will receive no benefits from the plan upon your death. Any QPSA waiver
prior to your attaining age 35 will become null and void on the first day of the
calendar year in which you attain age 35, if still employed.
Defined Contribution Plans (including 401(k) Plans and ERISA 403(b)
Annuities). Spousal consent to a distribution is generally not required. Upon
your death, your spouse will receive the entire death benefit, even if you
designated someone else as your beneficiary, unless your spouse consents in
writing to waive this right. Also, if you are married and elect an annuity as a
periodic income option, federal law requires that you receive a QJSA (as
described above), unless you and your spouse consent to waive this right.
IRAs, non-ERISA 403(b) Annuities, and 457 Plans. Spousal consent to a
distribution is not required. Upon your death, any death benefit will be paid to
your designated beneficiary.
Additional Information
For additional information about federal tax law requirements applicable to tax
favored plans, see the IRA Disclosure Statement.
HOW WILL I RECEIVE STATEMENTS AND REPORTS?
We send any statements and reports required by applicable law or regulation to
you at your last known address of record. You should therefore give us prompt
notice of any address change. We reserve the right, to the extent permitted by
law and subject to your prior consent, to provide any prospectus, prospectus
supplements, confirmations, statements and reports required by applicable law or
regulation to you through our Internet Website at
http://www.americanskandia.prudential.com or any other electronic means,
including diskettes or CD ROMs. We send a confirmation statement to you each
time a transaction is made affecting Account Value, such as making additional
Purchase Payments, transfers, exchanges or withdrawals. We also send quarterly
statements detailing the activity affecting your Annuity during the calendar
quarter. We may confirm regularly scheduled transactions, such as the Annual
Maintenance Fee, systematic withdrawals (including 72(t) payments and required
minimum distributions), bank drafting, dollar cost averaging, and static
rebalancing, in quarterly statements instead of confirming them immediately. You
should review the information in these statements carefully. You may request
additional reports. We reserve the right to charge up to $50 for each such
additional report. We may also send an annual report and a semi-annual report
containing applicable financial statements for the Separate Account and the
Portfolios, as of December 31 and June 30, respectively, to Owners or, with your
prior consent, make such documents available electronically through our Internet
Website or other electronic means.
WHO IS AMERICAN SKANDIA?
American Skandia Life Assurance Corporation, a Prudential Financial Company,
("American Skandia") is a stock life insurance company domiciled in Connecticut
with licenses in all 50 states, the District of Columbia and Puerto Rico.
American Skandia is a wholly-owned subsidiary of American Skandia, Inc. ("ASI"),
whose ultimate parent is Prudential Financial, Inc. American Skandia markets its
products to broker-dealers and financial planners through an internal field
marketing staff. In
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
addition, American Skandia markets through and in conjunction with financial
institutions such as banks that are permitted directly, or through affiliates,
to sell annuities.
American Skandia is in the business of issuing annuity and life insurance
products. American Skandia currently offers the following products: (a) flexible
premium deferred annuities and single premium fixed deferred annuities that are
registered with the SEC; (b) certain other fixed deferred annuities that are not
registered with the SEC; and (c) both fixed and variable immediate adjustable
annuities.
Effective May 1, 2003, Skandia U.S. Inc., the sole shareholder of ASI,
which is the parent of American Skandia, was purchased by Prudential Financial,
Inc. Prudential Financial, Inc. is a New Jersey insurance holding company whose
subsidiary companies serve individual and institutional customers worldwide and
include The Prudential Insurance Company of America, one of the largest life
insurance companies in the U.S. These companies offer a variety of products and
services, including life insurance, property and casualty insurance, mutual
funds, annuities, pension and retirement related services and administration,
asset management, securities brokerage, banking and trust services, real estate
brokerage franchises, and relocation services.
No company other than American Skandia has any legal responsibility to pay
amounts that it owes under its annuity and variable life insurance contracts.
However, Prudential Financial exercises significant influence over the
operations and capital structure of American Skandia.
WHAT ARE SEPARATE ACCOUNTS?
The separate accounts are where American Skandia sets aside and invests the
assets of some of our annuities. In the accumulation period, assets supporting
Account Values of the Annuities are held in a separate account established under
the laws of the State of Connecticut. We are the legal owner of assets in the
separate accounts. In the payout period, assets supporting fixed annuity
payments and any adjustable annuity payments we make available are held in our
general account. Assets supporting variable annuity payment options may be
invested in our separate accounts. Income, gains and losses from assets
allocated to these separate accounts are credited to or charged against each
such separate account without regard to other income, gains or losses of
American Skandia or of any other of our separate accounts. These assets may only
be charged with liabilities which arise from the Annuities issued by American
Skandia. The amount of our obligation in relation to allocations to the
Sub-accounts is based on the investment performance of such Sub-accounts.
However, the obligations themselves are our general corporate obligations.
Separate Account B
During the accumulation period, the assets supporting obligations based on
allocations to the variable investment options are held in Sub-accounts of
American Skandia Life Assurance Corporation Variable Account B, also referred to
as "Separate Account B". Separate Account B was established by us pursuant to
Connecticut law on November 25, 1987. 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.
Separate Account B consists of multiple Sub-accounts. Each Sub-account
invests only in a single mutual fund or mutual fund portfolio. The name of each
Sub-account generally corresponds to the name of the underlying Portfolio. Each
Sub-account in Separate Account B may have several different Unit Prices to
reflect the Insurance Charge, Distribution Charge (when applicable) and the
charges for any optional benefits that are offered under this Annuity and other
annuities issued by us through Separate Account B. Separate Account B is
registered with the SEC under the Investment Company Act of 1940 ("Investment
Company Act") as a unit investment trust, which is a type of investment company.
The SEC does not supervise investment policies, management or practices of
Separate Account B.
Prior to November 18, 2002, Separate Account B was organized as a single
separate account with six different Sub-account classes, each of which was
registered as a distinct unit investment trust under the Investment Company Act.
Effective November 18, 2002, each Sub-account class of Separate Account B was
consolidated into the unit investment trust formerly named American Skandia Life
Assurance Corporation Variable Account B (Class 1 Sub-accounts), which was
subsequently renamed American Skandia Life Assurance Corporation Variable
Account B. Each Sub-account of Separate Account B has multiple Unit Prices to
reflect the daily charge deducted for each combination of the applicable
Insurance Charge, Distribution Charge (when applicable) and the charge for each
optional benefit offered under Annuity contracts funded through Separate Account
B. The consolidation of Separate Account B had no impact on Annuity Owners.
We reserve the right to make changes to the Sub-accounts available under
the Annuity as we determine appropriate. We
89
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
General Information continued
may offer new Sub-accounts, eliminate Sub-accounts, or combine Sub-accounts at
our sole discretion. We may also close Sub-accounts to additional Purchase
Payments on existing Annuity contracts or close Sub-accounts for Annuities
purchased on or after specified dates. We may also substitute an underlying
mutual fund or portfolio of an underlying mutual fund for another underlying
mutual fund or portfolio of an underlying mutual fund, subject to our receipt of
any exemptive relief that we are required to obtain under the Investment Company
Act. We will notify Owners of changes we make to the Sub-accounts available
under the Annuity.
VALUES AND BENEFITS BASED ON ALLOCATIONS TO THE SUB-ACCOUNTS WILL VARY
WITH THE INVESTMENT PERFORMANCE OF THE UNDERLYING MUTUAL FUNDS OR FUND
PORTFOLIOS, AS APPLICABLE. WE DO NOT GUARANTEE THE INVESTMENT RESULTS OF ANY
SUB-ACCOUNT. YOUR ACCOUNT VALUE ALLOCATED TO THE SUB-ACCOUNTS MAY INCREASE OR
DECREASE. YOU BEAR THE ENTIRE INVESTMENT RISK. THERE IS NO ASSURANCE THAT THE
ACCOUNT VALUE OF YOUR ANNUITY WILL EQUAL OR BE GREATER THAN THE TOTAL OF THE
PURCHASE PAYMENTS YOU MAKE TO US.
Separate Account D
During the accumulation period, assets supporting our obligations based on Fixed
Allocations are held in American Skandia Life Assurance Corporation Separate
Account D, also referred to as "Separate Account D". Such obligations are based
on the fixed interest rates we credit to Fixed Allocations and the terms of the
Annuities. These obligations do not depend on the investment performance of the
assets in Separate Account D. Separate Account D was established by us pursuant
to Connecticut law.
There are no units in Separate Account D. The Fixed Allocations are
guaranteed by our general account. An Annuity Owner who allocates a portion of
their Account Value to Separate Account D does not participate in the investment
gain or loss on assets maintained in Separate Account D. Such gain or loss
accrues solely to us. We retain the risk that the value of the assets in
Separate Account D may drop below the reserves and other liabilities we must
maintain. Should the value of the assets in Separate Account D drop below the
reserve and other liabilities we must maintain in relation to the annuities
supported by such assets, we will transfer assets from our general account to
Separate Account D to make up the difference. We have the right to transfer to
our general account any assets of Separate Account D in excess of such reserves
and other liabilities. We maintain assets in Separate Account D supporting a
number of annuities we offer.
We currently employ investment managers to manage the assets maintained in
Separate Account D. Each manager we employ is responsible for investment
management of a different portion of Separate Account D. From time to time
additional investment managers may be employed or investment managers may cease
being employed. We are under no obligation to employ or continue to employ any
investment manager(s) and have sole discretion over the investment managers we
retain.
We are not obligated to invest according to specific guidelines or
strategies except as may be required by Connecticut and other state insurance
laws.
WHAT IS THE LEGAL STRUCTURE OF THE UNDERLYING FUNDS?
Each underlying mutual fund is registered as an open-end management investment
company under the Investment Company Act. Shares of the underlying mutual fund
portfolios are sold to separate accounts of life insurance companies offering
variable annuity and variable life insurance products. The shares may also be
sold directly to qualified pension and retirement plans.
Voting Rights
We are the legal owner of the shares of the underlying mutual funds in which the
Sub-accounts invest. However, under SEC rules, you have voting rights in
relation to Account Value maintained in the Sub-accounts. If an underlying
mutual fund portfolio requests a vote of shareholders, we will vote our shares
based on instructions received from Owners with Account Value allocated to that
Sub-account. Owners have the right to vote an amount equal to the number of
shares attributable to their contracts. If we do not receive voting instructions
in relation to certain shares, we will vote those shares in the same manner and
proportion as the shares for which we have received instructions. We will
furnish those Owners who have Account Value allocated to a Sub-account whose
underlying mutual fund portfolio has requested a "proxy" vote with proxy
materials and the necessary forms to provide us with their voting instructions.
Generally, you will be asked to provide instructions for us to vote on matters
such as changes in a fundamental investment strategy, adoption of a new
investment advisory agreement, or matters relating to the structure of the
underlying mutual fund that require a vote of shareholders.
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
American Skandia Trust (the "Trust") has obtained an exemption from the
Securities and Exchange Commission that permits its co-investment advisers,
American Skandia Investment Services, Incorporated ("ASISI") and Prudential
Investments LLC, subject to approval by the Board of Trustees of the Trust, to
change sub-advisors for a Portfolio and to enter into new sub-advisory
agreements, without obtaining shareholder approval of the changes. This
exemption (which is similar to exemptions granted to other investment companies
that are organized in a similar manner as the Trust) is intended to facilitate
the efficient supervision and management of the sub-advisors by ASISI,
Prudential Investments LLC and the Trustees. The Trust is required, under the
terms of the exemption, to provide certain information to shareholders following
these types of changes. We may add new Sub-accounts that invest in a series of
underlying funds other than the Trust that is managed by an affiliate. Such
series of funds may have a similar order from the SEC. You also should review
the prospectuses for the other underlying funds in which various Sub-accounts
invest as to whether they have obtained similar orders from the SEC.
Material Conflicts
It is possible that differences may occur between companies that offer shares of
an underlying mutual fund portfolio to their respective separate accounts
issuing variable annuities and/or variable life insurance products. Differences
may also occur surrounding the offering of an underlying mutual fund portfolio
to variable life insurance policies and variable annuity contracts that we
offer. Under certain circumstances, these differences could be considered
"material conflicts," in which case we would take necessary action to protect
persons with voting rights under our variable annuity contracts and variable
life insurance policies against persons with voting rights under other insurance
companies' variable insurance products. If a "material conflict" were to arise
between owners of variable annuity contracts and variable life insurance
policies issued by us we would take necessary action to treat such persons
equitably in resolving the conflict. "Material conflicts" could arise due to
differences in voting instructions between owners of variable life insurance and
variable annuity contracts of the same or different companies. We monitor any
potential conflicts that may exist.
Service Fees Payable to American Skandia
American Skandia or our affiliates have entered into agreements with the
investment adviser or distributor of the underlying Portfolios. Under the terms
of these agreements, American Skandia may provide administrative and support
services to the Portfolios for which it receives a fee of up to 0.75%
(currently) of the average assets allocated to the Portfolios under the Annuity
from the investment adviser, distributor and/or the fund. These agreements may
be different for each underlying mutual fund whose portfolios are offered as
Sub-accounts.
In addition, the investment adviser, sub-advisor or distributor of the
underlying Portfolios may also compensate us by providing reimbursement or
paying directly for, among other things, marketing and/or administrative
services and/or other services they provide in connection with the Annuity.
These services may include, but are not limited to: co-sponsoring various
meetings and seminars attended by broker-dealer firms' registered
representatives and creating marketing material discussing the Annuity and the
available options.
WHO DISTRIBUTES ANNUITIES OFFERED BY AMERICAN SKANDIA?
American Skandia Marketing, Incorporated ("ASM"), a wholly-owned subsidiary of
American Skandia, Inc., is the distributor and principal underwriter of the
securities offered through this prospectus. ASM acts as the distributor of a
number of annuity and life insurance products we offer and co-distributor of
American Skandia Trust and American Skandia Advisor Funds, Inc., a family of
retail mutual funds. ASM also acts as an introducing broker-dealer through which
it receives a portion of brokerage commissions in connection with purchases and
sales of securities held by portfolios of American Skandia Trust which are
offered as underlying investment options under the Annuity.
ASM's principal business address is One Corporate Drive, Shelton,
Connecticut 06484. ASM is registered as broker-dealer under the Securities
Exchange Act of 1934 ("Exchange Act") and is a member of the National
Association of Securities Dealers, Inc. ("NASD").
The Annuity is offered on a continuous basis. ASM enters into distribution
agreements with broker-dealers who are registered under the Exchange Act and
with entities that may offer the Annuity but are exempt from registration
("firms"). Applications for the Annuity are solicited by registered
representatives of those firms. Such representatives will also be our appointed
insurance agents under state insurance law. In addition, ASM may offer the
Annuity directly to potential purchasers.
Commissions are paid to firms on sales of the Annuity according to one or
more schedules. The individual representative will receive a portion of the
compensation, depending on the practice of his or her firm. Commissions are
generally based on a percentage of Purchase Payments made, up to a maximum of
7.0%. Alternative compensation schedules are available that provide a lower
initial commission plus ongoing annual compensation based on all or a portion of
Account Value. We may also provide compensation to the distributing firm for
providing ongoing service to you in relation to the Annuity. Commissions and
other compensation paid in relation
91
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
General Information continued
to the Annuity do not result in any additional charge to you or to the Separate
Account.
In addition, in an effort to promote the sale of our products (which may
include the placement of ASLAC and/or the Annuity on a preferred or recommended
company or product list and/or access to the firm's registered representatives),
we or ASM may enter into compensation arrangements with certain broker-dealer
firms with respect to certain or all registered representatives of such firms
under which such firms may receive separate compensation or reimbursement for,
among other things, training of sales personnel and/or marketing and/or
administrative services and/or other services they provide . These services may
include, but are not limited to: educating customers of the firm on the
Annuity's features; conducting due diligence, analysis and providing office
access, operations and systems support; holding seminars intended to educate the
firm's registered representatives and make them more knowledgeable about the
Annuity; providing a dedicated marketing coordinator; providing priority sales
desk support; and providing expedited marketing compliance approval. To the
extent permitted by NASD rules and other applicable laws and regulations, ASM
may pay or allow other promotional incentives or payments in the form of cash or
non-cash compensation. These arrangements may not be offered to all firms and
the terms of such arrangements may differ between firms. A list of the firms to
whom American Skandia pays an amount of greater than $10,000 for these
arrangements is provided in the Statement of Additional Information, which is
available upon request. You should note that firms and individual registered
representatives and branch managers within some firms participating in one of
these compensation arrangements might receive greater compensation for selling
the Annuity than for selling a different annuity that is not eligible for these
compensation arrangements. While compensation is generally taken into account as
an expense in considering the charges applicable to an annuity product, any such
compensation will be paid by us or ASM and will not result in any additional
charge to you. Overall compensation paid to the distributing firm does not
exceed, based on actuarial assumptions, 8.5% of the total Purchase Payments
made. Your registered representative can provide you with more information about
the compensation arrangements that apply upon the sale of the Annuity.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
American Skandia publishes annual and quarterly reports that are filed with the
SEC. These reports contain financial information about American Skandia that is
annually audited by an independent registered public accounting firm. American
Skandia's annual report for the year ended December 31, 2004, together with
subsequent periodic reports that American Skandia files with the SEC, are
incorporated by reference into this prospectus. You can obtain copies, at no
cost, of any and all of this information, including the American Skandia annual
report that is not ordinarily mailed to contract owners, the more current
reports and any subsequently filed documents at no cost by contacting us at
American Skandia -- Variable Annuities; P.O. Box 7960, Philadelphia, PA 19176
(Telephone: 203-926-1888). The SEC file number for American Skandia is 33-44202.
You may read and copy any filings made by American Skandia with the SEC at the
SEC's Public Reference Room at 450 Fifth Street, Washington, D.C. 20549-0102.
You can obtain information on the operation of the Public Reference Room by
calling (202) 942-8090. The SEC maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC at http://www.sec.gov.
FINANCIAL STATEMENTS
The financial statements of the separate account and American Skandia Life
Assurance Corporation are included in the Statement of Additional Information.
HOW TO CONTACT US
You can contact us by:
- - calling our Customer Service Team at 1-800-752-6342 during our normal
business hours, 8:30 a.m. EST to 8:00 p.m. EST, Monday through Friday, or
Skandia's telephone automated response system at 1-800-766-4530.
- - writing to us via regular mail at American Skandia -- Variable Annuities,
P.O. Box 7960, Philadelphia, PA 19176 OR for express mail American Skandia
-- Variable Annuities, 2101 Welsh Road, Dresher, PA 19025. NOTE: Failure
to send mail to the proper address may result in a delay in our receiving
and processing your request.
- - sending an email to service@prudential.com or visiting our Internet
Website at www.americanskandia.prudential.com.
- - accessing information about your Annuity through our Internet Website at
www.americanskandia.prudential.com.
You can obtain account information by calling our automated response
system and at www.americanskandia.prudential.com, our Internet Website. Our
Customer Service representatives are also available during business hours to
provide you with information about your account. You can request certain
transactions through our telephone voice response system, our Internet Website
92
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
or through a customer service representative. You can provide authorization for
a third party, including your attorney-in-fact acting pursuant to a power of
attorney, to access your account information and perform certain transactions on
your account. You will need to complete a form provided by us which identifies
those transactions that you wish to authorize via telephonic and electronic
means and whether you wish to authorize a third party to perform any such
transactions. Please note that unless you tell us otherwise, we deem that all
transactions that are directed by your investment professional with respect to
your Annuity have been authorized by you. We require that you or your
representative provide proper identification before performing transactions over
the telephone or through our Internet Website. This may include a Personal
Identification Number (PIN) that will be provided to you upon issue of your
Annuity or you may establish or change your PIN by calling our automated
response system and at www.americanskandia.prudential.com, our Internet Website.
Any third party that you authorize to perform financial transactions on your
account will be assigned a PIN for your account.
Transactions requested via telephone are recorded. To the extent permitted
by law, we will not be responsible for any claims, loss, liability or expense in
connection with a transaction requested by telephone or other electronic means
if we acted on such transaction instructions after following reasonable
procedures to identify those persons authorized to perform transactions on your
Annuity using verification methods which may include a request for your Social
Security number, PIN or other form of electronic identification. We may be
liable for losses due to unauthorized or fraudulent instructions if we did not
follow such procedures.
American Skandia does not guarantee access to telephonic, facsimile,
Internet or any other electronic information or that we will be able to accept
transaction instructions via such means at all times. Regular and/or express
mail will be the only means by which we will accept transaction instructions
when telephonic, facsimile, Internet or any other electronic means are
unavailable or delayed. American Skandia reserves the right to limit, restrict
or terminate telephonic, facsimile, Internet or any other electronic transaction
privileges at any time.
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Securities Act") may be permitted to directors, officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
LEGAL PROCEEDINGS
As of the date of this Prospectus, American Skandia and its affiliates are not
involved in any legal proceedings outside of the ordinary course of business.
American Skandia and its affiliates are involved in pending and threatened legal
proceedings in the normal course of its business, however, we do not anticipate
that the outcome of any such legal proceedings will have a material adverse
affect on the Separate Account, or American Skandia's ability to meet its
obligations under the Annuity, or on the distribution of the Annuity.
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The following are the contents of the Statement of Additional Information:
General Information about American Skandia
- - American Skandia Life Assurance Corporation
- - American Skandia Life Assurance Corporation Variable Account B
- - American Skandia Life Assurance Corporation Separate Account D
Principal Underwriter/Distributor -- American Skandia Marketing, Incorporated
Payments Made to Promote Sale of our Products
How the Unit Price is Determined
Additional Information on Fixed Allocations
- - How We Calculate the Market Value Adjustment
General Information
- - Voting Rights
- - Modification
- - Deferral of Transactions
- - Misstatement of Age or Sex
- - Ending the Offer
Annuitization
Experts
Legal Experts
Financial Statements
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AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
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APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B
Separate Account B consists of multiple Sub-accounts. Each Sub-account invests
only in a single mutual fund or mutual fund portfolio. All or some of these
Sub-accounts are available as investment options for other variable annuities we
offer pursuant to different prospectuses.
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 Sub-accounts of Separate Account
B that are being offered pursuant to this Prospectus; and (b) the number of
Units outstanding for each such Sub-account as of the dates shown. Since
November 18, 2002, we have been determining, on a daily basis, multiple Unit
Prices for each Sub-account of Separate Account B. We compute multiple Unit
Prices because several of our variable annuities invest in the same
Sub-accounts, and these annuities deduct varying charges that correspond to each
combination of the applicable Insurance Charge, Distribution Charge (when
applicable) and the charges for each optional benefit. Where an asset-based
charge corresponding to a particular Sub-account within a new annuity product is
identical to that in the same Sub-account within an existing annuity, the Unit
Price for the new annuity will be identical to that of the existing annuity. In
such cases, we will for reference purposes depict, in the condensed financial
information for the new annuity, Unit Prices of the existing annuity. The year
in which operations commenced in each such Sub-account is noted in parentheses.
To the extent a Sub-account commenced operations during a particular calendar
year, the Unit Price as of the end of the period reflects only the partial year
results from the commencement of operations until December 31st of the
applicable year. When a Unit Price was first calculated for a particular
Sub-account, we set the price of that Unit at $10.00 per Unit. Thereafter, Unit
Prices vary based on market performance. Unit Prices and Units are provided for
Sub-accounts that commenced operations prior to January 1, 2005.
A-1
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
Year Ended December 31,
-------------------------------------------------------------------------
Sub-account 2004 2003 2002 2001 2000
- ---------------------------------------------- ------------- ------------- ------------ ------------ -----------
AST JP Morgan International Equity Portfolio
With No Optional Benefits
Unit Price $ 8.24 $ 7.13 5.53 6.86 8.99
Number of Units 553,542 362,254 153,652 136,976 33,897
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.78 $ 12.81 9.96 -- --
Number of Units 192,576 57,874 19,651 -- --
With GMWB
Unit Value $ 12.46 $ 10.81 -- -- --
Number of Units 32,632 1,808 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.70 $ 12.77 9.95 -- --
Number of Units 22,423 8,138 293 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.42 $ 10.81 -- -- --
Number of Units 1,120 106 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.62 $ 12.74 -- -- --
Number of Units 217,166 17,098 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
---------- ---------- ---------- --------- ---------
AST William Blair International Growth (1997)
With No Optional Benefits
Unit Price $ 16.42 $ 14.32 10.35 14.10 18.68
Number of Units 1,953,908 1,166,396 7,064 5,277 6,782
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.35 $ 13.41 9.72 -- --
Number of Units 1,986,105 470,320 19,565 -- --
With GMWB
Unit Value $ 12.07 $ 10.56 -- -- --
Number of Units 216,886 18,507 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.26 $ 13.38 9.72 -- --
Number of Units 291,719 54,833 16,068 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.03 $ 10.56 -- -- --
Number of Units 38,033 6,110 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.18 $ 13.34 -- -- --
Number of Units 1,821,923 103,740 -- -- --
With HAV, EBP and GMWB
Unit Value $ 12.00 -- -- -- --
Number of Units 19,719 -- -- -- --
---------- ---------- ---------- --------- ---------
A-2
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Year Ended December 31,
-------------------------------------------------------------------------
Sub-account 2004 2003 2002 2001 2000
- --------------------------------------- ------------- ------------- ------------ ------------ -----------
AST LSV International Value (1994)
With No Optional Benefits
Unit Price $ 7.01 $ 5.86 4.43 5.41 8.08
Number of Units 233,045 91,736 32,967 29,954 20,311
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.40 $ 12.92 9.80 -- --
Number of Units 76,147 20,245 4,776 -- --
With GMWB
Unit Value $ 12.85 -- -- -- --
Number of Units 5,183 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.32 $ 12.88 9.79 -- --
Number of Units 6,471 632 279 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.81 -- -- -- --
Number of Units 6,010 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.24 $ 12.85 -- -- --
Number of Units 69,494 5,504 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
--------- --------- ------- -------- --------
AST MFS Global Equity (1999)
With No Optional Benefits
Unit Price $ 10.98 $ 9.40 7.48 8.64 9.72
Number of Units 213,485 123,219 46,925 49,536 23,151
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.42 $ 12.36 9.87 -- --
Number of Units 143,889 34,777 1,488 -- --
With GMWB
Unit Value $ 12.54 $ 10.76 -- -- --
Number of Units 17,891 421 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.34 $ 12.33 -- -- --
Number of Units 19,007 416 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.50 -- -- -- --
Number of Units 3,805 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.26 $ 12.29 -- -- --
Number of Units 98,046 4,306 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
--------- --------- ------- -------- --------
A-3
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
Year Ended December 31,
--------------------------------------------------------------------------
Sub-account 2004 2003 2002 2001 2000
- --------------------------------------------- ------------- ------------- ------------ ------------ ------------
AST State Street Research Small-Cap Growth 1
With No Optional Benefits
Unit Price $ 15.97 $ 17.38 12.12 18.70 20.25
Number of Units 107,136 145,364 6,331 2,439 978
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.43 $ 13.56 9.48 -- --
Number of Units 82,128 52,103 6,251 -- --
With GMWB
Unit Value $ 9.43 $ 10.30 -- -- --
Number of Units 8,600 3,356 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.37 $ 13.53 -- -- --
Number of Units 40,854 8,575 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 9.40 -- -- -- --
Number of Units 3,927 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.30 $ 13.49 --
Number of Units 113,913 9,676 --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
--------- --------- ------- ------- ------
AST DeAM Small-Cap Growth (1999)
With No Optional Benefits
Unit Price $ 7.41 $ 6.86 4.71 6.48 9.17
Number of Units 293,384 258,089 44,611 41,602 35,743
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.23 $ 14.13 9.72 -- --
Number of Units 78,039 27,101 2,506 -- --
With GMWB
Unit Value $ 11.15 $ 10.36 -- -- --
Number of Units 15,137 1,850 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.15 $ 14.09 9.72 -- --
Number of Units 35,100 7,018 277 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.12 $ 10.35 -- -- --
Number of Units 3,898 1,939 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.07 $ 14.05 -- -- --
Number of Units 56,414 1,850 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
--------- --------- ------- ------- ------
A-4
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Year Ended December 31,
----------------------------------------------------------------------
Sub-account 2004 2003 2002 2001 2000
- --------------------------------------- ---------- --------- --------- --------- --------
AST Federated Aggressive Growth (2000)
With No Optional Benefits
Unit Price $ 10.12 $ 8.33 4.98 7.12 9.08
Number of Units 1,169,995 859,909 25,040 10,912 243
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.97 $ 16.47 9.87 -- --
Number of Units 633,435 164,946 14,007 -- --
With GMWB
Unit Value $ 12.78 $ 10.55 -- -- --
Number of Units 70,619 8,491 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 19.86 $ 16.42 9.86 -- --
Number of Units 77,506 18,658 5,370 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.74 $ 10.55 -- -- --
Number of Units 12,031 1,546 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 19.75 $ 16.38 -- -- --
Number of Units 562,771 37,078 -- -- --
With HAV, EBP and GMWB
Unit Value $ 12.70 -- -- -- --
Number of Units 6,328 -- -- -- --
---------- --------- -------- -------- -------
AST Small-Cap Value (1997)
With No Optional Benefits
Unit Price $ 16.64 $ 14.47 10.79 12.06 11.41
Number of Units 1,293,786 962,965 66,744 33,608 15,339
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.47 $ 13.49 10.09 -- --
Number of Units 1,067,140 344,340 32,914 -- --
With GMWB
Unit Value $ 12.24 $ 10.69 -- -- --
Number of Units 120,010 14,484 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.39 $ 13.45 10.08 -- --
Number of Units 141,679 37,207 6,048 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.21 $ 10.68 -- -- --
Number of Units 16,803 2,140 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.31 $ 13.41 -- -- --
Number of Units 1,007,926 100,155 -- -- --
With HAV, EBP and GMWB
Unit Value $ 12.17 -- -- -- --
Number of Units 7,974 -- -- -- --
---------- --------- -------- -------- -------
A-5
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
Year Ended December 31,
---------------------------------------------------------------------
Sub-account 2004 2003 2002 2001 2000
- ---------------------------------------- ---------- ---------- --------- --------- --------
AST DeAM Small-Cap Value (2002)
With No Optional Benefits
Unit Price $ 13.13 $ 10.89 7.69 -- --
Number of Units 138,078 131,066 124 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 17.14 $ 14.25 10.09 -- --
Number of Units 91,275 30,696 1,519 -- --
With GMWB
Unit Value $ 12.85 $ 10.70 -- -- --
Number of Units 9,395 1,456 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 17.05 $ 14.21 -- -- --
Number of Units 39,619 7,542 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.81 -- -- -- --
Number of Units 4,319 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 16.96 $ 14.17 -- -- --
Number of Units 236,402 10,756 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
---------- ---------- -------- -------- -------
AST Goldman Sachs Mid-Cap Growth (2000)
With No Optional Benefits
Unit Price $ 4.44 $ 3.87 2.98 4.15 7.03
Number of Units 2,232,502 1,535,565 28,812 17,882 2,473
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.68 $ 12.81 9.88 -- --
Number of Units 633,571 170,457 11,936 -- --
With GMWB
Unit Value $ 12.05 $ 10.52 -- -- --
Number of Units 55,808 4,600 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.60 $ 12.77 9.88 -- --
Number of Units 102,613 20,463 5,904 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.01 $ 10.51 -- -- --
Number of Units 10,211 2,424 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.52 $ 12.73 -- -- --
Number of Units 516,261 37,400 -- -- --
With HAV, EBP and GMWB
Unit Value $ 11.97 -- -- -- --
Number of Units 5,270 -- -- -- --
---------- ---------- -------- -------- -------
A-6
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Year Ended December 31,
-------------------------------------------------------------------------
Sub-account 2004 2003 2002 2001 2000
- ------------------------------------------- ------------- ------------- ------------ ------------ -----------
AST Neuberger Berman Mid-Cap Growth (1994)
With No Optional Benefits
Unit Price $ 7.14 $ 6.23 4.83 7.11 9.71
Number of Units 555,160 371,267 56,712 51,711 36,882
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.99 $ 12.24 9.52 -- --
Number of Units 238,963 96,132 4,640 -- --
With GMWB
Unit Value $ 11.83 -- -- -- --
Number of Units 20,882 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.92 $ 12.20 9.51 -- --
Number of Units 25,256 12,416 915 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.80 -- -- -- --
Number of Units 4,925 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.84 $ 12.17 -- -- --
Number of Units 153,923 16,702 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
---------- --------- -------- -------- -------
AST Neuberger Berman Mid-Cap Value (1993)
With No Optional Benefits
Unit Price $ 16.76 $ 13.82 10.26 11.62 12.13
Number of Units 1,116,503 781,348 69,657 56,219 16,574
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.22 $ 13.40 9.98 -- --
Number of Units 989,311 268,150 16,671 -- --
With GMWB
Unit Value $ 13.12 $ 10.86 -- -- --
Number of Units 108,730 7,071 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 16.13 $ 13.37 9.98 -- --
Number of Units 173,241 40,022 5,947 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 13.08 $ 10.85 -- -- --
Number of Units 22,361 4,186 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 16.04 $ 13.33 -- -- --
Number of Units 937,314 87,253 -- -- --
With HAV, EBP and GMWB
Unit Value $ 13.04 -- -- -- --
Number of Units 6,141 -- -- -- --
---------- --------- -------- -------- -------
A-7
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
Year Ended December 31,
-------------------------------------------------------------------------
Sub-account 2004 2003 2002 2001 2000
- --------------------------------------- ------------- ------------- ------------ ------------ -----------
AST Alger All-Cap Growth (2000)
With No Optional Benefits
Unit Price $ 6.49 $ 6.06 4.53 7.14 8.68
Number of Units 214,092 200,264 61,001 56,649 30,915
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.36 $ 12.50 9.37 -- --
Number of Units 123,773 34,250 1,959 -- --
With GMWB
Unit Value $ 10.85 -- -- -- --
Number of Units 6,727 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.29 $ 12.47 -- -- --
Number of Units 7,519 2,323 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.22 $ 12.43 -- -- --
Number of Units 119,566 10,356 -- -- --
With HAV, EBP and GMWB
Unit Value $ 10.79 -- -- -- --
Number of Units 964 -- -- -- --
--------- --------- ------ ------- ------
AST Gabelli All-Cap Value (2000)
With No Optional Benefits
Unit Price $ 11.63 $ 10.21 7.61 9.72 10.07
Number of Units 256,401 140,873 38,982 26,857 12,895
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.27 $ 13.44 10.05 -- --
Number of Units 122,314 33,721 2,516 -- --
With GMWB
Unit Value $ 12.24 $ 10.79 -- -- --
Number of Units 4,942 1,880 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.19 $ 13.41 -- -- --
Number of Units 9,727 2,046 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.21 -- -- -- --
Number of Units 6,426 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.11 $ 13.37 -- -- --
Number of Units 116,474 12,627 -- -- --
With HAV, EBP and GMWB
Unit Value $ 12.17 -- -- -- --
Number of Units 1,376 -- -- -- --
--------- --------- ------ ------- ------
A-8
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Year Ended December 31,
--------------------------------------------------------------------------
Sub-account 2004 2003 2002 2001 2000
- ------------------------------------------- ------------- ------------- ------------ ------------ ------------
AST T. Rowe Price Natural Resources (1995)
With No Optional Benefits
Unit Price $ 17.81 $ 13.75 10.42 11.18 11.24
Number of Units 192,336 75,013 4,994 1,879 -0-
With any one of GRO Plus, EBP or HAV
Unit Price $ 17.75 $ 13.74 10.44 -- --
Number of Units 148,837 20,929 1,940 -- --
With GMWB
Unit Value $ 14.52 $ 11.25 -- -- --
Number of Units 15,011 1,184 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 17.65 $ 13.70 -- -- --
Number of Units 37,223 1,910 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 14.48 -- -- -- --
Number of Units 1,819 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 17.56 $ 13.66 -- -- --
Number of Units 172,186 24,634 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
--------- --------- ------- ------- ------
AST Alliance Growth 2 (1996)
With No Optional Benefits
Unit Price $ 6.19 $ 5.93 4.86 7.12 8.46
Number of Units 326,194 263,698 106,056 106,762 97,356
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.86 $ 11.39 9.35 -- --
Number of Units 70,775 28,954 1,038 -- --
With GMWB
Unit Value $ 10.69 $ 10.27 -- -- --
Number of Units 21,990 7,530 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 11.80 $ 11.35 9.34 -- --
Number of Units 7,799 4,138 618 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 10.66 -- -- -- --
Number of Units 941 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.73 $ 11.32 -- -- --
Number of Units 84,417 2,206 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
--------- --------- ------- ------- ------
A-9
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
Year Ended December 31,
-------------------------------------------------------------------------
Sub-account 2004 2003 2002 2001 2000
- --------------------------------------- ------------- ------------- ------------ ------------ -----------
AST MFS Growth (1999)
With No Optional Benefits
Unit Price $ 7.04 $ 6.44 5.31 7.48 9.68
Number of Units 791,823 893,170 112,701 47,656 3,089
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.50 $ 11.47 9.47 -- --
Number of Units 305,582 188,109 18,241 -- --
With GMWB
Unit Value $ 11.13 $ 10.22 -- -- --
Number of Units 21,410 7,308 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.43 $ 11.43 -- -- --
Number of Units 26,773 6,479 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.09 $ 10.21 -- -- --
Number of Units 4,350 1,319 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.37 $ 11.40 -- -- --
Number of Units 304,760 18,900 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
---------- ---------- -------- -------- --------
AST Marsico Capital Growth (1997)
With No Optional Benefits
Unit Price $ 9.67 $ 8.46 6.50 7.80 10.09
Number of Units 5,717,404 4,075,719 228,033 182,904 114,992
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.07 $ 12.35 9.52 -- --
Number of Units 3,543,456 1,021,520 78,038 -- --
With GMWB
Unit Value $ 11.74 $ 10.31 -- -- --
Number of Units 386,737 35,775 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.00 $ 12.32 9.52 -- --
Number of Units 479,057 126,883 26,662 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.70 $ 10.31 -- -- --
Number of Units 73,444 10,353 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.92 $ 12.28 -- -- --
Number of Units 3,136,818 215,988 -- -- --
With HAV, EBP and GMWB
Unit Value $ 11.66 -- -- -- --
Number of Units 32,384 -- -- -- --
---------- ---------- -------- -------- --------
A-10
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Year Ended December 31,
--------------------------------------------------------------------------
Sub-account 2004 2003 2002 2001 2000
- --------------------------------------------- ------------- ------------- ------------ ------------ ------------
AST Goldman Sachs Concentrated Growth (1992)
With No Optional Benefits
Unit Price $ 4.68 $ 4.57 3.69 5.33 7.9
Number of Units 733,920 604,491 405,437 404,404 235,747
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.93 $ 11.68 9.47 -- --
Number of Units 162,830 30,932 1,309 -- --
With GMWB
Unit Value $ 10.66 -- -- -- --
Number of Units 8,927 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 11.86 $ 11.65 -- -- --
Number of Units 25,285 2,681 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 10.63 -- -- -- --
Number of Units 884 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.80 $ 11.61 -- -- --
Number of Units 122,739 17,452 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
--------- --------- ----- ----- -------
AST DeAM Large-Cap Value (2000)
With No Optional Benefits
Unit Price $ 11.18 $ 9.58 7.67 9.17 9.83
Number of Units 191,637 85,554 7,126 1,696 442
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.49 $ 12.45 9.98 -- --
Number of Units 114,540 40,259 4,779 -- --
With GMWB
Unit Value $ 12.39 $ 10.66 -- -- --
Number of Units 19,713 2,495 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.41 $ 12.41 -- -- --
Number of Units 46,811 6,103 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.35 -- -- -- --
Number of Units 6,736 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.33 $ 12.38 -- -- --
Number of Units 175,087 9,674 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
--------- --------- ----- ----- -------
A-11
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
Year Ended December 31,
-------------------------------------------------------------------
Sub-account 2004 2003 2002 2001 2000
- ----------------------------------------------- ------------- ------------- ------------ ----------- ------
AST Alliance/Bernstein Growth + Value 3 (2001)
With No Optional Benefits
Unit Price $ 9.66 $ 8.89 7.14 9.64 --
Number of Units 194,363 137,293 37,810 -0- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.19 $ 12.16 9.79 -- --
Number of Units 71,486 29,927 2,021 -- --
With GMWB
Unit Value $ 11.28 -- -- -- --
Number of Units 16,087 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.12 $ 12.13 -- -- --
Number of Units 9,651 2,379 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.24 -- -- -- --
Number of Units 1,922 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.05 $ 12.09 -- -- --
Number of Units 72,365 5,118 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
--------- --------- -------- -------- ----
AST Sanford Bernstein Core Value 4 (2001)
With No Optional Benefits
Unit Price $ 12.28 $ 10.91 8.61 10.05 --
Number of Units 603,508 453,569 82,054 18,453 --
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.30 $ 12.75 10.09 -- --
Number of Units 243,464 91,128 65,721 -- --
With GMWB
Unit Value $ 12.00 $ 10.70 -- -- --
Number of Units 45,483 4,032 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.23 $ 12.71 10.08 -- --
Number of Units 51,451 16,568 25,273 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.96 $ 10.70 -- -- --
Number of Units 7,978 1,276 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.15 $ 12.67 -- -- --
Number of Units 220,419 11,518 -- -- --
With HAV, EBP and GMWB
Unit Value $ 11.92 -- -- -- --
Number of Units 1,051 -- -- -- --
--------- --------- -------- -------- ----
A-12
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Year Ended December 31,
--------------------------------------------------------------------------
Sub-account 2004 2003 2002 2001 2000
- ------------------------------------------------- ------------- ------------- ------------ ------------ ------------
AST Cohen & Steers Realty (1998)
With No Optional Benefits
Unit Price $ 22.03 $ 16.17 11.91 11.75 11.57
Number of Units 281,181 149,582 25,464 16,487 16,557
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.00 $ 13.99 10.33 -- --
Number of Units 304,865 61,714 1,341 -- --
With GMWB
Unit Value $ 14.23 $ 10.48 -- -- --
Number of Units 36,159 4,313 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 18.90 $ 13.95 -- -- --
Number of Units 41,357 5,221 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 14.19 -- -- -- --
Number of Units 2,049 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 18.80 $ 13.91 -- -- --
Number of Units 184,027 13,615 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
--------- --------- -------- -------- -------
AST Sanford Bernstein Managed Index 500 5 (1998)
With No Optional Benefits
Unit Price $ 8.99 $ 8.28 6.59 8.41 9.46
Number of Units 642,882 554,156 90,506 39,414 9,941
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.33 $ 12.31 9.81 -- --
Number of Units 220,398 82,843 3,351 -- --
With GMWB
Unit Value $ 11.44 $ 10.57 -- -- --
Number of Units 18,801 853 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.26 $ 12.27 9.81 -- --
Number of Units 12,699 2,937 681 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.41 $ 10.57 -- -- --
Number of Units 4,398 644 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.19 $ 12.24 -- -- --
Number of Units 389,368 16,957 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
--------- --------- -------- -------- -------
A-13
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- -------------------------------------------- ---------- ---------- ------- ------- ------
AST AMERICAN CENTURY INCOME & Growth (1997)
With No Optional Benefits
Unit Price $ 9.48 $ 8.52 6.70 8.47 9.36
Number of Units 613,910 339,653 124,168 113,372 70,887
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.92 $ 12.56 9.90 -- --
Number of Units 233,605 63,878 813 -- --
With GMWB
Unit Value $ 11.85 $ 10.70 -- -- --
Number of Units 45,084 2,828 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.85 $ 12.52 -- -- --
Number of Units 39,945 11,533 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.82 $ 10.69 -- -- --
Number of Units 3,722 2,487 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.77 $ 12.48 -- -- --
Number of Units 198,789 2,386 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AST ALLIANCE GROWTH AND INCOME 6 (1992)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.24 $ 10.25 7.84 10.35 10.53
Number of Units 4,119,501 3,076,626 142,152 205,232 34,439
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.03 $ 12.83 9.84 -- --
Number of Units 3,211,199 932,323 18,189 -- --
With GMWB
Unit Value $ 11.63 $ 10.64 -- -- --
Number of Units 361,569 38,248 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.96 $ 12.80 9.83 -- --
Number of Units 421,261 106,644 717 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.59 $ 10.64 -- -- --
Number of Units 53,860 10,811 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.88 $ 12.76 -- -- --
Number of Units 2,899,917 187,011 -- -- --
With HAV, EBP and GMWB
Unit Value $ 11.55 -- -- -- --
Number of Units 32,525 -- -- -- --
A-14
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
APPENDIX A
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- --------- ------ ------ ------
AST HOTCHKIS & Wiley Large-Cap Value
With No Optional Benefits
Unit Price $ 10.25 $ 8.99 7.59 9.31 10.32
Number of Units 417,314 204,589 44,419 44,212 8,596
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.30 $ 11.70 9.90 -- --
Number of Units 126,725 38,215 5,087 -- --
With GMWB
Unit Value $ 11.88 -- -- -- --
Number of Units 27,234 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.23 $ 11.67 9.90 -- --
Number of Units 49,033 11,538 200 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.84 $ 10.45 -- -- --
Number of Units 9,024 1,288 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.16 $ 11.63 -- -- --
Number of Units 173,888 21,961 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AST DEAM GLOBAL ALLOCATION (7)(1993)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.55 $ 8.71 7.38 8.84 10.14
Number of Units 78,619 61,801 34,451 38,208 30,678
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.81 $ 11.70 9.94 -- --
Number of Units 16,079 1,832 67 -- --
With GMWB
Unit Value $ 11.35 -- -- -- --
Number of Units 4,895 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.74 $ 11.67 -- -- --
Number of Units 14,649 1,259 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.67 $ 11.64 -- -- --
Number of Units 35,622 483 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-15
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ----------------------------------------------- --------- --------- ------- ------ ------
AST AMERICAN CENTURY STRATEGIC BALANCED (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.56 $ 9.81 8.36 9.38 9.87
Number of Units 146,721 115,095 5,490 4,905 1,725
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.54 $ 11.68 9.97 -- --
Number of Units 102,109 30,366 2,914 -- --
With GMWB
Unit Value $ 11.10 -- -- -- --
Number of Units 2,728 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.47 $ 11.64 -- -- --
Number of Units 10,605 1,824 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.06 -- -- -- --
Number of Units 2,700 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.40 $ 11.61 -- -- --
Number of Units 175,763 18,977 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AST T. ROWE PRICE ASSET ALLOCATION (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.39 $ 10.37 8.47 9.52 10.12
Number of Units 357,085 222,150 13,799 13,152 2,412
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.33 $ 12.18 9.97 -- --
Number of Units 202,648 83,496 4,012 -- --
With GMWB
Unit Value $ 11.48 $ 10.49 -- -- --
Number of Units 57,827 427 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.26 $ 12.14 -- -- --
Number of Units 27,099 12,666 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.44 $ 10.49 -- -- --
Number of Units 4,487 2,847 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.19 $ 12.11 -- -- --
Number of Units 349,177 27,414 -- -- --
With HAV, EBP and GMWB
Unit Value $ 11.41 -- -- -- --
Number of Units 1,537 -- -- -- --
A-16
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- --------- --------- --------- --------
AST T. ROWE PRICE GLOBAL BOND (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 14.73 $ 13.73 12.32 10.84 10.70
Number of Units 657,913 289,862 36,987 16,390 -0-
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.27 $ 11.47 10.32 -- --
Number of Units 759,419 92,875 2,954 -- --
With GMWB
Unit Value $ 11.06 $ 10.35 -- -- --
Number of Units 85,967 7,131 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.21 $ 11.44 10.31 -- --
Number of Units 103,452 13,487 4,861 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.03 $ 10.34 -- -- --
Number of Units 9,789 1,457 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.14 $ 11.40 -- -- --
Number of Units 712,411 24,361 -- -- --
With HAV, EBP and GMWB
Unit Value $ 11.00 -- -- -- --
Number of Units 9,975 -- -- -- --
AST GOLDMAN SACHS HIGH YIELD PORTFOLIO
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.06 $ 10.99 9.16 9.27 9.37
Number of Units 957,756 906,947 73,614 45,297 12,929
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.46 $ 12.30 10.27 -- --
Number of Units 395,118 144,343 2,990 -- --
With GMWB
Unit Value $ 11.37 $ 10.40 -- -- --
Number of Units 51,737 11,264 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.38 $ 12.26 -- -- --
Number of Units 46,959 12,603 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.34 $ 10.40 -- -- --
Number of Units 6,217 3,250 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.31 $ 12.23 -- -- --
Number of Units 426,333 27,535 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-17
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- ---------- ---------- ------- ------- ------
AST LORD ABBETT BOND-DEBENTURE (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.71 $ 11.98 10.22 10.30 10.13
Number of Units 1,012,739 814,135 43,077 16,628 425
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.67 $ 11.97 10.24 -- --
Number of Units 733,436 309,328 27,024 -- --
With GMWB
Unit Value $ 11.00 $ 10.41 -- -- --
Number of Units 92,187 12,397 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.60 $ 11.94 10.23 -- --
Number of Units 108,071 20,920 274 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 10.97 $ 10.41 -- -- --
Number of Units 14,516 1,266 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.53 $ 11.90 -- -- --
Number of Units 904,128 42,593 -- -- --
With HAV, EBP and GMWB
Unit Value $ 10.94 -- -- -- --
Number of Units 4,145 -- -- -- --
AST PIMCO TOTAL RETURN BOND (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.72 $ 13.23 12.72 11.80 10.97
Number of Units 3,074,732 2,301,863 362,294 275,317 37,918
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.91 $ 10.55 10.17 -- --
Number of Units 3,124,509 1,067,126 87,940 -- --
With GMWB
Unit Value $ 10.43 $ 10.10 -- -- --
Number of Units 329,463 37,841 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 10.85 $ 10.52 10.17 -- --
Number of Units 356,784 93,573 11,308 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 10.40 $ 10.09 -- -- --
Number of Units 35,761 3,287 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.79 $ 10.49 -- -- --
Number of Units 3,495,678 378,676 -- -- --
With HAV, EBP and GMWB
Unit Value $ 10.37 -- -- -- --
Number of Units 19,700 -- -- -- --
A-18
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- ---------- --------- ------ ------ ------
AST PIMCO LIMITED MATURITY BOND (1995)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.18 $ 12.08 10.09 11.29 10.59
Number of Units 2,189,975 956,856 38,260 112,948 1,940
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.32 $ 10.26 10.09 -- --
Number of Units 1,926,546 238,601 3,018 -- --
With GMWB
Unit Value $ 10.07 $ 10.03 -- -- --
Number of Units 264,755 23,203 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 10.26 $ 10.23 -- -- --
Number of Units 295,271 30,532 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 10.04 $ 10.02 -- -- --
Number of Units 23,826 1,299 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.21 $ 10.21 -- -- --
Number of Units 2,764,809 36,640 -- -- --
With HAV, EBP and GMWB
Unit Value $ 10.01 -- -- -- --
Number of Units 11,324 -- -- -- --
AST MONEY MARKET (1992)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.46 $ 10.51 10.57 10.57 10.32
Number of Units 1,663,940 1,245,396 403,604 179,509 29,567
With any one of GRO Plus, EBP or HAV
Unit Price $ 9.84 $ 9.91 9.99 -- --
Number of Units 860,728 432,412 69,199 -- --
With GMWB
Unit Value $ 9.90 $ 9.98 -- -- --
Number of Units 167,246 5,609 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 9.79 $ 9.88 9.99 -- --
Number of Units 118,431 40,239 11,113 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 9.87 -- -- -- --
Number of Units 6,752 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 9.73 $ 9.85 -- -- --
Number of Units 1,312,018 81,304 -- -- --
With HAV, EBP and GMWB
Unit Value $ 9.84 -- -- -- --
Number of Units 521 -- -- -- --
A-19
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ----------------------------------------------------- -------- --------- ------ ----- -----
Gartmore Variable Investment Trust -- GVIT DEVELOPING
MARKETS (1996)
With No Optional Benefits
Unit Price $ 12.52 $ 10.59 6.71 7.53 8.19
Number of Units 264,541 122,136 6,530 6,555 3,293
With any one of GRO Plus, EBP or HAV
Unit Price $ 18.44 $ 15.63 -- -- --
Number of Units 118,837 20,956 -- -- --
With GMWB
Unit Value $ 12.85 $ 10.90 -- -- --
Number of Units 31,734 1,863 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 18.35 $ 15.59 -- -- --
Number of Units 26,850 167 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.81 -- -- -- --
Number of Units 629 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 18.25 $ 15.54 -- -- --
Number of Units 161,653 12,503 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
Wells Fargo Variable Trust -- EQUITY INCOME (8)(1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 17.32 $ 15.79 12.67 15.89 17.01
Number of Units 19,612 10,586 1,063 1,992 -0-
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.48 $ 12.32 -- -- --
Number of Units 42,381 17,889 -- -- --
With GMWB
Unit Value $ 11.74 $ 10.23 -- -- --
Number of Units 2,400 314,757 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.40 $ 12.28 -- -- --
Number of Units 4,433 1,089 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.33 $ 12.25 -- -- --
Number of Units 39,530 5,900 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-20
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- ------------- --------- --------- ------ ------
AIM V.I. -- DYNAMICS (1999)
With No Optional Benefits
Unit Price $ 6.96 $ 6.22 4.57 6.80 9.99
Number of Units 188,184 137,600 18,808 15,825 22,264
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.71 $ 13.18 9.71 -- --
Number of Units 117,657 27,792 1,332 -- --
With GMWB
Unit Value $ 11.76 -- -- -- --
Number of Units 7,898 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.64 $ 13.14 -- -- --
Number of Units 8,375 1,003 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.56 $ 13.11 -- -- --
Number of Units 61,543 4,848 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AIM V.I. -- TECHNOLOGY (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 3.32 $ 3.21 2.24 4.27 7.98
Number of Units 78,567 42,720 30,448 35,767 25,984
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.83 -- -- -- --
Number of Units 216 -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-21
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- -------- -------- ------ ----- ------
AIM V.I. -- HEALTH SCIENCES (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.34 $ 10.68 8.46 11.35 13.14
Number of Units 92,506 59,116 19,405 27,104 32,969
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.69 $ 11.98 9.52 -- --
Number of Units 39,343 16,675 892 -- --
With GMWB
Unit Value $ 11.50 $ 10.87 -- -- --
Number of Units 8,859 1,773 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.63 $ 11.95 9.52 -- --
Number of Units 6,838 2,812 223 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.47 -- -- -- --
Number of Units 63 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.56 $ 11.91 -- -- --
Number of Units 87,037 2,077 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AIM V.I. -- FINANCIAL SERVICES (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.72 $ 11.85 9.26 11.02 12.38
Number of Units 44,091 48,538 7,204 8,536 9,786
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.56 $ 12.67 9.93 -- --
Number of Units 19,908 9,201 979 -- --
With GMWB
Unit Value $ 11.20 -- -- -- --
Number of Units 4,380 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.49 $ 12.63 9.92 -- --
Number of Units 8,738 2,426 190 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.17 -- -- -- --
Number of Units 1,383 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.42 $ 12.60 -- -- --
Number of Units 67,581 20,268 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-22
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- -------------------------------------------- -------- -------- ----- ----- ------
Evergreen VA -- INTERNATIONAL EQUITY (2000)
With No Optional Benefits
Unit Price $ 12.31 $ 10.46 -- -- --
Number of Units 62,400 24,847 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.27 $ 10.45 -- -- --
Number of Units 24,314 5,552 -- -- --
With GMWB
Unit Value $ 12.26 -- -- -- --
Number of Units 14,337 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.24 $ 10.45 -- -- --
Number of Units 7,296 1,075 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- $ 10.45 -- -- --
Number of Units -- 970 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.21 $ 10.45 -- -- --
Number of Units 32,858 827 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
Evergreen VA -- SPECIAL EQUITY 9 (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.57 $ 9.16 6.10 8.49 9.35
Number of Units 92,559 69,344 5,427 5,085 -0-
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.38 $ 14.76 9.86 -- --
Number of Units 71,520 19,312 295 -- --
With GMWB
Unit Value $ 10.64 $ 10.22 -- -- --
Number of Units 8,000 2,186 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.30 $ 14.71 -- -- --
Number of Units 27,564 1,917 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.22 $ 14.67 -- -- --
Number of Units 46,748 3,620 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-23
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- -------- ----- ----- ----
Evergreen VA -- OMEGA (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.75 $ 9.21 -- 9.04 --
Number of Units 26,849 15,743 -- -0- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.01 $ 13.27 -- -- --
Number of Units 22,947 3,320 -- -- --
With GMWB
Unit Value $ 11.04 -- -- -- --
Number of Units 1,787 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.93 $ 13.23 -- -- --
Number of Units 263 27 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.00 -- -- -- --
Number of Units 3,387 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.86 $ 13.19 -- -- --
Number of Units 31,153 283 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- EUROPE 30 (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.90 $ 7.00 5.11 6.97 9.30
Number of Units 201,444 75,543 2,539 7,317 -0-
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.93 $ 13.26 9.70 -- --
Number of Units 13,634 2,495 69 -- --
With GMWB
Unit Value $ 12.49 -- -- -- --
Number of Units 2,913 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.85 -- -- -- --
Number of Units 19,592 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.45 -- -- -- --
Number of Units 140 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.77 $ 13.18 -- -- --
Number of Units 99,557 13,365 -- -- --
With HAV, EBP and GMWB
Unit Value $ 12.41 -- -- -- --
Number of Units 562 -- -- -- --
A-24
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- -------- -------- ---- ---- ----
ProFund VP -- ASIA 30 (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.43 $ 12.66 -- -- --
Number of Units 63,254 47,272 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.71 $ 16.03 -- -- --
Number of Units 20,171 6,176 -- -- --
With GMWB
Unit Value $ 10.22 -- -- -- --
Number of Units 7,026 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.62 $ 15.99 -- -- --
Number of Units 18,117 173 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 10.19 -- -- -- --
Number of Units 98 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.54 $ 15.94 -- -- --
Number of Units 74,988 10,432 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- JAPAN (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.65 $ 9.09 -- -- --
Number of Units 87,251 28,579 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.52 $ 12.76 -- -- --
Number of Units 11,573 7,868 -- -- --
With GMWB
Unit Value $ 10.44 -- -- -- --
Number of Units 3,086 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.45 -- -- -- --
Number of Units 19,547 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.38 $ 12.69 -- -- --
Number of Units 35,968 1,883 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-25
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- -------- -------- ---- ---- ----
ProFund VP -- BANKS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.11 $ 10.97 -- -- --
Number of Units 12,480 8,886 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.22 $ 12.92 -- -- --
Number of Units 12,919 4,576 -- -- --
With GMWB
Unit Value $ 11.67 -- -- -- --
Number of Units 2,773 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.15 -- -- -- --
Number of Units 2,561 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.07 -- -- -- --
Number of Units 8,847 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- BASIC MATERIALS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.00 $ 11.02 -- -- --
Number of Units 42,597 53,759 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.56 $ 13.41 10.35 -- --
Number of Units 17,377 3,940 70 -- --
With GMWB
Unit Value $ 12.54 -- -- -- --
Number of Units 9,417 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.48 -- -- -- --
Number of Units 648 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.40 $ 13.33 -- -- --
Number of Units 23,555 8,054 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-26
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- -------- -------- ------ ----- ----
ProFund VP -- Biotechnology (2001)
With No Optional Benefits
Unit Price $ 7.73 $ 7.14 5.17 8.38 --
Number of Units 32,726 20,329 460 3,279 --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- CONSUMER SERVICES (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.67 $ 9.10 -- -- --
Number of Units 20,288 13,935 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.41 $ 11.71 9.38 -- --
Number of Units 27,094 2,321 686 -- --
With GMWB
Unit Value $ 10.78 -- -- -- --
Number of Units 10,848 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.35 -- -- -- --
Number of Units 65 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.28 -- -- -- --
Number of Units 17,197 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-27
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- -------- ---- ---- ----
ProFund VP -- CONSUMER GOODS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.47 $ 9.71 -- -- --
Number of Units 7,578 3,821 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.44 $ 11.56 9.91 -- --
Number of Units 8,109 1,762 74 -- --
With GMWB
Unit Value $ 11.49 -- -- -- --
Number of Units 3,092 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.37 $ 11.53 -- -- --
Number of Units 147 1,780 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.31 $ 11.49 -- -- --
Number of Units 8,437 954 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- OIL & GAS (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.62 $ 9.10 -- 9.20 --
Number of Units 186,654 50,155 -- -0- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.53 $ 12.19 10.12 -- --
Number of Units 66,223 2,523 641 -- --
With GMWB
Unit Value $ 13.91 -- -- -- --
Number of Units 8,976 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.45 $ 12.16 -- -- --
Number of Units 23,701 239 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.37 $ 12.12 -- -- --
Number of Units 58,804 4,007 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-28
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- -------- -------- ----- ----- ----
ProFund VP -- Financials (2001)
With No Optional Benefits
Unit Price $ 10.77 $ 9.88 7.76 9.23 --
Number of Units 70,662 32,283 3,258 8,154 --
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.60 $ 12.51 9.85 -- --
Number of Units 33,262 3,980 73 -- --
With GMWB
Unit Value $ 11.36 -- -- -- --
Number of Units 6,588 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.52 $ 12.47 9.84 -- --
Number of Units 20,343 388 401 -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.45 $ 12.44 -- -- --
Number of Units 17,749 1,060 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- HEALTH CARE (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 8.38 $ 8.29 7.15 9.37 --
Number of Units 91,641 23,591 1,235 2,564 --
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.19 $ 11.10 9.60 -- --
Number of Units 43,276 11,578 1,177 -- --
With GMWB
Unit Value $ 10.74 -- -- -- --
Number of Units 490 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 11.13 $ 11.07 9.60 -- --
Number of Units 31,097 402 416 -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.07 $ 11.04 -- -- --
Number of Units 8,570 1,969 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-29
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- -------- -------- ----- ----- ----
ProFund VP -- INDUSTRIALS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.27 $ 10.08 -- -- --
Number of Units 22,333 11,186 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.40 $ 12.91 10.21 -- --
Number of Units 15,368 3,639 72 -- --
With GMWB
Unit Value $ 12.18 -- -- -- --
Number of Units 6,290 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.32 -- -- -- --
Number of Units 3,396 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.24 -- -- -- --
Number of Units 4,426 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- INTERNET (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 18.08 $ 15.10 -- -- --
Number of Units 20,851 8,287 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-30
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- ------------- -------- ----- ---- ----
ProFund VP -- PHARMACEUTICALS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 8.02 $ 8.95 -- -- --
Number of Units 27,913 24,743 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 8.96 $ 10.02 -- -- --
Number of Units 40,402 6,951 -- -- --
With GMWB
Unit Value $ 9.51 $ 10.65 -- -- --
Number of Units 2,904 955 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 8.91 -- -- -- --
Number of Units 32 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 8.86 $ 9.96 -- -- --
Number of Units 23,137 2,871 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- PRECIOUS METALS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.90 $ 13.38 9.73 -- --
Number of Units 102,230 89,687 1,179 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.76 $ 15.51 11.31 -- --
Number of Units 18,961 6,099 65 -- --
With GMWB
Unit Value $ 10.26 -- -- -- --
Number of Units 5,163 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.69 $ 15.46 -- -- --
Number of Units 22,059 158 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 10.23 -- -- -- --
Number of Units 842 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.61 -- -- -- --
Number of Units 42,627 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-31
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- -------- -------- ------- ----- ----
ProFund VP -- REAL ESTATE (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 17.58 $ 14.00 10.65 10.78 --
Number of Units 53,006 18,355 2,230 2,306 --
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.78 $ 13.39 10.21 -- --
Number of Units 32,379 5,332 73 -- --
With GMWB
Unit Value $ 13.17 -- -- -- --
Number of Units 9,348 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 16.69 $ 13.35 -- -- --
Number of Units 2,337 850 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 16.60 $ 13.31 -- -- --
Number of Units 58,062 3,835 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- SEMICONDUCTOR (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.23 $ 9.58 -- -- --
Number of Units 52,485 17,621 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-32
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ---------------------------------------- --------- -------- --- ------ ----
ProFund VP -- TECHNOLOGY (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 4.91 $ 5.00 -- 5.92 --
Number of Units 88,720 74,180 -- 12,704 --
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.10 -- -- -- --
Number of Units 114 -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
- ---------------------------------------- -- ---------- --------- --- --------- ----
ProFund VP -- Telecommunications (2001)
With No Optional Benefits
Unit Price $ 5.04 $ 4.41 -- 7.11 --
Number of Units 118,731 30,179 -- -0- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.53 $ 10.13 -- -- --
Number of Units 16,606 4,026 -- -- --
With GMWB
Unit Value $ 12.64 -- -- -- --
Number of Units 3,263 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 11.47 $ 10.10 -- -- --
Number of Units 24,292 334 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.40 -- -- -- --
Number of Units 6,379 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-33
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- --------- ----- ----- ----
ProFund VP -- UTILITIES (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 8.75 $ 7.32 6.11 8.13 --
Number of Units 79,702 18,902 491 -0- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.13 $ 12.69 10.62 -- --
Number of Units 74,584 7,430 836 -- --
With GMWB
Unit Value $ 12.61 -- -- -- --
Number of Units 7,469 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.05 $ 12.65 -- -- --
Number of Units 4,044 2,920 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.97 $ 12.62 -- -- --
Number of Units 57,208 8,137 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- BULL (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.65 $ 9.91 -- -- --
Number of Units 412,259 394,427 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.93 $ 12.07 -- -- --
Number of Units 182,468 18,458 -- -- --
With GMWB
Unit Value $ 11.34 -- -- -- --
Number of Units 26,383 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.86 $ 12.03 -- -- --
Number of Units 15,572 2,154 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.31 -- -- -- --
Number of Units 40 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.79 $ 12.00 -- -- --
Number of Units 171,187 1,179 -- -- --
With HAV, EBP and GMWB
Unit Value $ 11.27 -- -- -- --
Number of Units 1,158 -- -- -- --
A-34
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- -------- ------- ------ ----
ProFund VP -- BEAR (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.09 $ 10.26 13.78 11.55 --
Number of Units 16,155 28,299 2,012 -0- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 6.65 $ 7.53 10.14 -- --
Number of Units 5,797 3,186 658 -- --
With GMWB
Unit Value $ 8.21 -- -- -- --
Number of Units 1,186 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 6.62 $ 7.51 -- -- --
Number of Units 42,157 2,165 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 8.19 -- -- -- --
Number of Units 532 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 6.58 -- -- -- --
Number of Units 41,480 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- ULTRABULL (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 8.25 $ 7.13 4.72 7.48 --
Number of Units 305,666 56,257 2,988 -0- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-35
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- -------- --------- ------ ------ ----
ProFund VP -- OTC (2001)
With No Optional Benefits
Unit Price $ 5.44 $ 5.07 -- 5.77 --
Number of Units 293,311 257,947 -- -0- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.47 $ 13.54 9.36 -- --
Number of Units 105,135 12,607 205 -- --
With GMWB
Unit Value $ 11.00 -- -- -- --
Number of Units 32,794 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.39 $ 13.50 -- -- --
Number of Units 67,576 4,836 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.31 $ 13.46 -- -- --
Number of Units 128,923 5,378 -- -- --
With HAV, EBP and GMWB
Unit Value $ 10.94 -- -- -- --
Number of Units 2,991 -- -- -- --
ProFund VP -- Short OTC (2002)
With No Optional Benefits
Unit Price $ 5.99 $ 6.83 11.03 -- --
Number of Units 77,280 40,617 934 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 5.64 $ 6.45 -- -- --
Number of Units 7,841 10,811 -- -- --
With GMWB
Unit Value $ 8.31 -- -- -- --
Number of Units 265 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 5.61 -- -- -- --
Number of Units 36 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 5.58 -- -- -- --
Number of Units 7,191 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-36
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- -------- --------- ----- ------ ------
ProFund VP -- UltraOTC (1999)
With No Optional Benefits
Unit Price $ 0.87 $ 0.77 -- 1.25 4.06
Number of Units 6,405,048 890,270 -- 58,556 3,787
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.53 -- -- -- --
Number of Units 90 -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- MID-CAP VALUE (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.80 $ 10.30 -- -- --
Number of Units 87,968 59,964 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.38 $ 13.46 10.07 -- --
Number of Units 64,251 18,261 2,821 -- --
With GMWB
Unit Value $ 12.30 -- -- -- --
Number of Units 3,276 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.29 -- -- -- --
Number of Units 10,601 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.26 -- -- -- --
Number of Units 215 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.21 $ 13.39 -- -- --
Number of Units 110,312 4,164 -- -- --
With HAV, EBP and GMWB
Unit Value $ 12.23 -- -- -- --
Number of Units 216 -- -- -- --
A-37
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- --------- ------ ----- -----
ProFund VP -- MID-CAP GROWTH (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.70 $ 9.75 -- -- --
Number of Units 80,520 24,107 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.54 $ 12.38 9.82 -- --
Number of Units 55,896 17,202 2,879 -- --
With GMWB
Unit Value $ 11.21 -- -- -- --
Number of Units 2,696 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.47 -- -- -- --
Number of Units 27,151 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.18 -- -- -- --
Number of Units 88 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.39 $ 12.31 -- -- --
Number of Units 53,472 2,028 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- ULTRAMID-CAP (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.13 $ 9.62 -- -- --
Number of Units 115,073 34,556 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 20.80 $ 16.53 -- -- --
Number of Units 28,117 5,328 -- -- --
With GMWB
Unit Value $ 13.97 -- -- -- --
Number of Units 4,794 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 20.68 $ 16.49 -- -- --
Number of Units 853 1,873 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 13.92 -- -- -- --
Number of Units 19 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 20.57 $ 16.44 -- -- --
Number of Units 101,493 3,746 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-38
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- --------- ------ ----- ----
ProFund VP -- SMALL-CAP VALUE (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.22 $ 9.46 -- -- --
Number of Units 123,988 105,751 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.93 $ 13.47 10.15 -- --
Number of Units 75,890 27,349 568 -- --
With GMWB
Unit Value $ 12.63 -- -- -- --
Number of Units 18,991 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.85 $ 13.43 -- -- --
Number of Units 24,538 4,300 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.59 -- -- -- --
Number of Units 45 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.76 $ 13.39 -- -- --
Number of Units 163,443 24,769 -- -- --
With HAV, EBP and GMWB
Unit Value $ 12.55 -- -- -- --
Number of Units 974 -- -- -- --
ProFund VP -- SMALL-CAP GROWTH (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.11 $ 10.23 -- -- --
Number of Units 237,000 65,882 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.47 $ 13.11 -- -- --
Number of Units 63,321 24,983 -- -- --
With GMWB
Unit Value $ 12.32 -- -- -- --
Number of Units 14,604 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.39 $ 13.07 -- -- --
Number of Units 32,374 4,774 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.29 -- -- -- --
Number of Units 162 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.31 $ 13.04 -- -- --
Number of Units 170,800 21,997 -- -- --
With HAV, EBP and GMWB
Unit Value $ 12.25 -- -- -- --
Number of Units 938 -- -- -- --
A-39
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ------------------------------------------ ------------- --------- ----- ------ --------
ProFund VP -- ULTRASMALL-CAP (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.28 $ 9.49 4.82 8.50 9.32
Number of Units 143,175 60,051 953 -0- 3,174
With any one of GRO Plus, EBP or HAV
Unit Price $ 25.20 -- -- -- --
Number of Units 4,066 -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- U.S. GOVERNMENT PLUS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.91 $ 11.15 11.59 -- --
Number of Units 42,782 20,058 1,005 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.43 $ 9.79 10.20 -- --
Number of Units 11,478 6,691 592 -- --
With GMWB
Unit Value $ 10.89 -- -- -- --
Number of Units 3,036 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 10.38 $ 9.76 -- -- --
Number of Units 1,887 818 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.32 $ 9.73 -- -- --
Number of Units 120,311 14,956 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-40
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Year Ended December 31,
---------------------------------------------------------
Sub-account 2004 2003 2002 2001 2000
- ---------------------------------------------- -------- -------- ------ ----- -----
ProFund VP -- RISING RATES OPPORTUNITY (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 6.70 $ 7.61 -- -- --
Number of Units 266,169 78,428 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 8.04 $ 9.16 9.70 -- --
Number of Units 168,043 31,892 3,456 -- --
With GMWB
Unit Value $ 8.37 -- -- -- --
Number of Units 25,505 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 8.00 $ 9.13 -- -- --
Number of Units 21,280 1,988 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 8.35 -- -- -- --
Number of Units 7,572 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 7.95 $ 9.11 -- -- --
Number of Units 333,355 4,991 -- -- --
With HAV, EBP and GMWB
Unit Value $ 8.32 -- -- -- --
Number of Units 307 -- -- -- --
ProFund VP -- LARGE-CAP GROWTH
WITH NO OPTIONAL BENEFITS
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.38 -- -- -- --
Number of Units 368 -- -- -- --
With GMWB
Unit Value $ 10.38 -- -- -- --
Number of Units 1,497 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.37 -- -- -- --
Number of Units 2,860 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-41
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- -------- ----- ----- ----- -----
ProFund VP -- LARGE-CAP VALUE
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.37 -- -- -- --
Number of Units 3,839 -- -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.37 -- -- -- --
Number of Units 1,527 -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.36 -- -- -- --
Number of Units 3,802 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- SHORT MID-CAP
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.70 -- -- -- --
Number of Units 571 -- -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-42
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------------- -------- -------- ------- ------- -------
ProFund VP -- Short Small-Cap
With No Optional Benefits
Unit Price $ 9.55 -- -- -- --
Number of Units 7,859 -- -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ -- -- -- --
Number of Units -- -- -- --
With GMWB
Unit Value $ -- -- -- --
Number of Units -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ -- -- -- --
Number of Units -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value $ -- -- -- --
Number of Units -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ -- -- -- --
Number of Units -- -- -- --
With HAV, EBP and GMWB
Unit Value $ -- -- -- --
Number of Units -- -- -- --
First Trust(R) 10 UNCOMMON VALUES (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 4.38 $ 3.99 2.95 4.73 7.44
Number of Units 33,075 22,064 23,080 31,543 32,451
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-43
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- --------- ----- ----- -----
First Trust Target Managed VIP (1999)
With No Optional Benefits
Unit Price $ 14.64 $ 13.20 -- -- --
Number of Units 695,591 476,951 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.56 -- -- -- --
Number of Units 246,099 -- -- -- --
With GMWB
Unit Value $ 11.33 -- -- -- --
Number of Units 142,741 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.48 -- -- -- --
Number of Units 168,841 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value $ 11.31 -- -- -- --
Number of Units 8,734 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.30 -- -- -- --
Number of Units 1,057,901 -- -- -- --
With HAV, EBP and GMWB
Unit Value $ 11.29 -- -- -- --
Number of Units 16,433 -- -- -- --
First Trust The DOW(SM) DART 10 (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.35 $ 12.05 -- -- --
Number of Units 24,245 10,069 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.29 -- -- -- --
Number of Units 25,135 -- -- -- --
With GMWB
Unit Value $ 10.48 -- -- -- --
Number of Units 4,769 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.22 -- -- -- --
Number of Units 19,324 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.47 -- -- -- --
Number of Units 1,597 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.46 -- -- -- --
Number of Units 78,082 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-44
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- ------------- ------------- ------- ------- ------
FIRST TRUST GLOBAL TARGET 15 10 (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 16.05 $ 12.96 -- -- --
Number of Units 22,405 8,569 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.96 -- -- -- --
Number of Units 22,182 -- -- -- --
With GMWB
Unit Value $ 11.85 -- -- -- --
Number of Units 927 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.88 -- -- -- --
Number of Units 16,155 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value $ 11.83 -- -- -- --
Number of Units 638 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.82 -- -- -- --
Number of Units 108,014 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
FIRST TRUST S&P Target 24 (1999)
With No Optional Benefits
Unit Price $ 13.34 $ 11.89 -- -- --
Number of Units 43,536 5,532 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.27 -- -- -- --
Number of Units 37,547 -- -- -- --
With GMWB
Unit Value $ 10.75 -- -- -- --
Number of Units 5,280 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.20 -- -- -- --
Number of Units 27,172 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.73 -- -- -- --
Number of Units 1,630 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.72 -- -- -- --
Number of Units 38,677 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-45
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
--------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ------------------------------------------- -------- ----- ----- ----- -----
FIRST TRUST NASDAQ TARGET 15 (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.54 -- -- -- --
Number of Units 7,266 -- -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
FIRST TRUST VALUE LINE(R) -- TARGET 25 (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 16.61 -- -- -- --
Number of Units 33,213 -- -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-46
APPENDIX A
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
--------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- -------- ----- ----- ----- ----
SP WILLIAM BLAIR INTERNATIONAL GROWTH
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.53 -- -- -- --
Number of Units 18,568 -- -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.53 -- -- -- --
Number of Units 18,201 -- -- -- --
With GMWB
Unit Value $ 10.53 -- -- -- --
Number of Units 89 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.53 -- -- -- --
Number of Units 3 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.53 -- -- -- --
Number of Units 2,276 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.53 -- -- -- --
Number of Units 73,031 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
1: Effective May 2, 2005 the name of the AST State Street Research Small-Cap
Growth Portfolio has changed to AST Small-Cap Growth Portfolio.
2: Effective May 2, 2005 the name of the AST Alliance Growth Portfolio has
changed to AST AllianceBernstein Large-Cap Growth Portfolio.
3: Effective May 2, 2005 the name of the AST Alliance/Bernstein Growth +
Value Portfolio has changed to AST AllianceBernstein Growth + Value
Portfolio.
4: Effective May 2, 2005 the name of the AST Sanford Bernstein Core Value
Portfolio has changed to AST AllianceBernstein Core Value Portfolio.
5: Effective May 2, 2005 the name of the AST Sanford Bernstein Managed Index
500 Portfolio has changed to AST AllianceBernstein Managed Index 500
Portfolio.
6: Effective May 2, 2005 the name of the AST Alliance Growth and Income
Portfolio has changed to AST AllianceBernstein Growth & Income Portfolio.
7: Effective May 2, 2005 the name of the AST DeAM Global Allocation Portfolio
has changed to AST Global Allocation Portfolio.
8: Effective May 2, 2005 the name of the Wells Fargo Variable Trust Equity
Income Portfolio has changed to Wells Fargo Variable Trust Advantage
Equity Income Portfolio.
9: Effective April 15, 2005 the name of the Evergreen VA--Special Equity
Portfolio has changed to Evergreen VA Growth Portfolio.
10: Effective May 2, 2005 the name of the First Trust Global Target 15
Portfolio has changed to First Trust Global Dividend Target 15 Portfolio.
A-47
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APPENDIX B
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits
EXAMPLES OF ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT CALCULATION
The following are examples of how the Enhanced Beneficiary Protection Optional
Death Benefit is calculated. Each example assumes that a $50,000 initial
Purchase Payment is made. Each example assumes that there is one Owner who is
age 50 on the Issue Date and that all Account Value is maintained in the
variable investment options. The formula for determining the Enhanced
Beneficiary Protection Optional Death Benefit is as follows:
Account Value of variable
investment options plus Interim Purchase Payments -
Growth = minus
Value of Fixed Allocations proportional withdrawals
(no MVA applies)
Example with market increase
Assume that the Owner has made no withdrawals and that the Account Value has
been increasing due to positive market performance. On the date we receive due
proof of death, the Account Value is $75,000. The basic Death Benefit is
calculated as Purchase Payments minus proportional withdrawals, or Account
Value, which ever is greater. Therefore, the basic Death Benefit is equal to
$75,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to
the amount payable under the basic Death Benefit ($75,000) PLUS 40% of the
"Growth" under the Annuity.
Growth = $75,000 - [$50,000 - $0]
= $ 25,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit =
40% of Growth
= $25,000 x 0.40
= $ 10,000
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $ 85,000
Examples with market decline
Assume that the Owner has made no withdrawals and that the Account Value has
been decreasing due to declines in market performance. On the date we receive
due proof of death, the Account Value is $45,000. The basic Death Benefit is
calculated as Purchase Payments minus proportional withdrawals, or Account
Value, which ever is greater. Therefore, the basic Death Benefit is equal to
$50,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to
the amount payable under the basic Death Benefit ($50,000) PLUS the "Growth"
under the Annuity.
Growth = $45,000 - [$50,000 - $0]
= $ -5,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit =
40% of Growth
NO BENEFIT IS PAYABLE
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $ 50,000
B-1
APPENDIX B
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits continued
IN THIS EXAMPLE YOU WOULD RECEIVE NO ADDITIONAL BENEFIT FROM PURCHASING THE
ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT.
Example with market increase and withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 5 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $90,000. The basic Death Benefit is calculated as Purchase
Payments minus proportional withdrawals, or Account Value, which ever is
greater. Therefore, the basic Death Benefit is equal to $90,000. The Enhanced
Beneficiary Protection Optional Death Benefit is equal to the amount payable
under the basic Death Benefit ($90,000) PLUS 40% of the "Growth" under the
Annuity.
Growth = $90,000 - [$50,000 - ($50,000 x $15,000/$75,000)]
= $90,000 - [$50,000 - $10,000]
= $90,000 - $40,000
= $ 50,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit =
40% of Growth
= $50,000 x 0.40
= $ 20,000
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $110,000
EXAMPLES OF HIGHEST ANNIVERSARY VALUE DEATH BENEFIT CALCULATION
The following are examples of how the Highest Anniversary Value Death Benefit is
calculated. Each example assumes an initial Purchase Payment of $50,000. Each
example assumes that there is one Owner who is age 70 on the Issue Date and that
all Account Value is maintained in the variable investment options.
EXAMPLE WITH MARKET INCREASE AND DEATH BEFORE DEATH BENEFIT TARGET DATE
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the date
we receive due proof of death, the Account Value is $75,000; however, the
Anniversary Value on the 5th anniversary of the Issue Date was $90,000. Assume
as well that the Owner has died before the Death Benefit Target Date. The Death
Benefit is equal to the greater of the Highest Anniversary Value or the basic
Death Benefit. The Death Benefit would be the Highest Anniversary Value
($90,000) because it is greater than the amount that would have been payable
under the basic Death Benefit ($75,000).
Example with withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $80,000; however, the Anniversary Value on the 5th anniversary
of the Issue Date was $90,000. Assume as well that the Owner has died before the
Death Benefit Target Date. The Death Benefit is equal to the greater of the
Highest Anniversary Value or the basic Death Benefit.
Highest Anniversary Value = $90,000 - [$90,000 x $15,000/$75,000]
= $90,000 - $18,000
= $72,000
Basic Death Benefit = max [$80,000, $50,000 - ($50,000 x $15,000/$75,000)]
= max [$80,000, $40,000]
= $80,000
The Death Benefit therefore is $80,000.
B-2
APPENDIX B
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Example with death after Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals had been made prior to the
Death Benefit Target Date. Further assume that the Owner dies after the Death
Benefit Target Date, when the Account Value is $75,000. The Highest Anniversary
Value on the Death Benefit Target Date was $80,000; however, following the Death
Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had
taken a withdrawal of $5,000 when the Account Value was $70,000. The Death
Benefit is equal to the greater of the Highest Anniversary Value plus Purchase
Payments minus proportional withdrawals after the Death Benefit Target Date or
the basic Death Benefit.
Highest Anniversary Value = $80,000 + $15,000 - [($80,000 + $15,000) x $5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $ 88,214
Basic Death Benefit = max [$75,000, ($50,000 + $15,000) - {($50,000 + $15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $ 75,000
The Death Benefit therefore is $88,214.
EXAMPLES OF COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
CALCULATION
The following are examples of how the Combination 5% Roll-Up and Highest
Anniversary Value Death Benefit are calculated. Each example assumes an initial
Purchase Payment of $50,000. Each example assumes that there is one Owner who
is age 70 on the Issue Date and that all Account Value is maintained in the
variable investment options.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the 7th
anniversary of the Issue Date we receive due proof of death, at which time the
Account Value is $75,000; however, the Anniversary Value on the 5th anniversary
of the Issue Date was $90,000. Assume as well that the Owner has died before the
Death Benefit Target Date. The Roll-Up Value is equal to initial Purchase
Payment accumulated at 5% for 6 years, or $67,005. The Death Benefit is equal to
the greatest of the Roll-Up Value, Highest Anniversary Value or the basic Death
Benefit. The Death Benefit would be the Highest Anniversary Value ($90,000)
because it is greater than both the Roll-Up Value ($67,005) and the amount that
would have been payable under the basic Death Benefit ($75,000).
Example with withdrawals
Assume that the Owner made a withdrawal of $5,000 on the 6th anniversary of the
Issue Date when the Account Value was $45,000. The Roll-Up Value on the 6th
anniversary of the Issue Date is equal to initial Purchase Payment accumulated
at 5% for 6 years, or $67,005. The 5% Dollar-for-Dollar Withdrawal Limit for the
7th annuity year is equal to 5% of the Roll-Up Value as of the 6th anniversary
of the Issue Date, or $3,350. Therefore, the remaining $1,650 of the withdrawal
results in a proportional reduction to the Roll-Up Value. On the 7th anniversary
of the Issue Date we receive due proof of death, at which time the Account Value
is $43,000; however, the Anniversary Value on the 2nd anniversary of the Issue
Date was $70,000. Assume as well that the Owner has died before the Death
Benefit Target Date. The Death Benefit is equal to the greatest of the Roll-Up
Value, Highest Anniversary Value or the basic Death Benefit.
B-3
APPENDIX B
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits continued
Roll-Up Value = {(67,005 - $3,350) - [($67,005 - $3,350) x $1,650/($45,000 -$3,350)]} x 1.05
= ($63,655 - $2,522) x 1.05
= $64,190
Highest Anniversary Value = $70,000 - [$70,000 x $5,000 / $45,000]
= $70,000 - $7,778
= $62,222
Basic Death Benefit = max [$43,000, $50,000 - ($50,000 x $5,000/$45,000)]
= max [$43,000, $44,444]
= $44,444
The Death Benefit therefore is $64,190.
Example with death after Death Benefit Target Date
Assume that the Owner has not made any withdrawals prior to the Death Benefit
Target Date. Further assume that the Owner dies after the Death Benefit Target
Date, when the Account Value is $75,000. The Roll-Up Value on the Death Benefit
Target Date (the contract anniversary on or following the Owner's 80th birthday)
is equal to initial Purchase Payment accumulated at 5% for 10 years, or $81,445.
The Highest Anniversary Value on the Death Benefit Target Date was $85,000;
however, following the Death Benefit Target Date, the Owner made a Purchase
Payment of $15,000 and later had taken a withdrawal of $5,000 when the Account
Value was $70,000. The Death Benefit is equal to the greatest of the Roll-Up
Value, Highest Anniversary Value or the basic Death Benefit as of the Death
Benefit Target Date; each increased by subsequent purchase payments and reduced
proportionally for subsequent withdrawals.
Roll-Up Value = $81,445 + $15,000 - [($81,445 + 15,000) x $5,000/$70,000]
= $81,445 + $15,000 - $6,889
= $89,556
Highest Anniversary Value = $85,000 + $15,000 - [($85,000 + 15,000) x $5,000/$70,000]
= $85,000 + $15,000 - $7,143
= $92,857
Basic Death Benefit = max [$75,000, $50,000 + $15,000 - {(50,000 + $15,000) x
$5,000/$70,000}]
= max [$75,000, $60,357]
= $75,000
The Death Benefit therefore is $92,857.
EXAMPLES OF HIGHEST DAILY VALUE DEATH BENEFIT CALCULATION
The following are examples of how the HDV Death Benefit is calculated. Each
example assumes an initial Purchase Payment of $50,000. Each example assumes
that there is one Owner who is age 70 on the Issue Date.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the date
we receive due proof of death, the Account Value is $75,000; however, the
Highest Daily Value was $90,000. Assume as well that the Owner has died before
the Death Benefit Target Date. The Death Benefit is equal to the greater of the
Highest Daily Value or the basic Death Benefit. The Death Benefit would be the
HDV ($90,000) because it is greater than the amount that would have been payable
under the basic Death Benefit ($75,000).
B-4
APPENDIX B
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Example with withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $80,000; however, the Highest Daily Value ($90,000) was
attained during the fifth Annuity Year. Assume as well that the Owner has died
before the Death Benefit Target Date. The Death Benefit is equal to the greater
of the Highest Daily Value (proportionally reduced by the subsequent withdrawal)
or the basic Death Benefit.
Highest Daily Value = $90,000 - [$90,000 x $15,000/$75,000]
= $90,000 - $18,000
= $72,000
Basic Death Benefit = max [$80,000, $50,000 - ($50,000 x $15,000/$75,000)]
= max [$80,000, $40,000]
= $80,000
The Death Benefit therefore is $80,000.
Example with death after Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals had been made prior to the
Death Benefit Target Date. Further assume that the Owner dies after the Death
Benefit Target Date, when the Account Value is $75,000. The Highest Daily Value
on the Death Benefit Target Date was $80,000; however, following the Death
Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had
taken a withdrawal of $5,000 when the Account Value was $70,000. The Death
Benefit is equal to the greater of the Highest Daily Value on the Death Benefit
Target Date plus Purchase Payments minus proportional withdrawals after the
Death Benefit Target Date or the basic Death Benefit.
Highest Daily Value = $80,000 + $15,000 - [($80,000 + $15,000) x $5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $88,214
Basic Death Benefit = max [$75,000, ($50,000 + $15,000) - {($50,000 + $15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $75,000
The Death Benefit therefore is $88,214.
B-5
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APPENDIX C
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix C -- Plus40(TM) Optional Life Insurance Rider
American Skandia's Plus40(TM) Optional Life Insurance Rider was offered, in
THOSE STATES WHERE APPROVED, BETWEEN NOVEMBER 18, 2002 AND MAY 1, 2003. THE
DESCRIPTION BELOW OF THE PLUS40 BENEFIT APPLIES TO THOSE CONTRACT OWNERS WHO
PURCHASED AN ANNUITY DURING THAT TIME PERIOD AND ELECTED THE PLUS40 BENEFIT.
THE LIFE INSURANCE COVERAGE PROVIDED UNDER THE PLUS40(TM) OPTIONAL LIFE
INSURANCE RIDER ("PLUS40(TM) RIDER" OR THE "RIDER") IS SUPPORTED BY AMERICAN
SKANDIA'S GENERAL ACCOUNT AND IS NOT SUBJECT TO, OR REGISTERED AS A SECURITY
UNDER, EITHER THE SECURITIES ACT OF 1933 OR THE INVESTMENT COMPANY ACT OF 1940.
INFORMATION ABOUT THE PLUS40(TM) RIDER IS INCLUDED AS AN APPENDIX TO THIS
PROSPECTUS TO HELP YOU UNDERSTAND THE RIDER AND THE RELATIONSHIP BETWEEN THE
RIDER AND THE VALUE OF YOUR ANNUITY. IT IS ALSO INCLUDED BECAUSE YOU CAN ELECT
TO PAY FOR THE RIDER WITH TAXABLE WITHDRAWALS FROM YOUR ANNUITY. THE STAFF OF
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT REVIEWED THIS INFORMATION.
HOWEVER, THE INFORMATION MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE
PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING ACCURACY AND COMPLETENESS.
THE INCOME TAX-FREE LIFE INSURANCE PAYABLE TO YOUR BENEFICIARY(IES) UNDER THE
PLUS40(TM) RIDER IS EQUAL TO 40% OF THE ACCOUNT VALUE OF YOUR ANNUITY AS OF THE
DATE WE RECEIVE DUE PROOF OF DEATH, SUBJECT TO CERTAIN ADJUSTMENTS, RESTRICTIONS
AND LIMITATIONS DESCRIBED BELOW.
ELIGIBILITY
The Plus40(TM) rider may be purchased as a rider on your Annuity. The Rider must
cover those persons upon whose death the Annuity's death benefit becomes payable
- -- the Annuity's owner or owners, or the Annuitant (in the case of an entity
owned Annuity). If the Annuity has two Owners, the Rider's death benefit is
payable upon the first death of such persons. If the Annuity is owned by an
entity, the Rider's death benefit is payable upon the death of the Annuitant,
even if a Contingent Annuitant is named.
The minimum allowable age to purchase the Plus40(TM) rider is 40; the
maximum allowable age is 75. If the Rider is purchased on two lives, both
persons must meet the age eligibility requirements. The Plus40(TM) rider is not
available to purchasers who use their Annuity as a funding vehicle for a Tax
Sheltered Annuity (or 403(b)) or as a funding vehicle for a qualified plan under
Section 401 of the Internal Revenue Code ("Code").
ADJUSTMENTS, RESTRICTIONS & LIMITATIONS
- If you die during the first 24 months following the effective date
of the Plus40(TM) rider (generally, the Issue Date of your Annuity),
the death benefit will be limited to the amount of any charges paid
for the Rider while it was in effect. While we will return the
charges you have paid during the applicable period as the death
benefit, your Beneficiary(ies) will receive no additional life
insurance benefit from the Plus40(TM) rider if you die within 24
months of its effective date.
- If you make a Purchase Payment within 24 months prior to the date of
death, the Account Value used to determine the amount of the death
benefit will be reduced by the amount of such Purchase Payment(s).
If we reduce the death benefit payable under the Plus40(TM) rider
based on this provision, we will return 50% of any charges paid for
the Rider based on those Purchase Payments as an additional amount
included in the death benefit under the Rider.
- If we apply Credits to your Annuity based on Purchase Payments, such
Credits are treated as Account Value for purposes of determining the
death benefit payable under the Plus40(TM) rider. However, if
Credits were applied to Purchase Payments made within 24 months
prior to the date of death, the Account Value used to determine the
amount of the death benefit will be reduced by the amount of such
Credits. If we reduce the death benefit payable under the Plus40(TM)
rider based on this provision, we will return 50% of any charges
paid for the Rider based on such Credits as an additional amount
included in the death benefit under the Rider.
- If you become terminally ill (as defined in the Rider) and elect to
receive a portion of the Plus40(TM) rider's death benefit under the
Accelerated Death Benefit provision, the amount that will be payable
under the Rider upon your death will be reduced. Please refer to the
Accelerated Death Benefit provision described below.
- If charges for the Plus40(TM) rider are due and are unpaid as of the
date the death benefit is being determined, such charges will be
deducted from the amount paid to your Beneficiary(ies).
C-1
APPENDIX C
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix C -- Plus40(TM) Optional Life Insurance Rider continued
- If the age of any person covered under the Plus40(TM) rider is
misstated, we will adjust any coverage under the Rider to conform to
the facts. For example, if, due to the misstatement, we overcharged
you for coverage under the Rider, we will add any additional charges
paid to the amount payable to your Beneficiary(ies). If, due to the
misstatement, we undercharged you for coverage under the Rider, we
will reduce the death benefit in proportion to the charges not paid
as compared to the charges that would have been paid had there been
no misstatement.
- On or after an Owner reaches the expiry date of the Rider (the
anniversary of the Annuity's Issue Date on or immediately after the
95th birthday), coverage will terminate. No charge will be made for
an Owner following the expiry date. If there are two Owners, the
expiry date applies separately to each Owner; therefore, coverage
may continue for one Owner and terminate as to the other Owner.
MAXIMUM BENEFIT
The Plus40(TM) rider is subject to a Maximum Death Benefit Amount based on the
Purchase Payments applied to your Annuity. The Plus40(TM) rider may also be
subject to a Per Life Maximum Benefit that is based on all amounts paid under
any annuity contract we issue to you under which you have elected the Plus40(TM)
rider or similar life insurance coverage.
- The Maximum Death Benefit Amount is 100% of the Purchase Payments
increasing at 5% per year following the date each Purchase Payment
is applied to the Annuity until the date of death. If Purchase
Payments are applied to the Annuity within 24 months prior to the
date of death, the Maximum Death Benefit Amount is decreased by the
amount of such Purchase Payments.
- The Per Life Maximum Benefit applies to Purchase Payments applied to
any such annuity contracts more than 24 months from the date of
death that exceed $1,000,000. If you make Purchase Payments in
excess of $1,000,000, we will reduce the aggregate death benefit
payable under all Plus40(TM) riders, or similar riders issued by us,
based on the combined amount of Purchase Payments in excess of
$1,000,000 multiplied by 40%. If the Per Life Maximum Benefit
applies, we will reduce the amount payable under each applicable
Plus40(TM) rider on a pro-rata basis. If the Per Life Maximum
Benefit applies upon your death, we will return any excess charges
that you paid on the portion of your Account Value on which no
benefit is payable. The Per Life Maximum Benefit does not limit the
amount of Purchase Payments that you may apply to your Annuity.
ACCELERATED DEATH BENEFIT PROVISION
If you become terminally ill, you may request that a portion of the death
benefit payable under the Plus40(TM) rider be prepaid instead of being paid to
your Beneficiary(ies) upon your death. Subject to our requirements and where
allowed by law, we will make a one time, lump sum payment. Our requirements
include proof satisfactory to us, in writing, of terminal illness after the
Rider's Effective Date.
The maximum we will pay, before any reduction, is the lesser of 50% of the
Rider's death benefit or $100,000. If you elect to accelerate payment of a
portion of the death benefit under the Plus40(TM) rider, the amount of the
remaining death benefit is reduced by the prepaid amount accumulating at an
annualized interest rate of 6.0%. Eligibility for an accelerated payout of a
portion of your Plus40(TM) rider death benefit may be more restrictive than any
medically-related surrender provision that may be applicable to you under the
Annuity.
CHARGES FOR THE PLUS40(TM) RIDER
The Plus40(TM) rider has a current charge and a guaranteed maximum charge. The
current charge for the Plus40(TM) rider is based on a percentage of your Account
Value as of the anniversary of the Issue Date of your Annuity. The applicable
percentages differ based on the attained age, last birthday of the Owner(s) or
Annuitant (in the case of an entity owned Annuity) as of the date the charge is
due. We reserve the right to change the current charge, at any time, subject to
regulatory approval where required. If there are two Owners, we calculate the
current charge that applies to each Owner individually and deduct the combined
amount as the charge for the Rider. There is no charge based on a person's life
after coverage expires as to that person. However, a charge will still apply to
the second of two Owners (and coverage will continue for such Owner) if such
Owner has not reached the expiry date.
C-2
APPENDIX C
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
PERCENTAGE OF
ATTAINED AGE ACCOUNT VALUE
Age 40-75 .80%
Age 76-80 1.60%
Age 81-85 3.20%
Age 86-90 4.80%
Age 91 6.50%
Age 92 7.50%
Age 93 8.50%
Age 94 9.50%
Age 95 10.50%
The charge for the Plus40(TM) rider may also be subject to a guaranteed
maximum charge that will apply if the current charge, when applied to the
Account Value, exceeds the guaranteed maximum charge. The guaranteed maximum
charge is based on a charge per $1,000 of insurance.
We determine the charge for the Rider annually, in arrears. We deduct the
charge: (1) upon your death; (2) on each anniversary of the Issue Date; (3) on
the date that you begin receiving annuity payments; (4) if you surrender your
Annuity other than a medically-related surrender; or (5) if you choose to
terminate the Rider. If the Rider terminates for any of the preceding reasons
on a date other than the anniversary of the Annuity's Issue Date, the charge
will be prorated. During the first year after the Annuity's Issue Date, the
charge will be prorated from the Issue Date. In all subsequent years, the
charge will be prorated from the last anniversary of the Issue Date.
You can elect to pay the annual charge through a redemption from your
Annuity's Account Value or through funds other than those within the Annuity.
If you do not elect a method of payment, we will automatically deduct the
annual charge from your Annuity's Account Value. The manner in which you elect
to pay for the Rider may have tax implications.
- If you elect to pay the charge through a redemption of your
Annuity's Account Value, the withdrawal will be treated as a taxable
distribution, and will generally be subject to ordinary income tax
on the amount of any investment gain withdrawn. If you are under age
59 1/2, the distribution may also be subject to a 10% penalty on any
gain withdrawn, in addition to ordinary income taxes. We first
deduct the amount of the charge pro-rata from the Account Value in
the variable investment options. We only deduct the charge pro-rata
from the Fixed Allocations to the extent there is insufficient
Account Value in the variable investment options to pay the charge.
- If you elect to pay the charge through funds other than those from
your Annuity, we require that payment be made electronically in U.S.
currency through a U.S. financial institution. If you elect to pay
the charge through electronic transfer of funds and payment has not
been received within 31 days from the due date, we will deduct the
charge as a redemption from your Annuity, as described above.
TERMINATION
You can terminate the Plus40(TM) rider at any time. Upon termination, you will
be required to pay a pro-rata portion of the annual charge for the Rider. The
Plus40(TM) rider will terminate automatically on the date your Account Value is
applied to begin receiving annuity payments, on the date you surrender the
Annuity or, on the expiry date with respect to such person who reaches the
expiry date. We may also terminate the Plus40(TM) rider, if necessary, to comply
with our interpretation of the Code and applicable regulations. Once terminated,
you may not reinstate your coverage under the Plus40(TM) rider.
CHANGES IN ANNUITY DESIGNATIONS
Changes in ownership and annuitant designations under the Annuity may result in
changes in eligibility and charges under the Plus40(TM) rider. These changes may
include termination of the Rider. Please refer to the Rider for specific
details.
C-3
APPENDIX C
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix C -- Plus40(TM) Optional Life Insurance Rider continued
SPOUSAL ASSUMPTION
A spousal beneficiary may elect to assume ownership of the Annuity instead of
taking the Annuity's Death Benefit. However, regardless of whether a spousal
beneficiary assumes ownership of the Annuity, THE DEATH BENEFIT UNDER THE
PLUS40(TM) RIDER WILL BE PAID DESPITE THE FACT THAT THE ANNUITY WILL CONTINUE.
The spousal beneficiary can apply the death benefit proceeds under the
Plus40(TM) rider to the Annuity as a new Purchase Payment, can purchase a new
annuity contract or use the death benefit proceeds for any other purpose.
Certain restrictions may apply to an Annuity that is used as a qualified
investment. Spousal beneficiaries may also be eligible to purchase the
Plus40(TM) rider, in which case the Annuity's Account Value, as of the date the
assumption is effective, will be treated as the initial Purchase Payment under
applicable provisions of the Rider.
TAX CONSIDERATION
The Plus40(TM) rider was designed to qualify as a life insurance contract under
the Code. As life insurance, under most circumstances, the Beneficiary(ies) does
not pay any Federal income tax on the death benefit payable under the Rider.
If your Annuity is being used as an Individual Retirement Annuity (IRA),
we consider the Plus40(TM) rider to be outside of your IRA, since premium for
the Rider is paid for either with funds outside of your Annuity or with
withdrawals previously subject to tax and any applicable tax penalty.
We believe payments under the accelerated payout provision of the Rider
will meet the requirements of the Code and the regulations in order to qualify
as tax-free payments. To the extent permitted by law, we will change our
procedures in relation to the Rider, or the definition of terminally ill, or
any other applicable term in order to maintain the tax-free status of any
amounts paid out under the accelerated payout provision.
C-4
APPENDIX D
AMERICAN SKANDIA ADVISOR PLAN III PROSPECTUS
Appendix D -- Additional Information on Asset Allocation Programs
PROGRAM RULES
- - You can elect an asset allocator program where the Sub-accounts for each
asset class in each model portfolio are designated based on an evaluation
of available Sub-accounts. If you elect the Lifetime Five Benefit ("LT5")
or the Highest Daily Value Death Benefit ("HDV"), you must enroll in one
of the eligible model portfolios. Asset allocation is a sophisticated
method of diversification that allocates assets among asset classes in
order to manage investment risk and potentially enhance returns over the
long term. However, asset allocation does not guarantee a profit or
protect against a loss.
HOW THE ASSET ALLOCATION PROGRAM WORKS
- - Amounts will automatically be allocated in accordance with the percentages
and to Sub-accounts indicated for the model portfolio that you choose. If
you allocate your Account Value or transfer your Account Value among any
Sub-accounts that are outside of your model portfolio, we will allocate
these amounts according to the allocation percentages of the applicable
model portfolio upon the next rebalancing. You may only choose one model
portfolio at a time. When you enroll in the asset allocation program and
upon each rebalance thereafter, 100% of your Account Value allocated to
the variable Sub-accounts will be allocated to the asset allocation
program. Any Account Value not invested in the Sub-accounts will not be
part of the program.
- - ADDITIONAL PURCHASE PAYMENTS: Unless otherwise requested, any additional
Purchase Payments applied to the variable Sub-accounts in the Annuity will
be allocated to the Sub-accounts according to the allocation percentages
for the model portfolio you choose. Allocation of additional Purchase
Payments outside of your model portfolio but into a Sub-account, will be
reallocated according to the allocation percentages of the applicable
model portfolio upon the next rebalancing.
- - REBALANCING YOUR MODEL PORTFOLIO: Changes in the value of the Sub-account
will cause your Account Value allocated to the Sub-accounts to vary from
the percentage allocations of the model portfolio you select. By selecting
the asset allocation program, you have directed us to periodically (e.g.,
quarterly) rebalance your Account Value allocated to the Sub-accounts in
accordance with the percentage allocations assigned to each Sub-account
within your model portfolio at the time you elected the program or as
later modified with your consent. Some asset allocation programs will only
require that a rebalancing occur when the percent of your Account Value
allocated to the Sub-accounts are outside of the acceptable range
permitted under such asset allocation program. Note -- Any Account Value
not invested in the Sub-accounts will not be affected by any rebalance.
- - SUB-ACCOUNT CHANGES WITHIN THE MODEL PORTFOLIOS: From time to time you may
be notified of a suggested change in a Sub-account or percentage allocated
to a Sub-account within your model portfolio. If you consent (in the
manner that is then permitted or required) to the suggested change, then
it will be implemented upon the next rebalance. If you do not consent then
rebalancing will continue in accordance with your unchanged model
portfolio, unless the Sub-account is no longer available under your
Annuity, in which case your lack of consent will be deemed a request to
terminate the asset allocation program and the provisions under
"Termination or Modification of the Asset Allocation Program" will apply.
- - OWNER CHANGES IN CHOICE OF MODEL PORTFOLIO: You may change from the model
portfolio that you have elected to any other currently available model
portfolio at any time. The change will be implemented on the date we
receive all required information in the manner that is then permitted or
required.
TERMINATION OR MODIFICATION OF THE ASSET ALLOCATION PROGRAM:
- - You may request to terminate your asset allocation program at any time.
Any termination will be effective on the date that American Skandia
receives your termination request in good order. If you are enrolled in
HDV or LT5, termination of your asset allocation program must coincide
with enrollment in a then currently available and approved asset
allocation program or other approved option. However, if you are enrolled
in LT5 you may terminate the LT5 benefit in order to then terminate your
asset allocation program. American Skandia reserves the right to terminate
or modify the asset allocation program at any time with respect to any
programs.
RESTRICTIONS ON ELECTING THE ASSET ALLOCATION:
- - You cannot participate in auto-rebalancing or a DCA program while enrolled
in an asset allocation program. Upon election of an asset allocation
program, American Skandia will automatically terminate your enrollment in
any auto-rebalancing or DCA program. Finally, Systematic Withdrawals can
only be made as flat dollar amounts.
D-1
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PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS FURTHER
DETAILS ABOUT THE AMERICAN SKANDIA ANNUITY DESCRIBED IN PROSPECTUS ASAPIII-PROS
(05/2005).
--------------------------------------
(print your name)
--------------------------------------
(address)
--------------------------------------
(city/state/zip code)
continued
Variable Annuity Issued by: Variable Annuity Distributed by:
AMERICAN SKANDIA LIFE AMERICAN SKANDIA
ASSURANCE CORPORATION MARKETING, INCORPORATED
A Prudential Financial Company A Prudential Financial Company
One Corporate Drive One Corporate Drive
Shelton, Connecticut 06484 Shelton, Connecticut 06484
Telephone: 1-800-752-6342 Telephone: 203-926-1888
http://www.americanskandia.prudential.com http://www.americanskandia.prudential.com
MAILING ADDRESSES:
AMERICAN SKANDIA -- VARIABLE ANNUITIES
P.O. Box 7960
Philadelphia, PA 19176
EXPRESS MAIL:
AMERICAN SKANDIA -- VARIABLE ANNUITIES
2101 Welsh Road
Dresher, PA 19025
AMERICAN SKANDIA LIFE AASSURANCE CORPORATION
A Prudential Financial Company
One Corporate Drive, Shelton, Connecticut 06484
AMERICAN SKANDIA
STAGECOACH(TM) ADVISOR PLAN(SM) III
Flexible Premium Deferred Annuity
PROSPECTUS: MAY 2, 2005
This Prospectus describes Stagecoach(TM) Advisor Plan(SM) III, a flexible
premium deferred annuity (the "Annuity") offered by American Skandia Life
Assurance Corporation ("American Skandia", "we", "our" or "us") exclusively
through Wells Fargo Bank, N.A. The Annuity may be offered as an individual
annuity contract or as an interest in a group annuity. This Prospectus describes
the important features of the Annuity and what you should consider before
purchasing the Annuity. THE ANNUITY OR CERTAIN OF ITS INVESTMENT OPTIONS AND/OR
FEATURES MAY NOT BE AVAILABLE IN ALL STATES. VARIOUS RIGHTS AND BENEFITS MAY
DIFFER BETWEEN STATES TO MEET APPLICABLE LAWS AND/OR REGULATIONS. FOR MORE
INFORMATION ABOUT VARIATIONS APPLICABLE TO YOUR STATE, PLEASE REFER TO YOUR
ANNUITY CONTRACT OR CONSULT YOUR INVESTMENT PROFESSIONAL.Certain Terms are
Capitalized in This Prospectus. Those terms are either defined in the Glossary
of Terms or in the Context of the Particular section.
American Skandia offers several different annuities which your investment
professional may be authorized to offer to you. Each annuity has different
features and benefits that may be appropriate for you based on your financial
situation, your age and how you intend to use the annuity. The different
features and benefits include variations in death benefit protection and the
ability to access your annuity's account value. The fees and charges you pay and
compensation paid to your Investment Professional may also be different between
each annuity.
The Variable Investment Options
The variable investment options, each a Sub-account of American Skandia Life
Assurance Corporation Variable Account B, invest in an underlying mutual fund
portfolio. Currently, portfolios of the following underlying mutual funds are
being offered: Wells Fargo Variable Trust, American Skandia Trust, Gartmore
Variable Investment Trust, A I M Advisors, Inc., Evergreen Variable Annuity
Trust, ProFunds VP, First Defined Portfolio Fund LLC and The Prudential Series
Fund, Inc.
Please Read This Prospectus
PLEASE READ THIS PROSPECTUS AND THE CURRENT PROSPECTUS FOR THE UNDERLYING MUTUAL
FUNDS. KEEP THEM FOR FUTURE REFERENCE. If you are purchasing the Annuity as a
replacement for existing variable annuity or variable life coverage, you should
consider any surrender or penalty charges you may incur when replacing your
existing coverage and that this Annuity may be subject to a contingent deferred
sales charge if you elect to surrender the Annuity or take a partial withdrawal.
You should consider your need to access the Annuity's Account Value and whether
the annuity's liquidity features will satisfy that need.
Available Information
We have also filed a Statement of Additional Information that is available from
us, without charge, upon your request. The contents of the Statement of
Additional Information are described on page 96. This Prospectus is part of the
registration statement we filed with the SEC regarding this offering. Additional
information on us and this offering is available in the registration statement
and the exhibits thereto. You may review and 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. These documents, as well as documents
incorporated by reference, may also be obtained through the SEC's Internet
Website (http:// www.sec.gov) for this registration statement as well as for
other registrants that file electronically with the SEC.
For Further Information call:
- - 1-800-752-6342
THESE ANNUITIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ISSUED, GUARANTEED OR
ENDORSED BY, ANY BANK, OR BANK SUBSIDIARY OF WELLS FARGO BANK, N.A., ARE NOT
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC), THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. AN INVESTMENT
IN THIS ANNUITY INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF VALUE,
EVEN WITH RESPECT TO AMOUNTS ALLOCATED TO THE AST MONEY MARKET SUB-ACCOUNT.
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.
STAGECOACH(TM) ADVISOR PLAN(SM) III IS A TRADEMARK OF THE WELLS FARGO BANK, N.A.
AND ADVISOR PLAN IS A SERVICE MARK OF THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA.
Prospectus Dated: May 2, 2005 Statement of Additional Information
WFAS3PR505 Dated: May 2, 2005 WFVASIIIPROS
PLEASE SEE OUR PRIVACY POLICY AND IRA DISCLOSURE STATEMENT ATTACHED TO THE BACK
COVER OF THIS PROSPECTUS.
Contents
Introduction ................................................................................. 1
Why Would I Choose to Purchase This Annuity? ............................................... 1
What Are Some of the Key Features of This Annuity? ......................................... 1
How Do I Purchase This Annuity? ............................................................ 1
Glossary of Terms ............................................................................ 2
Summary of Contract Fees and Charges ......................................................... 3
Expense Examples ............................................................................. 12
Investment Options ........................................................................... 13
What are the Investment Objectives and Policies of the Portfolios? ......................... 13
What are the Fixed Allocations? ............................................................ 29
Fees and Charges ............................................................................. 30
What are the Contract Fees and Charges? .................................................... 30
What Charges Apply Solely to the Variable Investment Options? .............................. 31
What Fees and Expenses are Incurred by the Portfolios? ..................................... 32
What Charges Apply to the Fixed Allocations? ............................................... 32
What Charges Apply if I Choose an Annuity Payment Option? .................................. 32
Exceptions/Reductions to Fees and Charges .................................................. 32
Purchasing Your Annuity ...................................................................... 33
What are Our Requirements for Purchasing the Annuity? ...................................... 33
Managing Your Annuity ........................................................................ 34
May I Change the Owner, Annuitant and Beneficiary Designations? ............................ 34
May I Return the Annuity if I Change My Mind? .............................................. 34
May I Make Additional Purchase Payments? ................................................... 34
May I Make Scheduled Payments Directly from My Bank Account? ............................... 34
May I Make Purchase Payments Through a Salary Reduction Program? ........................... 35
Managing Your Account Value .................................................................. 36
How and When are Purchase Payments Invested? ............................................... 36
Are There Restrictions or Charges on Transfers Between Investment Options? ................. 36
Do You Offer Dollar Cost Averaging? ........................................................ 38
Do You Offer Any Automatic Rebalancing Programs? ........................................... 38
Are Any Asset Allocation Programs Available? ............................................... 38
Do You Offer Programs Designed to Guarantee a "Return of Premium" at a Future Date? ........ 39
May I Give My Investment Professional Permission to Manage My Account Value? ............... 40
May I Authorize My Third Party Investment Advisor to Manage My Account? .................... 40
How Do the Fixed Allocations Work? ......................................................... 41
How Do You Determine Rates for Fixed Allocations? .......................................... 42
How Does the Market Value Adjustment Work? ................................................. 42
What Happens When My Guarantee Period Matures? ............................................. 43
Access To Account Value ...................................................................... 44
What Types of Distributions are Available to Me? ........................................... 44
Are There Tax Implications for Distributions? .............................................. 44
Can I Withdraw a Portion of My Annuity? .................................................... 44
How Much Can I Withdraw as a Free Withdrawal? .............................................. 45
Is There a Charge for a Partial Withdrawal? ................................................ 45
Can I Make Periodic Withdrawals From the Annuity During the Accumulation Period? ........... 45
Do You Offer a Program for Withdrawals Under Section 72(t) of the Internal Revenue Code?.... 46
What are Minimum Distributions and When Would I Need to Make Them? ......................... 46
Can I Surrender My Annuity for Its Value? .................................................. 46
What is a Medically-Related Surrender and How Do I Qualify? ................................ 46
What Types of Annuity Options are Available? ............................................... 47
How and When Do I Choose the Annuity Payment Option? ....................................... 48
How are Annuity Payments Calculated? ....................................................... 48
(i)
Contents
Living Benefit Programs .................................................................. 51
Do You Offer Programs Designed to Provide Investment Protection for Owners While They
are Alive? ........................................................................... 51
Guaranteed Return Option Plus(SM) (GRO Plus(SM))........................................ 52
Guaranteed Return Option (GRO) ......................................................... 57
Guaranteed Minimum Withdrawal Benefit (GMWB) ........................................... 59
Guaranteed Minimum Income Benefit (GMIB) ............................................... 63
Lifetime Five Income Benefit (Lifetime Five) ........................................... 68
Death Benefit ............................................................................ 74
What Triggers the Payment of a Death Benefit? .......................................... 74
Basic Death Benefit .................................................................... 74
Optional Death Benefits ................................................................ 74
American Skandia's Annuity Rewards ..................................................... 78
Payment of Death Benefits .............................................................. 79
Valuing Your Investment .................................................................. 81
How is My Account Value Determined? .................................................... 81
What is the Surrender Value of My Annuity? ............................................. 81
How and When Do You Value the Sub-Accounts? ............................................ 81
How Do You Value Fixed Allocations? .................................................... 81
When Do You Process and Value Transactions? ............................................ 81
What Happens to My Units When There is a Change in Daily Asset-Based Charges? .......... 82
Tax Considerations ....................................................................... 84
General Information ...................................................................... 91
How Will I Receive Statements and Reports? ............................................. 91
Who is American Skandia? ............................................................... 91
What are Separate Accounts? ............................................................ 91
What is the Legal Structure of the Underlying Funds? ................................... 93
Who Distributes Annuities Offered by American Skandia? ................................. 94
Incorporation of Certain Documents by Reference ........................................ 94
Financial Statements ................................................................... 95
How to Contact Us ...................................................................... 95
Indemnification ........................................................................ 95
Legal Proceedings ...................................................................... 96
Contents of the Statement of Additional Information .................................... 96
Appendix A -- Condensed Financial Information About Separate Account B ................... A-1
Appendix B -- Calculation of Optional Death Benefits ..................................... B-1
Appendix C -- Additional Information on Asset Allocation Programs ........................ C-1
(ii)
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Introduction
Why Would I Choose to Purchase This Annuity?
This Annuity is frequently used for retirement planning because it allows you to
accumulate retirement savings and also offers annuity payment options when you
are ready to begin receiving income. The Annuity also offers a choice of
different optional benefits, for an additional charge, that can provide
principal protection or guaranteed minimum income protection for Owners while
they are alive and one or more death benefits that can protect your retirement
savings if you die during a period of declining markets. It may be used as an
investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Roth
IRA, Section 401(a) plans (defined benefit plans and defined contribution plans
such as 401(k), profit sharing and money purchase plans) or Tax Sheltered
Annuity (or 403(b)). It may also be used as an investment vehicle for
"non-qualified" investments. The Annuity allows you to invest your money in a
number of variable investment options as well as in one or more fixed
allocations.
When an Annuity is purchased as a "NON-QUALIFIED" investment, you generally are
not taxed on any investment gains the Annuity earns until you make a withdrawal
or begin to receive annuity payments. This feature, referred to as
"tax-deferral", can be beneficial to the growth of your Account Value because
money that would otherwise be needed to pay taxes on investment gains each year
remains invested and can earn additional money. However, because the Annuity is
designed for long-term retirement savings, a 10% penalty tax may be applied on
withdrawals you make before you reach age 59 1/2. Annuities purchased as a
non-qualified investment are not subject to the maximum contribution limits that
may apply to a qualified investment, and are not subject to required minimum
distributions after age 70 1/2.
When an Annuity is purchased as a "QUALIFIED" investment, you should consider
that the Annuity does not provide any tax advantages in addition to the
preferential treatment already available through your retirement plan under the
Internal Revenue Code. An Annuity may offer features and benefits in addition to
providing tax deferral that other investment vehicles may not offer, including
death benefit protection for your beneficiaries, lifetime income options, and
the ability to make transfers between numerous variable investment options
offered under the Annuity. You should consult with your investment professional
as to whether the overall benefits and costs of the Annuity are appropriate
considering your overall financial plan.
What Are Some of the Key Features of This Annuity?
- - This Annuity is a "flexible premium deferred annuity." It is called
"flexible premium" because you have considerable flexibility in the timing
and amount of premium payments. Generally, investors "defer" receiving
annuity payments until after an accumulation period.
- - This Annuity offers both variable investment options and Fixed
Allocations. If you allocate your Account Value to variable investment
options, the value of your Annuity will vary daily to reflect the
investment performance of the underlying investment options. Fixed
Allocations of different durations are offered that are guaranteed by us,
but may have a Market Value Adjustment if you withdraw or transfer your
Account Value before the Maturity Date.
- - The Annuity features two distinct periods -- the accumulation period and
the payout period. During the accumulation period your Account Value is
allocated to one or more investment options.
- - During the payout period, commonly called "annuitization," you can elect
to receive annuity payments (1) for life; (2) for life with a guaranteed
minimum number of payments; (3) based on joint lives; or (4) for a
guaranteed number of payments. We currently make annuity payments
available on a fixed or variable basis.
- - This Annuity offers optional benefits, for an additional charge, that can
provide principal protection or guaranteed minimum income protection for
Owners while they are alive.
- - This Annuity offers a basic Death Benefit. It also offers optional Death
Benefits that provide an enhanced level of protection for your
beneficiary(ies) for an additional charge.
- - You are allowed to withdraw a limited amount of money from your Annuity on
an annual basis without any charges, although any optional guaranteed
benefit you elect may be reduced. Other product features allow you to
access your Account Value as necessary, although a charge may apply. After
Annuity Year 8, you are allowed to make unlimited withdrawals from your
Annuity without any charges.
- - Transfers between investment options are tax-free. Currently, you may make
twenty transfers each year free of charge. We also offer several programs
that enable you to manage your Account Value as your financial needs and
investment performance change.
How Do I Purchase This Annuity?
We sell the Annuity through licensed, registered investment professionals. You
must complete an application and submit a minimum initial purchase payment of
$1,000. We may allow you to make a lower initial purchase payment provided you
establish a bank drafting program under which purchase payments received in the
first Annuity Year total at least $1,000. If the Annuity is owned by an
individual or individuals, the oldest of those Owners must be age 80 or under,
as of the Issue Date of the Annuity. If the Annuity is owned by an entity, the
annuitant must be age 80 or under, as of the Issue Date of the Annuity. The
availability and level of protection of certain optional benefits may vary based
on the age of the Owner on the Issue Date of the Annuity or the date of the
Owner's death.
1
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Glossary of Terms
Many terms used within this Prospectus are described within the text where they
appear. The description of those terms are not repeated in this Glossary of
Terms.
ACCOUNT VALUE
The value of each allocation to a Sub-account (also referred to as "variable
investment option") or a Fixed Allocation prior to the Annuity Date, plus any
earnings, and/or less any losses, distributions and charges. The Account Value
is calculated before we assess any applicable Contingent Deferred Sales Charge
("CDSC" or "surrender charge") and/or, other than on a contract anniversary, any
fee that is deducted from the contract annually in arrears. The Account Value is
determined separately for each Sub-account and for each Fixed Allocation, and
then totaled to determine the Account Value for your entire Annuity. The Account
Value of each Fixed Allocation on other than its Maturity Date may be calculated
using a market value adjustment.
ANNUITIZATION
The application of Account Value (or Protected Income Value for the Guaranteed
Minimum Income Benefit, if applicable) to one of the available annuity options
for the Annuitant to begin receiving periodic payments for life, for a
guaranteed minimum number of payments or for life with a guaranteed minimum
number of payments.
ANNUITY DATE
The date you choose for annuity payments to commence. A maximum Annuity Date may
apply.
ANNUITY YEAR
A 12-month period commencing on the Issue Date of the Annuity and each
successive 12-month period thereafter.
CODE
The Internal Revenue Code of 1986, as amended from time to time.
FIXED ALLOCATION
An allocation of Account Value that is to be credited a fixed rate of interest
for a specified Guarantee Period during the accumulation period.
GUARANTEE PERIOD
A period of time during the accumulation period where we credit a fixed rate of
interest on a Fixed Allocation.
INTERIM VALUE
The value of a Fixed Allocation on any date other than the Maturity Date. The
Interim Value is equal to the initial value allocated to the Fixed Allocation
plus all interest credited to the Fixed Allocation as of the date calculated,
less any transfers or withdrawals from the Fixed Allocation.
ISSUE DATE
The effective date of your Annuity.
MVA
A market value adjustment used in the determination of Account Value of each
Fixed Allocation on any day more than 30 days prior to the Maturity Date of such
Fixed Allocation.
OWNER
With an Annuity issued as an individual annuity contract, the Owner is either an
eligible entity or person named as having ownership rights in relation to the
Annuity. With an Annuity issued as a certificate under a group annuity contract,
the "Owner" refers to the person or entity who has the rights and benefits
designated as to the "Participant" in the certificate.
SURRENDER VALUE
The value of your Annuity available upon surrender prior to the Annuity Date. It
equals the Account Value as of the date we price the surrender minus any
applicable CDSC, Annual Maintenance Fee, Tax Charge, and the charge for any
optional benefits. The surrender value may be calculated using a Market Value
Adjustment with respect to amounts in any Fixed Allocation.
UNIT
A measure used to calculate your Account Value in a Sub-account during the
accumulation period.
VALUATION DAY
Every day the New York Stock Exchange is open for trading or any other day the
Securities and Exchange Commission requires mutual funds or unit investment
trusts to be valued.
2
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Summary of Contract Fees and Charges
Below is a summary of the fees and charges for the Annuity. Some fees and
charges are assessed against your Annuity while others are assessed against
assets allocated to the variable investment options. The fees and charges that
are assessed against the Annuity include the Contingent Deferred Sales Charge,
Transfer Fee, Tax Charge and Annual Maintenance Fee. The charges that are
assessed against the variable investment options are the mortality and expense
risk charge, the charge for administration of the Annuity, the Distribution
Charge and the charge for certain optional benefits you elect, other than the
Guaranteed Minimum Income Benefit, which is assessed against the Protected
Income Value. Each underlying mutual fund portfolio assesses a charge for
investment management, other expenses and with some mutual funds, a 12b-1
charge. The prospectus for each underlying mutual fund provides more detailed
information about the expenses for the underlying mutual funds.
The following table provides a summary of the fees and charges you will pay if
you surrender the Annuity or transfer Account Value among investment options.
These fees and charges are described in more detail within this Prospectus.
YOUR TRANSACTION FEES AND CHARGES
(ASSESSED AGAINST THE ANNUITY)
FEE/CHARGE AMOUNT DEDUCTED
- ------------------------------------ --------------------------------------------------------------------
7.5%
The charge is a percentage of each applicable Purchase Payment
deducted upon surrender or withdrawal. The period during which a
particular percentage applies is measured from the Issue Date of the
Annuity.
Contingent Deferred Sales Charge*
$10.00 (currently, $15.00 maximum) (Currently, we deduct the fee
after the 20th transfer each Annuity Year. We guarantee that the
number of charge free transfers per Annuity Year will never
be less than 8.)
Transfer Fee
Up to 3.5% of the value that is annuitized, depending on the
requirements of the applicable jurisdiction. This charge is deducted
generally at the time you annuitize your contract.
Tax Charge
* The following are the Contingent Deferred Sales Charges (as a percentage of
each applicable Purchase Payment) upon surrender or withdrawal. For purposes of
calculating this charge we consider the year following the Issue Date of your
Annuity as Year 1.
Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9+
- -------- -------- -------- -------- -------- -------- -------- -------- --------
7.5% 7.0% 6.5% 6.0% 5.0% 4.0% 3.0% 2.0% 0.0%
3
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Summary of Contract Fees and Charges continued
The following table provides a summary of the periodic fees and charges you will
pay while you own the Annuity, excluding the underlying mutual fund Portfolio
annual expenses. These fees and charges are described in more detail within this
Prospectus.
YOUR PERIODIC FEES AND CHARGES
ANNUAL FEES/CHARGES ASSESSED AGAINST THE ANNUITY
FEE/CHARGE AMOUNT DEDUCTED
- --------------------------------------------------- --------------------------------------
Smaller of $35 or 2% of Account Value
(Only applicable if Account Value is
less than $100,000) (Assessed annually
on the Annuity's anniversary date or
upon surrender)
Annual Maintenance Fee
ANNUAL FEES/CHARGES OF THE SUB-ACCOUNT(1)
(AS A PERCENTAGE OF THE AVERAGE DAILY NET ASSETS OF THE SUB-ACCOUNTS)
FEE/CHARGE AMOUNT DEDUCTED
- ---------------------------------------- ----------------------------------------
Mortality & Expense Risk Charge(2) 0.50%
Administration Charge(2) 0.15%
Distribution Charge(3) 0.60% in Annuity Years 1-8
Settlement Service Charge(4) 1.40% per year of the value of each
Sub-account if the Owner's beneficiary
elects the Qualified Beneficiary
Continuation Option(5) ("Qualified BCO")
Total Annual Charges of the Sub-accounts 1.25% per year of the value of each
Sub-account in Annuity Years 1-8; 0.65%
in Annuity Years 9 and later (1.40% per
year if you are a beneficiary electing
the Qualified BCO)
1: These charges are deducted daily and apply to Variable Investment Options
only.
2: The combination of the Mortality and Expense Risk Charge and Administration
Charge is referred to as the "Insurance Charge" elsewhere in this Prospectus.
3: The Distribution Charge in Annuity Years 9+ is 0.00%.
4: The Mortality & Expense Risk Charge, the Administration Charge and the
Distribution Charge do not apply if you are a beneficiary under the Qualified
Beneficiary Continuation Option. The Settlement Service Charge applies only if
your beneficiary elects the Qualified Beneficiary Continuation Option.
5: When an Annuity is used as an IRA, 403(b) or other "qualified investment",
upon the Owner's death a beneficiary may generally elect to continue the Annuity
and receive Minimum Distributions under the Annuity instead of receiving the
death benefit in a single payment. If a beneficiary elects this option, the
beneficiary will incur the Settlement Service Charge. Please refer to the
section of this Prospectus that describes the Qualified Beneficiary Continuation
Option for more detailed information about this option, including certain
restrictions and limitations that may apply.
4
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
The following table provides a summary of the fees and charges you will pay if
you elect any of the following optional benefits.Not all optional benefits may
be purchased in combination with one another. You may only elect one optional
living benefit. The optional living benefits are the Guaranteed Return Option
Plus program (and where not available, Guaranteed Return Option), the Guaranteed
Minimum Withdrawal Benefit, the Guaranteed Minimum Income Benefit and the
Lifetime Five(SM) Income Benefit. For the optional death benefits, you may elect
the Highest Anniversary Value Death Benefit or the Highest Daily Value Death
Benefit together with the Enhanced Beneficiary Protection Death Benefit, or any
of these three benefits individually, but the Combination 5% Roll-up and HAV
Death Benefit may only be purchased individually. The fees and charges of each
of the optional benefits are described in more detail within this Prospectus.
YOUR OPTIONAL BENEFIT FEES AND CHARGES
OPTIONAL
BENEFIT FEE/ TOTAL ANNUAL
OPTIONAL BENEFIT CHARGE CHARGE*
- ------------------------------------------------------------------------------ ----------------------- --------------------------
GUARANTEED RETURN OPTION Plus(SM) (GRO Plus(SM))/GUARANTEED RETURN OPTION
We offer a program that guarantees a "return of premium" at a future date, 0.25% of average daily 1.50% in Annuity Years
while allowing you to allocate all or a portion of your Account Value to net assets of the Sub- 1-8; 0.90% in Annuity
certain Sub-accounts. accounts Years 9 and later; 1.65%
for Qualified BCO
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
We offer a program that guarantees your ability to withdraw amounts over 0.35% of average daily 1.60% in Annuity Years
time equal to an initial principal value,regardless of the impact of market net assets of the Sub- 1-8; 1.00% in Annuity
performance on your Account Value. accounts Years 9 and later; 1.75%
for Qualified BCO
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)**
We offer a program that, after a seven-year waiting period, guarantees your 0.50% per year of the 1.25% in Annuity Years
ability to begin receiving income from your Annuity in the form of annuity average Protected 1-8; 0.65% in Annuity
payments based on your total Purchase Payments and an annual increase Income Value during Years 9 and later
of 5% on such Purchase Payments adjusted for withdrawals (called the each year; deducted PLUS
"Protected Income Value"), regardless of the impact of market performance annually in arrears 0.50% per year of average
on your Account Value. each Annuity Year Protected Income Value
LIFETIME FIVE INCOME BENEFIT**
We offer a program that guarantees your ability to withdraw amounts equal 0.60% of average daily 1.85% in Annuity Years
to a percentage of an initial principal value,regardless of the impact of net assets of the Sub- 1-8; 1.25% in Annuity
market performance on your Account Value, subject to our program rules accounts Years 9 and later
regarding the timing and amount of withdrawals.
ENHANCED BENEFICIARY PROTECTION DEATH BENEFIT**
We offer an Optional Death Benefit that provides an enhanced level of 0.25% of average daily 1.50% in Annuity Years
protection for your beneficiary(ies) by providing amounts in addition to the net assets of the Sub- 1-8; 0.90% in Annuity
basic Death Benefit that can be used to offset federal and state taxes accounts Years 9 and later
payable on any taxable gains in your Annuity at the time of your death.
5
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Summary of Contact Fees and Charges continued
OPTIONAL
BENEFIT FEE/ TOTAL ANNUAL
OPTIONAL BENEFIT CHARGE CHARGE*
- ------------------------------------------------------------------------------ ----------------------- --------------------------
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT ("HAV")**
We offer an Optional Death Benefit that provides an enhanced level of 0.25% of average daily 1.50% in Annuity Years
protection for your beneficiary(ies) by providing a death benefit equal to the net assets of the Sub- 1-8; 0.90% in Annuity
greater of the basic Death Benefit and the Highest Anniversary Value, less accounts Years 9 and later
proportional withdrawals.
COMBINATION 5% ROLL-UP AND HAV DEATH BENEFIT**
We offer an Optional Death Benefit that provides an enhanced level of 0.50% of average daily 1.75% in Annuity Years
protection for your beneficiary(ies) by providing the greater of the Highest net assets of the Sub- 1-8; 1.15% in Annuity
Anniversary Value Death Benefit and a 5% annual increase on Purchase accounts Years 9 and later
Payments adjusted for withdrawals.
HIGHEST DAILY VALUE DEATH BENEFIT ("HDV")**
We offer an Optional Death Benefit that provides an enhanced level of 0.50% of average daily 1.75% in Annuity Years
protection for your beneficiary(ies) by providing a death benefit equal to the net assets of the Sub- 1-8; 1.15% in Annuity
greater of the basic Death Benefit and the Highest Daily Value, less accounts Years 9 and later
proportional withdrawals.
Please refer to the section of this Prospectus that describes each optional
benefit for a complete description of the benefit, including any restrictions or
limitations that may apply.
* The Total Annual Charge includes the Insurance Charge and Distribution Charge
assessed against the average daily net assets allocated the Sub-accounts. If you
elect more than one optional benefit, the Total Annual Charge would be increased
to include the charge for each optional benefit.
** These optional benefits are not available under the Qualified BCO.
The following table provides the range (minimum and maximum) of the total annual
expenses for the underlying mutual funds ("Portfolios") as of December 31, 2004.
Each figure is stated as a percentage of the underlying Portfolio's average
daily net assets.
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES
MINIMUM MAXIMUM
- ------------------------------------ ------- --------
Total Portfolio Operating Expense 0.63% 3.06%
The following are the investment management fees, other expenses, 12b-1 fees (if
applicable), and the total annual expenses for each underlying mutual fund
("Portfolio") as of December 31, 2004, except as noted. Each figure is stated as
a percentage of the underlying Portfolio's average daily net assets. For certain
of the underlying Portfolios, a portion of the management fee has been waived
and/or other expenses have been partially reimbursed. Any such fee waivers
and/or reimbursements have been reflected in the footnotes. The "Total Annual
Portfolio Operating Expenses" reflect the combination of the underlying
Portfolio's investment management fee, other expenses and any 12b-1 fees. The
following expenses are deducted by the underlying Portfolio before it provides
American Skandia with the daily net asset value. Any footnotes about expenses
appear after the list of all the Portfolios. The underlying Portfolio
information was provided by the underlying mutual funds and has not been
independently verified by us. See the prospectuses or statements of additional
information of the underlying Portfolios for further details. The current
prospectus and statement of additional information for the underlying Portfolios
can be obtained by calling 1-800-752-6342.
6
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS)
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
-------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA TRUST: (2,3)
AST JPMorgan International Equity 1.00% 0.13% None 1.13%
AST William Blair International Growth 1.00% 0.22% None 1.22%
AST LSV International Value (4) 1.00% 0.37% None 1.37%
AST MFS Global Equity 1.00% 0.35% None 1.35%
AST Small-Cap Growth (5) 0.90% 0.24% None 1.14%
AST DeAM Small-Cap Growth 0.95% 0.22% None 1.17%
AST Federated Aggressive Growth 0.95% 0.24% None 1.19%
AST Small-Cap Value (6) 0.90% 0.18% None 1.08%
AST DeAM Small-Cap Value 0.95% 0.33% None 1.28%
AST Goldman Sachs Mid-Cap Growth 1.00% 0.25% None 1.25%
AST Neuberger Berman Mid-Cap Growth 0.90% 0.22% None 1.12%
AST Neuberger Berman Mid-Cap Value 0.90% 0.15% None 1.05%
AST Alger All-Cap Growth 0.95% 0.22% None 1.17%
AST Gabelli All-Cap Value 0.95% 0.26% None 1.21%
AST T. Rowe Price Natural Resources 0.90% 0.26% None 1.16%
AST AllianceBernstein Large-Cap Growth(7) 0.90% 0.23% None 1.13%
AST MFS Growth 0.90% 0.20% None 1.10%
AST Marsico Capital Growth 0.90% 0.14% None 1.04%
AST Goldman Sachs Concentrated Growth 0.90% 0.17% None 1.07%
AST DeAM Large-Cap Value 0.85% 0.26% None 1.11%
AST AllianceBernstein Growth + Value 0.90% 0.32% None 1.22%
AST AllianceBernstein Core Value(8) 0.75% 0.24% None 0.99%
AST Cohen & Steers Realty 1.00% 0.22% None 1.22%
AST AllianceBernstein Managed Index 500(9) 0.60% 0.17% None 0.77%
AST American Century Income & Growth 0.75% 0.24% None 0.99%
AST AllianceBernstein Growth & Income(10) 0.75% 0.15% None 0.90%
AST Hotchkis & Wiley Large-Cap Value 0.75% 0.19% None 0.94%
AST Global Allocation(11) 0.89% 0.26% None 1.15%
AST American Century Strategic Balanced 0.85% 0.27% None 1.12%
AST T. Rowe Price Asset Allocation 0.85% 0.27% None 1.12%
AST T. Rowe Price Global Bond 0.80% 0.27% None 1.07%
AST Goldman Sachs High Yield 0.75% 0.18% None 0.93%
AST Lord Abbett Bond-Debenture 0.80% 0.22% None 1.02%
AST PIMCO Total Return Bond 0.65% 0.16% None 0.81%
AST PIMCO Limited Maturity Bond 0.65% 0.17% None 0.82%
AST Money Market 0.50% 0.13% None 0.63%
GARTMORE VARIABLE INVESTMENT TRUST:
GVIT Developing Markets 1.15% 0.38% 0.25% 1.78%
7
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Summary of Contract Fees and Charges continued
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
- ---------------------------------------------------------------------------------------------------------------
WELLS FARGO VARIABLE TRUST ADVANTAGE:(12)
Advantage C&B Large Cap Value 0.55% 0.39% 0.25% 1.19%
Advantage Equity Income 0.55% 0.23% 0.25% 1.03%
Advantage International Core 0.75% 0.42% 0.25% 1.42%
Advantage Small Cap Growth 0.75% 0.24% 0.25% 1.24%
Advantage Large Company Core 0.55% 0.33% 0.25% 1.13%
Advantage Large Company Growth 0.55% 0.25% 0.25% 1.05%
Advantage Asset Allocation 0.55% 0.22% 0.25% 1.02%
Advantage Total Return Bond 0.45% 0.26% 0.25% 0.96%
AIM VARIABLE INSURANCE FUNDS:(13)
AIM V.I. Dynamics Fund -- Series I shares 0.75% 0.39% None 1.14%
AIM V.I. Technology Fund -- Series I shares 0.75% 0.40% None 1.15%
AIM V.I. Health Sciences Fund -- Series I shares(14) 0.75% 0.36% None 1.11%
AIM V.I. Financial Services Fund -- Series I shares 0.75% 0.37% None 1.12%
EVERGREEN VARIABLE ANNUITY TRUST:
International Equity 0.42% 0.30% None 0.72%
Growth 0.70% 0.26% None 0.96%
Omega 0.52% 0.16% None 0.68%
PROFUND VP:(15)
Access High Yield 0.75% 1.02% 0.25% 1.98%
Bull 0.75% 0.78% 0.25% 1.78%
OTC 0.75% 0.87% 0.25% 1.87%
Large-Cap Value 0.75% 1.04% 0.25% 2.04%
Large-Cap Growth 0.75% 2.06% 0.25% 3.06%
Mid-Cap Value 0.75% 0.92% 0.25% 1.92%
Mid-Cap Growth 0.75% 0.94% 0.25% 1.94%
Small-Cap Value 0.75% 0.95% 0.25% 1.95%
Small-Cap Growth 0.75% 0.90% 0.25% 1.90%
Asia 30 0.75% 0.86% 0.25% 1.86%
Europe 30 0.75% 0.78% 0.25% 1.78%
Japan 0.75% 0.85% 0.25% 1.85%
UltraBull 0.75% 0.89% 0.25% 1.89%
UltraMid-Cap 0.75% 0.94% 0.25% 1.94%
UltraSmall-Cap 0.75% 0.94% 0.25% 1.94%
UltraOTC 0.75% 0.88% 0.25% 1.88%
Bear 0.75% 0.90% 0.25% 1.90%
Short Mid-Cap 0.75% 0.90% 0.25% 1.90%
Short Small-Cap 0.75% 1.28% 0.25% 2.28%
Short OTC 0.75% 0.86% 0.25% 1.86%
Banks 0.75% 0.98% 0.25% 1.98%
Basic Materials 0.75% 0.96% 0.25% 1.96%
Biotechnology 0.75% 0.98% 0.25% 1.98%
8
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES1 FEES EXPENSES
- ---------------------------------------------------------------------------------------------------------------
Consumer Goods 0.75% 0.99% 0.25% 1.99%
Consumer Services 0.75% 1.20% 0.25% 2.20%
Financials 0.75% 0.92% 0.25% 1.92%
Health Care 0.75% 0.91% 0.25% 1.91%
Industrials 0.75% 0.99% 0.25% 1.99%
Internet 0.75% 0.94% 0.25% 1.94%
Oil & Gas 0.75% 0.92% 0.25% 1.92%
Pharmaceuticals 0.75% 0.97% 0.25% 1.97%
Precious Metals 0.75% 0.87% 0.25% 1.87%
Real Estate 0.75% 0.93% 0.25% 1.93%
Semiconductor 0.75% 0.99% 0.25% 1.99%
Technology 0.75% 0.87% 0.25% 1.87%
Telecommunications 0.75% 0.95% 0.25% 1.95%
Utilities 0.75% 0.95% 0.25% 1.95%
U.S. Government Plus 0.50% 0.86% 0.25% 1.61%
Rising Rates Opportunity 0.75% 0.75% 0.25% 1.75%
FIRST DEFINED PORTFOLIO FUND, LLC: (16),(17)
First Trust(R) 10 Uncommon Values 0.60% 0.76% 0.25% 1.61%
Target Managed VIP 0.60% 1.25% 0.25% 2.10%
The Dow(SM) DART 10 0.60% 1.53% 0.25% 2.38%
Global Dividend Target 15 0.60% 1.85% 0.25% 2.70%
S&P(R) Target 24 0.60% 1.58% 0.25% 2.43%
NASDAQ(R) Target 15 0.60% 1.75% 0.25% 2.60%
Value Line(R) Target 25 0.60% 1.48% 0.25% 2.33%
The Dow Target Dividend(18) 0.60% 0.62% 0.25% 1.47%
THE PRUDENTIAL SERIES FUND, INC.:
SP William Blair International Growth 0.85% 0.45% 0.25% 1.55%
(1) As noted above, shares of the Portfolios generally are purchased through
variable insurance products. Many of the Portfolios and/or their investment
advisers and/or distributors have entered into arrangements with us as the
issuer of the Annuity under which they compensate us for providing ongoing
services in lieu of the Trust providing such services. Amounts paid by a
Portfolio under those arrangements are included under "Other Expenses." For more
information see the prospectus for each underlying portfolio and, "Service Fees
payable to American Skandia," later in this Prospectus.
9
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Summary of Contract Fees and Charges continued
(2) The Portfolios' total actual annual operating expenses for the year ended
December 31, 2004 were less than the amount shown in the table due to fee
waivers, reimbursement of expenses and expense offset arrangements. These
waivers, reimbursements, and offset arrangements are voluntary and may be
terminated by American Skandia Investment Services, Inc. and Prudential
Investments LLC at any time. After accounting for the waivers, reimbursements
and offset arrangements, the Portfolios' actual annual operating expenses were:
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
AST William Blair International Growth 1.11%
AST LSV International Value 1.22%
AST DeAM Small-Cap Growth 1.02%
AST DeAM Small-Cap Value 1.13%
AST Goldman Sachs Mid-Cap Growth 1.13%
AST Neuberger Berman Mid-Cap Growth 1.11%
AST Neuberger Berman Mid-Cap Value 1.04%
AST AllianceBernstein Large-Cap Growth 1.10%
AST MFS Growth 1.07%
AST Marsico Capital Growth 1.02%
AST Goldman Sachs Concentrated Growth 1.00%
AST DeAM Large-Cap Value 0.99%
AST Cohen & Steers Realty 1.11%
AST AllianceBernstein Growth & Income 0.87%
AST Hotchkis & Wiley Large-Cap Value 0.90%
AST American Century Strategic Balanced 1.09%
AST T. Rowe Price Asset Allocation 1.07%
AST Lord Abbett Bond-Debenture Portfolio 0.97%
AST PIMCO Total Return Bond 0.78%
AST PIMCO Limited Maturity Bond 0.79%
AST Money Market 0.58%
(3) Until November 18, 2004, the Trust had a Distribution Plan under Rule 12b-1
to permit an affiliate of the Trust's Investment Managers to receive brokerage
commissions in connection with purchases and sales of securities held by the
Portfolios, and to use these commissions to promote the sale of shares of the
Portfolio. The Distribution Plan was terminated effective November 18, 2004. The
total annual portfolio operating expenses do not reflect any brokerage
commissions paid pursuant to the Distribution Plan prior to the Plan's
termination.
(4) Effective November 18, 2004, LSV Asset Management became the Sub-advisor of
the Portfolio. Prior to November 18, 2004, Deutsche Asset Management, Inc.
served as Sub-advisor of the Portfolio, then named "AST DeAM International
Equity Portfolio."
(5) Effective May 1, 2005, Eagle Asset Management and Neuberger Berman
Management, Inc. became Co-Sub-advisors of the Portfolio. Prior to May 1, 2005,
State Street Research and Management Company served as Sub-advisor of the
Portfolio, then named "AST State Street Research Small-Cap Growth Portfolio."
(6) Effective November 18, 2004, Integrity Asset Management, Lee Munder Capital
Group, J.P. Morgan Fleming Asset Management became Co-Sub-advisors of the
Portfolio. Prior to November 18, 2004, GAMCO Advisors Inc. served as Sub-advisor
of the Portfolio, then named "AST Gabelli Small-Cap Value Portfolio."
(7) Effective May 1, 2005, the name of the Portfolio was changed from "AST
Alliance Growth Portfolio" to "AST AllianceBernstein Large-Cap Growth
Portfolio."
(8) Effective May 1, 2005, the name of the Portfolio was changed from "AST
Sanford Bernstein Core Value Portfolio" to "AST AllianceBernstein Core Value
Portfolio."
(9) Effective May 1, 2005, the name of the Portfolio was changed from "AST
Sanford Bernstein Managed Index 500 Portfolio" to "AST AllianceBernstein
Managed Index 500 Portfolio."
(10) Effective May 1, 2005, the name of the Portfolio was changed from "AST
Alliance Growth and Income Portfolio" to "AST AllianceBernstein Growth & Income
Portfolio."
(11) The AST Global Allocation Portfolio invests primarily in shares of other
AST Portfolios (the "Underlying Portfolios").
(a) The only management fee directly paid by the Portfolio is a 0.10% fee
paid to American Skandia Investment Services, Inc. and Prudential Investments
LLC. The management fee shown in the chart for the Portfolio is (i) that 0.10%
management fee paid by the Portfolio plus (ii) an estimate of the management
fees paid by the Underlying Portfolios, which are borne indirectly by investors
in the Portfolio. The estimate was calculated based on the percentage of the
Portfolio invested in each Underlying Portfolio as of December 31, 2004 using
the management fee rates shown in the chart above.
(b) The expense information shown in the chart for the Portfolio reflects
(i) the expenses of the Portfolio itself plus (ii) an estimate of the expenses
paid by the Underlying Portfolios, which are borne indirectly by investors in
the Portfolio. The estimate was calculated based on the percentage of the
Portfolio invested in each Underlying Portfolio as of December 31, 2004 using
the expense rates for the Underlying Portfolios shown in the above chart.
(c) Effective May 1, 2005, Prudential Investment LLC provides day-to-day
management of the Portfolio. Prior to May 1, 2005, Deutsche Asset Management,
Inc. served as Sub-advisor of the Portfolio, then named "AST DeAM Global
Allocation Portfolio."
(12) (a) The Adviser of Wells Fargo Variable Trust has committed through April
30, 2006 to waive fees and/or reimburse expenses to the extent necessary to
maintain the Fund's net operating expenses as shown.
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
Advantage C&B Large Cap Value 1.00%
Advantage Equity Income 1.00%
Advantage International Core 1.00%
Advantage Small Cap Growth 1.20%
Advantage Large Company Core 1.00%
Advantage Large Company Growth 1.00%
Advantage Asset Allocation 1.00%
Advantage Total Return Bond 0.90%
10
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
(b) In addition, the following name changes were made effective May 1, 2005:
OLD PORTFOLIO NAME NEW PORTFOLIO NAME
Equity Value Advantage C&B Large Cap Value
Equity Income Advantage Equity Income
International Equity Advantage International Core
Small Cap Growth Advantage Small Cap Growth
Growth Advantage Large Company Core
Large Company Growth Advantage Large Company Growth
Asset Allocation Advantage Asset Allocation
Total Return Bond Advantage Total Return Bond
(13) The Fund's adviser is entitled to receive reimbursement from the Fund for
fees and expenses paid for by the Fund's adviser pursuant to expense limitation
commitments between the Fund's adviser and the Fund if such reimbursement does
not cause the Fund to exceed its then-current expense limitations and the
reimbursement is made within three years after the Fund's adviser incurred the
expense.
(14) Effective July 1, 2005, the "AIM V.I. Health Sciences Fund" will be renamed
"AIM V.I. Global Health Care Fund."
(15) ProFund Advisors LLC has contractually agreed to waive Investment Advisory
and Management Services Fees and to reimburse other expenses to the extent Total
Annual Portfolio Operating Expenses, as a percentage of average daily net
assets, exceed 1.98% (1.73% for ProFund VP U.S. Government Plus and 1.78% for
ProFund VP Rising Rates Opportunity) through December 31, 2005. After such date,
any of the expense limitations may be terminated or revised. Amounts waived or
reimbursed in a particular fiscal year may be repaid to ProFund Advisors LLC
within three years of the waiver or reimbursement to the extent that recoupment
will not cause the Portfolio's expenses to exceed any expense limitation in
place at that time. A waiver or reimbursement lowers the expense ratio and
increases overall returns to investors.
(16) The Funds' Board of Trustees reserves the right to suspend payments under
the 12b-1 Plan at any time. On May 1, 2003, 12b-1 payments were suspended for
all Funds except the First Trust 10 Uncommon Values Portfolio. Payments under
the 12b-1 Plan resumed effective May 1, 2004 for the Target Managed VIP
Portfolio, the Dow Dart 10 Portfolio, the Global Dividend Target 15 Portfolio,
the S&P Target 24 Portfolio, the Nasdaq Target 15 Portfolio and the Value Line
Target 25 Portfolio.
(17) For the period September 30, 2004 through December 31, 2007, First Trust
has contractually agreed to waive fees and reimburse expenses of the Portfolios
to limit the total annual fund operating expenses (excluding brokerage expense
and extraordinary expense) to 1.37% for the First Trust 10 Uncommon Values
Portfolio and 1.47% for each of the other Portfolios' average daily net assets.
First Trust has entered into an agreement with First Defined Portfolio Fund, LLC
that will allow First Trust to recover from the Portfolios any fees waived or
reimbursed during the three year period of January 1, 2005 through December 31,
2007. However, First Trust's ability to recover such amounts is limited to the
extent that it would not exceed the amount reimbursed or waived during such
period.
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
First Trust(R) 10 Uncommon Values 1.37%
Target Managed VIP 1.47%
S&P Target 24 1.47%
The Dow(SM)DART 10 1.47%
Value Line(R) Target 25 1.47%
Global Dividend Target 15 1.47%
Nasdaq Target 15 1.47%
Dow Target Dividend 1.47%
(18) The Dow (SM)Target Dividend Portfolio is newly organized. Accordingly,
Other Expenses and Total Annual Portfolio Operating Expenses are based on
estimated expenses for the current fiscal year.
11
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Expense Examples
These examples are designed to assist you in understanding the various expenses
you may incur with the Annuity over certain periods of time based on specific
assumptions. The examples reflect the Contingent Deferred Sales Charges, Annual
Maintenance Fee, Insurance Charge, Distribution Charge (when applicable), and
the highest total annual portfolio operating expenses for any underlying
Portfolio offered under the product, as well as the maximum charges for the
optional benefits that are offered under the Annuity that can be elected in
combination with one another.
Below are examples showing what you would pay in expenses at the end of the
stated time periods had you invested $10,000 in the Annuity and received a 5%
annual return on assets, and elected all optional benefits available.
The examples shown assume that: (a) you only allocate Account Value to the
Sub-account with the maximum total annual portfolio operating expenses for the
underlying Portfolio (shown above), not to a Fixed Allocation; (b) the Insurance
Charge is assessed as 0.65% per year; (c) the Distribution Charge is assessed as
0.60% per year in Annuity Years 1 -- 8; (d) the Annual Maintenance Fee is
reflected as an asset-based charge based on an assumed average contract size;
(e) you make no withdrawals of Account Value during the period shown; (f) you
make no transfers, or other transactions for which we charge a fee during the
period shown; (g) no tax charge applies; (h) the highest total annual portfolio
operating expenses for any underlying Portfolio offered under the product
applies; and (i) the charge for each optional benefit is reflected as an
additional charge equal to 0.60% per year of the average daily net assets of the
Sub-accounts for the Lifetime Five Income Benefit, 0.50% per year of the average
daily net assets of the Sub-accounts for the Highest Daily Value Death Benefit
and 0.25% of the average daily net assets of the Sub-accounts for the Enhanced
Beneficiary Protection Death Benefit. Amounts shown in the examples are rounded
to the nearest dollar.
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 will be less than those shown if you elect a
different combination of optional benefits than indicated in the examples or if
you allocate account value to any other available Sub-accounts.
Expense Examples are provided as follows: 1.) if you surrender the Annuity at
the end of the stated time period; 2.) if you annuitize at the end of the stated
time period; and 3.) if you do not surrender your Annuity. A table of
accumulation values appears in Appendix A to this Prospectus.
IF YOU SURRENDER YOUR ANNUITY AT IF YOU ANNUITIZE YOUR ANNUITY AT IF YOU DO NOT SURRENDER
THE END OF THE APPLICABLE TIME PERIOD: THE END OF THE APPLICABLE TIME PERIOD: YOUR ANNUITY
- --------------------------------------- --------------------------------------- -----------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,405 $2,724 $3,930 $6,475 $730 $2,139 $3,480 $6,475 $730 $2,139 $3,480 $6,475
12
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Investment Options
WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE PORTFOLIOS?
Each variable investment option is a Sub-account of American Skandia Life
Assurance Corporation Variable Account B (see "What are Separate Accounts" for
more detailed information). Each Sub-account invests exclusively in one
Portfolio. You should carefully read the prospectus for any Portfolio in which
you are interested. The following chart classifies each of the Portfolios based
on our assessment of their investment style (as of the date of this Prospectus).
The chart also provides a description of each Portfolio's investment objective
(in italics) and a short, summary description of their key policies to assist
you in determining which Portfolios may be of interest to you. There is no
guarantee that any underlying Portfolio will meet its investment objective.
The name of the advisor/sub-advisor for each Portfolio appears next to the
description. Those Portfolios whose name includes the prefix "AST" are
Portfolios of American Skandia Trust. The investment managers for AST are
American Skandia Investment Services, Incorporated, a Prudential Financial
Company, and Prudential Investments LLC, affiliated companies of American
Skandia. However, a sub-advisor, as noted below, is engaged to conduct
day-to-day investment decisions.
The Portfolios are not publicly traded mutual funds. They are only
available as investment options in variable annuity contracts and variable life
insurance policies issued by insurance companies, or in some cases, to
participants in certain qualified retirement plans. However, some of the
Portfolios available as Sub-accounts under the Annuity are managed by the same
portfolio advisor or sub-advisor as a retail mutual fund of the same or similar
name that the Portfolio may have been modeled after at its inception. Certain
retail mutual funds may also have been modeled after a Portfolio. While the
investment objective and policies of the retail mutual funds and the Portfolios
may be substantially similar, the actual investments will differ to varying
degrees. Differences in the performance of the funds can be expected, and in
some cases could be substantial. You should not compare the performance of a
publicly traded mutual fund with the performance of any similarly named
Portfolio offered as a Sub-account. Details about the investment objectives,
policies, risks, costs and management of the Portfolios are found in the
prospectuses for the underlying mutual funds. The current prospectus and
statement of additional information for the underlying Portfolios can be
obtained by calling 1-800-752-6342.
Effective MAY 1, 2004, THE SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO
(FORMERLY THE SP JENNISON INTERNATIONAL GROWTH PORTFOLIO) is no longer offered
as a Sub-account under the Annuity, except as follows: if at any time prior to
May 1, 2004 you had any portion of your Account Value allocated to the SP
William Blair International Growth Sub-account, you may continue to allocate
Account Value and make transfers into and/or out of the SP William Blair
International Growth Sub-account, including any bank drafting, dollar cost
averaging, asset allocation and rebalancing programs. If you never had a portion
of your Account Value allocated to the SP William Blair International Growth
Sub-account prior to May 1, 2004 or if you purchase your Annuity on or after May
1, 2004, you cannot allocate Account Value to the SP William Blair International
Growth Sub-account.
This Sub-account may be offered to new Owners at some future date;
however, at the present time, there is no intention to do so. We also reserve
the right to offer or close this Sub-account to all Owners that owned the
Annuity prior to the close date.
13
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------
INTERNATIONAL AST JPMORGAN INTERNATIONAL EQUITY: seeks long-term capital growth by investing J.P. Morgan
EQUITY in a diversified portfolio of international equity securities. The Fleming Asset
Portfolioseeks to meet its objective by investing, under normal market Management
conditions, at least 80% of its assets in a diversified portfolio of equity
securities of companies located or operating in developed non-U.S. countries
and emerging markets of the world.
INTERNATIONAL AST WILLIAM BLAIR INTERNATIONAL GROWTH: Seeks long-term capital appreciation. William Blair &
EQUITY The Portfolio invests primarily in stocks of large and medium-sized companies Company, L.L.C.
located in countries included in the Morgan Stanley Capital International All
Country World Ex-U.S. Index.
INTERNATIONAL AST LSV INTERNATIONAL VALUE (formerly AST DeAM International Equity): seeks Deutsche Asset
EQUITY capital growth. The Portfolio pursues its objective by primarily investing at Management, Inc.
least 80% of the value of its assets in the equity securities of companies in
developed non-U.S. countries that are represented in the MSCI EAFE Index.
INTERNATIONAL AST MFS GLOBAL EQUITY: seeks capital growth. Under normal circumstances the Massachusetts
EQUITY Portfolio invests at least 80% of its assets in equity securities of U.S. and Financial Services
foreign issuers (including issuers in developing countries). The Portfolio Company
generally seeks to purchase securities of companies with relatively large
market capitalizations relative to the market in which they are traded.
SMALL CAP AST SMALL-CAP GROWTH (formerly AST State Street Research Small-Cap Growth): Eagle Asset
GROWTH seeks long-term capital growth. The Portfolio pursues its objective by Management,
primarily investing in the common stocks of small-capitalization companies. Neuberger Berman
Management, Inc.
SMALL CAP AST DEAM SMALL-CAP GROWTH: seeks maximum growth of investors' capital from a Deutsche Asset
GROWTH portfolio of growth stocks of smaller companies. The Portfolio pursues its Management, Inc.
objective, under normal circumstances, by primarily investing at least 80% of
its total assets in the equity securities of small-sized companies included in
the Russell 2000 Growth(R) Index.
SMALL CAP AST FEDERATED AGGRESSIVE GROWTH: seeks capital growth. The Portfolio pursues Federated Equity
GROWTH its investment objective by investing primarily in the stocks of small Management
companies that are traded on national security exchanges, the NASDAQ stock Company of
exchange and the over-the-counter market. Pennsylvania/
Federated Global
Investment
Management Corp.
SMALL CAP AST SMALL-CAP VALUE (formerly AST Gabelli Small-Cap Value): seeks to provide Integrity Asset
VALUE long-term capital growth by investing primarily in small-capitalization stocks Management, Lee
that appear to be undervalued. The Portfolio will have a non-fundamental Munder Capital
policy to invest, under normal circumstances, at least 80% of the value of its Group, J.P. Morgan
assets in small capitalization companies. Fleming Asset
Management
14
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------
Small Cap AST DeAM Small-Cap Value: seeks maximum growth of investors' capital. The Deutsche Asset
VALUE Portfolio pursues its objective under normal market conditions, by primarily Management, Inc.
investing at least 80% of its total assets in the equity securities of
small-sized companies included in the Russell 2000(R) Value Index.
MID CAP AST GOLDMAN SACHS MID-CAP GROWTH: seeks long-term capital growth. The Goldman Sachs
Growth Portfolio pursues its investment objective by investing primarily in equity Asset Management,
securities selected for their growth potential, and normally invests at least L.P.
80% of the value of its assets in medium capitalization companies.
MID-CAP AST NEUBERGER BERMAN MID-CAP GROWTH: seeks capital growth. Under normal market Neuberger Berman
Growth conditions, the Portfolio primarily invests at least 80% of its net assets in Management Inc.
the common stocks of mid-cap companies. The Sub-advisor looks for fast-growing
companies that are in new or rapidly evolving industries.
MID CAP VALUE AST NEUBERGER BERMAN MID-CAP VALUE: seeks capital growth. Under normal Berman Neuberger
market conditions, the Portfolio primarily invests at least 80% of its net Management
assets Inc. in the common stocks of mid-cap companies. Under the Portfolio's
value-oriented investment approach, the Sub-advisor looks for well-managed
companies whose stock prices are undervalued and that may rise before other
investors realize their worth.
SPECIALTY AST ALGER ALL-CAP GROWTH: seeks long-term capital growth. The Portfolio Fred Alger
invests primarily in equity securities, such as common or preferred stocks Management Inc
that , Inc. are listed on U.S. exchanges or in the over-the-counter market.
The Portfolio may invest in the equity securities of companies of all sizes,
and may emphasize either larger or smaller companies at a given time based on
the Sub-advisor's assessment of particular companies and market conditions.
SPECIALTY AST GABELLI ALL-CAP VALUE: seeks capital growth. The Portfolio pursues its GAMCO Investors,
objective by investing primarily in readily marketable equity securities Inc.
including common stocks, preferred stocks and securities that may be converted
at a later time into common stock. The Portfolio may invest in the securities
of companies of all sizes, and may emphasize either larger or smaller
companies at a given time based on the Sub-advisor's assessment of particular
companies and market conditions.
SPECIALTY AST T. ROWE PRICE NATURAL RESOURCES: seeks long-term capital growth primarily T. Rowe Price
through the common stocks of companies that own or develop natural resources Associates, Inc.
(such as energy products, precious metals and forest products) and other basic
commodities. The Portfolio normally invests primarily (at least 80% of its
total assets) in the common stocks of natural resource companies whose
earnings and tangible assets could benefit from accelerating inflation.
LARGE CAP AST ALLIANCEBERNSTEIN LARGE-CAP GROWTH (formerly AST Alliance Growth): Growth Alliance Capital
GROWTH seeks long-term capital growth. The Portfolio invests at least 80% of its Management, L.P.
total assets in the equity securities of a limited number of large, carefully
selected, high-quality U.S. companies that are judged likely to achieve
superior earnings growth.
15
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------
LARGE CAP AST MFS GROWTH: seeks long-term capital growth and future income. Under normal Massachusetts
GROWTH market conditions, the Portfolio invests at least 80% of its total assets in Financial Services
common stocks and related securities, such as preferred stocks, convertible Company
securities and depositary receipts, of companies that the Sub-advisor believes
offer better than average prospects for long-term growth.
LARGE CAP AST MARSICO CAPITAL GROWTH: seeks capital growth. Income realization is not an Marsico Capital
GROWTH investment objective and any income realized on the Portfolio's investments, Management, LLC
therefore, will be incidental to the Portfolio's objective. The Portfolio will
pursue its objective by investing primarily in common stocks of larger, more
established companies.
LARGE CAP AST GOLDMAN SACHS CONCENTRATED GROWTH: seeks growth of capital in a manner Goldman Sachs
GROWTH consistent with the preservation of capital. Realization of income is not a Asset Management,
significant investment consideration and any income realized on the L.P.
Portfolio's investments, therefore, will be incidental to the Portfolio's
objective. The Portfolio will pursue its objective by investing primarily in
equity securities of companies that the Sub-advisor believes have potential to
achieve capital appreciation over the long-term.
LARGE CAP AST DEAM LARGE-CAP VALUE: seeks maximum growth of capital by investing Deutsche Asset
VALUE primarily in the value stocks of larger companies. The Portfolio pursues its Management, Inc.
objective, under normal market conditions, by primarily investing at least 80%
of the value of its assets in the equity securities of large-sized companies
included in the Russell 1000(R) Value Index.
LARGE CAP AST ALLIANCEBERNSTEIN GROWTH + VALUE: seeks capital growth by investing Alliance Capital
BLEND approximately 50% of its assets in growth stocks of large companies and Management, L.P.
approximately 50% of its assets in value stocks of large companies. The
Portfolio will invest primarily in common stocks of large U.S. companies
included in the Russell 1000(R) Index.
LARGE CAP AST ALLIANCEBERNSTEIN CORE VALUE (formerly AST Sanford Bernstein Core Value): Alliance Capital
VALUE seeks long-term capital growth by investing primarily in common stocks. The Management, L.P.
Sub-advisor expects that the majority of the Portfolio's assets will be
invested in the common stocks of large companies that appear to be
undervalued.
SPECIALTY AST COHEN & Steers Realty: seeks to maximize total return through investment Cohen & Steers
in real estate securities. The Portfolio pursues its investment objective by Capital
investing, under normal circumstances, at least 80% of its net assets in Management, Inc.
securities of real estate issuers.
LARGE CAP AST ALLIANCEBERNSTEIN MANAGED INDEX 500 (formerly AST Sanford Bernstein Alliance Capital
BLEND Managed Index 500): seeks to outperform the S&P 500 through stock selection Management, L.P.
resulting in different weightings of common stocks relative to the index. The
Portfolio will invest, under normal circumstances, at least 80% of its net
assets in securities included in the Standard & Poor's 500 Composite Stock
Price Index.
16
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------
LARGE CAP AST AMERICAN CENTURY INCOME & Growth: seeks capital growth with current income American Century
VALUE as a secondary objective. The Portfolio invests primarily in common stocks Investment
that offer potential for capital growth, and may, consistent with its Management, Inc.
investment objective, invest in stocks that offer potential for current income.
LARGE CAP AST ALLIANCEBERNSTEIN GROWTH & Income: seeks long-term growth of capital and Alliance Capital
VALUE income while attempting to avoid excessive fluctuations in market value. Management, L.P.
The Portfolio normally will invest in common stocks (and securities
convertible into common stocks).
LARGE CAP AST HOTCHKIS & Wiley Large-Cap Value: seeks current income and long-term Hotchkis and Wiley
VALUE growth of income, as well as capital appreciation. The Portfolio invests, Capital
under normal circumstances, at least 80% of its net assets plus borrowings for Management
, LLC investment purposes in common stocks of large cap U.S. companies that
have a high cash dividend or payout yield relative to the market.
ASSET AST GLOBAL ALLOCATION (formerly AST DeAM Global Allocation): seeks to obtain Prudential
ALLOCATION/ the highest potential total return consistent with a specified level of risk Investments LLC
BALANCED tolerance. The Portfolio seeks to achieve its investment objective by
investing in several other AST Portfolios ("Underlying Portfolios"). The
Portfolio intends its strategy of investing in combinations of Underlying
Portfolios to result in investment diversification that an investor could
otherwise achieve only by holding numerous investments.
ASSET AST AMERICAN CENTURY STRATEGIC BALANCED: seeks capital growth and current American Century
Allocation/ income. The Sub-advisor intends to maintain approximately 60% of the Investment
Balanced Portfolio's assets in equity securities and the remainder in bonds and other Management, Inc.
fixed income securities.
ASSET AST T. ROWE PRICE ASSET ALLOCATION: seeks a high level of total return by T. Rowe Price
Allocation/ investing primarily in a diversified portfolio of fixed income and equity Associates, Inc.
Balanced securities. The Portfolio normally invests approximately 60% of its total
assets in equity securities and 40% in fixed income securities. This mix may
vary depending on the Sub-advisor's outlook for the markets.
FIXED INCOME AST T. ROWE PRICE GLOBAL BOND: seeks to provide high current income and T. Rowe Price
capital growth by investing in high quality foreign and U.S. International, Inc.
dollar-denominated bonds. The Portfolio will invest at least 80% of its total
assets in fixed income securities, including high quality bonds issued or
guaranteed by U.S. or foreign governments or their agencies and by foreign
authorities, provinces and municipalities as well as investment grade
corporate bonds and mortgage and asset-backed securities of U.S. and foreign
issuers.
FIXED INCOME AST GOLDMAN SACHS HIGH YIELD: seeks a high level of current income and may Goldman Sachs
also consider the potential for capital appreciation. The Portfolio invests, Asset Management,
under normal circumstances, at least 80% of its net assets plus any borrowings L.P.
for investment purposes (measured at time of purchase) ("Net Assets") in high-
yield, fixed-income securities that, at the time of purchase, are
non-investment grade securities.
17
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST LORD ABBETT BOND-DEBENTURE: seeks high current income and the opportunity Lord, Abbett & Co.
for capital appreciation to produce a high total return. To pursue its LLC
objective, the Portfolio will invest, under normal circumstances, at least 80%
of the value of its assets in fixed income securities and normally invests
primarily in high yield and investment grade debt securities, securities
convertible into common stock and preferred stocks.
FIXED INCOME AST PIMCO TOTAL RETURN BOND: seeks to maximize total return consistent with Pacific Investment
preservation of capital and prudent investment management. The Portfolio will Management
invest in a diversified portfolio of fixed-income securities of varying Company LLC
maturities. The average portfolio duration of the Portfolio generally will (PIMCO)
vary within a three- to six-year time frame based on the Sub-advisor's
forecast for interest rates.
FIXED INCOME AST PIMCO LIMITED MATURITY BOND: seeks to maximize total return consistent Pacific Investment
with preservation of capital and prudent investment management. The Portfolio Management
will invest in a diversified portfolio of fixed-income securities of varying Company LLC
maturities. The average portfolio duration of the Portfolio generally will (PIMCO)
vary within a one- to three-year time frame based on the Sub-advisor's
forecast for interest rates.
FIXED INCOME AST MONEY MARKET: seeks high current income while maintaining high levels of Wells Capital
liquidity. The Portfolio attempts to accomplish its objective by maintaining a Management, Inc.
dollar-weighted average maturity of not more than 90 days and by investing in
securities which have effective maturities of not more than 397 days.
INTERNATIONAL GVIT DEVELOPING MARKETS: seeks long-term capital appreciation, under normal Gartmore Global
EQUITY conditions by investing at least 80% of its total assets in stocks of Asset Management
companies of any size based in the world's developing economies. Under normal Trust/Gartmore
market conditions, investments are maintained in at least six countries at all Global Partners
times and no more than 35% of total assets in any single one of them.
LARGE CAP ADVANTAGE C&B Large Cap Value Fund (formerly Equity Value): Seeks maximum Wells Fargo Funds
VALUE long-term total return, consistent with minimizing risk to principal. The Management, LLC
Portfolio will principally invest in large-capitalization securities, which
the Sub-advisor defines as securities of companies with market capitalizations
of $1 billion or more.
LARGE CAP ADVANTAGE EQUITY INCOME FUND (formerly Equity Income): Seeks long-term capital Wells Fargo Funds
VALUE appreciation and above-average dividend income. The Portfolio invests in the Management, LLC
common stocks of large U.S. companies with strong return potential and
above-average dividend income. The Portfolio invests principally in securities
of companies with market capitalizations of $3 billion or more.
INTERNATIONAL ADVANTAGE INTERNATIONAL CORE FUND (formerly International Equity): Seeks Wells Fargo Funds
EQUITY long-term capital appreciation. The Portfolio will principally invest in Management, LLC
non-U.S. securities. The Portfolio will focus on companies with strong growth
potential that offer good relative values.
18
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------
SMALL CAP ADVANTAGE SMALL CAP GROWTH FUND (formerly Small Cap Growth): Seeks long-term Wells Fargo Funds
GROWTH capital appreciation. The Portfolio focuses on companies that the Sub-advisor Management, LLC
believes have above-average growth potential, or that may be involved in new
or innovative products, services and processes.
LARGE CAP ADVANTAGE LARGE COMPANY CORE FUND (formerly Growth): Seeks total return Wells Fargo Funds
BLEND comprised of long-term capital appreciation and current income. The Portfolio Management, LLC
will invest at least 80% of the Fund's assets in securities of
large-capitalization companies, which are defined as those with market
capitalizations of $3 billion or more.
LARGE CAP ADVANTAGE LARGE COMPANY GROWTH FUND (formerly Large Company Growth): Seeks Wells Fargo Funds
GROWTH long-term capital appreciation. The Portfolio invests in the common stocks of Management, LLC
large U.S. companies that the Sub-advisor believes have superior growth
potential. The Portfolio invests principally in securities of companies with
market capitalizations of $3 billion or more.
ASSET ADVANTAGE ASSET ALLOCATION FUND (formerly Asset Allocation): Seeks long-term Wells Fargo Funds
ALLOCATION/ total return, consistent with reasonable risk. The Portfolio invests in equity Management, LLC
BALANCED and fixed-income securities in varying proportions, with an emphasis on equity
securities. The Portfolio does not select individual securities for
investment, rather, it buys substantially all of the securities of various
indexes to replicate such indexes.
FIXED INCOME ADVANTAGE TOTAL RETURN BOND FUND (formerly Total Return Bond): Seeks total Wells Fargo Funds
return consisting of income and capital appreciation. The Portfolio invests Management, LLC
principally in investment-grade debt securities, which include U.S. Government
obligations, corporate bonds, mortgage- and other asset-backed securities and
money market instruments. Under normal circumstances, the Portfolio is
expected to maintain an overall effective duration between 4 and 5.5 years.
MID CAP AIM VARIABLE INSURANCE FUNDS -- AIM V.I. Dynamics Fund -- Series I shares A I M Advisors,
GROWTH (formerly an INVESCO fund): seeks long-term capital growth. The Portfolio Inc.
pursues its objective by normally investing at least 65% of its assets in
common stocks of mid-sized companies that are included in the Russell Midcap
Growth(R) Index at the time of purchase.
SPECIALTY AIM VARIABLE INSURANCE FUNDS -- AIM V.I. Technology Fund -- Series I shares A I M Advisors,
(formerly an INVESCO fund): seeks capital growth. The Portfolio normally Inc.
invests at least 80% of its net assets in the equity securities and
equity-related instruments of companies engaged in technology-related
industries. These include, but are not limited to, various applied
technologies, hardware, software, semiconductors, telecommunications equipment
and services and service-related companies in information technology.
SPECIALTY AIM VARIABLE INSURANCE FUNDS -- AIM V.I. Health Sciences Fund -- Series I A I M Advisors
shares (formerly an INVESCO fund) (Effective July 1, 2005, AIM V.I. Health Inc.
Sciences Fund will be renamed AIM V.I. Global Health Care Fund): seeks capital
growth. The Portfolio normally invests at least 80% of its net assets in the
equity securities and equity-related instruments of companies related to
health care.
19
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------
SPECIALTY AIM VARIABLE INSURANCE FUNDS -- AIM V.I. Financial Services Fund -- Series I A I M Advisors,
shares (formerly an INVESCO fund): seeks capital growth. The Portfolio Inc.
normally invests at least 80% of its net assets in the equity securities and
equity-related instruments of companies involved in the financial services
sector. These companies include, but are not limited to, banks, insurance
companies, investment and miscellaneous industries, and suppliers to financial
services companies.
INTERNATIONAL EVERGREEN VA INTERNATIONAL EQUITY (formerly Evergreen VA International Evergreen
EQUITY Growth): seeks long-term capital growth and secondarily, modest income. The Investment
Portfolio normally invests 80% of its assets in equity securities issued by Management
established, quality, non-U.S. companies located in countries with developed Company, LLC
markets and may purchase across all market capitalizations. The Portfolio
normally invests at least 65% of its assets in securities of companies in at
least three different countries (other than the U.S.).
SMALL CAP EVERGREEN VA GROWTH (formerly Evergreen VA Special Equity): seeks long-term Evergreen
GROWTH capital growth. The Portfolio invests at least 75% of its assets in common Investment
stocks of small- and medium-sized companies (i.e., companies whose market Management
capitalizations fall within the range of the Russell 2000(R) Growth Index, Company, LLC
at the time of purchase).
SPECIALTY EVERGREEN VA OMEGA: seeks long-term capital growth. The Portfolio invests Evergreen
primarily, and under normal conditions, substantially all of its assets in Investment
common stocks and securities convertible into common stocks of U.S. companies Management
across all market capitalizations. Company, LLC
INTERNATIONAL PROFUND VP EUROPE 30: seeks daily investment results, before fees and ProFund Advisors
EQUITY expenses, that correspond to the daily performance of the ProFunds Europe 30 LLC
Index. The ProFunds Europe 30 Index, created by ProFund Advisors, is composed
of 30 companies whose principal offices are located in Europe and whose
securities are traded on U.S. exchanges or on the NASDAQ as depositary
receipts or ordinary shares.
SPECIALTY PROFUND VP ASIA 30: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the ProFunds Asia 30 Index. The LLC
ProFunds Asia 30 Index, created by ProFund Advisors, is composed of 30
companies whose principal offices are located in the Asia/Pacific region,
excluding Japan, and whose securities are traded on U.S. exchanges or on the
NASDAQ as depository receipts or ordinary shares.
SPECIALTY PROFUND VP JAPAN: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the Nikkei 225 Stock Average. LLC
Since the Japanese markets are not open when ProFund VP Japan values its
shares, ProFund VP Japan determines its success in meeting this investment
objective by comparing its daily return on a given day with the daily
performance of related futures contracts traded in the United States related
to the Nikkei 225 Stock Average.
20
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP BANKS: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the Dow Jones U.S. Banks Index. LLC
The Dow Jones U.S. Banks Index measures the performance of the banking
industry portion of the U.S. equity market.
SPECIALTY PROFUND VP BASIC MATERIALS: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones U.S. Basic LLC
Materials Sector Index. The Dow Jones U.S. Basic Materials Sector Index
measures the performance of the basic materials economic sector of the U.S.
equity market.
SPECIALTY PROFUND VP BIOTECHNOLOGY: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones U.S. LLC
Biotechnology Index. The Dow Jones U.S. Biotechnology Index measures the
performance of the biotechnology industry portion of the U.S. equity market.
SPECIALTY PROFUND VP CONSUMER SERVICES (formerly ProFund VP Consumer Cyclical): seeks ProFund Advisors
daily investment results, before fees and expenses, that correspond to the LLC
daily performance of the Dow Jones U.S. Consumer Services Index. The Dow Jones
U.S. Consumer Services Index measures the performance of consumer spending in
the services industry of the U.S. equity market.
SPECIALTY PROFUND VP CONSUMER GOODS (formerly ProFund VP Consumer Non-Cyclical): seeks ProFund Advisors
daily investment results, before fees and expenses, that correspond to the LLC
daily performance of the Dow Jones U.S. Consumer Goods Index. The Dow Jones
U.S. Consumer Goods Index measures the performance of consumer spending in the
goods industry of the U.S. equity market.
SPECIALTY PROFUND VP OIL & Gas (formerly ProFund VP Energy): seeks daily investment ProFund Advisors
results, before fees and expenses, that correspond to the daily performance of LLC
the Dow Jones U.S. Oil & Gas Index. The Dow Jones U.S. Oil & Gas Sector Index
measures the performance of the energy sector of the U.S. equity market.
SPECIALTY PROFUND VP FINANCIALS (formerly ProFund VP Financial): seeks daily investment ProFund Advisors
results, before fees and expenses, that correspond to the daily performance of LLC
the Dow Jones U.S. Financials Sector Index. The Dow Jones U.S. Financials
Sector Index measures the performance of the financial services economic
sector of the U.S. equity market.
SPECIALTY PROFUND VP HEALTH CARE (formerly ProFund VP Healthcare): seeks daily ProFund Advisors
investment results, before fees and expenses, that correspond to the daily LLC
performance of the Dow Jones U.S. Health Care Index. The Dow Jones U.S. Health
Care Index measures the performance of the healthcare economic sector of the
U.S. equity market.
SPECIALTY PROFUND VP INDUSTRIALS (formerly ProFund VP Industrial): seeks daily ProFund Advisors
investment results, before fees and expenses, that correspond to the daily LLC
performance of the Dow Jones U.S. Industrials Index. The Dow Jones U.S.
Industrials Index measures the performance of the industrial economic sector
of the U.S. equity market.
21
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP INTERNET: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the Dow Jones Composite Internet LLC
Index. The Dow Jones Composite Internet Index measures the performance of
stocks in the U.S. equity markets that generate the majority of their revenues
from the Internet.
SPECIALTY PROFUND VP PHARMACEUTICALS: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones U.S. LLC
Pharmaceuticals Index. The Dow Jones U.S. Pharmaceuticals Index measures the
performance of the pharmaceuticals industry portion of the U.S. equity market.
SPECIALTY PROFUND VP PRECIOUS METALS: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones Precious LLC
Metals Index. The Dow Jones Precious Metals Index measures the performance of
the precious metals mining industry.
SPECIALTY PROFUND VP REAL ESTATE: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones U.S. Real LLC
Estate Index. The Dow Jones U.S. Real Estate Index measures the performance of
the real estate industry portion of the U.S. equity market.
SPECIALTY PROFUND VP SEMICONDUCTOR: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones U.S. LLC
Semiconductor Index. The Dow Jones U.S. Semiconductor Index measures the
performance of the semiconductor industry portion of the U.S. equity market.
SPECIALTY PROFUND VP TECHNOLOGY: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones U.S. LLC
Technology Sector Index. The Dow Jones U.S. Technology Sector Index measures
the performance of the technology sector of the U.S. equity market.
SPECIALTY PROFUND VP TELECOMMUNICATIONS: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the Dow Jones U.S. LLC
Telecommunications Sector Index. The Dow Jones U.S. Telecommunications
Sector Index measures the performance of the telecommunications economic
sector of the U.S. equity market.
SPECIALTY PROFUND VP UTILITIES: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the Dow Jones U.S. Utilities Sector LLC
Index. The Dow Jones U.S. Utilities Sector Index measures the performance of
the utilities economic sector of the U.S. equity market.
SPECIALTY PROFUND VP BULL: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the S&P 500(R) Index. LLC
22
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP BEAR: seeks daily investment results, before fees and expenses, that ProFund Advisors
correspond to the inverse (opposite) of the daily performance of the S&P LLC
500(R) Index. If ProFund VP Bear is successful in meeting its objective,
its net asset value should gain approximately the same, on a percentage basis,
as any decrease in the S&P 500(R) Index when the Index declines on a given
day. Conversely, its net asset value should lose approximately the same, on a
percentage basis, as any increase in the Index when the Index rises on a given
day.
SPECIALTY PROFUND VP ULTRABULL: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to twice (200%) the daily performance of the S&P 500(R) LLC
Index. Prior to May 1, 2003, ProFund VP UltraBull was named "ProFund VP Bull
Plus" and sought daily investment results that corresponded to one and one-half
times (150%) the daily performance of the S&P 500(R) Index. If ProFund VP
UltraBull is successful in meeting its objective, its net asset value should
gain approximately twice as much, on a percentage basis, as the S&P 500(R)
Index when the Index rises on a given day. Conversely, its net asset value
should lose approximately twice as much, on a percentage basis, as the Index
when the Index declines on a given day.
SPECIALTY PROFUND VP OTC: seeks daily investment results, before fees and expenses, that ProFund Advisors
correspond to the daily performance of the NASDAQ-100 Index(R). "OTC" in LLC
the name of ProFund VP OTC refers to securities that do not trade on a U.S.
securities exchange registered under the Securities Exchange Act of 1934.
SPECIALTY PROFUND VP SHORT OTC: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the inverse (opposite) of the daily performance of the LLC
NASDAQ-100 Index(R). If ProFund VP Short OTC is successful in meeting its
objective, its net asset value should gain approximately the same, on a
percentage basis, as any decrease in the NASDAQ-100 Index(R) when the Index
declines on a given day. Conversely, its net asset value should lose
approximately the same, on a percentage basis, as any increase in the Index
when the Index rises on a given day. "OTC" in the name of ProFund VP Short OTC
refers to securities that do not trade on a U.S. securities exchange registered
under the Securities Exchange Act of 1934.
SPECIALTY PROFUND VP ULTRAOTC: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to twice (200%) the daily performance of the NASDAQ-100 LLC
Index(R). If ProFund VP UltraOTC is successful in meeting its objective,
its net asset value should gain approximately twice as much, on a percentage
basis, as the NASDAQ-100 Index(R) when the Index rises on a given day.
Conversely, its net asset value should lose approximately twice as much, on a
percentage basis, as the Index when the Index declines on a given day. "OTC" in
the name of ProFund VP UltraOTC refers to securities that do not trade on a
U.S. securities exchange registered under the Securities Exchange Act of 1934.
23
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------
MID CAP VALUE PROFUND VP MID-CAP VALUE: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the S&P MidCap 400/ Barra LLC
Value Index(R). The S&P MidCap400/Barra Value Index(R) is a float
adjusted market capitalization weighted index comprised of the stocks in the
S&P MidCap 400 Index that have comparatively low price-to-book ratios as
determined before each semiannual rebalance date.
MID CAP PROFUND VP MID-CAP GROWTH: seeks daily investment results, before fees and ProFund Advisors
GROWTH expenses, that correspond to the daily performance of the S&P MidCap 400/ Barra LLC
Growth Index(R). The S&P MidCap 400/Barra Growth Index(R) is a float
adjusted market capitalization weighted index comprised of the stocks in the
S&P MidCap 400 Index(R) that have comparatively high price-to-book ratios
as determined before each semiannual rebalance date.
SPECIALTY PROFUND VP ULTRAMID-CAP: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to twice (200%) the daily performance of the S&P LLC
MidCap 400 Index(R). If ProFund VP UltraMid-Cap is successful in meeting its
objective, its net asset value should gain approximately twice as much, on a
percentage basis, as the S&P MidCap 400 Index(R) when the Index rises on a
given day. Conversely, its net asset value should lose approximately twice as
much, on a percentage basis, as the Index when the Index declines on a
given day.
SMALL CAP PROFUND VP SMALL-CAP VALUE: seeks daily investment results, before fees and ProFund Advisors
VALUE Value expenses, that correspond to the daily performance of the S&P SmallCap LLC
600/Barra Value Index(R). The S&P SmallCap 600/Barra Value Index(R) is a
float adjusted market capitalization weighted index comprised of the stocks in
the S&P SmallCap 600/Barra Value Index(R) that have comparatively low
price-to-book ratios as determined before each semiannual rebalance date.
SMALL CAP PROFUND VP SMALL-CAP GROWTH: seeks daily investment results, before fees and ProFund Advisors
GROWTH expenses, that correspond to the daily performance of the S&P SmallCap LLC
600/Barra Growth Index(R). The S&P SmallCap 600/Barra Growth Index(R)
is a float adjusted market capitalization weighted index comprised of the
stocks in the S&P SmallCap 600/Barra Growth Index(R) that have
comparatively high price-to- book ratios as determined before each semiannual
rebalance date.
SPECIALTY PROFUND VP ULTRASMALL-CAP: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to twice (200%) the daily performance of the Russell LLC
2000(R) Index. If ProFund VP UltraSmall-Cap is successful in meeting its
objective, its net asset value should gain approximately twice as much, on a
percentage basis, as the Russell 2000 Index(R) when the Index rises on a
given day. Conversely, its net asset value should lose approximately twice as
much, on a percentage basis, as the Index when the Index declines on a given
day.
24
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSEPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- -----------------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP U.S. GOVERNMENT PLUS: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to one and one-quarter times (125%) the daily LLC
price movement of the most recently issued 30-year U.S. Treasury bond ("Long
Bond"). In accordance with its stated objective, the net asset value of ProFund
VP U.S. Government Plus generally should decrease as interest rates rise. If
ProFund VP U.S. Government Plus is successful in meeting its objective, its net
asset value should gain approximately one and one-quarter times (125%) as
much, on a percentage basis, as any daily increase in the price of the Long Bond
on a given day. Conversely, its net asset value should lose approximately one
and one-quarter as much, on a percentage basis, as any daily decrease in the
price of the Long Bond on a given day.
SPECIALTY PROFUND VP RISING RATES OPPORTUNITY: seeks daily investment results, before ProFund Advisors
fees and expenses, that correspond to one and one-quarter times (125%) the LLC
inverse (opposite) of the daily price movement of the most recently issued
30-year U.S. Treasury bond ("Long Bond"). In accordance with its stated
objective, the net asset value of ProFund VP Rising Rates Opportunity generally
should decrease as interest rates fall. If ProFund VP Rising Rates Opportunity is
successful in meeting its objective, its net asset value should gain approximately
one and one-quarter times as much, on a percentage basis, as any daily
decrease in the Long Bond on a given day. Conversely, its net asset value should
lose approximately one and one-quarter times as much, on a percentage basis,
as any daily increase in the Long Bond on a given day.
LARGE CAP PROFUND VP LARGE-CAP GROWTH: seeks daily investment results, before fees ProFund Advisors
GROWTH and expenses, that correspond to the daily performance of the S&P 500/Barra LLC
Growth Index[RegTM]. The S&P 500/Barra Growth Index is a float adjusted market
capitalization weighted index comprised of the stocks in the S&P 500 Index that
have comparatively high price-to-book ratios as determined before each
semiannual rebalance date.
LARGE CAP PROFUND VP LARGE-CAP VALUE: seeks daily investment results, before fees and ProFund Advisors
VALUE expenses, that correspond to the daily performance of the S&P 500/Barra Value LLC
Index[RegTM]. The S&P 500/Barra Value Index is a float adjusted market capitalization
weighted index comprised of the stocks in the S&P 500 Index that have
comparatively low price-to-book ratios as determined before each semiannual
rebalance date.
SPECIALTY PROFUND VP SHORT SMALL-CAP: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the inverse (opposite) of the daily performance of LLC
the Russell 2000[RegTM] Index. If ProFund VP Short Small-Cap is successful in meeting
its objective, its net asset value should gain approximately the same amount, on
a percentage basis, as any decrease in the Russell 2000 Index when the Index
declines on a given day. Conversely, its net asset value should lose
approximately the same amount, on a percentage basis, as any increase in the
Index when the Index rises on a given day.
25
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSEPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- -------------------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP SHORT MID-CAP: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the inverse (opposite) of the daily performance of LLC
the S&P MidCap 400 Index[RegTM]. If ProFund VP Short Mid-Cap is successful in
meeting its objective, its net asset value should gain approximately the same
amount, on a percentage basis, as any decrease in the S&P MidCap 400 Index
when the Index declines on a given day. Conversely, its net asset value should
lose approximately the same amount, on a percentage basis, as any increase in
the Index when the Index rises on a given day.
SPECIALTY ACCESS VP HIGH YIELD: seeks to provide investment results that correspond ProFund Advisors
generally to the total return of the high yield market consistent with maintaining LLC
reasonable liquidity. The Access VP High Yield, created by ProFund Advisors, will
achieve its high yield exposure primarily through CDSs but may invest in high
yield debt instruments ("junk bonds"), Interest rate swap agreements and futures
contracts, and other debt and money market instruments without limitation,
consistent with applicable regulations. Under normal market conditions, the fund
will invest at least 80% of its net assets in credit default swaps and other
financial instruments that in combination have economic characteristics similar to
the high yield debt market and/or in high yield debt securities. The fund seeks to
maintain exposure to the high yield bond markets regardless of market
conditions and without taking defensive positions.
SPECIALTY FIRST TRUST(R) 10 UNCOMMON VALUES: seeks to provide above-average capital First Trust Advisors
appreciation. The Portfolio seeks to achieve its objective by investing primarily in L.P.
the ten common stocks selected by the Investment Policy Committee of Lehman
Brothers Inc. ("Lehman Brothers") with the assistance of the Research
Department of Lehman Brothers which, in their opinion have the greatest
potential for capital appreciation during the next year. The stocks included in the
Portfolio are adjusted annually on or about July 1st in accordance with the
selections of Lehman Brothers.
SPECIALTY TARGET MANAGED VIP: seeks to provide above-average total return. The Portfolio First Trust Advisors
seeks to achieve its objective by investing in common stocks of the most L.P.
attractive companies that are identified by a model based on six uniquely
specialized strategies -- The DowSM DART 5, the European Target 20, the
Nasdaq[RegTM] Target 15, the S&P Target 24, the Target Small Cap and the Value Line[RegTM]
Target 25.
SPECIALTY THE DOW(SM) DART 10: seeks to provide above-average total return. The First Trust Advisors
Portfolio seeks to achieve its objective by investing in common stocks issued by L.P.
companies that are expected to provide income and to have the potential for
capital appreciation. The Portfolio invests primarily in the common stocks of the
ten companies in the DJIA that have the highest combined dividend yields and
buyback ratios on or about the applicable stock selection date.
26
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSEPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- --------------------------------------------------------------------------------------------------------------------------
SPECIALTY GLOBAL DIVIDEND TARGET 15 (FORMERLY GLOBAL TARGET 15): seeks to provide above- First Trust Advisors
average total return. The Portfolio seeks to achieve its objective by investing in L.P.
common stocks issued by companies that are expected to provide income and to
have the potential for capital appreciation. The Portfolio invests primarily in the
common stocks of the companies which are components of the DJIA, the
Financial Times Industrial Ordinary Share Index ("FT Index") and the Hang Seng
Index. The Portfolio primarily consists of common stocks of the five companies
with the lowest per share stock prices of the ten companies in each of the
DJIA, FT Index and Hang Seng Index, respectively, that have the highest dividend
yield in the respective index on or about the applicable stock selection date.
SPECIALTY S&P(R) TARGET 24: seeks to provide above-average total return. The Portfolio First Trust Advisors
seeks to achieve its objective by investing in common stocks issued by L.P.
companies that have the potential for capital appreciation. The Portfolio invests
primarily in the common stocks of twenty-four companies selected from a subset
of the stocks included in the Standard & Poor's 500 Composite Stock Price
Index[RegTM]. The subset of stocks will be taken from each of the eight largest
economic sectors of the S&P 500 Index[RegTM] based on the sector's market
capitalization.
SPECIALTY THE DOW(SM) TARGET DIVIDEND seeks to provide above-average total return. The First Trust Advisors
Portfolio seeks to achieve its objective by investing in common stocks issued by L.P.
companies that are expected to provide income and to have the potential for
capital appreciation. The Portfolio invests primarily in the 20 common stocks
from the Dow Jones Select Dividend Index SM with the best overall ranking on
both the change in return on assets over the last 12 months and price-to-book
ratio as of the close of business on or about the applicable stock selection date.
SPECIALTY VALUE LINE(R) TARGET 25: seeks to provide above-average capital appreciation. First Trust Advisors
The Portfolio seeks to achieve its objective by investing in 25 of the 100 L.P.
common stocks that Value Line[RegTM] gives a #1 ranking for TimelinessTM which have
recently exhibited certain positive financial attributes as of the close of business
on the applicable stock selection date through a multi-step process.
SPECIALTY NASDAQ(R) TARGET 15: seeks to provide above-average total return. The Portfolio First Trust Advisors
seeks to achieve its objective by investing in common stocks issued by L.P.
companies that are expected to have the potential for capital appreciation. The
Portfolio invests primarily in the common stocks of fifteen companies selected
from a pre-screened subset of the stocks included in the Nasdaq-100 Index[RegTM] on
or about the applicable stock selection date through a multi-step process.
27
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL THE PRUDENTIAL SERIES FUND, INC. -- SP WILLIAM BLAIR INTERNATIONAL Prudential
EQUITY Growth: Seeks long-term capital appreciation. The Portfolio invests primarily in Investments LLC/
stocks of large and medium-sized companies located in countries included in the William Blair &
Morgan Stanley Capital International All Country World Ex-U.S. Index. Under Company, LLC
normal market conditions, the portfolio invests at least 80% of its net assets in
equity securities. The Portfolio's assets normally will be allocated among not
fewer than six different countries and will not concentrate investments in any
particular industry.
"Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard &
Poor's 500," and "500" are trademarks of the McGraw-Hill Companies, Inc. and
have been licensed for use by American Skandia Investment Services,
Incorporated. The Portfolio is not sponsored, endorsed, sold or promoted by
Standard & Poor's and Standard & Poor's makes no representation regarding the
advisability of investing in the Portfolio.
"Dow Jones Industrial Average(SM)", "DJIA(SM)", "Dow Industrials(SM)", "Dow
Jones Select Dividend Index(SM)", and "The Dow 10(SM)", are service marks of Dow
Jones & Company, Inc. ("Dow Jones") and have been licensed for use for certain
purposes by First Trust Advisors L.P. ("First Trust"). The portfolios,
including, and in particular the Target Managed VIP portfolio The Dow(SM) DART
10 portfolio, and The Dow(SM) Target Dividend Portfolio are not endorsed, sold
or promoted by Dow Jones, and Dow Jones makes no representation regarding the
advisability of investing in such products.
"Standard & Poor's," "S&P," "S&P 500," "Standard & Poor's 500," and "500" are
trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by
First Trust on behalf of the S&P Target 24 Portfolio and the Target Managed VIP
Portfolio. The Portfolios are not sponsored, endorsed, managed, sold or
promoted by Standard & Poor's and Standard & Poor's makes no representation
regarding the advisability of investing in the Portfolio.
"The Nasdaq 100(R)", "Nasdaq-100 Index(R)", "Nasdaq Stock Market(R)", and
"Nasdaq(R)]" are trade or service marks of The Nasdaq Stock Market, Inc. (which
with its affiliates are the "Corporations") and have been licensed for use by
First Trust. The Nasdaq Target 15 Portfolio and Target Managed VIP Portfolio
have not been passed on by the Corporations as to its legality or suitability.
The Nasdaq Target 15 Portfolio and Target Managed VIP Portfolio are not issued,
endorsed, sponsored, managed, sold or promoted by the Corporations. THE
CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE NASDAQ
TARGET 15 PORTFOLIO OR THE TARGET MANAGED VIP PORTFOLIO.
"Value Line(R)," "The Value Line Investment Survey," and "Value Line
Timeliness(TM) Ranking System" are registered trademarks of Value Line
Securities, Inc. or Value Line Publishing, Inc. The Target Managed VIP(R)
Portfolio is not sponsored, recommended, sold or promoted by Value Line
Publishing, Inc., Value Line, Inc. or Value Line Securities, Inc. ("Value
Line"). Value Line makes no representation regarding the advisability of
investing in the Portfolio.
The First Trust(R) 10 Uncommon Values portfolio is not sponsored or created
by Lehman Brothers, Inc. ("Lehman Brothers"). Lehman Brothers' only
relationship to First Trust is the licensing of certain trademarks and trade
names of Lehman Brothers and of the "10 Uncommon Values" which is determined,
composed and calculated by Lehman Brothers without regard to First Trust or the
First Trust(R) 10 Uncommon Values portfolio.
Dow Jones has no relationship to the ProFunds VP, other than the licensing of
the Dow Jones sector indices and its service marks for use in connection with
the ProFunds VP. The ProFunds VP are not sponsored, endorsed, sold, or promoted
by Standard & Poor's or NASDAQ, and neither Standard & Poor's nor NASDAQ makes
any representations regarding the advisability of investing in the ProFunds VP.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
WHAT ARE THE FIXED ALLOCATIONS?
We offer Fixed Allocations of different durations during the accumulation
period. These "Fixed Allocations" earn a guaranteed fixed rate of interest for
a specified period of time, called the "Guarantee Period." In most states, we
offer Fixed Allocations with Guarantee Periods from 1 to 10 years. We may also
offer special purpose Fixed Allocations for use with certain optional
investment programs. We guarantee the fixed rate for the entire Guarantee
Period. However, if you withdraw or transfer Account Value before the end of
the Guarantee Period, we will adjust the value of your withdrawal or transfer
based on a formula, called a "Market Value Adjustment." The Market Value
Adjustment can either be positive or negative, depending on the movement of
applicable interest rates payable on Strips of the appropriate duration. Please
refer to the section entitled "How does the Market Value Adjustment Work?" for
a description of the formula along with examples of how it is calculated. You
may allocate Account Value to more than one Fixed Allocation at a time.
Fixed Allocations may not be available in all states. Availability of
Fixed Allocations is subject to change and may differ by state and by the
annuity product you purchase. Please call American Skandia at 1-800-752-6342 to
determine availability of Fixed Allocations in your state and for your annuity
product.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Fees and Charges
The charges under the contracts are designed to cover, in the aggregate, our
direct and indirect costs of selling, administering and providing benefits under
the contracts. They are also designed, in the aggregate, to compensate us for
the risks of loss we assume pursuant to the contracts. If, as we expect, the
charges that we collect from the contracts exceed our total costs in connection
with the contracts, we will earn a profit. Otherwise we will incur a loss. For
example, American Skandia may make a profit on the Insurance Charge if, over
time, the actual costs of providing the guaranteed insurance obligations under
the Annuity are less than the amount we deduct for the Insurance Charge. To the
extent we make a profit on the Insurance Charge, such profit may be used for any
other corporate purpose, including payment of other expenses that American
Skandia incurs in promoting, distributing, issuing and administering the
Annuity.
The rates of certain of our charges have been set with reference to
estimates of the amount of specific types of expenses or risks that we will
incur. In most cases, this prospectus identifies such expenses or risks in the
name of the charge; however, the fact that any charge bears the name of, or is
designed primarily to defray a particular expense or risk does not mean that the
amount we collect from that charge will never be more than the amount of such
expense or risk, nor does it mean that we may not also be compensated for such
expense or risk out of any other charges we are permitted to deduct by the terms
of the contract. A portion of the proceeds that American Skandia receives from
charges that apply solely to the variable investment options may include amounts
based on market appreciation of the variable investment option values.
WHAT ARE THE CONTRACT FEES AND CHARGES?
CONTINGENT DEFERRED SALES CHARGE: We do not deduct a sales charge from Purchase
Payments you make to your Annuity. However, we may deduct a CDSC if you
surrender your Annuity or when you make a partial withdrawal. The CDSC
reimburses us for expenses related to sales and distribution of the Annuity,
including commissions, marketing materials and other promotional expenses. The
CDSC is calculated as a percentage of your Purchase Payment being surrendered or
withdrawn during the applicable Annuity Year. For purposes of calculating the
CDSC, we consider the year following the Issue Date of your Annuity as Year 1.
The amount of the CDSC decreases over time, measured from the Issue Date of the
Annuity. The CDSC percentages are shown below.
YEARS 1 2 3 4 5 6 7 8 9+
- --------------------------------------------------------------------------------------------------------------------
CHARGE (%) 7.5% 7.0% 6.5% 6.0% 5.0% 4.0% 3.0% 2.0% 0.0%
THE CDSC PERIOD IS BASED ON THE ISSUE DATE OF THE ANNUITY, NOT ON THE DATE
EACH PURCHASE PAYMENT IS APPLIED TO THE ANNUITY. Purchase Payments applied to
the Annuity after the Issue Date do not have their own CDSC period. During the
first eight (8) Annuity Years, under certain circumstances you can withdraw a
limited amount of Account Value without paying a CDSC. This is referred to as a
"Free Withdrawal." After eight (8) complete Annuity Years, you can surrender
your Annuity or make a partial withdrawal without a CDSC being deducted from the
amount being withdrawn. Free Withdrawals are not treated as a withdrawal of
Purchase Payments for purposes of calculating the CDSC on a subsequent
withdrawal or surrender. Withdrawals of amounts greater than the maximum Free
Withdrawal amount are treated as a withdrawal of Purchase Payments and will be
assessed a CDSC during Annuity Years 1 through 8. For purposes of calculating
the CDSC on a surrender, the Purchase Payments being withdrawn may be greater
than your remaining Account Value or the amount of your withdrawal request. This
is most likely to occur if you have made prior withdrawals under the Free
Withdrawal provision or if your Account Value has declined in value due to
negative market performance.
We may waive the CDSC under certain medically-related circumstances or
when taking a Minimum Distribution from an Annuity purchased as a "qualified"
investment. Free Withdrawals, Medically-Related Surrenders and Minimum
Distributions are each explained more fully in the section entitled "Access to
Your Account Value".
TRANSFER FEE: Currently, you may make twenty (20) free transfers between
investment options each Annuity Year. We will charge $10.00 for each transfer
after the twentieth in each Annuity Year. We do not consider transfers made as
part of a dollar cost averaging, automatic rebalancing or asset allocation
program when we count the twenty free transfers. All transfers made on the same
day will be treated as one (1) transfer. Renewals or transfers of Account Value
from a Fixed Allocation at the end of its Guarantee Period are not subject to
the Transfer Fee and are not counted toward the twenty free transfers. We may
reduce the number of free transfers allowable each Annuity Year (subject to a
minimum of eight) without charging a Transfer Fee unless you make use of
electronic means to
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
transmit your transfer requests. We may eliminate the Transfer Fee for transfer
requests transmitted electronically or through other means that reduce our
processing costs. If enrolled in any program that does not permit transfer
requests to be transmitted electronically, the Transfer Fee will not be waived.
ANNUAL MAINTENANCE FEE: During the accumulation period we deduct an Annual
Maintenance Fee. The Annual Maintenance Fee is $35.00 or 2% of your Account
Value invested in the variable investment options, whichever is less. This fee
will be deducted annually on the anniversary of the Issue Date of your Annuity
or, if you surrender your Annuity during the Annuity Year, the fee is deducted
at the time of surrender. Currently, the Annual Maintenance Fee is only deducted
if your Account Value is less than $100,000 on the anniversary of the Issue Date
or at the time of surrender. We may increase the Annual Maintenance Fee.
However, any increase will only apply to Annuities issued after the date of the
increase.
TAX CHARGE: Several states and some municipalities charge premium taxes or
similar taxes on annuities that we are required to pay. The amount of tax will
vary from jurisdiction to jurisdiction and is subject to change. The tax charge
currently ranges up to 31/2% of your premium and is designed to approximate the
taxes that we are required to pay. We generally will deduct the charge at the
time the tax is imposed, but may also decide to deduct the charge from each
Purchase Payment at the time of a withdrawal or surrender of your Annuity or at
the time you elect to begin receiving annuity payments. We may assess a charge
against the Sub-accounts and the Fixed Allocations equal to any taxes which may
be imposed upon the separate accounts.
We will pay company income taxes on the taxable corporate earnings created
by this separate account product. While we may consider company income taxes
when pricing our products, we do not currently include such income taxes in the
tax charges you pay under the contract. We will periodically review the issue of
charging for these taxes and may impose a charge in the future.
In calculating our corporate income tax liability, we derive certain
corporate income tax benefits associated with the investment of company assets,
including separate account assets, which are treated as company assets under
applicable income tax law. These benefits reduce our overall corporate income
tax liability. Under current law, such benefits may include foreign tax credits
and corporate dividends received deductions. We do not pass these tax benefits
through to holders of the separate account annuity contracts because (i) the
contract owners are not the owners of the assets generating these benefits under
applicable income tax law and (ii) we do not currently include company income
taxes in the tax charges you pay under the contract.
WHAT CHARGES APPLY SOLELY TO THE VARIABLE INVESTMENT OPTIONS?
INSURANCE CHARGE: We deduct an Insurance Charge daily. The charge is
assessed against the average daily assets allocated to the Sub-accounts and is
equal to 0.65% on an annual basis. The Insurance Charge is the combination of
the Mortality & Expense Risk Charge (0.50%) and the Administration Charge
(0.15%). The Insurance Charge is intended to compensate American Skandia for
providing the insurance benefits under the Annuity, including the Annuity's
basic death benefit that provides guaranteed benefits to your beneficiaries even
if the market declines and the risk that persons we guarantee annuity payments
to will live longer than our assumptions. The charge also covers administrative
costs associated with providing the Annuity benefits, including preparation of
the contract, confirmation statements, annual account statements and annual
reports, legal and accounting fees as well as various related expenses. Finally,
the charge covers the risk that our assumptions about the mortality risks and
expenses under this Annuity are incorrect and that we have agreed not to
increase these charges over time despite our actual costs. We may increase the
portion of the total Insurance Charge that is deducted for administrative costs;
however, any increase will only apply to Annuities issued after the date of the
increase.
The Insurance Charge is not deducted against assets allocated to a Fixed
Allocation. However, the amount we credit to Fixed Allocations may also reflect
similar assumptions about the insurance guarantees provided under the Annuity.
DISTRIBUTION CHARGE: We deduct a Distribution Charge daily. The charge is
assessed against the average assets allocated to the Sub-accounts and is equal
to 0.60% on an annual basis in Annuity Years 1 through 8. After the end of the
first eight Annuity Years, the 0.60% charge for distribution will no longer be
assessed. The Distribution Charge is intended to compensate us for a portion of
our acquisition expenses under the Annuity, including promotion and distribution
of the Annuity. The Distribution Charge is deducted against your Annuity's
Account
31
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Fees and Charges continued
Value and any increases or decreases in your Account Value
based on market fluctuations of the Sub-accounts will affect the charge.
OPTIONAL BENEFITS FOR WHICH WE ASSESS A CHARGE SOLELY AGAINST THE VARIABLE
INVESTMENT OPTIONS: If you elect to purchase certain optional benefits, we will
deduct an additional charge on a daily basis solely from your Account Value
allocated to the Sub-accounts. The additional charge is included in the daily
calculation of the Unit Price for each Sub-account. We may assess charges for
other optional benefits on a different basis as described elsewhere in the
prospectus. Please refer to the sections entitled "Living Benefit Programs" and
"Death Benefit" for a description of the charge for each Optional Benefit.
WHAT FEES AND EXPENSES ARE INCURRED BY THE PORTFOLIOS?
Each Portfolio incurs total annual operating expenses comprised of an
investment management fee, other expenses and any distribution and service
(12b-1) fees that may apply. These fees and expenses are reflected daily by
each Portfolio before it provides American Skandia with the net asset value as
of the close of business each day. More detailed information about fees and
expenses can be found in the prospectuses for the Portfolios.
WHAT CHARGES APPLY TO THE FIXED ALLOCATIONS?
No specific fee or expenses are deducted when determining the rate we credit to
a Fixed Allocation. However, for some of the same reasons that we deduct the
Insurance Charge against Account Value allocated to the Sub-accounts, we also
take into consideration mortality, expense, administration, profit and other
factors in determining the interest rates we credit to Fixed Allocations. Any
CDSC or Tax Charge applies to amounts that are taken from the variable
investment options or the Fixed Allocations. A Market Value Adjustment may also
apply to transfers, certain withdrawals, surrender or annuitization from a
Fixed Allocation.
WHAT CHARGES APPLY IF I CHOOSE AN ANNUITY PAYMENT OPTION?
If you select a fixed payment option, the amount of each fixed payment will
depend on the Account Value of your Annuity when you elected to annuitize.
There is no specific charge deducted from these payments; however, the amount
of each annuity payment reflects assumptions about our insurance expenses. If
you select a variable payment option that we may offer, then the amount of your
benefits will reflect changes in the value of your Annuity and will be subject
to charges that apply under the variable immediate annuity option. Also, a tax
charge may apply (see "Tax Charge" above).
EXCEPTIONS/REDUCTIONS TO FEES AND CHARGES
We may reduce or eliminate certain fees and charges or alter the manner in
which the particular fee or charge is deducted. For example, we may reduce the
amount of the CDSC or the length of time it applies, reduce or eliminate the
amount of the Annual Maintenance Fee or reduce the portion of the total
Insurance Charge that is deducted as an Administration Charge. Generally, these
types of changes will be based on a reduction to our sales, maintenance or
administrative expenses due to the nature of the individual or group purchasing
the Annuity. Some of the factors we might consider in making such a decision
are: (a) the size and type of group; (b) the number of Annuities purchased by
an Owner; (c) the amount of Purchase Payments or likelihood of additional
Purchase Payments; and/or (d) other transactions where sales, maintenance or
administrative expenses are likely to be reduced. We will not discriminate
unfairly between Annuity purchasers if and when we reduce any fees and charges.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Purchasing Your Annuity
WHAT ARE OUR REQUIREMENTS FOR PURCHASING THE ANNUITY?
INITIAL PURCHASE PAYMENT: You must make a minimum initial Purchase Payment of
$1,000. However, if you decide to make payments under a systematic investment
or "bank drafting" program, we will accept a lower initial Purchase Payment
provided that, within the first Annuity Year, you make at least $1,000 in total
Purchase Payments.
Where allowed by law, we must approve any initial and additional Purchase
Payments of $1,000,000 or more. We may apply certain limitations and/or
restrictions on the Annuity as a condition of our acceptance, including limiting
the liquidity features or the Death Benefit protection provided under the
Annuity, limiting the right to make additional Purchase Payments, changing the
number of transfers allowable under the Annuity or restricting the Sub-accounts
or Fixed Allocations that are available. Other limitations and/or restrictions
may apply.
Except as noted below, Purchase Payments must be submitted by check drawn
on a U.S. bank, in U.S. dollars, and made payable to American Skandia. Purchase
Payments may also be submitted via 1035 exchange or direct transfer of funds.
Under certain circumstances, Purchase Payments may be transmitted to American
Skandia via wiring funds through your investment professional's broker-dealer
firm. Additional Purchase Payments may also be applied to your Annuity under an
arrangement called "bank drafting" where you authorize us to deduct money
directly from your bank account. We call our bank drafting program "Auto Saver".
We may reject any payment if it is received in an unacceptable form. Our
acceptance of a check is subject to our ability to collect funds.
AGE RESTRICTIONS: The Owner must be age 80 or under as of the Issue Date
of the Annuity. If the Annuity is owned jointly, the oldest of the Owners must
be age 80 or under on the Issue Date. If the Annuity is owned by an entity, the
Annuitant must be age 80 or under as of the Issue Date. You should consider your
need to access your Account Value and whether the Annuity's liquidity features
will satisfy that need. If you take a distribution prior to age 59 1/2, you may
be subject to a 10% penalty in addition to ordinary income taxes on any gain.
The availability and level of protection of certain optional benefits may vary
based on the age of the Owner on the Issue Date of the Annuity or the date of
the Owner's death.
OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS: We will ask you to name the
Owner(s), Annuitant and one or more Beneficiaries for your Annuity.
- - Owner: The Owner(s) holds all rights under the Annuity. You may name up to
two Owners in which case all ownership rights are held jointly. Generally,
joint owners are required to act jointly; however, if each owner provides
us with an instruction that we find acceptable, we will permit each owner
to act separately. All information and documents that we are required to
send you will be sent to the first named owner. This Annuity does not
provide a right of survivorship. Refer to the Glossary of Terms for a
complete description of the term "Owner."
- - Annuitant: The Annuitant is the person we agree to make annuity payments
to and upon whose life we continue to make such payments. You must name an
Annuitant who is a natural person. We do not accept a designation of joint
Annuitants during the accumulation period. Where allowed by law, you may
name one or more Contingent Annuitants. A Contingent Annuitant will become
the Annuitant if the Annuitant dies before the Annuity Date. Please refer
to the discussion of "Considerations for Contingent Annuitants" in the Tax
Considerations section of the Prospectus.
- - Beneficiary: The Beneficiary is the person(s) or entity you name to
receive the death benefit. Your beneficiary designation must be the exact
name of your beneficiary, not only a reference to the beneficiary's
relationship to you. For example, a designation of "surviving spouse"
would not be acceptable. If no beneficiary is named the death benefit will
be paid to you or your estate.
Your right to make certain designations may be limited if your Annuity is
to be used as an IRA or other "qualified" investment that is given beneficial
tax treatment under the Code. You should seek competent tax advice on the
income, estate and gift tax implications of your designations.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Managing Your Annuity
MAY I CHANGE THE OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS?
You may change the Owner, Annuitant and Beneficiary designations by sending us
a request in writing. Upon an ownership change, any automated investment or
withdrawal programs will be canceled. The new owner must submit the applicable
program enrollment if they wish to participate in such a program. Where allowed
by law, such changes will be subject to our acceptance. Some of the changes we
will not accept include, but are not limited to:
- - a new Owner subsequent to the death of the Owner or the first of any joint
Owners to die, except where a spouse-Beneficiary has become the Owner as a
result of an Owner's death;
- - a new Annuitant subsequent to the Annuity Date;
- - for "non-qualified" investments, a new Annuitant prior to the Annuity Date
if the Annuity is owned by an entity; and
- - a change in Beneficiary if the Owner had previously made the designation
irrevocable.
SPOUSAL OWNERS/SPOUSAL BENEFICIARIES
If an Annuity is co-owned by spouses, we will assume that the sole primary
Beneficiary is the surviving spouse that was named as the co-owner unless you
elect an alternative Beneficiary designation. Unless you elect an alternative
Beneficiary designation, upon the death of either spousal Owner, the surviving
spouse may elect to assume ownership of the Annuity instead of taking the Death
Benefit payment. The Death Benefit that would have been payable will be the new
Account Value of the Annuity as of the date of due proof of death and any
required proof of a spousal relationship. As of the date the assumption is
effective, the surviving spouse will have all the rights and benefits that
would be available under the Annuity to a new purchaser of the same attained
age. For purposes of determining any future Death Benefit for the beneficiary
of the surviving spouse, the new Account Value will be considered as the
initial Purchase Payment. No CDSC will apply to the new Account Value. However,
any additional Purchase Payments applied after the date the assumption is
effective will be subject to all provisions of the Annuity, including the CDSC
when applicable.
SPOUSAL CONTINGENT ANNUITANT
If the Annuity is owned by an entity and the surviving spouse is named as a
Contingent Annuitant, upon the death of the Annuitant, the surviving spouse
that was named as the Contingent Annuitant will become the Annuitant. NO DEATH
BENEFIT IS PAYABLE UPON THE DEATH OF THE ANNUITANT. However, the Account Value
of the Annuity as of the date of due proof of death of the Annuitant (and any
required proof of the spousal relationship) will reflect the amount that would
have been payable had a Death Benefit been paid.
MAY I RETURN THE ANNUITY IF I CHANGE MY MIND?
If after purchasing your Annuity you change your mind and decide that you do
not want it, you may return it to us within a certain period of time known as a
right to cancel period. This is often referred to as a "free-look." Depending
on the state in which you purchased your Annuity and, in some states, if you
purchased the Annuity as a replacement for a prior contract, the right to
cancel period may be ten (10) days, twenty-one (21) days or longer, measured
from the time that you received your Annuity. If you return your Annuity during
the applicable period, we will refund your current Account Value plus any tax
charge deducted, and depending on your state's requirements, any applicable
insurance charges deducted. The amount returned to you may be higher or lower
than the Purchase Payment(s) applied during the right to cancel period. Where
required by law, we will return your Purchase Payment(s), or the greater of
your current Account Value and the amount of your Purchase Payment(s) applied
during the right to cancel period.
MAY I MAKE ADDITIONAL PURCHASE PAYMENTS?
The minimum amount that we accept as an additional Purchase Payment is $100
unless you participate in "Auto Saver" or a periodic Purchase Payment program.
Unless you participate in an asset allocation program, or unless you have
provided us with other specific allocation instructions for one, more than one,
or all subsequent Purchase Payments, we will allocate any additional Purchase
Payments you make according to your initial Purchase Payment allocation
instructions. If you so instruct us, we will allocate subsequent purchase
payments according to any new allocation instructions. Purchase Payments made
while you participate in an asset allocation program will be allocated in
accordance with such program. Additional Purchase Payments may be paid at any
time before the Annuity Date.
MAY I MAKE SCHEDULED PAYMENTS DIRECTLY FROM MY BANK ACCOUNT?
You can make additional Purchase Payments to your Annuity by authorizing us to
deduct money directly from your bank account
34
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
and applying it to your Annuity. This type of program is often called "bank
drafting". We call our bank drafting program "Auto Saver." Purchase Payments
made through Auto Saver may only be allocated to the variable investment options
when applied. Auto Saver allows you to invest in your Annuity with a lower
initial Purchase Payment, as long as you authorize payments that will equal at
least $1,000 during the first 12 months of your Annuity. We may suspend or
cancel bank drafting privileges if sufficient funds are not available from the
applicable financial institution on any date that a transaction is scheduled to
occur.
MAY I MAKE PURCHASE PAYMENTS THROUGH A SALARY REDUCTION PROGRAM?
These types of programs are only available with certain types of qualified
investments. If your employer sponsors such a program, we may agree to accept
periodic Purchase Payments through a salary reduction program as long as the
allocations are made only to variable investment options and the periodic
Purchase Payments received in the first year total at least $1,000.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Managing Your Account Value
HOW AND WHEN ARE PURCHASE PAYMENTS
INVESTED?
(See "Valuing Your Investment" for a description of our procedure for pricing
initial and subsequent Purchase Payments.)
INITIAL PURCHASE PAYMENT: Once we accept your application, we invest your
net Purchase Payment in the Annuity. The net Purchase Payment is your initial
Purchase Payment minus any tax charges that may apply. On your application we
ask you to provide us with instructions for allocating your Account Value. You
can allocate Account Value to one or more variable investment options or Fixed
Allocations.
SUBSEQUENT PURCHASE PAYMENTS: Unless you participate in an asset
allocation program, or unless you have provided us with other specific
allocation instructions for one, more than one, or all subsequent Purchase
Payments, we will allocate any additional Purchase Payments you make according
to your initial Purchase Payment allocation instructions. If you so instruct us,
we will allocate subsequent Purchase Payments according to any new allocation
instructions. Unless you tell us otherwise, Purchase Payments made while you
participate in an asset allocation program will be allocated in accordance with
such program.
ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?
During the accumulation period you may transfer Account Value between
investment options. Transfers are not subject to taxation on any gain. We may
require a minimum of $500 in each Sub-account you allocate Account Value to at
the time of any allocation or transfer. If you request a transfer and, as a
result of the transfer, there would be less than $500 in the Sub-account, we
may transfer the remaining Account Value in the Sub-account pro-rata to the
other investment options to which you transferred.
We may impose specific restrictions on financial transactions (including
transfer requests) for certain Portfolios based on the Portfolio's investment
and/or transfer restrictions. We may do so to conform to any present or future
restriction that is imposed by any portfolio available under this Annuity.
Currently, any purchase, redemption or transfer involving the ProFunds VP
Sub-accounts must be received by us no later than one hour prior to any
announced closing of the applicable securities exchange (generally, 3:00 p.m.
Eastern time) to be processed on the current Valuation Day. The "cut-off" time
for such financial transactions involving a ProFunds VP Sub-account will be
extended to 1/2 hour prior to any announced closing (generally, 3:30 p.m.
Eastern time) for transactions submitted electronically through American
Skandia's Internet website (www.americanskandia.prudential.com).
Currently, we charge $10.00 for each transfer after the twentieth (20th) in each
Annuity Year. Transfers made as part of a dollar cost averaging, automatic
rebalancing or asset allocation program do not count toward the twenty free
transfer limit. Renewals or transfers of Account Value from a Fixed Allocation
at the end of its Guarantee Period are not subject to the transfer charge. We
may reduce the number of free transfers allowable each Annuity Year (subject to
a minimum of eight) without charging a Transfer Fee unless you make use of
electronic means to transmit your transfer requests. We may also increase the
Transfer Fee that we charge to $15.00 for each transfer after the number of free
transfers has been used up. We may eliminate the Transfer Fee for transfer
requests transmitted electronically or through other means that reduce our
processing costs. If enrolled in any program that does not permit transfer
requests to be transmitted electronically, the Transfer Fee will not be waived.
Once you have made 20 transfers among the Sub-accounts during an Annuity
Year, we will accept any additional transfer request during that year only if
the request is submitted to us in writing with an original signature and
otherwise is in good order. For purposes of this 20 transfer limit, we (i) do
not view a facsimile transmission as a "writing", (ii) will treat multiple
transfer requests submitted on the same business day as a single transfer, and
(iii) do not count any transfer that solely involves Sub-accounts corresponding
to any ProFund Portfolio and/or the AST Money Market Portfolio, or any transfer
that involves one of our systematic programs, such as asset allocation and
automated withdrawals.
Frequent transfers among Sub-accounts in response to short-term
fluctuations in markets, sometimes called "market timing," can make it very
difficult for a Portfolio manager to manage a Portfolio's investments. Frequent
transfers may cause the Portfolio to hold more cash than otherwise necessary,
disrupt management strategies, increase transaction costs, or affect
performance. The Annuity offers Sub-accounts designed for Owners who wish to
engage in frequent transfers (i.e., one or more of the Sub-accounts
corresponding to the ProFund Portfolios and the AST Money Market Portfolio), and
we encourage Owners seeking frequent transfers to utilize those Sub-accounts.
In light of the risks posed to Owners and other investors by frequent
transfers, we reserve the right to limit the number of
36
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
transfers in any Annuity Year for all existing or new Owners and to take the
other actions discussed below. We also reserve the right to limit the number of
transfers in any Annuity Year or to refuse any transfer request for an Owner or
certain Owners if: (a) we believe that excessive transfer activity (as we define
it) or a specific transfer request or group of transfer requests may have a
detrimental effect on Unit Values or the share prices of the Portfolios; or (b)
we are informed by a Portfolio (e.g., by the Portfolio's portfolio manager) that
the purchase or redemption of shares in the Portfolio must be restricted because
the Portfolio believes the transfer activity to which such purchase and
redemption relates would have a detrimental effect on the share prices of the
affected Portfolio. Without limiting the above, the most likely scenario where
either of the above could occur would be if the aggregate amount of a trade or
trades represented a relatively large proportion of the total assets of a
particular Portfolio. In furtherance of our general authority to restrict
transfers as described above, and without limiting other actions we may take in
the future, we have adopted the following specific restrictions:
- - With respect to each Sub-account (other than the AST Money Market
Sub-account, or a Sub-account corresponding to a ProFund Portfolio), we
track amounts exceeding a certain dollar threshold that were transferred
into the Sub-account. If you transfer such amount into a particular
Sub-account, and within 30 calendar days thereafter transfer (the
"Transfer Out") all or a portion of that amount into another Sub-account,
then upon the Transfer Out, the former Sub-account becomes restricted (the
"Restricted Sub-account"). Specifically, we will not permit subsequent
transfers into the Restricted Sub-account for 90 calendar days after the
Transfer Out if the Restricted Sub-account invests in a non-international
Portfolio, or 180 calendar days after the Transfer Out if the Restricted
Sub-account invests in an international Portfolio. For purposes of this
rule, we (i) do not count transfers made in connection with one of our
systematic programs, such as asset allocation and automated withdrawals;
(ii) do not count any transfer that solely involves Sub-accounts
corresponding to any ProFund Portfolio and/or the AST Money Market
Portfolio; and (iii) do not categorize as a transfer the first transfer
that you make after the Issue Date, if you make that transfer within 30
calendar days after the Issue Date. Even if an amount becomes restricted
under the foregoing rules, you are still free to redeem the amount from
your Annuity at any time.
- - We reserve the right to effect exchanges on a delayed basis for all
contracts. That is, we may price an exchange involving the Sub-accounts on
the Valuation Day subsequent to the Valuation Day on which the exchange
request was received. Before implementing such a practice, we would issue
a separate written notice to Owners that explains the practice in detail.
- - If we deny one or more transfer requests under the foregoing rules, we
will inform you or your investment professional promptly of the
circumstances concerning the denial.
- - Contract owners in New York who purchased their contracts prior to March
15, 2004 are not subject to the specific restrictions outlined in bulleted
paragraphs immediately above. In addition, there are contract owners of
different variable annuity contracts that are funded through the same
Separate Account that are not subject to the above-referenced transfer
restrictions and, therefore, might make more numerous and frequent
transfers than contract owners who are subject to such limitations.
Finally, there are contract owners of other variable annuity contracts or
variable life contracts that are issued by American Skandia as well as
other insurance companies that have the same underlying mutual fund
portfolios available to them. Since some contract owners are not subject
to the same transfer restrictions, unfavorable consequences associated
with such frequent trading within the underlying mutual fund (e.g.,
greater portfolio turnover, higher transaction costs, or performance or
tax issues) may affect all contract owners. Similarly, while contracts
managed by an investment professional or third party investment advisor
are subject to the restrictions on transfers between investment options
that are discussed above, if the advisor manages a number of contracts in
the same fashion unfavorable consequences may be associated with
management activity since it may involve the movement of a substantial
portion of an underlying mutual fund's assets which may affect all
contract owners invested in the affected options. Apart from
jurisdiction-specific and contract differences in transfer restrictions,
we will apply these rules uniformly (including contracts managed by an
investment professional or third party investment advisor), and will not
waive a transfer restriction for any contract owner.
ALTHOUGH OUR TRANSFER RESTRICTIONS ARE DESIGNED TO PREVENT EXCESSIVE
TRANSFERS, THEY ARE NOT CAPABLE OF PREVENTING EVERY POTENTIAL OCCURRENCE OF
EXCESSIVE TRANSFER ACTIVITY.
37
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Managing Your Account Value continued
DO YOU OFFER DOLLAR COST AVERAGING?
Yes. We offer Dollar Cost Averaging during the accumulation period. Dollar Cost
Averaging allows you to systematically transfer an amount periodically from one
investment option to one or more other investment options. You can choose to
transfer earnings only, principal plus earnings or a flat dollar amount. You
may elect a Dollar Cost Averaging program that transfers amounts monthly,
quarterly, semi-annually, or annually from variable investment options, or a
program that transfers amounts monthly from Fixed Allocations. By investing
amounts on a regular basis instead of investing the total amount at one time,
Dollar Cost Averaging may decrease the effect of market fluctuation on the
investment of your Purchase Payment. This may result in a lower average cost of
units over time. However, there is no guarantee that Dollar Cost Averaging will
result in a profit or protect against a loss in a declining market. There is no
minimum Account Value required to enroll in a Dollar Cost Averaging program and
we do not deduct a charge for participating in a Dollar Cost Averaging program.
You can Dollar Cost Average from variable investment options or Fixed
Allocations. Dollar Cost Averaging from Fixed Allocations is subject to a number
of rules that include, but are not limited to the following:
- - You may only use Fixed Allocations with Guarantee Periods of 1, 2 or 3
years.
- - You may only Dollar Cost Average earnings or principal plus earnings. If
transferring principal plus earnings, the program must be designed to last
the entire Guarantee Period for the Fixed Allocation.
- - Dollar Cost Averaging transfers from Fixed Allocations are not subject to
a Market Value Adjustment.
NOTE: When a Dollar Cost Averaging program is established from a Fixed
Allocation, the fixed rate of interest we credit to your Account Value is
applied to a declining balance due to the transfers of Account Value to the
Sub-accounts during the Guarantee Period. This will reduce the effective rate of
return on the Fixed Allocation over the Guarantee Period. The Dollar Cost
Averaging program is not available if you elect the Guaranteed Return Option
PlusSM, the Guaranteed Return Option or the automatic rebalancing programs when
it involves transfers out of the Fixed Allocations and is also not available
when you have elected an asset allocation program.
DO YOU OFFER ANY AUTOMATIC REBALANCING PROGRAMS?
Yes. During the accumulation period, we offer automatic rebalancing among the
variable investment options you choose. You can choose to have your Account
Value rebalanced monthly, quarterly, semi-annually, or annually. On the
appropriate date, the variable investment options you chose are rebalanced to
the allocation percentages you request. With automatic rebalancing, we transfer
the appropriate amount from the "overweighted" Sub-accounts to the
"underweighted" Sub-accounts to return your allocations to the percentages you
requested. For example, over time the performance of the variable investment
options will differ, causing your percentages allocations to shift. Any
transfer to or from any variable investment option that is not part of your
automatic rebalancing program, will be made, however that variable investment
option will not become part of your rebalancing program unless we receive
instructions from you indicating that you would like such option to become part
of the program.
There is no minimum Account Value required to enroll in automatic
rebalancing. All rebalancing transfers as part of an Automatic Rebalancing
program are not included when counting the number of transfers each year toward
the maximum number of free transfers. We do not deduct a charge for
participating in an automatic rebalancing program. Participation in the
Automatic Rebalancing program may be restricted if you are enrolled in certain
other optional programs.
ARE ANY ASSET ALLOCATION PROGRAMS AVAILABLE?
Yes. Certain "static asset allocation programs" are available for use with the
Annuity. These programs are considered static because once you have selected a
model portfolio, the Sub-accounts and the percentage of contract value
allocated to each Sub-account cannot be changed without your consent. The
programs are available at no additional charge. Under these programs, the
Sub-account for each asset class in each model portfolio is designated for you.
Under the programs, the values in the Sub-accounts will be rebalanced
periodically back to the indicated percentages for the applicable asset class
within the model portfolio that you have selected. For more information on the
asset allocation programs, see the Appendix entitled "Additional Information on
the Asset Allocation Programs."
38
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Asset allocation is a sophisticated method of diversification, which
allocates assets among asset classes in order to manage investment risk and
enhance returns over the long term. However, asset allocation does not guarantee
a profit or protect against a loss. No personalized investment advice is
provided in connection with the asset allocation programs and you should not
rely on these programs as providing individualized investment recommendations to
you. The asset allocation programs do not guarantee better investment results.
We reserve the right to terminate or change the asset allocation programs at any
time. You should consult with your Investment Professional before electing any
asset allocation program.
DO YOU OFFER PROGRAMS DESIGNED TO GUARANTEE A "RETURN OF PREMIUM" AT A FUTURE
DATE?
Yes. We offer two different programs for investors who wish to invest in the
variable investment options but also wish to protect their principal, as of a
specific date in the future. They are the Balanced Investment Program and the
Guaranteed Return Option PlusSM. (The Guaranteed Return Option Plus (GRO
PlusSM) is not available in all states. In some states where GRO Plus is not
available we offer the Guaranteed Return Option (GRO).) Both the Balanced
Investment Program and GRO Plus allow you to allocate a portion of your Account
Value to the available variable investment options while ensuring that your
Account Value will at least equal your contributions adjusted for withdrawals
and transfers on a specified date. Under GRO Plus, Account Value is allocated
to and maintained in Fixed Allocations to the extent we, in our sole
discretion, deem it is necessary to support our guarantee under the program.
This differs from the Balanced Investment Program where a set amount is
allocated to a Fixed Allocation regardless of the performance of the underlying
Sub-accounts or the interest rate environment after the amount is allocated to
a Fixed Allocation. Generally, more of your Account Value will be allocated to
the variable investment options under the GRO Plus program than under the
Balanced Investment Program (although in periods of poor market performance,
low interest rates and/or as the option progresses to its maturity date, this
may not be the case). You may not want to use either of these programs if you
expect to begin taking annuity payments before the program would be completed.
In addition, as with most return of premium programs, amounts that are a
vailable to allocate to the variable investment options may be substantially
less than they would be if you did not elect a return of premium program.
This means that, if investment experience in the variable investment options
were positive, your Account Value would grow at a slower rate than if you did
not elect a return of premium program and allocated all of your Account Value to
the variable investment options.
BALANCED INVESTMENT PROGRAM
We offer a balanced investment program where a portion of your Account Value is
allocated to a Fixed Allocation and the remaining Account Value is allocated to
the variable investment options that you select. When you enroll in the
Balanced Investment Program, you choose the duration that you wish the program
to last. This determines the duration of the Guarantee Period for the Fixed
Allocation. Based on the fixed rate for the Guarantee Period chosen, we
calculate the portion of your Account Value that must be allocated to the Fixed
Allocation to grow to a specific "principal amount" (such as your initial
Purchase Payment). We determine the amount based on the rates then in effect
for the Guarantee Period you choose. If you continue the program until the end
of the Guarantee Period and make no withdrawals or transfers, at the end of the
Guarantee Period, the Fixed Allocation will have grown to equal the "principal
amount". Withdrawals or transfers from the Fixed Allocation before the end of
the Guarantee Period will terminate the program and may be subject to a Market
Value Adjustment. You can transfer the Account Value that is not allocated to
the Fixed Allocation between any of the Sub-accounts available under the
Annuity. Account Value you allocate to the variable investment options is
subject to market fluctuations and may increase or decrease in value. We do not
deduct a charge for participating in the Balanced Investment Program.
EXAMPLE
Assume you invest $100,000. You choose a 10-year program and allocate a
portion of your Account Value to a Fixed Allocation with a 10-year
Guarantee Period. The rate for the 10-year Guarantee Period is 2.50%*.
Based on the fixed interest rate for the Guarantee Period chosen, the
factor is 0.781198 for determining how much of your Account Value will be
allocated to the Fixed Allocation. That means that $78,120 will be
allocated to the Fixed Allocation and the remaining Account Value
($21,880) will be allocated to the variable investment options. Assuming
that you do not make any withdrawals or transfers from the Fixed
Allocation, it will
* The rate in this example is hypothetical and may not reflect the current rate
for Guarantee Periods of this duration.
39
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Managing Your Account Value continued
grow to $100,000 at the end of the Guarantee Period. Of course we cannot
predict the value of the remaining Account Value that was allocated to the
variable investment options.
The GUARANTEED RETURN OPTION PLUS (GRO PLUS) guarantees that, after a
seven-year period following commencement of the program ("maturity date") and on
each anniversary of the maturity date thereafter, your Account Value will not be
less than the Account Value on the effective date of the program. The program
also offers you the option to elect a second, enhanced guarantee amount at a
higher Account Value subject to a separate maturity period (and its
anniversaries). The GRO Plus program may be appropriate if you wish to protect a
principal amount (called the "Protected Principal Value") against market
downturns as of a specific date in the future, but also wish to exercise control
of your available Account Value among the variable investment options to
participate in market experience. Under the GRO Plus program, you give us the
right to allocate amounts to Fixed Allocations as needed to support the
guarantees provided. The available Account Value is the amount not allocated to
the Fixed Allocations to support the guarantees provided. There is a fee
associated with this program. See "Living Benefit Programs," later in this
Prospectus, for more information about this program.
MAY I GIVE MY INVESTMENT PROFESSIONAL PERMISSION TO MANAGE MY ACCOUNT VALUE?
Yes. Your Investment Professional may direct the allocation of your Account
Value and request financial transactions between investment options while you
are living, subject to our rules and unless you tell us otherwise. IF YOUR
INVESTMENT PROFESSIONAL HAS THIS AUTHORITY, WE DEEM THAT ALL TRANSACTIONS THAT
ARE DIRECTED BY YOUR INVESTMENT PROFESSIONAL WITH RESPECT TO YOUR ANNUITY HAVE
BEEN AUTHORIZED BY YOU. You must contact us immediately if and when you revoke
such authority. We will not be responsible for acting on instructions from your
Investment Professional until we receive notification of the revocation of such
person's authority. We may also suspend, cancel or limit these privileges at
any time. We will notify you if we do.
MAY I AUTHORIZE MY THIRD PARTY INVESTMENT ADVISOR TO MANAGE MY ACCOUNT?
Yes. You may engage your own investment advisor to manage your account. These
investment advisors may be firms or persons who also are appointed by us, or
whose affiliated broker-dealers are appointed by us, as authorized sellers of
the Annuity. EVEN IF THIS IS THE CASE, HOWEVER, PLEASE NOTE THAT THE INVESTMENT
ADVISOR YOU ENGAGE TO PROVIDE ADVICE AND/OR MAKE TRANSFERS FOR YOU, IS NOT
ACTING ON OUR BEHALF, BUT RATHER IS ACTING ON YOUR BEHALF. We do not offer
advice about how to allocate your Account Value under any circumstance. As
such, we are not responsible for any recommendations such investment advisors
make, any investment models or asset allocation programs they choose to follow
or any specific transfers they make on your behalf.
Any fee that is charged by your investment advisor is in addition to the
fees and expenses that apply under your Annuity. If you authorize your
investment advisor to withdraw amounts from your Annuity (to the extent
permitted) to pay for the investment advisor's fee, as with any other withdrawal
from your Annuity, you may incur adverse tax consequences, a CDSC and/or a
Market Value Adjustment. Withdrawals to pay your investment advisor generally
will also reduce the level of various living and death benefit guarantees
provided (e.g. the withdrawals will reduce proportionately the Annuity's
guaranteed minimum death benefit.) WE ARE NOT A PARTY TO THE AGREEMENT YOU HAVE
WITH YOUR INVESTMENT ADVISOR AND DO NOT VERIFY THAT AMOUNTS WITHDRAWN FROM YOUR
ANNUITY, INCLUDING AMOUNTS WITHDRAWN TO PAY FOR THE INVESTMENT ADVISOR'S FEE,
ARE WITHIN THE TERMS OF YOUR AGREEMENT WITH YOUR INVESTMENT ADVISOR. You will,
however, receive confirmations of transactions that affect your Annuity. If your
investment advisor has also acted as your Investment Professional with respect
to the sale of your Annuity, he or she may be receiving compensation for
services provided both as an Investment Professional and investment advisor.
Alternatively, the investment advisor may compensate the Investment Professional
from whom you purchased your Annuity for the referral that led you to enter into
your investment advisory relationship with the investment advisor. If you are
interested in the details about the compensation that your investment advisor
and/or your Investment Professional receive in connection with your Annuity, you
should ask them for more details.
We or an affiliate of ours may provide administrative support to licensed,
registered investment professionals or investment advisors who you authorize to
make financial transactions on your behalf. We may require Investment
Professionals or investment advisors, who are authorized by multiple contract
owners to make financial transactions, to enter into an administrative agreement
with American Skandia as a condition of
40
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
our accepting transactions on your behalf. The administrative agreement may
impose limitations on the investment professional's or investment advisor's
ability to request financial transactions on your behalf. These limitations are
intended to minimize the detrimental impact of an investment professional who is
in a position to transfer large amounts of money for multiple clients in a
particular Portfolio or type of portfolio or to comply with specific
restrictions or limitations imposed by a Portfolio(s) of American Skandia.
Contracts managed by your investment professional also are subject to the
restrictions on transfers between investment options that are discussed in the
section entitled "ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN
INVESTMENT OPTIONS?". Since transfer activity under contracts managed by an
investment professional or third party investment advisor may result in
unfavorable consequences to all contract owners invested in the affected options
we reserve the right to limit the investment options available to a particular
Owner whose contract is managed by the advisor or impose other transfer
restrictions we deem necessary. The administrative agreement may limit the
available investment options, require advance notice of large transactions, or
impose other trading limitations on your investment professional. Your
investment professional will be informed of all such restrictions on an ongoing
basis. We may also require that your investment professional transmit all
financial transactions using the electronic trading functionality available
through our Internet website (www.americanskandia.prudential.com).
LIMITATIONS THAT WE MAY IMPOSE ON YOUR INVESTMENT PROFESSIONAL OR INVESTMENT
ADVISOR UNDER THE TERMS OF THE ADMINISTRATIVE AGREEMENT DO NOT APPLY TO
FINANCIAL TRANSACTIONS REQUESTED BY AN OWNER ON THEIR OWN BEHALF, EXCEPT AS
OTHERWISE DESCRIBED IN THIS PROSPECTUS.
HOW DO THE FIXED ALLOCATIONS WORK?
We credit the fixed interest rate to the Fixed Allocation throughout a set
period of time called a "Guarantee Period." Fixed Allocations currently are
offered with Guarantee Periods from 1 to 10 years. We may make Fixed
Allocations of different durations available in the future, including Fixed
Allocations offered exclusively for use with certain optional investment
programs. Fixed Allocations may not be available in all states and may not
always be available for all Guarantee Periods depending on market factors and
other considerations.
The interest rate credited to a Fixed Allocation is the rate in effect
when the Guarantee Period begins and does not change during the Guarantee
Period. The rates are an effective annual rate of interest. We determine the
interest rates for the various Guarantee Periods. At the time that we confirm
your Fixed Allocation, we will advise you of the interest rate in effect and the
date your Fixed Allocation matures. We may change the rates we credit new Fixed
Allocations at any time. Any change in interest rate does not affect Fixed
Allocations that were in effect before the date of the change. To inquire as to
the current rates for Fixed Allocations, please call 1-800-752-6342.
A Guarantee Period for a Fixed Allocation begins:
- - when all or part of a net Purchase Payment is allocated to that particular
Guarantee Period;
- - upon transfer of any of your Account Value to a Fixed Allocation for that
particular Guarantee Period; or
- - when you "renew" a Fixed Allocation by electing a new Guarantee Period.
To the extent permitted by law, we may establish different interest rates
for Fixed Allocations offered to a class of Owners who choose to participate in
various optional investment programs we make available. This may include, but is
not limited to, Owners who elect to use Fixed Allocations under a dollar cost
averaging program (see "Do You Offer Dollar Cost Averaging?") or a balanced
investment program (see "Do you offer programs designed to guarantee a "Return
of Premium" at a future date?"). The interest rate credited to Fixed Allocations
offered to this class of purchasers may be different than those offered to other
purchasers who choose the same Guarantee Period but who do not participate in an
optional investment program. Any such program is at our sole discretion.
American Skandia may offer Fixed Allocations with Guarantee Periods of 3 months
or 6 months exclusively for use as a short-term Fixed Allocation ("Short-term
Fixed Allocations"). Short-term Fixed Allocations may only be established with
your initial Purchase Payment or additional Purchase Payments. You may not
transfer existing Account Value to a Short-term Fixed Allocation. We reserve the
right to terminate offering these special purpose Fixed Allocations at any time.
On the Maturity Date of the Short-term Fixed Allocation, the Account Value
will be transferred to the Sub-account(s) you choose at the inception of the
program. If no instructions are provided, such Account Value will be transferred
to the AST Money Market Sub-account. Short-term Fixed Allocations may not be
renewed on the Maturity Date. If you surrender the
41
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Managing Your Account Value continued
Annuity or transfer any Account Value from the Short-term Fixed Allocation to
any other investment option before the end of the Guarantee Period, a Market
Value Adjustment will apply.
HOW DO YOU DETERMINE RATES FOR FIXED ALLOCATIONS?
We do not have a specific formula for determining the fixed interest rates for
Fixed Allocations. Generally the interest rates we offer for Fixed Allocations
will reflect the investment returns available on the types of investments we
make to support our fixed rate guarantees. These investment types may include
cash, debt securities guaranteed by the United States government and its
agencies and instrumentalities, money market instruments, corporate debt
obligations of different durations, private placements, asset-backed
obligations and municipal bonds. In determining rates we also consider factors
such as the length of the Guarantee Period for the Fixed Allocation, regulatory
and tax requirements, liquidity of the markets for the type of investments we
make, commissions, administrative and investment expenses, our insurance risks
in relation to the Fixed Allocations, general economic trends and competition.
Some of these considerations are similar to those we consider in determining
the Insurance Charge that we deduct from Account Value allocated to the
Sub-accounts.
We will credit interest on a new Fixed Allocation in an existing Annuity
at a rate not less than the rate we are then crediting to Fixed Allocations for
the same Guarantee Period selected by new Annuity purchasers in the same class.
The interest rate we credit for a Fixed Allocation is subject to a
minimum. Please refer to the Statement of Additional Information. In certain
states the interest rate may be subject to a minimum under state law or
regulation.
HOW DOES THE MARKET VALUE ADJUSTMENT WORK?
If you transfer or withdraw Account Value from a Fixed Allocation more than 30
days before the end of its Guarantee Period, we will adjust the value of your
investment based on a formula, called a "Market Value Adjustment" or "MVA". The
amount of any Market Value Adjustment can be either positive or negative,
depending on the movement of a combination of Strip Yields on Strips and an
Option-adjusted Spread (each as defined below) between the time that you
purchase the Fixed Allocation and the time you make a transfer or withdrawal.
The Market Value Adjustment formula compares the combination of Strip Yields
for Strips and the Option-adjusted Spreads as of the date the Guarantee Period
began with the combination of Strip Yields for Strips and the Option-adjusted
Spreads as of the date the MVA is being calculated. In certain states the
amount of any Market Value Adjustment may be limited under state law or
regulation. If your Annuity is governed by the laws of that state, any Market
Value Adjustment that applies will be subject to our rules for complying with
such law or regulation.
- - "Strips" are a form of security where ownership of the interest portion of
United States Treasury securities are separated from ownership of the
underlying principal amount or corpus.
- - "Strip Yields" are the yields payable on coupon Strips of United States
Treasury securities.
- - "Option-adjusted Spread" is the difference between the yields on corporate
debt securities (adjusted to disregard options on such securities) and
government debt securities of comparable duration. We currently use the
Merrill Lynch 1 to 10 year Investment Grade Corporate Bond Index of
Option-adjusted Spreads.
MVA FORMULA
The MVA formula is applied separately to each Fixed Allocation to determine the
Account Value of the Fixed Allocation on a particular date. The formula is as
follows:
[(1+I) / (1+J+0.0010)](N/365)
where:
I is the Strip Yield as of the start date of the Guarantee Period for
coupon Strips maturing at the end of the applicable Guarantee Period plus
the Option-adjusted Spread. If there are no Strips maturing at that time,
we will 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 being applied for
coupon Strips maturing at the end of the applicable Guarantee Period plus
the Option-adjusted Spread. If there are no Strips maturing at that time,
we will 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 the original Guarantee Period.
If you surrender your Annuity under the right to cancel provision, the MVA
formula is:
[(1 + I)/(1 + J)](N/365).
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
MVA EXAMPLES
The following hypothetical examples show the effect of the MVA in determining
Account Value. Assume the following:
- - You allocate $50,000 into a Fixed Allocation (we refer to this as the
"Allocation Date" in these examples) with a Guarantee Period of 5 years
(we refer to this as the "Maturity Date" in these examples).
- - The Strip Yields for coupon Strips beginning on the Allocation Date and
maturing on the Maturity Date plus the Option-adjusted Spread is 5.50% (I
= 5.50%).
- - You make no withdrawals or transfers until you decide to withdraw the
entire Fixed Allocation after exactly three (3) years, at which point 730
days remain before the Maturity Date (N = 730).
EXAMPLE OF POSITIVE MVA
Assume that at the time you request the withdrawal, the Strip Yields for Strips
maturing on the Maturity Date plus the Option-adjusted Spread is 4.00% (J =
4.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0010)](N/365) =
[1.055/1.041](2) = 1.027078
Interim Value = $57,881.25
Account Value after MVA = Interim Value x MVA
Factor = $59,448.56
EXAMPLE OF NEGATIVE MVA
Assume that at the time you request the withdrawal, the Strip Yields for Strips
maturing on the Maturity Date plus the Option-adjusted Spread is 7.00% (J =
7.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0010)](N/365) =
[1.055/1.071)](2) = 0.970345
Interim Value = $57,881.25
Account Value after MVA = Interim Value x MVA
Factor = $56,164.78.
WHAT HAPPENS WHEN MY GUARANTEE PERIOD MATURES?
The "Maturity Date" for a Fixed Allocation is the last day of the Guarantee
Period. Before the Maturity Date, you may choose to renew the Fixed Allocation
for a new Guarantee Period of the same or different length or you may transfer
all or part of that Fixed Allocation's Account Value to another Fixed
Allocation or to one or more Sub-accounts. We will not charge a MVA if you
choose to renew a Fixed Allocation on its Maturity Date or transfer the Account
Value to one or more variable investment options. We will notify you before the
end of the Guarantee Period about the fixed interest rates that we are
currently crediting to all Fixed Allocations that are being offered. The rates
being credited to Fixed Allocations may change before the Maturity Date.
IF YOU DO NOT SPECIFY HOW YOU WANT A FIXED ALLOCATION TO BE ALLOCATED ON
ITS MATURITY DATE, WE WILL THEN TRANSFER THE ACCOUNT VALUE OF THE FIXED
ALLOCATION TO THE AST MONEY MARKET SUB-ACCOUNT. You can then elect to allocate
the Account Value to any of the Sub-accounts or to a new Fixed Allocation.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Access To Account Value
WHAT TYPES OF DISTRIBUTIONS ARE AVAILABLE TO ME?
During the accumulation period you can access your Account Value through
partial withdrawals, Systematic Withdrawals, and where required for tax
purposes, Minimum Distributions. You can also surrender your Annuity at any
time. We may deduct a portion of the Account Value being withdrawn or
surrendered as a CDSC. The CDSC will be assessed on the amount of Purchase
Payments, not on the Account Value at the time of the withdrawal or surrender.
If you surrender your Annuity, in addition to any CDSC, we may deduct the
Annual Maintenance Fee, any Tax Charge that applies and the charge for any
optional benefits. We may also apply a Market Value Adjustment to any Fixed
Allocations being withdrawn or surrendered. Certain amounts may be available to
you each Annuity Year that are not subject to a CDSC. These are called "Free
Withdrawals." In addition, under certain circumstances, we may waive the CDSC
for surrenders made for qualified medical reasons or for withdrawals made to
satisfy Minimum Distribution requirements. Unless you notify us differently,
withdrawals are taken pro-rata based on the Account Value in the investment
options at the time we receive your withdrawal request. Each of these types of
distributions is described more fully below.
ARE THERE TAX IMPLICATIONS FOR DISTRIBUTIONS?
(For more information, see "Tax Considerations")
DURING THE ACCUMULATION PERIOD
A distribution during the accumulation period is deemed to come first from any
"gain" in your Annuity and second as a return of your "tax basis", if any.
Distributions from your Annuity are generally subject to ordinary income
taxation on the amount of any investment gain unless the distribution qualifies
as a non-taxable exchange or transfer. If you take a distribution prior to the
taxpayer's age 59 1/2, you may be subject to a 10% penalty in addition to
ordinary income taxes on any gain. You may wish to consult a professional tax
advisor for advice before requesting a distribution.
DURING THE ANNUITIZATION PERIOD
During the annuitization period, a portion of each annuity payment is taxed as
ordinary income at the tax rate you are subject to at the time of the payment.
The Code and regulations have "exclusionary rules" that we use to determine
what portion of each annuity payment should be treated as a return of any tax
basis you have in the Annuity. Once the tax basis in the Annuity has been
distributed, the remaining annuity payments are taxable as ordinary income. The
tax basis in the Annuity may be based on the tax-basis from a prior contract in
the case of a 1035 exchange or other qualifying transfer.
CAN I WITHDRAW A PORTION OF MY ANNUITY?
Yes, you can make a withdrawal during the accumulation period.
- - To meet liquidity needs, you can withdraw a limited amount from your
Annuity during each of Annuity Years 1-8 without a CDSC being applied. We
call this the "Free Withdrawal" amount. The Free Withdrawal amount is not
available if you choose to surrender your Annuity. Amounts withdrawn as a
Free Withdrawal do not reduce the amount of CDSC that may apply upon a
subsequent withdrawal or surrender of the Annuity. The minimum Free
Withdrawal you may request is $100.
- - You can also make withdrawals in excess of the Free Withdrawal amount. The
maximum amount that you may withdraw will depend on the Annuity's
Surrender Value as of the date we process the withdrawal request. After
any partial withdrawal, your Annuity must have a Surrender Value of at
least $1,000, or we may treat the partial withdrawal request as a request
to fully surrender your Annuity. The minimum partial withdrawal you may
request is $100.
When we determine if a CDSC applies to partial withdrawals and Systematic
Withdrawals, we will first determine what, if any, amounts qualify as a
Free Withdrawal. Those amounts are not subject to the CDSC. Partial
withdrawals or Systematic Withdrawals of amounts greater than the maximum
Free Withdrawal amount will be subject to a CDSC.
You may request a withdrawal for an exact dollar amount after deduction of
any CDSC that applies (called a "net withdrawal") or request a gross withdrawal
from which we will deduct any CDSC that applies, resulting in less money being
payable to you than the amount you requested. If you request a net withdrawal,
the amount deducted from your Account Value to pay the CDSC may also be subject
to a CDSC.
Partial withdrawals may also be available following annuitization but only
if you choose certain annuity payment options.
To request the forms necessary to make a withdrawal from your Annuity,
contact our Customer Service Team at 1-800-752-6342 or visit our Internet
Website at www.americanskandia.prudential.com.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
HOW MUCH CAN I WITHDRAW AS A FREE WITHDRAWAL?
ANNUITY YEARS 1-8
The maximum Free Withdrawal amount during each of Annuity Years 1 through 8
(when a CDSC would otherwise apply to a partial withdrawal or surrender of your
initial Purchase Payments) is 10% of all Purchase Payments. We may apply a
Market Value Adjustment to any Fixed Allocations. Withdrawals of amounts
greater than the maximum Free Withdrawal amount are treated as a withdrawal of
Purchase Payments and will be assessed a CDSC during Annuity Years 1 through 8.
If, during Annuity Years 1 through 8, all Purchase Payments withdrawn are
subject to a CDSC, then any subsequent withdrawals will be withdrawn from any
gain in the Annuity. If you do not make a Free Withdrawal during an Annuity
Year, you are not allowed to carry over the Free Withdrawal amount to the next
Annuity Year.
ANNUITY YEARS 9+
After Annuity Year 8, you can surrender your Annuity or make a partial
withdrawal without a CDSC being deducted from the amount being withdrawn.
NOTE: Amounts that you have withdrawn as a Free Withdrawal will not reduce
the amount of any CDSC that we deduct if, during the first eight (8) Annuity
Years, you make a partial withdrawal or choose to surrender the Annuity.
EXAMPLES
1. Assume you make an initial Purchase Payment of $10,000 and make no
additional Purchase Payments. The maximum Free Withdrawal amount during
each of the first eight Annuity Years would be 10% of $10,000, or $1,000.
2. Assume you make an initial Purchase Payment of $10,000 and make an
additional Purchase Payment of $5,000 in Annuity Year 6. The maximum Free
Withdrawal amount during Annuity Years 7 and 8 would be 10% of $15,000, or
$1,500. Beginning in Annuity Year 9 and thereafter, you can surrender your
Annuity or make a partial withdrawal without a CDSC being deducted from
the amount being withdrawn.
3. Assume you make an initial Purchase Payment of $10,000 and take a Free
Withdrawal of $500 in Annuity Year 6 and $1,000 in Annuity Year 7. If you
surrender your Annuity in Annuity Year 8, the CDSC will be assessed
against the initial Purchase Payment amount ($10,000), not the amount of
Purchase Payments reduced by the amounts that were withdrawn under the
Free Withdrawal provision.
IS THERE A CHARGE FOR A PARTIAL WITHDRAWAL?
A CDSC may be assessed against a partial withdrawal during the first eight (8)
Annuity Years. Whether a CDSC applies and the amount to be charged depends on
whether the partial withdrawal exceeds any Free Withdrawal amount and, if so,
the number of years that have elapsed since the Issue Date of the Annuity.
1. If you request a partial withdrawal, we determine if the amount you
requested is available as a Free Withdrawal (in which case it would not be
subject to a CDSC);
2. If the amount requested exceeds the available Free Withdrawal amount, we
determine if a CDSC will apply to the partial withdrawal based on the
number of years that have elapsed since the Annuity was issued. The
maximum Free Withdrawal amount during each of Annuity Years 1 through 8 is
10% of all Purchase Payments. Withdrawals of amounts greater than the
maximum Free Withdrawal amount are treated as a withdrawal of Purchase
Payments and will be assessed a CDSC. If, during Annuity Years 1 through
8, all Purchase Payments are withdrawn subject to a CDSC, then any
subsequent withdrawals will be withdrawn from any gain in the Annuity.
CAN I MAKE PERIODIC WITHDRAWALS FROM THE ANNUITY DURING THE ACCUMULATION PERIOD?
Yes. We call these "Systematic Withdrawals." You can receive Systematic
Withdrawals of earnings only, principal plus earnings or a flat dollar amount.
Systematic Withdrawals during the first eight (8) Annuity Years may be subject
to a CDSC. We will determine whether a CDSC applies and the amount in the same
way as we would for a Partial Withdrawal.
Systematic Withdrawals can be made from Account Value allocated to the
variable investment options or Fixed Allocations. Generally, Systematic
Withdrawals from Fixed Allocations are limited to earnings accrued after the
program of Systematic Withdrawals begins, or payments of fixed dollar amounts
that do not exceed such earnings. Systematic Withdrawals are available on a
monthly, quarterly, semi-annual or annual basis. The Surrender Value of your
Annuity must be at least $20,000 before we will allow you to begin a program of
Systematic Withdrawals.
The minimum amount for each Systematic Withdrawal is $100. If any
scheduled Systematic Withdrawal is for less than $100 (which may occur under a
program that provides payment of an amount equal to the earnings in the annuity
for the
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Access To Account Value continued
period requested), we may postpone the withdrawal and add the expected amount to
the amount that is to be withdrawn on the next scheduled Systematic Withdrawal.
DO YOU OFFER A PROGRAM FOR WITHDRAWALS UNDER SECTION 72(t) OF THE INTERNAL
REVENUE CODE?
Yes. If your Annuity is used as a funding vehicle for certain retirement plans
that receive special tax treatment under Sections 401, 403(b) or 408 of the
Code, Section 72(t) of the Code may provide an exception to the 10% penalty tax
on distributions made prior to age 59 1/2 if you elect to receive distributions
as a series of "substantially equal periodic payments". Distributions received
under this provision in any Annuity Year that exceed the maximum amount
available as a free withdrawal will be subject to a CDSC. We may apply a Market
Value Adjustment to any Fixed Allocations. To request a program that complies
with Section 72(t), you must provide us with certain required information in
writing on a form acceptable to us. We may require advance notice to allow us
to calculate the amount of 72(t) withdrawals. The Surrender Value of your
Annuity must be at least $20,000 before we will allow you to begin a program
for withdrawals under Section 72(t). The minimum amount for any such withdrawal
is $100.
You may also annuitize your contract and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments before age 59 1/2 that are not subject to the 10% penalty.
WHAT ARE MINIMUM DISTRIBUTIONS AND WHEN WOULD I NEED TO MAKE THEM?
(See "Tax Considerations" for a further discussion of Minimum Distributions.)
Minimum Distributions are a type of Systematic Withdrawal we allow to meet
distribution requirements under Sections 401, 403(b) or 408 of the Code. Under
the Code, you may be required to begin receiving periodic amounts from your
Annuity. In such case, we will allow you to make Systematic Withdrawals in
amounts that satisfy the minimum distribution rules under the Code. We do not
assess a CDSC on Minimum Distributions from your Annuity if you are required by
law to take such Minimum Distributions from your Annuity at the time it is
taken. However, a CDSC may be assessed on that portion of a Systematic
Withdrawal that is taken to satisfy the minimum distribution requirements in
relation to other savings or investment plans under other qualified retirement
plans not maintained with American Skandia.
The amount of the required Minimum Distribution for your particular
situation may depend on other annuities, savings or investments. We will only
calculate the amount of your required Minimum Distribution based on the value of
your Annuity. We require three (3) days advance written notice to calculate and
process the amount of your payments. You may elect to have Minimum Distributions
paid out monthly, quarterly, semi-annually or annually. The $100 minimum amount
that applies to Systematic Withdrawals applies to monthly minimum distributions
but does not apply to minimum distributions taken out on a quarterly,
semi-annual or annual basis.
You may also annuitize your contract and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments and satisfying the Minimum Distribution requirements under the Code.
CAN I SURRENDER MY ANNUITY FOR ITS VALUE?
Yes. During the accumulation period you can surrender your Annuity at any time.
Upon surrender, you will receive the Surrender Value. Upon surrender of your
Annuity, you will no longer have any rights under the Annuity.
For purposes of calculating the CDSC on surrender, the Purchase Payments
being withdrawn may be greater than your remaining Account Value or the amount
of your withdrawal request. This is most likely to occur if you have made prior
withdrawals under the Free Withdrawal provision or if your Account Value has
declined in value due to negative market performance. We may apply a Market
Value Adjustment to any Fixed Allocations.
Under certain annuity payment options, you may be allowed to surrender
your Annuity for its then current value.
To request the forms necessary to surrender your Annuity, contact our
Customer Service Team at 1-800-752-6342 or visit our Internet Website at
www.americanskandia.prudential.com.
WHAT IS A MEDICALLY-RELATED SURRENDER AND HOW DO I QUALIFY?
Where permitted by law, you may request to surrender your Annuity prior to the
Annuity Date without application of any CDSC upon occurrence of a
medically-related "Contingency Event". We may apply a Market Value Adjustment
to any Fixed Allocations. The amount payable will be your Account Value.
This waiver of any applicable CDSC is subject to our rules, including but
not limited to the following:
o The Annuitant must have been named or any change of Annuitant must have
been accepted by us, prior to the
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
"Contingency Event" described below in order to qualify for a
medically-related surrender.
- - the Annuitant must be alive as of the date we pay the proceeds of such
surrender request;
- - if the Owner is one or more natural persons, all such Owners must also be
alive at such time;
- - we must receive satisfactory proof of the Annuitant's confinement in a
Medical Care Facility or Fatal Illness in writing on a form satisfactory
to us; and
- - this benefit is not available if the total Purchase Payments received
exceed $500,000 for all annuities issued by us with this benefit where the
same person is named as Annuitant.
A "Contingency Event" occurs if the Annuitant is:
- - first confined in a "Medical Care Facility" while your Annuity is in force
and remains confined for at least 90 days in a row; or
- - first diagnosed as having a "Fatal Illness" while your Annuity is in
force.
The definitions of "Medical Care Facility" and "Fatal Illness," as well as
additional terms and conditions, are provided in your Annuity. Specific details
and definitions in relation to this benefit may differ in certain jurisdictions.
WHAT TYPES OF ANNUITY OPTIONS ARE AVAILABLE?
We currently make annuity options available that provide fixed annuity
payments, variable payments or adjustable payments. Fixed options provide the
same amount with each payment. Variable options generally provide a payment
which may increase or decrease depending on the investment performance of the
Sub-accounts. However, currently, we also make a variable payment option that
has a guarantee feature. Adjustable options provide a fixed payment that is
periodically adjusted based on current interest rates. WE DO NOT GUARANTEE TO
MAKE ANY ANNUITY PAYMENT OPTIONS AVAILABLE IN THE FUTURE OTHER THAN THOSE FIXED
ANNUITIZATION OPTIONS GUARANTEED IN YOUR ANNUITY. Please refer to the
"Guaranteed Minimum Income Benefit" and the "Lifetime Five Income Benefit"
under "Living Benefits" below for a description of annuity options that are
available when you elect these benefits. For additional information on annuity
payment options you may request a Statement of Additional Information.
When you purchase an Annuity, or at a later date, you may choose an
Annuity Date, an annuity option and the frequency of annuity payments. You may
change your choices before the Annuity Date under the terms of your contract. A
maximum Annuity Date may be required by law. The Annuity Date may depend on the
annuity option you choose. Certain annuity options may not be available
depending on the age of the Annuitant. Certain of these annuity options may be
available to Beneficiaries who choose to receive the Death Benefit proceeds as a
series of payments instead of a lump sum payment.
OPTION 1
PAYMENTS FOR LIFE: Under this option, income is payable periodically until the
death of the "key life". The "key life" (as used in this section) is the person
or persons upon whose life annuity payments are based. No additional annuity
payments are made after the death of the key life. Since no minimum number of
payments is guaranteed, this option offers the largest amount of periodic
payments of the life contingent annuity options. It is possible that only one
payment will be payable if the death of the key life occurs before the date the
second payment was due, and no other payments nor death benefits would be
payable. This Option is currently available on a fixed or variable basis. Under
this option, you cannot make a partial or full surrender of the annuity.
OPTION 2
PAYMENTS BASED ON JOINT LIVES: Under this option, income is payable
periodically during the joint lifetime of two key lives, and thereafter during
the remaining lifetime of the survivor, ceasing with the last payment prior to
the survivor's death. No minimum number of payments is guaranteed under this
option. It is possible that only one payment will be payable if the death of
all the key lives occurs before the date the second payment was due, and no
other payments or death benefits would be payable. THIS OPTION IS CURRENTLY
AVAILABLE ON A FIXED OR VARIABLE BASIS. Under this option, you cannot make a
partial or full surrender of the annuity.
OPTION 3
PAYMENTS FOR LIFE WITH A CERTAIN PERIOD: Under this option, income is payable
until the death of the key life. However, if the key life dies before the end
of the period selected (5, 10 or 15 years), the remaining payments are paid to
the Beneficiary until the end of such period. This Option is currently
available on a fixed or variable basis. If you elect to receive payments on a
variable basis under this option, you can request partial or full surrender of
the annuity and receive its then current cash value (if any) subject to our
rules.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Access To Account Value continued
OPTION 4
FIXED PAYMENTS FOR A CERTAIN PERIOD: Under this option, income is payable
periodically for a specified number of years. If the payee dies before the end
of the specified number of years, the remaining payments are paid to the
Beneficiary until the end of such period. Note that under this option, payments
are not based on any assumptions of life expectancy. Therefore, that portion of
the Insurance Charge assessed to cover the risk that key lives outlive our
expectations provides no benefit to an Owner selecting this option. Under this
option, you cannot make a partial or full surrender of the annuity.
OPTION 5
VARIABLE PAYMENTS FOR LIFE WITH A CASH VALUE: Under this option, benefits are
payable periodically until the death of the key life. Benefits may increase or
decrease depending on the investment performance of the Sub-accounts. This
option has a cash value that also varies with the investment performance of the
Sub-account. The cash value provides a "cushion" from volatile investment
performance so that negative investment performance does not automatically
result in a decrease in the annuity payment each month, and positive investment
performance does not automatically result in an increase in the annuity payment
each month. The cushion generally "stabilizes" monthly annuity payments. Any
cash value remaining on the death of the key life is paid to the Beneficiary in
a lump sum or as periodic payments. Under this option, you can request partial
or full surrender of the Annuity and receive its then current cash value (if
any) subject to our rules.
OPTION 6
VARIABLE PAYMENTS FOR LIFE WITH A CASH VALUE AND GUARANTEE: Under this option,
benefits are payable as described in Option 5; except that, while the key life
is alive, the annuity payment will not be less than a guaranteed amount, which
generally is equal to the first annuity payment. We charge an additional amount
for this guarantee. Under this option, any cash value remaining on the death of
the key life is paid to the Beneficiary in a lump sum or as periodic payments.
Under this option, you can request partial or full surrender of the Annuity and
receive its then current cash value (if any) subject to our rules.
We may make additional annuity payment options available in the future.
HOW AND WHEN DO I CHOOSE THE ANNUITY PAYMENT OPTION?
Unless prohibited by law, we require that you elect either a life annuity or an
annuity with a certain period of at least 5 years if any CDSC would apply were
you to surrender your Annuity on the Annuity Date. Therefore, choosing an
Annuity Date within eight (8) years of the Issue Date of the Annuity may limit
the available annuity payment options. Certain annuity payment options may not
be available if your Annuity Date occurs during the period that a CDSC would
apply.
You have a right to choose your annuity start date. If you have not
provided us with your Annuity Date or annuity payment option in writing, then:
- - a default date for the Annuity Date will be the first day of the calendar
month following the later of the Annuitant's 85th birthday or the fifth
anniversary of our receipt of your request to purchase an Annuity; and
- - the annuity payments, where allowed by law, will be calculated on a fixed
basis under Option 3, Payments for Life with 10 years certain.
If you choose to defer the Annuity Date beyond the default date, the IRS
may not consider your Annuity to be an annuity under the tax law. If that should
occur, all gain in your Annuity at that time will become immediately taxable to
you. Further, each subsequent year's increase in Account Value would be taxable
in that year. By choosing to continue to defer after the default date, you will
assume the risk that your Annuity will not be considered an annuity for federal
income tax purposes.
HOW ARE ANNUITY PAYMENTS CALCULATED?
Fixed Annuity Payments (Options 1-4)
If you choose to receive fixed annuity payments, you will receive equal
fixed-dollar payments throughout the period you select. The amount of the fixed
payment will vary depending on the annuity payment option and payment frequency
you select. Generally, the first annuity payment is determined by multiplying
the Account Value, minus any state premium taxes that may apply, by the factor
determined from our table of annuity rates. The table of annuity rates differs
based on the type of annuity chosen and the frequency of payment selected. Our
rates will not be less than our guaranteed minimum rates. These guaranteed
minimum rates are derived from the a2000 Individual Annuity Mortality Table
with an assumed interest
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
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.
VARIABLE ANNUITY PAYMENTS
Generally, we offer three different types of variable annuity payment options.
The first annuity payment will be calculated based upon the assumed investment
return ("AIR"). You select the AIR before we start to make annuity payments.
You will not receive annuity payments until you choose an AIR. The remaining
annuity payments will fluctuate based on the performance of the Sub-accounts
relative to the AIR, as well as other factors described below. The greater the
AIR, the greater the first annuity payment. A higher AIR may result in smaller
potential growth in the annuity payments. A lower AIR results in a lower
initial annuity payment. Within payment options 1-3, if the Sub-accounts you
choose perform exactly the same as the AIR, then subsequent annuity payments
will be the same as the first annuity payment. If the Sub-accounts you choose
perform better than the AIR, then subsequent annuity payments will be higher
than the first annuity payment. If the Sub-accounts you choose perform worse
than the AIR, then subsequent annuity payments will be lower than the first.
Within payment options 5 and 6, the cash value for the Annuitant (while alive)
and a variable period of time during which annuity payments will be made
whether or not the Annuitant is still alive are adjusted based on the
performance of the Sub-accounts relative to the AIR; however, subsequent
annuity payments do not always increase or decrease based on the performance of
the Sub-accounts relative to the AIR.
- VARIABLE PAYMENTS (OPTIONS 1-3) We calculate each annuity payment
amount by multiplying the number of units scheduled to be redeemed
under a schedule of units for each Sub-account by the Unit Value of
each Sub-account on the annuity payment date. We determine the
schedule of units based on your Account Value (minus any premium tax
that applies) at the time you elect to begin receiving annuity
payments. The schedule of units will vary based on the annuity
payment option selected, the length of any certain period (if
applicable), the Annuitant's age and gender (if annuity payments are
due for the life of the Annuitant) and the Unit Value of the
Sub-accounts you initially selected on the Issue Date. The
calculation is performed for each Sub-account, and the sum of the
Sub-account calculations equals the amount of your annuity payment.
Other than to fund annuity payments, the number of units allocated
to each Sub-account will not change unless you transfer among the
Sub-accounts or make a withdrawal (if allowed). You can select one
of three AIRs for these options: 3%, 5% or 7%.
- STABILIZED VARIABLE PAYMENTS (Option 5) This option provides
guaranteed payments for life, a cash value for the Annuitant (while
alive) and a variable period of time during which annuity payments
will be made whether or not the Annuitant is still alive. We
calculate the initial annuity payment amount by multiplying the
number of units scheduled to be redeemed under a schedule of units
by the Unit Values determined on the annuitization date. The
schedule of units is established for each Sub-account you choose on
the annuitization date based on the applicable benchmark rate,
meaning the AIR, and the annuity factors. The annuity factors
reflect our assumptions regarding the costs we expect to bear in
guaranteeing payments for the lives of the Annuitant and will depend
on the benchmark rate, the annuitant's attained age and gender
(where permitted). Unlike variable payments (described above) where
each payment can vary based on Sub-account performance, this payment
option cushions the immediate impact of Sub-account performance by
adjusting the length of the time during which annuity payments will
be made whether or not the Annuitant is alive while generally
maintaining a level annuity payment amount. Sub-account performance
that exceeds a benchmark rate will generally extend this time
period, while Sub-account performance that is less than a benchmark
rate will generally shorten the period. If the period reaches zero
and the Annuitant is still alive, Annuity Payments continue,
however, the annuity payment amount will vary depending on
Sub-account performance, similar to conventional variable payments.
The AIR for this option is 4%.
- STABILIZED VARIABLE PAYMENTS WITH A GUARANTEED MINIMUM (OPTION 6)
This option provides guaranteed payments for life in the same manner
as Stabilized Variable Payments (described above). In addition to
the stabilization feature, this option also guarantees that variable
annuity
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Access To Account Value continued
payments will not be less than the initial annuity pay- ment amount
regardless of Sub-account performance. The AIR for this option is 3%
The variable annuity payment options are described in greater detail in a
separate prospectus which will be provided to you at the time you elect one of
the variable annuity payment options.
ADJUSTABLE ANNUITY PAYMENTS
We may make an adjustable annuity payment option available. Adjustable annuity
payments are calculated similarly to fixed annuity payments except that on
every fifth (5th) anniversary of receiving annuity payments, the annuity
payment amount is adjusted upward or downward depending on the rate we are
currently crediting to annuity payments. The adjustment in the annuity payment
amount does not affect the duration of remaining annuity payments, only the
amount of each payment.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Living Benefit Programs
DO YOU OFFER PROGRAMS DESIGNED TO PROVIDE INVESTMENT PROTECTION FOR OWNERS WHILE
THEY ARE ALIVE?
American Skandia offers different optional benefits, for an additional charge,
that can provide investment protection for Owners while they are alive.
Notwithstanding the additional protection provided under the optional Living
Benefit Programs, the additional cost has the impact of reducing net
performance of the investment options. Each optional benefit offers a distinct
type of guarantee, regardless of the performance of variable investment
options, that may be appropriate for you depending on the manner in which you
intend to make use of your annuity while you are alive. Depending on which
optional benefit you choose, you can have substantial flexibility to invest in
variable investment options while:
- - protecting a principal amount from decreases in value as of specified
future dates due to investment performance;
- - taking withdrawals with a guarantee that you will be able to withdraw not
less than a principal amount over time; or
- - guaranteeing a minimum amount of growth will be applied to your principal,
if it is to be used as the basis for lifetime income payments beginning
after a waiting period.
Below is a brief summary of the "living benefits" that American Skandia offers.
Please refer to the benefit description for a complete description of the terms,
conditions and limitations of each optional benefit. You should consult with
your Investment Professional to determine if any of these optional benefits may
be appropriate for you based on your financial needs. There are many factors to
consider, but we note that among them you may want to evaluate the tax
implications of these different approaches to meeting your needs, both between
these benefits and in comparison to other potential solutions to your needs
(e.g. comparing the tax implications of the withdrawal benefit and annuity
payments).
I. The Guaranteed Return Option Plus(SM) (GRO Plus(SM)) guarantees that,
after a seven-year period following commencement of the program ("maturity
date") and on each anniversary of the maturity date thereafter, your
Account Value will not be less than the Account Value on the effective
date of the program. The program also offers you the option to elect a
second, enhanced guarantee amount at a higher Account Value subject to a
separate maturity period (and its anniversaries). The GRO Plus(SM) program
may be appropriate if you wish to protect a principal amount (called the
"Protected Principal Value") against market downturns as of a specific
date in the future, but also wish to exercise control by allocating and
transferring your available Account Value among the variable investment
options to participate in market experience. Under the GRO Plus(SM)
program, you give us the right to allocate amounts to Fixed Allocations as
needed to support the guarantees provided. The available Account Value
that may be allocated among your variable investment options are those
amounts not allocated to the Fixed Allocations to support the guarantees
provided.
II. THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) guarantees your ability
to make cumulative withdrawals over time equal to an initial principal
value (called the "Protected Value"), regardless of decreases in your
Account Value due to market losses. The GMWB program may be appropriate if
you intend to make periodic withdrawals from your Annuity and wish to
ensure that market performance will not affect your ability to receive
guaranteed minimum withdrawals. Taking income as withdrawals, rather than
annuity payments, may be less tax efficient for non-qualified uses of the
Annuity, but provides greater control over the timing and amount of
withdrawals during the accumulation period, as well as continuing the
Annuity's other benefits, such as the death benefit.
III. THE GUARANTEED MINIMUM INCOME BENEFIT (GMIB) guarantees your ability,
after a minimum seven-year waiting period, to begin receiving income from
the Annuity in the form of annuity payments based on your total purchase
payments under the Annuity and an annual increase of 5% on such Purchase
Payments, adjusted for withdrawals, regardless of the impact of market
performance on your Account Value. The GMIB program may be appropriate if
you anticipate using your Annuity as a future source of periodic fixed
income payments for the remainder of your life and wish to ensure that the
basis upon which your income payments will be calculated will achieve at
least a minimum amount despite fluctuations in market performance.
IV. The LIFETIME FIVE INCOME BENEFIT guarantees your ability to withdraw
amounts equal to a percentage of a "Protected Withdrawal Value" regardless
of decreases in your Account Value due to market losses. The Lifetime Five
Benefit may be appropriate if you intend to make periodic withdrawals from
your Annuity and wish to ensure that market performance will not affect
your ability to receive guaranteed minimum withdrawals. Taking income as
withdrawals, rather than annuity
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Living Benefit Programs continued
payments, may be less tax efficient for non-qualified uses of the Annuity,
but provides greater control over the timing and amount of withdrawals
during the accumulation period, as well as continuing the Annuity's other
benefits, such as the death benefit.
GUARANTEED RETURN OPTION Plus(SM) (GRO Plus(SM))
THE GUARANTEED RETURN OPTION PLUS DESCRIBED BELOW IS ONLY BEING OFFERED IN THOSE
JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL, AND WILL BE OFFERED
SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY APPROVAL IN THOSE
JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS
ONCE APPROVED. THE PROGRAM CAN BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF
THEIR ANNUITY, AND CAN BE ELECTED BY EXISTING ANNUITY OWNERS ON EITHER THE
ANNIVERSARY OF THE ISSUE DATE OF THEIR ANNUITY OR ON A DATE OTHER THAN THAT
ANNIVERSARY, AS DESCRIBED BELOW UNDER "ELECTION OF THE PROGRAM". THE GUARANTEED
RETURN OPTION PLUS IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION
PROGRAM (AND IT IS CURRENTLY ACTIVE), THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT
RIDER, THE GUARANTEED MINIMUM INCOME BENEFIT RIDER, THE LIFETIME FIVE INCOME
BENEFIT RIDER, THE HIGHEST DAILY VALUE DEATH BENEFIT OR THE DOLLAR COST
AVERAGING PROGRAM IF IT INVOLVES TRANSFERS OUT OF THE FIXED ALLOCATIONS.
We offer a program that, after a seven-year period following commencement
of the program (we refer to the end of that period and any applicable subsequent
period as the "maturity date") and on each anniversary of the maturity date
thereafter while the program remains in effect, guarantees your Account Value
will not be less than your Account Value on the effective date of your program
(called the "Protected Principal Value"). The program also offers you the
opportunity to elect a second, enhanced guaranteed amount at a later date if
your Account Value has increased, while preserving the guaranteed amount
established on the effective date of your program. The enhanced guaranteed
amount (called the "Enhanced Protected Principal Value") guarantees that, after
a separate period following election of the enhanced guarantee and on each
anniversary thereafter while this enhanced guarantee amount remains in effect,
your Account Value will not be less than your Account Value on the effective
date of your election of the enhanced guarantee.
The program monitors your Account Value daily and, if necessary,
systematically transfers amounts between variable investment options you choose
and Fixed Allocations used to support the Protected Principal Value(s). The
program may be appropriate if you wish to protect a principal amount against
market downturns as of a specific date in the future, but also wish to invest in
the variable investment options to participate in market performance. There is
an additional charge if you elect the Guaranteed Return Option Plus program.
The guarantees provided by the program exist only on the applicable
maturity date(s) and on each anniversary of the maturity date(s) thereafter.
However, due to the ongoing monitoring of your Account Value and the transfer of
Account Value between the variable investment options and the Fixed Allocations
to support our future guarantees, the program may provide some protection from
significant market losses if you choose to surrender the Annuity or begin
receiving annuity payments prior to a maturity date. For this same reason, the
program may limit your ability to benefit from market increases while it is in
effect.
KEY FEATURE -- PROTECTED PRINCIPAL VALUE/ENHANCED PROTECTED PRINCIPAL VALUE
The Guaranteed Return Option Plus offers a base guarantee as well as the option
of electing an enhanced guarantee at a later date.
- - BASE GUARANTEE: Under the base guarantee, American Skandia guarantees that
on the maturity date and on each anniversary of the maturity date
thereafter that the program remains in effect, your Account Value will be
no less than the Protected Principal Value. On the maturity date and on
each anniversary after the maturity date that the program remains in
effect, if your Account Value is below the Protected Principal Value,
American Skandia will apply additional amounts to your Annuity from its
general account to increase your Account Value to be equal to the
Protected Principal Value.
- - ENHANCED GUARANTEE: On any anniversary following commencement of the
program, you can establish an enhanced guaranteed amount based on your
current Account Value. Under the enhanced guarantee, American Skandia
guarantees that at the end of a specified period following the election
52
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
of the enhanced guarantee (also referred to as its "maturity date"), and
on each anniversary of the maturity date thereafter that the enhanced
guaranteed amount remains in effect, your Account Value will be no less
than the Enhanced Protected Principal Value. YOU CAN ELECT AN ENHANCED
GUARANTEE MORE THAN ONCE; HOWEVER, A SUBSEQUENT ELECTION SUPERSEDES THE
PRIOR ELECTION OF AN ENHANCED GUARANTEE. ELECTION OF AN ENHANCED GUARANTEE
DOES NOT IMPACT THE BASE GUARANTEE. IN ADDITION, YOU MAY ELECT AN "AUTO
STEP-UP" FEATURE THAT WILL AUTOMATICALLY CREATE AN ENHANCED GUARANTEE (OR
INCREASE YOUR ENHANCED GUARANTEE, IF PREVIOUSLY ELECTED) ON EACH
ANNIVERSARY OF THE PROGRAM (AND CREATE A NEW MATURITY PERIOD FOR THE NEW
ENHANCED GUARANTEE) IF THE ACCOUNT VALUE AS OF THAT ANNIVERSARY EXCEEDS
THE PROTECTED PRINCIPAL VALUE OR ENHANCED PROTECTED PRINCIPAL VALUE BY 7%
OR MORE. YOU MAY ALSO ELECT TO TERMINATE AN ENHANCED GUARANTEE. IF YOU
ELECT TO TERMINATE THE ENHANCED GUARANTEE, THE BASE GUARANTEE WILL REMAIN
IN EFFECT. IF YOU HAVE ELECTED THE ENHANCED GUARANTEE, ON THE GUARANTEE'S
MATURITY DATE AND ON EACH ANNIVERSARY OF THE MATURITY DATE THEREAFTER THAT
THE ENHANCED GUARANTEE AMOUNT REMAINS IN EFFECT, IF YOUR ACCOUNT VALUE IS
BELOW THE ENHANCED PROTECTED PRINCIPAL VALUE, AMERICAN SKANDIA WILL APPLY
ADDITIONAL AMOUNTS TO YOUR ANNUITY FROM ITS GENERAL ACCOUNT TO INCREASE
YOUR ACCOUNT VALUE TO BE EQUAL TO THE ENHANCED PROTECTED PRINCIPAL VALUE.
Any amounts added to your Annuity to support our guarantees under the
program will be applied to any Fixed Allocations first and then to the
sub-accounts pro rata, based on your most recent allocation instructions in
accordance with the allocation mechanism we use under the program. We will
notify you of any amounts added to your Annuity under the program. If our
assumptions are correct and the operations relating to the administration of the
program work properly, we do not expect that we will need to add additional
amounts to the Annuity. The Protected Principal Value is referred to as the
"Base Guarantee" and the Enhanced Protected Principal Value is referred to as
the "Step-up Guarantee" in the rider we issue for this benefit.
WITHDRAWALS UNDER YOUR ANNUITY
Withdrawals from your Annuity, while the program is in effect, will reduce the
base guarantee under the program as well as any enhanced guarantee. Cumulative
annual withdrawals up to 5% of the Protected Principal Value as of the
effective date of the program (adjusted for any subsequent Purchase Payments)
will reduce the applicable guaranteed amount by the actual amount of the
withdrawal (referred to as the "dollar-for-dollar limit"). If the amount
withdrawn is greater than the dollar-for-dollar limit, the portion of the
withdrawal equal to the dollar-for-dollar limit will be treated as described
above, and the portion of the withdrawal in excess of the dollar-for-dollar
limit will reduce the base guarantee and the enhanced guarantee proportionally,
according to the formula as described in the rider for this benefit (see the
examples of this calculation below). Withdrawals other than Systematic
Withdrawals will be taken pro-rata from the variable investment options and any
Fixed Allocations. Systematic Withdrawals will be taken pro-rata from the
variable investment options and any fixed allocations up to growth attributable
to the Fixed Allocations and thereafter pro-rata solely from the variable
investment options. Withdrawals will be subject to all other provisions of the
Annuity, including any Contingent Deferred Sales Charge and Market Value
Adjustment that would apply.
Charges for other optional benefits under the Annuity that are deducted as
an annual charge in arrears will not reduce the applicable guaranteed amount
under the Guaranteed Return Option Plus program, however, any partial
withdrawals in payment of charges for any third party investment advisory
service will be treated as withdrawals and will reduce the applicable guaranteed
amount.
The following examples of dollar-for-dollar and proportional reductions
assume that: 1.) the Issue Date and the effective date of the GRO PlusSM program
are October 13, 2004; 2.) an initial Purchase Payment of $250,000; 3.) a base
guarantee amount of $250,000; and 4.) a dollar-for-dollar limit of $12,500 (5%
of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 29, 2004 (in the first Annuity Year).
No prior withdrawals have been taken. As the amount withdrawn is less than the
Dollar-for-dollar Limit:
- - The base guarantee amount is reduced by the amount withdrawn (i.e., by
$10,000, from $250,000 to $240,000).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance
of the first Annuity Year is also reduced by the amount withdrawn (from
$12,500 to $2,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on December 18, 2004 (still within the
first Annuity Year). The Account Value immediately before the withdrawal is
$180,000. As the amount withdrawn exceeds the Remaining Limit of $2,500 from
Example 1:
- - The base guarantee amount is first reduced by the Remaining Limit (from
$240,000 to $237,500);
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Living Benefit Programs continued
- - The result is then further reduced by the ratio of A to B,
where:
- A is the amount withdrawn less the Remaining Limit ($10,000 -
$2,500, or $7,500).
- B is the Account Value less the Remaining Limit ($180,000 - $2,500,
or $177,500).
The resulting base guarantee amount is: $237,500 x (1 - $7,500 /
$177,500), or $227,464.79.
- The Remaining Limit is set to zero (0) for the balance of the first
Annuity Year.
EXAMPLE 3. RESET OF THE DOLLAR-FOR-DOLLAR LIMIT
A $10,000 withdrawal is made on December 19, 2005 (second Annuity Year). The
Remaining Limit has been reset to the dollar-for-dollar limit of $12,500. As
the amount withdrawn is less than the dollar-for-dollar limit:
- - The base guarantee amount is reduced by the amount withdrawn (i.e.,
reduced by $10,000, from $227,464.79 to $217,464.79).
- - The Remaining Limit for the balance of the second Annuity Year is also
reduced by the amount withdrawn (from $12,500 to $2,500).
KEY FEATURE -- ALLOCATION OF ACCOUNT VALUE
Account Value is transferred to and maintained in Fixed Allocations to the
extent we, in our sole discretion, deem it is necessary to support our
guarantee(s) under the program. We monitor fluctuations in your Account Value
each Valuation Day, as well as the prevailing interest rates on Fixed
Allocations, the remaining duration(s) until the applicable maturity date(s)
and the amount of Account Value allocated to Fixed Allocation(s) relative to a
"reallocation trigger", which determines whether Account Value must be
transferred to or from Fixed Allocation(s). While you are not notified when
your Account Value reaches a reallocation trigger, you will receive a
confirmation statement indicating the transfer of a portion of your Account
Value either to or from Fixed Allocation(s).
- - IF YOUR ACCOUNT VALUE IS GREATER THAN OR EQUAL TO THE REALLOCATION
TRIGGER, your Account Value in the variable investment options will remain
allocated according to your most recent instructions. If a portion of
Account Value was previously allocated to a Fixed Allocation to support
the applicable guaranteed amount, all or a portion of those amounts may be
transferred from the Fixed Allocation and re-allocated to the variable
investment options pro-rata according to your most recent allocation
instructions (including the model allocations under any asset allocation
program you may have elected). A Market Value Adjustment will apply when
we reallocate Account Value from a Fixed Allocation to the variable
investment options, which may result in a decrease or increase in your
Account Value.
- - If your Account Value is less than the reallocation trigger, a portion of
your Account Value in the variable investment options will be transferred
from your variable investment options pro rata according to your
allocations to a new Fixed Allocation(s) to support the applicable
guaranteed amount. The new Fixed Allocation(s) will have a Guarantee
Period equal to the time remaining until the applicable maturity date(s).
The Account Value allocated to the new Fixed Allocation(s) will be
credited with the fixed interest rate(s) then being credited to a new
Fixed Allocation(s) maturing on the applicable maturity date(s) (rounded
to the next highest yearly duration). The Account Value will remain
invested in each applicable Fixed Allocation until the applicable maturity
date unless, at an earlier date, your Account Value is greater than or
equal to the reallocation trigger and, therefore, amounts can be
transferred to the
54
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
variable investment options while maintaining the guaranteed protection
under the program (as described above).
IF A SIGNIFICANT AMOUNT OF YOUR ACCOUNT VALUE IS SYSTEMATICALLY TRANSFERRED TO
FIXED ALLOCATIONS TO SUPPORT THE PROTECTED PRINCIPAL VALUE AND/OR THE ENHANCED
PROTECTED PRINCIPAL VALUE DURING PERIODS OF MARKET DECLINES, LOW INTEREST RATES,
AND/OR AS THE PROGRAM NEARS ITS MATURITY DATE, LESS OF YOUR ACCOUNT VALUE MAY BE
AVAILABLE TO PARTICIPATE IN THE INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT
OPTIONS IF THERE IS A SUBSEQUENT MARKET RECOVERY. DURING PERIODS CLOSER TO THE
MATURITY DATE OF THE BASE GUARANTEE OR ANY ENHANCED GUARANTEE, OR ANY
ANNIVERSARY OF SUCH MATURITY DATE(S), A SIGNIFICANT PORTION OF YOUR ACCOUNT
VALUE MAY BE ALLOCATED TO FIXED ALLOCATIONS TO SUPPORT ANY APPLICABLE GUARANTEED
AMOUNT(S). IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER AND NEW
FIXED ALLOCATIONS MUST BE ESTABLISHED DURING PERIODS WHERE THE INTEREST RATE(S)
BEING CREDITED TO SUCH FIXED ALLOCATIONS IS LOW, A LARGER PORTION OF YOUR
ACCOUNT VALUE MAY NEED TO BE TRANSFERRED TO FIXED ALLOCATIONS TO SUPPORT THE
APPLICABLE GUARANTEED AMOUNT(S), CAUSING LESS OF YOUR ACCOUNT VALUE TO BE
AVAILABLE TO PARTICIPATE IN THE INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT
OPTIONS.
Separate Fixed Allocations may be established in support of the Protected
Principal Value and the Enhanced Protected Principal Value (if elected). There
may also be circumstances when a Fixed Allocation will be established only in
support of the Protected Principal Value or the Enhanced Protected Principal
Value. If you elect an enhanced guarantee, it is more likely that a portion of
your Account Value may be allocated to Fixed Allocations and will remain
allocated for a longer period of time to support the Enhanced Protected
Principal Value, even during a period of positive market performance and/or
under circumstances where Fixed Allocations would not be necessary to support
the Protected Principal Value. Further, there may be circumstances where Fixed
Allocations in support of the Protected Principal Value or Enhanced Protected
Principal Value are transferred to the variable investment options differently
than each other because of the different guarantees they support.
American Skandia uses an allocation mechanism based on assumptions of
expected and maximum market volatility, interest rates and time left to the
maturity of the program to determine the reallocation trigger. The allocation
mechanism is used to determine the allocation of Account Value between Fixed
Allocations and the Sub-accounts you choose. American Skandia reserves the right
to change the allocation mechanism and the reallocation trigger at its
discretion, subject to regulatory approval where required. Changes to the
allocation mechanism and/or the reallocation trigger may be applied to existing
programs where allowed by law.
ELECTION OF THE PROGRAM
The Guaranteed Return Option Plus program can be elected at the time that you
purchase your Annuity, or on any Valuation Day thereafter (prior to
annuitization). If you elect the program after the Issue Date of your Annuity,
the program will be effective as of the Valuation Day that we receive the
required documentation in good order at our home office, and the guaranteed
amount will be based on your Account Value as of that date. If you previously
elected the Guaranteed Return Option program and wish to elect the Guaranteed
Return Option Plus program, your prior Guaranteed Return Option program will be
terminated. Termination of the Guaranteed Return Option for the purpose of
electing the Guaranteed Return Option Plus will be treated as any other
termination of the Guaranteed Return Option (see below), including the
termination of any guaranteed amount, and application of any applicable Market
Value Adjustment when amounts are transferred to the variable investment
options as a result of the termination. The Guaranteed Return Option Plus
program will then be added to your Annuity BASED ON THE CURRENT ACCOUNT VALUE.
TERMINATION OF THE PROGRAM
You can elect to terminate the enhanced guarantee but maintain the protection
provided by the base guarantee. You also can terminate the Guaranteed Return
Option Plus program entirely. If you terminate the program entirely, you can
subsequently elect to participate in the program again (based on the Account
Value on that date) by furnishing the documentation we require. In a rising
market, you could, for example, terminate the program on a given Valuation Day
and two weeks later reinstate the program with a higher base guarantee (and a
new maturity date). However, your ability to reinstate the program is limited
by the following: (A) in any Annuity Year, we do not permit more than two
program elections (including any election made effective on the Annuity issue
date and any election made by a surviving spouse) and (B) a program
reinstatement cannot be effected on the same business day on
55
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Living Benefit Programs continued
which a program termination was effected. Upon termination, any Account Value in
the Fixed Allocations will be transferred to the variable investment options
pro-rata based on the Account Values in such variable investment options, or in
accordance with any effective asset allocation program. A Market Value
Adjustment will apply.
The program will terminate automatically upon: (a) the death of the Owner
or the Annuitant (in an entity owned contract); (b) as of the date Account Value
is applied to begin annuity payments; or (c) upon full surrender of the Annuity.
If you elect to terminate the program, the Guaranteed Return Option Plus will no
longer provide any guarantees. The surviving spouse may elect the benefit at any
time, subject to the limitations described above, after the death of the Annuity
Owner. The surviving spouse's election will be effective on the Valuation Day
that we receive the required documentation in good order at our home office, and
the Account Value on that Valuation Day will be the Protected Principal Value.
The charge for the Guaranteed Return Option Plus program will no longer be
deducted from your Account Value upon termination of the program.
SPECIAL CONSIDERATIONS UNDER THE GUARANTEED RETURN OPTION PLUS
This program is subject to certain rules and restrictions, including, but not
limited to the following:
- - Upon inception of the program, 100% of your Account Value must be
allocated to the variable investment options. No Fixed Allocations may be
in effect as of the date that you elect to participate in the program.
However, the reallocation trigger may transfer Account Value to Fixed
Allocations as of the effective date of the program under some
circumstances.
- - You cannot allocate any portion of Purchase Payments or transfer Account
Value to or from a Fixed Allocation while participating in the program;
however, all or a portion of any Purchase Payments may be allocated by us
to Fixed Allocations to support the amount guaranteed. You cannot
participate in any dollar cost averaging program that transfers Account
Value from a Fixed Allocation to a variable investment option.
- - Transfers from Fixed Allocations made as a result of the allocation
mechanism under the program will be subject to the Market Value Adjustment
formula under the Annuity; however, the 0.10% liquidity factor in the
formula will not apply. A Market Value Adjustment may be either positive
or negative. Transfer amounts will be taken from the most recently
established Fixed Allocation.
- - Transfers from the Sub-accounts to Fixed Allocations or from Fixed
Allocations to the Sub-accounts under the program will not count toward
the maximum number of free transfers allowable under the Annuity.
- - Any amounts applied to your Account Value by American Skandia on the
maturity date or any anniversary of the maturity date will not be treated
as "investment in the contract" for income tax purposes.
- - Low interest rates may require allocation to Fixed Allocations even when
the current Account Value exceeds the guarantee.
- - As the time remaining until the applicable maturity date gradually
decreases the program will become increasingly sensitive to moves to Fixed
Allocations.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
CHARGES UNDER THE PROGRAM
We deduct a charge equal to 0.25% of the average daily net assets of the
sub-accounts for participation in the Guaranteed Return Option Plus program.
The annual charge is deducted daily. Account Value allocated to Fixed
Allocations under the program is not subject to the charge. The charge is
deducted to compensate American Skandia for: (a) the risk that your Account
Value on the maturity date is less than the amount guaranteed; and (b)
administration of the program.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
GUARANTEED RETURN OPTION (GRO)
THE GUARANTEED RETURN OPTION DESCRIBED BELOW IS OFFERED ONLY IN THOSE
JURISDICTIONS WHERE WE HAVE NOT YET RECEIVED REGULATORY APPROVAL FOR THE
GUARANTEED RETURN OPTION PLUS AS OF THE DATE THE ELECTION OF THE OPTION IS MADE.
CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS. THE PROGRAM CAN
BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY, AND CAN BE
ELECTED BY EXISTING ANNUITY OWNERS ON EITHER THE ANNIVERSARY OF THE ISSUE DATE
OF THEIR ANNUITY OR ON A DATE OTHER THAN THAT ANNIVERSARY, AS DESCRIBED BELOW
UNDER "ELECTION OF THE PROGRAM". THE GUARANTEED RETURN OPTION IS NOT AVAILABLE
IF YOU ELECT THE GRO PLUS RIDER, THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT
RIDER, THE GUARANTEED MINIMUM INCOME BENEFIT RIDER, THE LIFETIME FIVE INCOME
BENEFIT RIDER, THE HIGHEST DAILY VALUE DEATH BENEFIT OR THE DOLLAR COST
AVERAGING PROGRAM IF IT INVOLVES TRANSFERS OUT OF THE FIXED ALLOCATIONS.
We offer a program that, after a seven-year period following commencement
of the program (we refer to the end of that period as the "maturity date")
guarantees your Account Value will not be less than your Account Value on the
effective date of your program (called the "Protected Principal Value").
The program monitors your Account Value daily and, if necessary,
systematically transfers amounts between variable investment options you choose
and the Fixed Allocation used to support the Protected Principal Value. The
program may be appropriate if you wish to protect a principal amount against
market downturns as of a specific date in the future, but also wish to invest in
the variable investment options to participate in market performance. There is
an additional charge if you elect the Guaranteed Return Option program.
The guarantee provided by the program exists only on the applicable
maturity date. However, due to the ongoing monitoring of your Account Value and
the transfer of Account Value between the variable investment options and the
Fixed Allocation to support our future guarantee, the program may provide some
protection from significant market losses if you choose to surrender the Annuity
or begin receiving annuity payments prior to a maturity date. For this same
reason, the program may limit your ability to benefit from market increases
while it is in effect.
KEY FEATURE -- PROTECTED PRINCIPAL VALUE
- - Under the GRO option, American Skandia guarantees that on the maturity
date, your Account Value will be no less than the Protected Principal
Value. On the maturity date if your Account Value is below the Protected
Principal Value, American Skandia will apply additional amounts to your
Annuity from its general account to increase your Account Value to be
equal to the Protected Principal Value.
Any amounts added to your Annuity to support our guarantee under the
program will be applied to the Fixed Allocation first and then to the
Sub-accounts pro rata, based on your most recent allocation instructions in
accordance with the allocation mechanism we use under the program. We will
notify you of any amounts added to your Annuity under the program. If our
assumptions are correct and the operations relating to the administration of the
program work properly, we do not expect that we will need to add additional
amounts to the Annuity. The Protected Principal Value is generally referred to
as the "Guaranteed Amount" in the rider we issue for this benefit.
KEY FEATURE -- ALLOCATION OF ACCOUNT VALUE
Account Value is transferred to and maintained in a Fixed Allocation to the
extent we, in our sole discretion, deem it is necessary to support our
guarantee under the program. We monitor fluctuations in your Account Value each
Valuation Day, as well as the prevailing interest rate on the Fixed Allocation,
the remaining duration until the applicable maturity date and the amount of
Account Value allocated to the Fixed Allocation relative to a "reallocation
trigger", which determines whether Account Value must be transferred to or from
the Fixed Allocation. While you are not notified when your Account Value
reaches a reallocation trigger, you will receive a confirmation statement
indicating the transfer of a portion of your Account Value either to or from
the Fixed Allocation.
- - IF YOUR ACCOUNT VALUE IS GREATER THAN OR EQUAL TO THE REALLOCATION
TRIGGER, your Account Value in the variable investment options will remain
allocated according to your most recent instructions. If a portion of
Account Value was previously allocated to the Fixed Allocation to support
the guaranteed amount, all or a portion of those amounts may be
transferred from the Fixed Allocation and re-allocated to the variable
investment options pro-rata according to your most recent allocation
instructions (including the model allocations under any asset allocation
program you may have elected). A Market Value Adjustment will apply when
we reallocate Account Value from the Fixed Allocation to
57
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Living Benefit Programs continued
the variable investment options, which may result in a decrease or
increase in your Account Value.
- - IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER, a portion of
your Account Value in the variable investment options will be transferred
from your variable investment options pro rata according to your
allocations to a new Fixed Allocation to support the guaranteed amount.
The new Fixed Allocation will have a Guarantee Period equal to the time
remaining until the applicable maturity date. The Account Value allocated
to the new Fixed Allocation will be credited with the fixed interest rate
then being credited to a new Fixed Allocation maturing on the applicable
maturity date (rounded to the next highest yearly duration). The Account
Value will remain invested in the Fixed Allocation until the maturity date
unless, at an earlier date, your Account Value is greater than or equal to
the reallocation trigger and, therefore, amounts can be transferred to the
variable investment options while maintaining the guaranteed protection
under the program (as described above).
IF A SIGNIFICANT AMOUNT OF YOUR ACCOUNT VALUE IS SYSTEMATICALLY TRANSFERRED TO
THE FIXED ALLOCATION TO SUPPORT THE PROTECTED PRINCIPAL VALUE DURING PERIODS OF
MARKET DECLINES, LOW INTEREST RATES, AND/OR AS THE PROGRAM NEARS ITS MATURITY
DATE, LESS OF YOUR ACCOUNT VALUE MAY BE AVAILABLE TO PARTICIPATE IN THE
INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS IF THERE IS A
SUBSEQUENT MARKET RECOVERY. DURING PERIODS CLOSER TO THE MATURITY DATE OF THE
GUARANTEE A SIGNIFICANT PORTION OF YOUR ACCOUNT VALUE MAY BE ALLOCATED TO THE
FIXED ALLOCATION TO SUPPORT ANY APPLICABLE GUARANTEED AMOUNT. IF YOUR ACCOUNT
VALUE IS LESS THAN THE REALLOCATION TRIGGER AND A NEW FIXED ALLOCATION MUST BE
ESTABLISHED DURING PERIODS WHERE THE INTEREST RATE BEING CREDITED TO SUCH FIXED
ALLOCATION IS LOW, A LARGER PORTION OF YOUR ACCOUNT VALUE MAY NEED TO BE
TRANSFERRED TO THE FIXED ALLOCATION TO SUPPORT THE GUARANTEED AMOUNT, CAUSING
LESS OF YOUR ACCOUNT VALUE TO BE AVAILABLE TO PARTICIPATE IN THE INVESTMENT
EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS.
American Skandia uses an allocation mechanism based on assumptions of
expected and maximum market volatility, interest rates and time left to the
maturity of the program to determine the reallocation trigger. The allocation
mechanism is used to determine the allocation of Account Value between the Fixed
Allocation and the Sub-accounts you choose. American Skandia reserves the right
to change the allocation mechanism and the reallocation trigger at its
discretion, subject to regulatory approval where required. Changes to the
allocation mechanism and/or the reallocation trigger may be applied to existing
programs where allowed by law.
ELECTION OF THE PROGRAM
The Guaranteed Return Option can be elected at the time that you purchase your
Annuity, or on any Valuation Day thereafter (prior to annuitization). If you
elect the program after the Issue Date of your Annuity, the program will be
effective as of the business day that we receive the required documentation in
good order at our home office, and the guaranteed amount will be based on your
Account Value as of that date.
TERMINATION OF THE PROGRAM
The Annuity Owner also can terminate the Guaranteed Return Option program. Upon
termination, any Account Value in the Fixed Allocation will be transferred to
the variable investment options pro rata based on the Account Values in such
variable investment options, or in accordance with any effective asset
allocation program. A Market Value Adjustment will apply.
The program will terminate automatically upon: (a) the death of the Owner
or the Annuitant (in an entity owned contract); (b) as of the date Account Value
is applied to begin annuity payments; or (c) upon full surrender of the Annuity.
If you elect to terminate the program, the Guaranteed Return Option will no
longer provide any guarantees. If the surviving spouse assumes the Annuity,
he/she may re-elect the benefit on any anniversary of the Issue Date of the
Annuity or, if the deceased Owner had not previously elected the benefit, may
elect the benefit at any time. The surviving spouse's election will be effective
on the Valuation Day that we receive the required documentation in good order at
our home office, and the Account Value on that Valuation Day will be the
Protected Principal Value.
The charge for the Guaranteed Return Option program will no longer be
deducted from your Account Value upon termination of the program.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
SPECIAL CONSIDERATIONS UNDER THE GUARANTEED RETURN OPTION
This program is subject to certain rules and restrictions, including, but not
limited to the following:
- - Upon inception of the program, 100% of your Account Value must be
allocated to the variable investment options. The Fixed Allocation may not
be in effect as of the date that you elect to participate in the program.
However, the reallocation trigger may transfer Account Value to the Fixed
Allocation as of the effective date of the program under some
circumstances.
- - Annuity Owners cannot allocate any portion of Purchase Payments or
transfer Account Value to or from the Fixed Allocation while participating
in the program; however, all or a portion of any Purchase Payments may be
allocated by us to the Fixed Allocation to support the amount guaranteed.
You cannot participate in any dollar cost averaging program that transfers
Account Value from the Fixed Allocation to a variable investment option.
- - Transfers from the Fixed Allocation made as a result of the allocation
mechanism under the program will be subject to the Market Value Adjustment
formula under the Annuity; however, the 0.10% liquidity factor in the
formula will not apply. A Market Value Adjustment may be either positive
or negative. Transfer amounts will be taken from the most recently
established Fixed Allocation.
- - Transfers from the Sub-accounts to the Fixed Allocation or from the Fixed
Allocation to the Sub-accounts under the program will not count toward the
maximum number of free transfers allowable under the Annuity.
- - Any amounts applied to your Account Value by American Skandia on the
maturity date or any anniversary of the maturity date will not be treated
as "investment in the contract" for income tax purposes.
- - Low interest rates may require allocation to the Fixed Allocation even
when the current Account Value exceeds the guarantee.
- - As the time remaining until the applicable maturity date gradually
decreases the program will become increasingly sensitive to moves to the
Fixed Allocation.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
CHARGES UNDER THE PROGRAM
We deduct a charge equal to 0.25% of the average daily net assets of the
sub-accounts for participation in the Guaranteed Return Option program. The
annual charge is deducted daily. In those states where the daily deduction of
the charge has not yet been approved, the annual charge is deducted annually,
in arrears. Account Value allocated to the Fixed Allocation under the program
is not subject to the charge. The charge is deducted to compensate American
Skandia for: (a) the risk that your Account Value on the maturity date is less
than the amount guaranteed; and (b) administration of the program.
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL AND
WILL BE OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY
APPROVAL IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. CURRENTLY, THE PROGRAM CAN ONLY BE ELECTED BY NEW
PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY. WE MAY OFFER THE PROGRAM TO
EXISTING ANNUITY OWNERS IN THE FUTURE, SUBJECT TO OUR ELIGIBILITY RULES AND
RESTRICTIONS. THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT PROGRAM IS NOT AVAILABLE
IF YOU ELECT THE GUARANTEED RETURN OPTION, GUARANTEED RETURN OPTION PLUS, THE
GUARANTEED MINIMUM INCOME BENEFIT RIDER OR THE LIFETIME FIVE INCOME BENEFIT
RIDER.
We offer a program that guarantees your ability to withdraw amounts equal
to an initial principal value (called the "Protected Value"), regardless of the
impact of market performance on your Account Value, subject to our program rules
regarding the timing and amount of withdrawals. The program may be appropriate
if you intend to make periodic withdrawals from your Annuity and wish to ensure
that market performance will not affect your ability to protect your principal.
You are not required to make withdrawals as part of the program -- the
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Living Benefit Programs Continued
guarantee is not lost if you withdraw less than the maximum allowable amount of
principal each year under the rules of the program. There is an additional
charge if you elect the GMWB program; however, the charge may be waived under
certain circumstances described below.
KEY FEATURE -- PROTECTED VALUE
The Protected Value is the total amount that we guarantee will be available to
you through withdrawals from your Annuity and/or benefit payments, regardless
of the impact of market performance on your Account Value. The Protected Value
is reduced with each withdrawal you make until the Protected Value is reduced
to zero. When the Protected Value is reduced to zero due to your withdrawals,
the GMWB program terminates. Additionally, the Protected Value is used to
determine the maximum annual amount that you can withdraw from your Annuity,
called the Protected Annual Withdrawal Amount, without triggering an adjustment
in the Protected Value on a proportional basis. The Protected Value is referred
to as the "Benefit Base" in the rider we issue for this benefit.
The Protected Value is determined as of the date you make your first
withdrawal under the Annuity following your election of the GMWB program. The
initial Protected Value is equal to the greater of (A) the Account Value on the
date you elect the GMWB program, plus any additional Purchase Payments before
the date of your first withdrawal; or (B) the Account Value as of the date of
the first withdrawal from your Annuity. The Protected Value may be enhanced by
increases in your Account Value due to market performance during the period
between your election of the GMWB program and the date of your first withdrawal.
- - If you elect the GMWB program at the time you purchase your Annuity, the
Account Value will be your initial Purchase Payment.
- - IF WE OFFER THE GMWB PROGRAM TO EXISTING ANNUITY OWNERS, the Account Value
on the anniversary of the Issue Date of your Annuity following your
election of the GMWB program will be used to determine the initial
Protected Value.
- - If you make additional Purchase Payments after your first withdrawal, the
Protected Value will be increased by the amount of the additional Purchase
Payment.
You may elect to step-up your Protected Value if, due to positive market
performance, your Account Value is greater than the Protected Value. You are
eligible to step-up the Protected Value on or after the 5th Annuity anniversary
following the first withdrawal under the GMWB program. The Protected Value can
be stepped up again on or after the 5th Annuity anniversary following the
preceding step-up. If you elect to step-up the Protected Value, you must do so
during the 30-day period prior to your eligibility date. If you elect to step-up
the Protected Value under the program, and on the date you elect to step-up, the
charges under the GMWB program have changed for new purchasers, your program may
be subject to the new charge going forward.
Upon election of the step-up, we reset the Protected Value to be equal to
the then current Account Value. For example, assume your initial Protected Value
was $100,000 and you have made cumulative withdrawals of $40,000, reducing the
Protected Value to $60,000. On the date you are eligible to step-up the
Protected Value, your Account Value is equal to $75,000. You could elect to
step-up the Protected Value to $75,000 on the date you are eligible. Upon
election of the step-up, we also reset the Protected Annual Withdrawal Amount
(discussed immediately below) to be equal to the greater of (A) the Protected
Annual Withdrawal Amount immediately prior to the reset; and (B) 7% of the
Protected Value immediately after the reset.
KEY FEATURE -- PROTECTED ANNUAL WITHDRAWAL AMOUNT
The initial Protected Annual Withdrawal Amount is equal to 7% of the Protected
Value. Under the GMWB program, if your cumulative withdrawals each Annuity Year
are less than or equal to the Protected Annual Withdrawal Amount, your Protected
Value will be reduced on a "dollar-for-dollar" basis (the Protected Value is
reduced by the actual amount of the withdrawal, including any CDSC or MVA that
may apply). Cumulative withdrawals in any Annuity Year that exceed the Protected
Annual Withdrawal Amount trigger a proportional adjustment to both the Protected
Value and the Protected Annual Withdrawal Amount, as described in the rider for
this benefit (see the examples of this calculation below). The Protected Annual
Withdrawal Amount is referred to as the "Maximum Annual Benefit" in the rider we
issue for this benefit.
THE GMWB PROGRAM DOES NOT AFFECT YOUR ABILITY TO MAKE WITHDRAWALS UNDER
YOUR ANNUITY OR LIMIT YOUR ABILITY TO REQUEST WITHDRAWALS THAT EXCEED THE
PROTECTED
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
ANNUAL WITHDRAWAL AMOUNT. You are not required to withdraw all or any portion of
the Protected Annual Withdrawal Amount each Annuity Year.
- - If, cumulatively, you withdraw an amount less than the Protected Annual
Withdrawal Amount in any Annuity Year, you cannot carry-over the unused
portion of the Protected Annual Withdrawal Amount to subsequent Annuity
Years. However, because the Protected Value is only reduced by the actual
amount of withdrawals you make under these circumstances, any unused
Protected Annual Withdrawal Amount may extend the period of time until the
remaining Protected Value is reduced to zero.
- - Additional Purchase Payments will increase the Protected Annual Withdrawal
Amount by 7% of the applicable Purchase Payment.
- - If the Protected Annual Withdrawal Amount after an adjustment exceeds the
Protected Value, the Protected Annual Withdrawal Amount will be set equal
to the Protected Value.
The following examples of dollar-for-dollar and proportional reductions
and the reset of the Maximum Annual Benefit assume that: 1.) the Issue Date and
the effective date of the GMWB program are October 13, 2004; 2.) an initial
Purchase Payment of $250,000; 3.) a Protected Value of $250,000; and 4.) a
Protected Annual Withdrawal Amount of $17,500 (7% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 13, 2004 (in the first Annuity Year).
No prior withdrawals have been taken. As the amount withdrawn is less than the
Protected Annual Withdrawal Amount:
- - The Protected Value is reduced by the amount withdrawn (i.e., by $10,000,
from $250,000 to $240,000).
- - The remaining Protected Annual Withdrawal Amount for the balance of the
first Annuity Year is also reduced by the amount withdrawn (from $17,500
to $7,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL
REDUCTIONS
A second $10,000 withdrawal is taken on December 13, 2004 (still within the
first Annuity Year). The Account Value immediately before the withdrawal is
$220,000. As the amount withdrawn exceeds the remaining Protected Annual
Withdrawal Amount of $7,500 from Example 1:
- - the Protected Value is first reduced by the remaining Protected Annual
Withdrawal Amount (from $240,000 to $232,500);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the remaining Protected Annual
Withdrawal Amount ($10,000 - $7,500, or $2,500).
- B is the Account Value less the remaining Protected Annual
Withdrawal Amount ($220,000 - $7,500, or $212,500).
The resulting Protected Value is: $232,500 x (1 - $2,500 / $212,500), or
$229,764.71.
- - the Protected Annual Withdrawal Amount is also reduced by the ratio of A
to B: The resulting Protected Annual Withdrawal Amount is: $17,500 x (1 -
$2,500 / $212,500), or $17,294.12.
- - The remaining Protected Annual Withdrawal Amount is set to zero (0) for
the balance of the first Annuity Year.
EXAMPLE 3. RESET OF THE MAXIMUM ANNUAL BENEFIT
A $10,000 withdrawal is made on October 13, 2005 (second Annuity Year). The
remaining Protected Annual Withdrawal Amount has been reset to the Protected
Annual Withdrawal Amount of $17,294.12 from Example 2. As the amount withdrawn
is less than the remaining Protected Annual Withdrawal Amount:
- - the Protected Value is reduced by the amount withdrawn (i.e., reduced by
$10,000, from $229,764.71 to $219,764.71).
- - The remaining Protected Annual Withdrawal Amount for the balance of the
second Annuity Year is also reduced by the amount withdrawn (from
$17,294.12 to $7,294.12).
BENEFITS UNDER THE GMWB PROGRAM
- - In addition to any withdrawals you make under the GMWB program, market
performance may reduce your Account Value. If your Account Value is equal
to zero, and you have not received all of your Protected Value in the form
of withdrawals from your Annuity, we will continue to make payments equal
to the remaining Protected Value in the form of fixed, periodic payments
until the remainder of the Protected Value is paid, at which time the
rider terminates. The fixed, periodic payments will each be equal to the
Protected Annual Withdrawal Amount, except for the last payment which may
be equal to the remaining Protected Value. We will determine the duration
for which periodic
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Living Benefit Programs continued
payments will continue by dividing the Protected Value by the Protected
Annual Withdrawal Amount. You will not have the right to make additional
Purchase Payments or receive the remaining Protected Value in a lump sum.
You can elect the frequency of payments, subject to our rules then in
effect.
- - If the death benefit under the Annuity becomes payable before you have
received all of your Protected Value in the form of withdrawals from your
Annuity, your Beneficiary has the option to elect to receive the remaining
Protected Value as an alternate death benefit payout in lieu of the amount
payable under any other death benefit provided under the Annuity. The
remaining Protected Value will be payable in the form of fixed, periodic
payments. Your beneficiary can elect the frequency of payments, subject to
our rules then in effect. We will determine the duration for which
periodic payments will continue by dividing the Protected Value by the
Protected Annual Withdrawal Amount. THE PROTECTED VALUE IS NOT EQUAL TO
THE ACCOUNT VALUE FOR PURPOSES OF THE ANNUITY'S OTHER DEATH BENEFIT
OPTIONS. THE GMWB PROGRAM DOES NOT INCREASE OR DECREASE THE AMOUNT
OTHERWISE PAYABLE UNDER THE ANNUITY'S OTHER DEATH BENEFIT OPTIONS.
GENERALLY, THE GMWB PROGRAM WOULD BE OF VALUE TO YOUR BENEFICIARY ONLY
WHEN THE PROTECTED VALUE AT DEATH EXCEEDS ANY OTHER AMOUNT AVAILABLE AS A
DEATH BENEFIT.
- - If you elect to begin receiving annuity payments before you have received
all of your Protected Value in the form of withdrawals from your Annuity,
an additional annuity payment option will be available that makes fixed
annuity payments for a certain period, determined by dividing the
Protected Value by the Protected Annual Withdrawal Amount. If you elect to
receive annuity payments calculated in this manner, the assumed interest
rate used to calculate such payments will be 0%, which is less than the
assumed interest rate on other annuity payment options we offer. This 0%
assumed interest rate results in lower annuity payments than what would
have been paid if the assumed interest rate was higher than 0%. YOU CAN
ALSO ELECT TO TERMINATE THE GMWB PROGRAM AND BEGIN RECEIVING ANNUITY
PAYMENTS BASED ON YOUR THEN CURRENT ACCOUNT VALUE (NOT THE REMAINING
PROTECTED VALUE) UNDER ANY OF THE AVAILABLE ANNUITY PAYMENT OPTIONS.
OTHER IMPORTANT CONSIDERATIONS
- - Withdrawals under the GMWB program are subject to all of the terms and
conditions of the Annuity, including any CDSC and MVA that may apply.
- - Withdrawals made while the GMWB program is in effect will be treated, for
tax purposes, in the same way as any other withdrawals under the Annuity.
- - The GMWB program does not directly affect the Annuity's Account Value or
Surrender Value, but any withdrawal will decrease the Account Value by the
amount of the withdrawal. If you surrender your Annuity, you will receive
the current Surrender Value, not the Protected Value.
- - You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the GMWB program. The GMWB program
provides a guarantee that if your Account Value declines due to market
performance, you will be able to receive your Protected Value in the form
of periodic benefit payments.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
ELECTION OF THE PROGRAM
Currently, the GMWB program can only be elected at the time that you purchase
your Annuity. In the future, we may offer existing Annuity Owners the option to
elect the GMWB program after the Issue Date of their Annuity, subject to our
eligibility rules and restrictions. If you elect the GMWB program after the
Issue Date of your Annuity, the program will be effective as of the next
anniversary date. Your Account Value as of such anniversary date will be used
to calculate the initial Protected Value and the initial Protected Annual
Withdrawal Amount.
We reserve the right to restrict the maximum amount of Protected Value
that may be covered under the GMWB program under this Annuity or any other
annuities that you own that are issued by American Skandia or its affiliated
companies.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
TERMINATION OF THE PROGRAM
The program terminates automatically when your Protected Value reaches zero
based on your withdrawals. You may terminate the program at any time by
notifying us. If you terminate the program, any guarantee provided by the
benefit will terminate as of the date the termination is effective. The program
terminates upon your surrender of the Annuity, upon due proof of death (unless
your surviving spouse elects to continue the Annuity and the GMWB program or
your Beneficiary elects to receive the amounts payable under the GMWB program
in lieu of the death benefit) or upon your election to begin receiving annuity
payments.
The charge for the GMWB program will no longer be deducted from your
Account Value upon termination of the program.
CHARGES UNDER THE PROGRAM
Currently, we deduct a charge equal to 0.35% of the average daily net assets of
the Sub-accounts per year to purchase the GMWB program. The annual charge is
deducted daily. Account Value allocated to Fixed Allocations under the program
is not subject to the charge.
- - If, during the seven years following the effective date of the program,
you do not make any withdrawals, and do not make any additional Purchase
Payments after a five-year period following the effective date of the
program, the program will remain in effect; however, we will waive the
annual charge going forward. If you make an additional Purchase Payment
following the waiver of the annual charge, we will begin charging for the
program. After year seven (7) following the effective date of the program,
withdrawals will not cause a charge to be re-imposed.
- - If you elect to step-up the Protected Value under the program, and on the
date you elect to step-up, the charges under the program have changed for
new purchasers, your program may be subject to the new charge level for
the benefit.
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS
If you purchase an Annuity as an investment vehicle for "qualified"
investments, including an IRA, SEP-IRA, Roth IRA or Tax Sheltered Annuity (or
403(b)), the minimum distribution rules under the Code require that you begin
receiving periodic amounts from your Annuity beginning after age 70 1/2. The
amount required under the Code may exceed the Protected Annual Withdrawal
Amount, which will cause us to recalculate the Protected Value and the
Protected Annual Withdrawal Amount, resulting in a lower amount payable in
future Annuity Years. In addition, the amount and duration of payments under
the annuity payment and death benefit provisions may be adjusted so that the
payments do not trigger any penalty or excise taxes due to tax considerations
such as minimum distribution requirements.
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
THE GUARANTEED MINIMUM INCOME BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL, AND
WILL BE OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY
APPROVAL IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. CURRENTLY, THE PROGRAM CAN ONLY BE ELECTED BY NEW
PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY. WE MAY OFFER THE PROGRAM TO
EXISTING ANNUITY OWNERS IN THE FUTURE, SUBJECT TO OUR ELIGIBILITY RULES AND
RESTRICTIONS. THE GUARANTEED MINIMUM INCOME BENEFIT PROGRAM IS NOT AVAILABLE IF
YOU ELECT THE GUARANTEED RETURN OPTION PROGRAM, GUARANTEED RETURN OPTION PLUS
PROGRAM, THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT RIDER OR THE LIFETIME FIVE
INCOME BENEFIT RIDER.
We offer a program that, after a seven-year waiting period, guarantees
your ability to begin receiving income from your Annuity in the form of annuity
payments based on a guaranteed minimum value (called the "Protected Income
Value") that increases after the waiting period begins, regardless of the impact
of market performance on your Account Value. The program may be appropriate for
you if you anticipate using your Annuity as a future source of periodic fixed
income payments for the remainder of your life and wish to ensure that the basis
upon which your income payments will be calculated will achieve at least a
minimum amount despite fluctuations in market performance. There is an
additional charge if you elect the GMIB program.
KEY FEATURE -- PROTECTED INCOME VALUE
The Protected Income Value is the minimum amount that we guarantee will be
available (net of any applicable tax charge), after a waiting period of at
least seven years, as a basis to begin receiving fixed annuity payments. The
Protected Income Value is initially established on the effective date of the
GMIB
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Living Benefit Programs continued
program and is equal to your Account Value on such date. Currently, since the
GMIB program may only be elected at issue, the effective date is the Issue Date
of the Annuity. The Protected Income Value is increased daily based on an annual
growth rate of 5%, subject to the limitations described below. The Protected
Income Value is referred to as the "Protected Value" in the rider we issue for
this benefit. The 5% annual growth rate is referred to as the "Roll-Up
Percentage" in the rider we issue for this benefit.
The Protected Income Value is subject to a limit of 200% (2X) of the sum
of the Protected Income Value established on the effective date of the GMIB
program, or the effective date of any step-up value, plus any additional
Purchase Payments made after the waiting period begins ("Maximum Protected
Income Value"), minus the sum of any reductions in the Protected Income Value
due to withdrawals you make from the Annuity after the waiting period begins.
- - Subject to the maximum age/durational limits described immediately below,
we will no longer increase the Protected Income Value by the 5% annual
growth rate once you reach the Maximum Protected Income Value. However, we
will increase the Protected Income Value by the amount of any additional
Purchase Payments after you reach the Maximum Protected Income Value.
Further, if you make withdrawals after you reach the Maximum Protected
Income Value, we will reduce the Protected Income Value and the Maximum
Protected Income Value by the proportional impact of the withdrawal on
your Account Value.
- - Subject to the Maximum Protected Income Value, we will no longer increase
the Protected Income Value by the 5% annual growth rate after the later of
the anniversary date on or immediately following the Annuitant's 80th
birthday or the 7th anniversary of the later of the effective date of the
GMIB program or the effective date of the most recent step-up. However, we
will increase the Protected Income Value by the amount of any additional
Purchase Payments. Further, if you make withdrawals after the Annuitant
reaches the maximum age/duration limits, we will reduce the Protected
Income Value and the Maximum Protected Income Value by the proportional
impact of the withdrawal on your Account Value.
- - Subject to the Maximum Protected Income Value, if you make an additional
Purchase Payment, we will increase the Protected Income Value by the
amount of the Purchase Payment and will apply the 5% annual growth rate on
the new amount from the date the Purchase Payment is applied.
- - As described below, after the waiting period begins, cumulative
withdrawals each Annuity Year that are up to 5% of the Protected Income
Value on the prior anniversary of the Annuity will reduce the Protected
Income Value by the amount of the withdrawal. Cumulative withdrawals each
Annuity Year in excess of 5% of the Protected Income Value on the prior
anniversary of the Annuity, will reduce the Protected Income Value
proportionately. All withdrawals after the Maximum Protected Income Value
is reached will reduce the Protected Income Value proportionately. The 5%
annual growth rate will be applied to the reduced Protected Income Value
from the date of the withdrawal.
Stepping-Up the Protected Income Value -- You may elect to "step-up" or
"reset" your Protected Income Value if your Account Value is greater than the
current Protected Income Value. Upon exercise of the step-up provision, your
initial Protected Income Value will be reset equal to your current Account
Value. From the date that you elect to step-up the Protected Income Value, we
will apply the 5% annual growth rate to the stepped-up Protected Income Value,
as described above. You can exercise the step-up provision twice on any business
day while the GMIB program is in effect, and only while the Annuitant is less
than age 76.
- - A new seven-year waiting period will be established upon the effective
date of your election to step-up the Protected Income Value. You cannot
exercise your right to begin receiving annuity payments under the GMIB
program until the end of the new waiting period.
- - The Maximum Protected Income Value will be reset as of the effective date
of any step-up. The new Maximum Protected Income Value will be equal to
200% of the sum of the Protected Income Value as of the effective date of
the step-up plus any subsequent Purchase Payments, minus the impact of any
withdrawals after the date of the step-up.
- - When determining the guaranteed annuity purchase rates for annuity
payments under the GMIB program, we will apply such rates based on the
number of years since the most recent step-up.
- - If you elect to step-up the Protected Income Value under the program, and
on the date you elect to step-up, the
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
charges under the GMIB program have changed for new purchasers, your
program may be subject to the new charge going forward.
- - A step-up will increase the dollar for dollar limit on the anniversary of
the Issue Date of the Annuity following such step-up.
Impact of Withdrawals on the Protected Income Value -- Cumulative
withdrawals each Annuity Year up to 5% of the Protected Income Value will reduce
the Protected Income Value on a "dollar-for-dollar" basis (the Protected Income
Value is reduced by the actual amount of the withdrawal). Cumulative withdrawals
in any Annuity Year in excess of 5% of the Protected Income Value will reduce
the Protected Income Value proportionately (see the examples of this calculation
below). The 5% annual withdrawal amount is determined on each anniversary of the
Issue Date (or on the Issue Date for the first Annuity Year) and applies to any
withdrawals during the Annuity Year. This means that the amount available for
withdrawals each Annuity Year on a "dollar-for-dollar" basis is adjusted on each
Annuity anniversary to reflect changes in the Protected Income Value during the
prior Annuity Year.
The following examples of dollar-for-dollar and proportional reductions
assume that: 1.) the Issue Date and the effective date of the GMIB program are
October 13, 2005; 2.) an initial Purchase Payment of $250,000; 3.) an initial
Protected Income Value of $250,000; and 4.) a dollar-for-dollar limit of $12,500
(5% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 13, 2005 (in the first Annuity Year).
No prior withdrawals have been taken. Immediately prior to the withdrawal, the
Protected Income Value is $251,038.10 (the initial value accumulated for 31
days at an annual effective rate of 5%). As the amount withdrawn is less than
the dollar-for-dollar limit:
- - The Protected Income Value is reduced by the amount withdrawn (i.e., by
$10,000, from $251,038.10 to $241,038.10).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance
of the first Annuity Year is also reduced by the amount withdrawn (from
$12,500 to $2,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on December 13, 2005 (still within the
first Annuity Year). Immediately before the withdrawal, the Account Value is
$220,000 and the Protected Income Value is $242,006.64. As the amount withdrawn
exceeds the Remaining Limit of $2,500 from Example 1:
- - The Protected Income Value is first reduced by the Remaining Limit (from
$242,006.64 to $239,506.64);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the Remaining Limit ($10,000 -
$2,500, or $7,500).
- B is the Account Value less the Remaining Limit ($220,000 - $2,500,
or $217,500).
The resulting Protected Income Value is:
$239,506.64 x (1 - $7,500 / $217,500), or $231,247.79.
- - The Remaining Limit is set to zero (0) for the balance of the first
Annuity Year.
EXAMPLE 3. RESET OF THE DOLLAR-FOR-DOLLAR LIMIT
A $10,000 withdrawal is made on the first anniversary of the Issue Date, October
13, 2006 (second Annuity Year). Prior to the withdrawal, the Protected Income
Value is $240,838.37. The Remaining Limit is reset to 5% of this amount, or
$12,041.92. As the amount withdrawn is less than the dollar-for-dollar limit:
- - The Protected Income Value is reduced by the amount withdrawn (i.e.,
reduced by $10,000, from $240,838.37 to $230,838.37).
- - The Remaining Limit for the balance of the second Annuity Year is also
reduced by the amount withdrawn (from $12,041.92 to $2,041.92).
KEY FEATURE -- GMIB ANNUITY PAYMENTS
You can elect to apply the Protected Income Value to one of the available GMIB
Annuity Payment Options on any anniversary date following the initial waiting
period, or any subsequent waiting period established upon your election to
step-up the Protected Income Value. Once you have completed the waiting period,
you will have a 30-day period each year, prior to the Annuity anniversary,
during which you may elect to begin receiving annuity payments under one of the
available GMIB Annuity Payment Options. You must elect one of the GMIB Annuity
Payment Options by the anniversary of the Annuity's Issue Date on or immediately
following the Annuitant's 95th birthday, except for Annuities used as a funding
vehicle for an IRA, SEP IRA or 403(b), in which case you must elect one of the
GMIB Annuity Payment Options by the anniversary of the Annuity's Issue Date on
or immediately following the Annuitant's 92nd birthday.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Living Benefit Programs continued
The amount of each GMIB Annuity Payment will be determined based on the
age and, where permitted by law, sex of the Annuitant by applying the Protected
Income Value (net of any applicable tax charge that may be due) to the GMIB
Annuity Payment Option you choose. We use special annuity purchase rates to
calculate the amount of each payment due under the GMIB Annuity Payment Options.
These special rates for the GMIB Annuity Payment Options are calculated using an
assumed interest rate factor that provides for lower growth in the value applied
to produce annuity payments than if you elected an annuity payment option that
is not part of the GMIB program. These special rates also are calculated using
other factors such as "age setbacks" (use of an age lower than the Annuitant's
actual age) that result in lower payments than would result if you elected an
annuity payment option that is not part of the GMIB program. Use of an age
setback entails a longer assumed life for the Annuitant which in turn results in
lower annuity payments.
ON THE DATE THAT YOU ELECT TO BEGIN RECEIVING GMIB ANNUITY PAYMENTS, WE
GUARANTEE THAT YOUR PAYMENTS WILL BE CALCULATED BASED ON YOUR ACCOUNT VALUE AND
OUR THEN CURRENT ANNUITY PURCHASE RATES IF THE PAYMENT AMOUNT CALCULATED ON THIS
BASIS WOULD BE HIGHER THAN IT WOULD BE BASED ON THE PROTECTED INCOME VALUE AND
THE SPECIAL GMIB ANNUITY PURCHASE RATES.
GMIB ANNUITY PAYMENT OPTION 1 -- PAYMENTS FOR LIFE WITH A CERTAIN PERIOD
Under this option, monthly annuity payments will be made until the death of the
Annuitant. If the Annuitant dies before having received 120 monthly annuity
payments, the remainder of the 120 monthly annuity payments will be made to the
Beneficiary.
GMIB ANNUITY PAYMENT OPTION 2 -- PAYMENTS FOR JOINT LIVES WITH A CERTAIN PERIOD
Under this option, monthly annuity payments will be made until the death of
both the Annuitant and the Joint Annuitant. If the Annuitant and the Joint
Annuitant die before having received 120 monthly annuity payments, the
remainder of the 120 monthly annuity payments will be made to the Beneficiary.
- - If the Annuitant dies first, we will continue to make payments until the
later of the death of the Joint Annuitant and the end of the period
certain. However, if the Joint Annuitant is still receiving annuity
payments following the end of the certain period, we will reduce the
amount of each subsequent payment to 50% of the original payment amount.
- - If the Joint Annuitant dies first, we will continue to make payments until
the later of the death of the Annuitant and the end of the period certain.
You cannot withdraw your Account Value or the Protected Income Value under
either GMIB Annuity Payment Option once annuity payments have begun. We may make
other payout frequencies available, such as quarterly, semi-annually or
annually.
OTHER IMPORTANT CONSIDERATIONS
- - YOU SHOULD NOTE THAT GMIB IS DESIGNED TO PROVIDE A TYPE OF INSURANCE THAT
SERVES AS A SAFETY NET ONLY IN THE EVENT YOUR ACCOUNT VALUE DECLINES
SIGNIFICANTLY DUE TO NEGATIVE INVESTMENT PERFORMANCE. IF YOUR CONTRACT
VALUE IS NOT SIGNIFICANTLY AFFECTED BY NEGATIVE INVESTMENT PERFORMANCE, IT
IS UNLIKELY THAT THE PURCHASE OF THE GMIB WILL RESULT IN YOUR RECEIVING
LARGER ANNUITY PAYMENTS THAN IF YOU HAD NOT PURCHASED GMIB. This is
because the assumptions that we use in computing the GMIB, such as the
annuity purchase rates, (which include assumptions as to age-setbacks and
assumed interest rates), are more conservative than the assumptions that
we use in computing annuity payout options outside of GMIB. Therefore, you
may generate higher income payments if you were to annuitize a lower
Account Value at the current annuity purchase rates, than if you were to
annuitize under the GMIB with a higher Protected Value than your Account
Value but, at the annuity purchase rates guaranteed under the GMIB. The
GMIB program does not directly affect the Annuity's Account Value,
Surrender Value or the amount payable under either the basic death benefit
provision of the Annuity or any optional death benefit provision. If you
surrender your Annuity, you will receive the current Surrender Value, not
the Protected Income Value. The Protected Income Value is only applicable
if you elect to begin receiving annuity payments under one of the GMIB
annuity options after the waiting period.
- - The Annuity offers other annuity payment options that you can elect which
do not impose an additional charge, but which do not offer to guarantee a
minimum value on which to make annuity payments.
- - Where allowed by law, we reserve the right to limit subsequent purchase
payments if we determine, at our sole discretion, that based on the timing
of your Purchase Payments and withdrawals, your Protected Income Value is
increasing in ways we did not intend. In determining
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
whether to limit Purchase Payments, we will look at Pur chase Payments
which are disproportionately larger than your initial Purchase Payment and
other actions that may artificially increase the Protected Income Value.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to
an eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible
investment options will not be counted in determining the number of free
transfers during an Annuity Year. We may also require that you allocate
your Account Value according to an asset allocation model.
- - If you change the Annuitant after the effective date of the GMIB program,
the period of time during which we will apply the 5% annual growth rate
may be changed based on the age of the new Annuitant. If the new Annuitant
would not be eligible to elect the GMIB program based on his or her age at
the time of the change, then the GMIB program will terminate.
- - Annuity payments made under the GMIB program are subject to the same tax
treatment as any other annuity payment.
- - At the time you elect to begin receiving annuity payments under the GMIB
program or under any other annuity payment option we make available, the
protection provided by the Annuity's basic death benefit or any optional
death benefit provision you elected will no longer apply.
ELECTION OF THE PROGRAM
Currently, the GMIB program can only be elected at the time that you purchase
your Annuity. The Annuitant must be age 75 or less as of the effective date of
the GMIB program. In the future, we may offer existing Annuity Owners the option
to elect the GMIB program after the Issue Date of their Annuity, subject to our
eligibility rules and restrictions. If you elect the GMIB program after the
Issue Date of your Annuity, the program will be effective as of the date of
election. Your Account Value as of that date will be used to calculate the
Protected Income Value as of the effective date of the program.
TERMINATION OF THE PROGRAM
The GMIB program cannot be terminated by the Owner once elected. The GMIB
program automatically terminates as of the date the Annuity is fully
surrendered, on the date the death benefit is payable to your Beneficiary
(unless your surviving spouse elects to continue the Annuity), or on the date
that your Account Value is transferred to begin making annuity payments. The
GMIB program may also be terminated if you designate a new Annuitant who would
not be eligible to elect the GMIB program based on his or her age at the time of
the change.
Upon termination of the GMIB program we will deduct the charge from your
Account Value for the portion of the Annuity Year since the prior anniversary of
the Annuity's Issue Date (or the Issue Date if in the first Annuity Year).
CHARGES UNDER THE PROGRAM
Currently, we deduct a charge equal to 0.50% per year of the average Protected
Income Value for the period the charge applies. Because the charge is
calculated based on the average Protected Income Value, it does not increase or
decrease based on changes to the Annuity's Account Value due to market
performance. The dollar amount you pay each year will increase in any year the
Protected Income Value increases, and it will decrease in any year the
Protected Income Value decreases due to withdrawal, irrespective of whether
your Account Value increases or decreases.
The charge is deducted annually in arrears each Annuity Year on the
anniversary of the Issue Date of the Annuity. We deduct the amount of the charge
pro-rata from the Account Value allocated to the variable investment options and
the Fixed Allocations. No MVA will apply to Account Value deducted from a Fixed
Allocation. If you surrender your Annuity, begin receiving annuity payments
under the GMIB program or any other annuity payment option we make available
during an Annuity Year, or the GMIB program terminates, we will deduct the
charge for the portion of the Annuity Year since the prior anniversary of the
Annuity's Issue Date (or the Issue Date if in the first Annuity Year).
No charge applies after the Annuity Date.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Living Benefit Programs continued
LIFETIME FIVE INCOME BENEFIT (LIFETIME FIVE)
THE LIFETIME FIVE INCOME BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING OFFERED
IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL AND WILL BE
OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY APPROVAL
IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. CURRENTLY, LIFETIME FIVE CAN BE ELECTED ONLY ONCE
EACH ANNUITY YEAR, AND ONLY WHERE THE ANNUITANT AND THE OWNER ARE THE SAME
PERSON OR, IF THE ANNUITY OWNER IS AN ENTITY, WHERE THERE IS ONLY ONE ANNUITANT.
WE RESERVE THE RIGHT TO LIMIT THE ELECTION FREQUENCY IN THE FUTURE. BEFORE
MAKING ANY SUCH CHANGE TO THE ELECTION FREQUENCY, WE WILL PROVIDE PRIOR NOTICE
TO OWNERS WHO HAVE AN EFFECTIVE LIFETIME FIVE INCOME BENEFIT. THE ANNUITANT MUST
BE AT LEAST 45 YEARS OLD WHEN THE PROGRAM IS ELECTED. THE LIFETIME FIVE INCOME
BENEFIT PROGRAM IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION,
GUARANTEED RETURN OPTION PLUS, GUARANTEED MINIMUM WITHDRAWAL BENEFIT OR THE
GUARANTEED MINIMUM INCOME BENEFIT RIDER. AS LONG AS YOUR LIFETIME FIVE INCOME
BENEFIT IS IN EFFECT, YOU MUST ALLOCATE YOUR ACCOUNT VALUE IN ACCORDANCE WITH AN
ELIGIBLE MODEL UNDER OUR ASSET ALLOCATION PROGRAMS, WHICH ARE GENERALLY
DESCRIBED IN THE "ARE ANY ASSET ALLOCATION PROGRAMS AVAILABLE?" SECTION ABOVE.
FOR FURTHER INFORMATION ON ASSET ALLOCATION PROGRAMS, PLEASE CONSULT WITH YOUR
INVESTMENT PROFESSIONAL OR CALL 1-800-752-6342.
We offer a program that guarantees your ability to withdraw amounts equal
to a percentage of an initial principal value (called the "Protected Withdrawal
Value"), regardless of the impact of market performance on your Account Value,
subject to our program rules regarding the timing and amount of withdrawals.
There are two options -- one is designed to provide an annual withdrawal amount
for life (the "Life Income Benefit") and the other is designed to provide a
greater annual withdrawal amount as long as there is Protected Withdrawal Value
(adjusted as described below) (the "Withdrawal Benefit"). If there is no
Protected Withdrawal Value, the withdrawal benefit will be zero. You do not
choose between these two options; each option will continue to be available as
long as the Annuity has an Account Value and the Lifetime Five is in effect.
Certain benefits under Lifetime Five may remain in effect even if the Account
Value of the Annuity is zero. The program may be appropriate if you intend to
make periodic withdrawals from your Annuity and wish to ensure that market
performance will not affect your ability to receive annual payments. You are not
required to make withdrawals as part of the program -- the guarantees are not
lost if you withdraw less than the maximum allowable amount each year under the
rules of the program.
KEY FEATURE -- PROTECTED WITHDRAWAL VALUE
The Protected Withdrawal Value is initially used to determine the amount of each
initial annual payment under the Life Income Benefit and the Withdrawal Benefit.
The initial Protected Withdrawal Value is determined as of the date you make
your first withdrawal under the Annuity following your election of Lifetime
Five. The initial Protected Withdrawal Value is equal to the greater of (A) the
Account Value on the date you elect Lifetime Five, plus any additional Purchase
Payments each growing at 5% per year from the date of your election of the
program, or application of the Purchase Payment to your Annuity, as applicable,
until the date of your first withdrawal or the 10th anniversary of the benefit
effective date, if earlier (B) the Account Value as of the date of the first
withdrawal from your Annuity, prior to the withdrawal, and (C) the highest
Account Value on each Annuity anniversary prior to the first withdrawal or on
the first 10 Annuity anniversaries if earlier than the date of your first
withdrawal after the benefit effective date. Each value is increased by the
amount of any subsequent Purchase Payments.
- - If you elect the Lifetime Five program at the time you purchase your
Annuity, the Account Value will be your initial Purchase Payment.
- - For existing Owners who are electing the Lifetime Five benefit, the
Account Value on the date of your election of the Lifetime Five program
will be used to determine the initial Protected Withdrawal Value.
- - If you make additional Purchase Payments after your first withdrawal, the
Protected Withdrawal Value will be increased by the amount of each
additional Purchase Payment.
You may elect to step-up your Protected Withdrawal Value if, due to
positive market performance, your Account Value is greater than the Protected
Withdrawal Value. You are eligible
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
to step-up the Protected Withdrawal Value on or after the 5th anniversary of the
first withdrawal under the Lifetime Five program. The Protected Withdrawal Value
can be stepped up again on or after the 5th anniversary following the preceding
step-up. If you elect to step-up the Protected Withdrawal Value under the
program, and on the date you elect to step-up, the charges under the Lifetime
Five program have changed for new purchasers, your program may be subject to the
new charge going forward.
Upon election of the step-up, we increase the Protected Withdrawal Value
to be equal to the then current Account Value. For example, assume your initial
Protected Withdrawal Value was $100,000 and you have made cumulative withdrawals
of $40,000, reducing the Protected Withdrawal Value to $60,000. On the date you
are eligible to step-up the Protected Withdrawal Value, your Account Value is
equal to $75,000. You could elect to step-up the Protected Withdrawal Value to
$75,000 on the date you are eligible. If your current Annual Income Amount and
Annual Withdrawal Amount are less than they would be if we did not reflect the
step-up in Protected Withdrawal Value, then we will increase these amounts to
reflect the step-up as described below.
The Protected Withdrawal Value is reduced each time a withdrawal is made
on a dollar-for-dollar basis up to 7% per Annuity Year of the Protected
Withdrawal Value and on the greater of a dollar-for-dollar basis or a pro rata
basis for withdrawals in an Annuity Year in excess of that amount until the
Protected Withdrawal Value is reduced to zero. At that point the Annual
Withdrawal Amount will be zero until such time (if any) as the Annuity reflects
a Protected Withdrawal Value (for example, due to a step-up or additional
Purchase Payments being made into the Annuity).
KEY FEATURE -- ANNUAL INCOME AMOUNT UNDER THE LIFE INCOME BENEFIT
The initial Annual Income Amount is equal to 5% of the initial Protected
Withdrawal Value. Under the Lifetime Five program, if your cumulative
withdrawals in an Annuity Year are less than or equal to the Annual Income
Amount, they will not reduce your Annual Income Amount in subsequent Annuity
Years. If your cumulative withdrawals are in excess of the Annual Income Amount
("Excess Income"), your Annual Income Amount in subsequent years will be reduced
(except with regard to required minimum distributions) by the result of the
ratio of the Excess Income to the Account Value immediately prior to such
withdrawal (see examples of this calculation below). Reductions include the
actual amount of the withdrawal, including any CDSC that may apply. A withdrawal
can be considered Excess Income under the Life Income Benefit even though it
does not exceed the Annual Withdrawal Amount under the Withdrawal Benefit. When
you elect a step-up, your Annual Income Amount increases to equal 5% of your
Account Value after the step-up if such amount is greater than your Annual
Income Amount. Your Annual Income Amount also increases if you make additional
Purchase Payments. The amount of the increase is equal to 5% of any additional
Purchase Payments. Any increase will be added to your Annual Income Amount
beginning on the day that the step-up is effective or the Purchase Payment is
made. A determination of whether you have exceeded your Annual Income Amount is
made at the time of each withdrawal; therefore a subsequent increase in the
Annual Income Amount will not offset the effect of a withdrawal that exceeded
the Annual Income Amount at the time the withdrawal was made.
KEY FEATURE -- ANNUAL WITHDRAWAL AMOUNT UNDER THE WITHDRAWAL BENEFIT
The initial Annual Withdrawal Amount is equal to 7% of the initial Protected
Withdrawal Value. Under the Lifetime Five program, if your cumulative
withdrawals each Annuity Year are less than or equal to the Annual Withdrawal
Amount, your Protected Withdrawal Value will be reduced on a dollar-for-dollar
basis. If your cumulative withdrawals are in excess of the Annual Withdrawal
Amount ("Excess Withdrawal"), your Annual Withdrawal Amount will be reduced
(except with regard to required minimum distributions) by the result of the
ratio of the Excess Withdrawal to the Account Value immediately prior to such
withdrawal (see the examples of this calculation below). Reductions include the
actual amount of the withdrawal, including any CDSC that may apply. When you
elect a step-up, your Annual Withdrawal Amount increases to equal 7% of your
Account Value after the step-up if such amount is greater than your Annual
Withdrawal Amount. Your Annual Withdrawal Amount also increases if you make
additional Purchase Payments. The amount of the increase is equal to 7% of any
additional Purchase Payments. A determination of whether you have exceeded your
Annual Withdrawal Amount is made at the time of each withdrawal; therefore, a
subsequent increase
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Living Benefit Programs continued
in the Annual Withdrawal Amount will not offset the effect of a withdrawal that
exceeded the Annual Withdrawal Amount at the time the withdrawal was made.
The Lifetime Five program does not affect your ability to make withdrawals
under your Annuity or limit your ability to request withdrawals that exceed the
Annual Income Amount and the Annual Withdrawal Amount. You are not required to
withdraw all or any portion of the Annual Withdrawal Amount or Annual Income
Amount in each Annuity Year.
- - If, cumulatively, you withdraw an amount less than the Annual Withdrawal
Amount under the Withdrawal Benefit in any Annuity Year, you cannot
carry-over the unused portion of the Annual Withdrawal Amount to
subsequent Annuity Years. However, because the Protected Withdrawal Value
is only reduced by the actual amount of withdrawals you make under these
circumstances, any unused Annual Withdrawal Amount may extend the period
of time until the remaining Protected Withdrawal Value is reduced to zero.
- - If, cumulatively, you withdraw an amount less than the Annual Income
Amount under the Life Income Benefit in any Annuity Year, you cannot
carry-over the unused portion of the Annual Income Amount to subsequent
Annuity Years. However, because the Protected Withdrawal Value is only
reduced by the actual amount of withdrawals you make under these
circumstances, any unused Annual Income Amount may extend the period of
time until the remaining Protected Withdrawal Value is reduced to zero.
The following examples of dollar-for-dollar and proportional reductions
and the step-up of the Protected Withdrawal Value, Annual Withdrawal Amount and
Annual Income Amount assume: 1.) the Issue Date and the Effective Date of the
Lifetime Five program are February 1, 2005; 2.) an initial Purchase Payment of
$250,000; 3.) the Account Value on February 1, 2006 is equal to $265,000; 4.)
the first withdrawal occurs on March 1, 2006 when the Account Value is equal to
$263,000; and 5.) the Account Value on March 1, 2011 is equal to $240,000.
The initial Protected Withdrawal Value is calculated as the greatest of
(a), (b) and (c):
(a) Purchase payment accumulated at 5% per year from February 1, 2005
until March 1, 2006 (393 days) = $250,000 x 1.05(393/365) =
$263,484.33
(b) Account Value on March 1, 2006 (the date of the first withdrawal) =
$263,000
(c) Account Value on February 1, 2006 (the first Annuity Anniversary) =
$265,000
Therefore, the initial Protected Withdrawal Value is equal to $265,000.
The Annual Withdrawal Amount is equal to $18,550 under the Withdrawal Benefit
(7% of $265,000). The Annual Income Amount is equal to $13,250 under the Life
Income Benefit (5% of $265,000).
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
If $10,000 was withdrawn (less than both the Annual Income Amount and the
Annual Withdrawal Amount) on March 1, 2006, then the following values would
result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 -
$10,000 = $8,550
Annual Withdrawal Amount for future Annuity Years remains at $18,550
- - Remaining Annual Income Amount for current Annuity Year = $13,250 -
$10,000 = $3,250
Annual Income Amount for future Annuity Years remains at $13,250
- - Protected Withdrawal Value is reduced by $10,000 from $265,000 to $255,000
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
(a) If $15,000 was withdrawn (more than the Annual Income Amount but less
than the Annual Withdrawal Amount) on March 1, 2006, then the
following values would result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 -
$15,000 = $3,550
Annual Withdrawal Amount for future Annuity Years remains at $18,550
- - Remaining Annual Income Amount for current Annuity Year = $0 Excess of
withdrawal over the Annual Income Amount ($15,000 - $13,250 = $1,750)
reduces Annual Income Amount for future Annuity Years.
- - Reduction to Annual Income Amount = Excess Income/ Account Value before
Excess Income x Annual Income Amount = $1,750 / ($263,000 - $13,250) x
$13,250 = $93
Annual Income Amount for future Annuity Years = $13,250 - $93 = $13,157
- - Protected Withdrawal Value is reduced by $15,000 from $265,000 to $250,000
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
(b) If $25,000 was withdrawn (more than both the Annual Income Amount
and the Annual Withdrawal Amount) on March 1, 2006, then the
following values would result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Withdrawal Amount ($25,000 - $18,550
= $6,450) reduces Annual Withdrawal Amount for future Annuity Years.
- - Reduction to Annual Withdrawal Amount = Excess Withdrawal/Account Value
before Excess Withdrawal x Annual Withdrawal Amount = $6,450 / ($263,000 -
$18,550) x $18,550 = $489
Annual Withdrawal Amount for future Annuity Years = $18,550 - $489 =
$18,061
- - Remaining Annual Income Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Income Amount ($25,000 - $13,250 =
$11,750) reduces Annual Income Amount for future Annuity Years.
- - Reduction to Annual Income Amount = Excess Income/ Account Value before
Excess Income x Annual Income Amount = $11,750 / ($263,000 - $13,250) x
$13,250 = $623
Annual Income Amount for future Annuity Years = $13,250 - $623 = $12,627
- - Protected Withdrawal Value is first reduced by the Annual Withdrawal
Amount ($18,550) from $265,000 to $246,450. It is further reduced by the
greater of a dollar-for-dollar reduction or a proportional reduction.
Dollar-for-dollar reduction = $25,000 - $18,550 = $6,450
- - Proportional reduction = Excess Withdrawal / Account Value before Excess
Withdrawal x Protected Withdrawal Value = $6,450 / ($263,000 - $18,550) x
$246,450 = $6,503 Protected Withdrawal Value = $246,450 - max {$6,450,
$6,503} = $239,947
EXAMPLE 3. STEP-UP OF THE PROTECTED WITHDRAWAL VALUE
If the Annual Income Amount ($13,250) is withdrawn each year starting on March
1, 2006 for a period of 5 years, the Protected Withdrawal Value on March 1, 2011
would be reduced to $198,750 {$265,000 x ($13,250 x 5)}. If a step-up is elected
on March 1, 2011, then the following values would result:
- - Protected Withdrawal Value = Account Value on March 1, 2011 = $240,000
- - Annual Income Amount is equal to the greater of the current Annual Income
Amount or 5% of the stepped up Protected Withdrawal Value. Current Annual
Income Amount is $13,250. 5% of the stepped-up Protected Withdrawal Value
is 5% of $240,000, which is $12,000. Therefore, the Annual Income Amount
remains $13,250.
- - Annual Withdrawal Amount is equal to the greater of the current Annual
Withdrawal Amount or 7% of the stepped up Protected Withdrawal Value.
Current Annual Withdrawal Amount is $18,550. 7% of the stepped-up
Protected Withdrawal Value is 7% of $240,000, which is $16,800. Therefore,
the Annual Withdrawal Amount remains $18,550.
BENEFITS UNDER THE LIFETIME FIVE PROGRAM
- - If your Account Value is equal to zero, and the cumulative withdrawals in
the current Annuity Year are greater than the Annual Withdrawal Amount,
the Lifetime Five program will terminate. To the extent that your Account
Value was reduced to zero as a result of cumulative withdrawals that are
equal to or less than the Annual Income Amount and amounts are still
payable under both the Life Income Benefit and the Withdrawal Benefit, you
will be given the choice of receiving the payments under the Life Income
Benefit or under the Withdrawal Benefit. Once you make this election we
will make an additional payment for that Annuity Year equal to either the
remaining Annual Income Amount or Annual Withdrawal Amount for the Annuity
Year, if any, depending on the option you choose. In subsequent Annuity
Years we make payments that equal either the Annual Income Amount or the
Annual Withdrawal Amount as described in this Prospectus. You will not be
able to change the option after your election and no further Purchase
Payments will be accepted under your Annuity. If you do not make an
election, we will pay you annually under the Life Income Benefit. To the
extent that cumulative withdrawals in the current Annuity Year that
reduced your Account Value to zero are more than the Annual Income Amount
but less than or equal to the Annual Withdrawal Amount and amounts are
still payable under the Withdrawal Benefit, you will receive the payments
under the Withdrawal Benefit. In the year of a withdrawal that reduced
your Account Value to zero, we will make an additional payment to equal
any remaining Annual Withdrawal Amount and make payments equal to the
Annual Withdrawal Amount in each subsequent year (until the Protected
Withdrawal Value is depleted). Once your Account Value equals zero no
further Purchase Payments will be accepted under your Annuity.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Living Benefit Programs continued
- - If annuity payments are to begin under the terms of your Annuity or if you
decide to begin receiving annuity payments and there is any Annual Income
Amount due in subsequent Annuity Years or any remaining Protected
Withdrawal Value, you can elect one of the following three options:
(1) apply your Account Value to any annuity option available; or
(2) request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We
make such annuity payments until the Annuitant's death; or
(3) request that, as of the date annuity payments are to begin, we pay
out any remaining Protected Withdrawal Value as annuity payments.
Each year such annuity payments will equal the Annual Withdrawal
Amount or the remaining Protected Withdrawal Value if less. We make
such annuity payments until the earlier of the Annuitant's death or
the date the Protected Withdrawal Value is depleted.
We must receive your request in a form acceptable to us at our office.
- - In the absence of an election when mandatory annuity payments are to
begin, we will make annual annuity payments as a single life fixed annuity
with five payments certain using the greater of the annuity rates then
currently available or the annuity rates guaranteed in your Annuity. The
amount that will be applied to provide such annuity payments will be the
greater of:
(1) the present value of future Annual Income Amount payments. Such
present value will be calculated using the greater of the single
life fixed annuity rates then currently available or the single life
fixed annuity rates guaranteed in your Annuity; and
(2) the Account Value.
- - If no withdrawal was ever taken, we will determine a Protected Withdrawal
Value and calculate an Annual Income Amount and an Annual Withdrawal
Amount as if you made your first withdrawal on the date the annuity
payments are to begin.
OTHER IMPORTANT CONSIDERATIONS
- - Withdrawals under the Lifetime Five program are subject to all of the
terms and conditions of the Annuity, including any CDSC.
- - Withdrawals made while the Lifetime Five program is in effect will be
treated, for tax purposes, in the same way as any other withdrawals under
the Annuity. The Lifetime Five program does not directly affect the
Annuity's Account Value or Surrender Value, but any withdrawal will
decrease the Account Value by the amount of the withdrawal (plus any
applicable CDSC). If you surrender your Annuity, you will receive the
current Surrender Value, not the Protected Withdrawal Value.
- - You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the Lifetime Five program. The
Lifetime Five program provides a guarantee that if your Account Value
declines due to market performance, you will be able to receive your
Protected Withdrawal Value or Annual Income Amount in the form of periodic
benefit payments.
- - You must allocate your Account Value in accordance with an eligible model
under an available asset allocation program or in accordance with other
options that we may permit in order to elect and maintain the Lifetime
Five program. Our asset allocation programs are described generally in the
"Are Any Asset Allocation Programs Available?" section above. For further
information on asset allocation programs, please consult with your
Investment Professional or call 1-800-752-6342.
ELECTION OF THE PROGRAM
The Lifetime Five program can be elected at the time that you purchase your
Annuity. We also offer existing Owners the option to elect the Lifetime Five
program after the Issue Date of their Annuity, subject to our eligibility rules
and restrictions. Your Account Value as the date of election will be used as a
basis to calculate the initial Protected Withdrawal Value, the initial Protected
Annual Withdrawal Amount, and the Annual Income Amount.
TERMINATION OF THE PROGRAM
The program terminates automatically when your Protected Withdrawal Value and
Annual Income Amount equals zero. You may terminate the program at any time by
notifying us. If you terminate the program, any guarantee provided by the
benefit will terminate as of the date the termination is effective. The program
terminates upon your surrender of the Annuity, upon the death of the Annuitant
(but your surviving spouse may elect a new Lifetime Five if your spouse elects
the spousal continuance option and your spouse would then be eligible to elect
the benefit if he or she was a new purchaser), upon a change in ownership of the
Annuity that changes the tax identification number of the Owner, upon change in
the Annuitant or upon your election to begin receiving annuity payments.
The charge for the Lifetime Five program will no longer be deducted from
your Account Value upon termination of the program.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS
If you purchase an Annuity as an investment vehicle for "qualified"
investments, including an IRA, SEP-IRA, or Tax Sheltered Annuity (or 403(b)),
the minimum distribution rules under the Code require that you begin receiving
periodic amounts from your Annuity beginning after age 70 1/2. The amount
required under the Code may exceed the Annual Withdrawal Amount and the Annual
Income Amount, which will cause us to increase the Annual Income Amount and the
Annual Withdrawal Amount in any Annuity Year that required minimum
distributions due from your Annuity are greater than such amounts. Any such
payments will reduce your Protected Withdrawal Value. In addition, the amount
and duration of payments under the annuity payment and death benefit provisions
may be adjusted so that the payments do not trigger any penalty or excise taxes
due to tax considerations such as minimum distribution requirements.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Death Benefit
WHAT TRIGGERS THE PAYMENT OF A DEATH BENEFIT?
The Annuity provides a Death Benefit during its accumulation period. IF THE
ANNUITY IS OWNED BY ONE OR MORE NATURAL PERSONS, THE DEATH BENEFIT IS PAYABLE
UPON THE FIRST DEATH OF AN OWNER. IF THE ANNUITY IS OWNED BY AN ENTITY, THE
DEATH BENEFIT IS PAYABLE UPON THE ANNUITANT'S DEATH, IF THERE IS NO CONTINGENT
ANNUITANT. If a Contingent Annuitant was designated before the Annuitant's death
and the Annuitant dies, then the Contingent Annuitant becomes the Annuitant and
a Death Benefit will not be paid at that time. The person upon whose death the
Death Benefit is paid is referred to below as the "decedent."
BASIC DEATH BENEFIT
The Annuity provides a basic Death Benefit at no additional charge. The
Insurance Charge we deduct daily from your Account Value allocated to the
Sub-accounts is used, in part, to pay us for the risk we assume in providing the
basic Death Benefit guarantee under the Annuity. The Annuity also offers three
different optional Death Benefits that can be purchased for an additional
charge. The additional charge is deducted to compensate American Skandia for
providing increased insurance protection under the optional Death Benefits.
NOTWITHSTANDING THE ADDITIONAL PROTECTION PROVIDED UNDER THE OPTIONAL DEATH
BENEFITS, THE ADDITIONAL COST HAS THE IMPACT OF REDUCING THE NET PERFORMANCE OF
THE INVESTMENT OPTIONS.
The BASIC DEATH BENEFIT is the greater of:
- - The sum of all Purchase Payments less the sum of all proportional
withdrawals.
- - The sum of your Account Value in the variable investment options and your
Interim Value in the Fixed Allocations.
"PROPORTIONAL WITHDRAWALS" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn. For
example, a withdrawal of 50% of Account Value would be considered as a 50%
reduction in Purchase Payments for purposes of calculating the basic Death
Benefit.
OPTIONAL DEATH BENEFITS
Three optional Death Benefits are offered for purchase with your Annuity to
provide an enhanced level of protection for your beneficiaries.
CURRENTLY, THESE BENEFITS ARE ONLY OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE
RECEIVED REGULATORY APPROVAL AND MUST BE ELECTED AT THE TIME THAT YOU PURCHASE
YOUR ANNUITY. WE MAY, AT A LATER DATE, ALLOW EXISTING ANNUITY OWNERS TO PURCHASE
AN OPTIONAL DEATH BENEFIT SUBJECT TO OUR RULES AND ANY CHANGES OR RESTRICTIONS
IN THE BENEFITS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS
ONCE APPROVED AND IF YOU PURCHASE YOUR ANNUITY AS PART OF AN EXCHANGE,
REPLACEMENT OR TRANSFER, IN WHOLE OR IN PART, FROM ANY OTHER ANNUITY WE ISSUE.
THE "COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE" DEATH BENEFIT MAY
ONLY BE ELECTED INDIVIDUALLY, AND CANNOT BE ELECTED IN COMBINATION WITH ANY
OTHER OPTIONAL DEATH BENEFIT.
ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT
The Enhanced Beneficiary Protection Optional Death Benefit can provide
additional amounts to your Beneficiary that may be used to offset federal and
state taxes payable on any taxable gains in your Annuity at the time of your
death. Whether this benefit is appropriate for you may depend on your particular
circumstances, including other financial resources that may be available to your
Beneficiary to pay taxes on your Annuity should you die during the accumulation
period. No benefit is payable if death occurs on or after the Annuity Date.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT PROVIDES A
BENEFIT THAT IS PAYABLE IN ADDITION TO THE BASIC DEATH BENEFIT. If the Annuity
has one Owner, the Owner must be age 75 or less at the time the benefit is
purchased. If the Annuity has joint Owners, the oldest Owner must be age 75 or
less. If the Annuity is owned by an entity, the Annuitant must be age 75 or
less.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
CALCULATION OF ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT
If you purchase the Enhanced Beneficiary Protection Optional Death Benefit, the
Death Benefit is calculated as follows:
1. the BASIC DEATH BENEFIT described above;
PLUS
2. 40% of your "GROWTH" under the Annuity, as defined below.
"GROWTH" means the sum of your Account Value in the variable investment
options and your Interim Value in the Fixed Allocations, minus the total of all
Purchase Payments reduced by the sum of all proportional withdrawals.
"PROPORTIONAL WITHDRAWALS" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT IS SUBJECT TO A
MAXIMUM OF 100% OF ALL PURCHASE PAYMENTS APPLIED TO THE ANNUITY AT LEAST 12
MONTHS PRIOR TO THE DEATH OF THE DECEDENT THAT TRIGGERS THE PAYMENT OF THE DEATH
BENEFIT.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT IS BEING OFFERED IN
THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL. CERTAIN TERMS
AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. PLEASE REFER TO
THE SECTION ENTITLED "TAX CONSIDERATIONS" FOR A DISCUSSION OF SPECIAL TAX
CONSIDERATIONS FOR PURCHASERS OF THIS BENEFIT. THE ENHANCED BENEFICIARY
PROTECTION DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT THE "COMBINATION 5%
ROLL-UP AND HIGHEST ANNIVERSARY VALUE" DEATH BENEFIT.
See Appendix B for examples of how the Enhanced Beneficiary Protection
Optional Death Benefit is calculated.
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT ("HAV")
If the Annuity has one Owner, the Owner must be age 79 or less at the time the
Highest Anniversary Value Optional Death Benefit is purchased. If the Annuity
has joint Owners, the oldest Owner must be age 79 or less. If the Annuity is
owned by an entity, the Annuitant must be age 79 or less.
CERTAIN OF THE PORTFOLIOS OFFERED AS SUB-ACCOUNTS UNDER THE ANNUITY ARE
NOT AVAILABLE IF YOU ELECT THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT. IN
ADDITION, WE RESERVE THE RIGHT TO REQUIRE YOU TO USE CERTAIN ASSET ALLOCATION
MODEL(S) IF YOU ELECT THIS DEATH BENEFIT.
CALCULATION OF HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
The HAV Death Benefit depends on whether death occurs before or after the Death
Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value as of the Owner's date of death.
If the Owner dies on or after the Death Benefit Target Date, the Death
Benefit equals the greater of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value on the Death Benefit Target Date plus
the sum of all Purchase Payments less the sum of all proportional
withdrawals since the Death Benefit Target Date.
THE AMOUNT DETERMINED BY THIS CALCULATION IS INCREASED BY ANY PURCHASE
PAYMENTS RECEIVED AFTER THE OWNER'S DATE OF DEATH AND DECREASED BY ANY
PROPORTIONAL WITHDRAWALS SINCE SUCH DATE.
THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT DESCRIBED ABOVE IS CURRENTLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL.
CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. THE
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT THE
"COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE" OR THE "HIGHEST DAILY
VALUE" DEATH BENEFIT.
Please refer to the definition of Death Benefit Target Date below. This
death benefit may not be an appropriate feature where the Owner's age is near
the age specified in the Death Benefit Target Date. This is because the benefit
may not have the same potential for growth as it otherwise would, since there
will be fewer contract anniversaries before the death benefit target date is
reached. The death benefit target date under this death benefit is earlier than
the death benefit target date under the Combination 5% Roll-up and Highest
Anniversary Value Death Benefit for Owners who are age 76 or older when the
Annuity is issued, which may result in a lower value on the death benefit, since
there will be fewer contract anniversaries before the death benefit target date
is reached.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Death Benefit continued
See Appendix B for examples of how the Highest Anniversary Value Death
Benefit is calculated.
COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
If the Annuity has one Owner, the Owner must be age 79 or less at the time the
Combination 5% Roll-up and HAV Optional Death Benefit is purchased. If the
Annuity has joint Owners, the oldest Owner must be age 79 or less. If the
Annuity is owned by an entity, the Annuitant must be age 79 or less.
CERTAIN OF THE PORTFOLIOS OFFERED AS SUB-ACCOUNTS UNDER THE ANNUITY ARE
NOT AVAILABLE IF YOU ELECT THE COMBINATION 5% ROLL-UP AND HAV DEATH BENEFIT. IN
ADDITION, WE RESERVE THE RIGHT TO REQUIRE YOU TO USE CERTAIN ASSET ALLOCATION
MODEL(S) IF YOU ELECT THIS DEATH BENEFIT.
CALCULATION OF THE COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH
BENEFIT
The Combination 5% Roll-up and HAV Death Benefit equals the greatest of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value death benefit described above, and
3. 5% Roll-up described below.
The calculation of the 5% Roll-up depends on whether death occurs before
or after the Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date the 5% Roll up is
equal to:
- - all Purchase Payments increasing at an annual effective interest rate of
5% starting on the date that each Purchase Payment is made and ending on
the Owner's date of death;
MINUS
- - the sum of all withdrawals, dollar for dollar up to 5% of the death
benefit's value as of the prior contract anniversary (or issue date if the
withdrawal is in the first contract year). Any withdrawals in excess of
the 5% dollar for dollar limit are proportional.
If the Owner dies on or after the Death Benefit Target Date the 5% Roll-up
is equal to:
- - the 5% Roll-up value as of the Death Benefit Target Date increased by
total Purchase Payments made after the Death Benefit Target Date;
MINUS
- - the sum of all withdrawals which reduce the 5% Roll-up proportionally.
PLEASE REFER TO THE DEFINITIONS OF DEATH BENEFIT TARGET DATE BELOW. THIS DEATH
BENEFIT MAY NOT BE AN APPROPRIATE FEATURE WHERE THE OWNER'S AGE IS NEAR THE AGE
SPECIFIED IN THE DEATH BENEFIT TARGET DATE. THIS IS BECAUSE THE BENEFIT MAY NOT
HAVE THE SAME POTENTIAL FOR GROWTH AS IT OTHERWISE WOULD, SINCE THERE WILL BE
FEWER CONTRACT ANNIVERSARIES BEFORE THE DEATH BENEFIT TARGET DATE IS REACHED.
THE "COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE" DEATH BENEFIT
DESCRIBED ABOVE IS CURRENTLY BEING OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE
RECEIVED REGULATORY APPROVAL. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. THE "COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY
VALUE" DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT ANY OTHER OPTIONAL DEATH
BENEFIT.
See Appendix B for examples of how the Combination 5% Roll-up and Highest
Anniversary Value Death Benefit is calculated.
KEY TERMS USED WITH THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT AND THE
COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT:
- - The Death Benefit Target Date for the Highest Anniversary Value Death
Benefit is the contract anniversary on or after the 80th birthday of the
current Owner, the oldest of either joint Owner or the Annuitant, if
entity owned.
- - The Death Benefit Target Date for the Combination 5% Roll-up and HAV Death
Benefit is the later of the contract anniversary on or after the 80th
birthday of the current Owner, the oldest of either joint Owner or the
Annuitant, if entity owned, or five years after the Issue Date of the
Annuity.
- - The Highest Anniversary Value equals the highest of all previous
"Anniversary Values" less proportional withdrawals since such anniversary
and plus any Purchase Payments since such anniversary.
- - The Anniversary Value is the Account Value as of each anniversary of the
Issue Date of the Annuity. The Anniversary Value on the Issue Date is
equal to your Purchase Payment.
- - Proportional withdrawals are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
Proportional withdrawals result in a reduction to the Highest Anniversary
Value or 5% Roll-up value by reducing such value in the same proportion as
the Account Value was reduced by the
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
withdrawal as of the date the withdrawal occurred. For example, if your
Highest Anniversary Value or 5% Roll-up value is $125,000 and you
subsequently withdraw $10,000 at a time when your Account Value is equal
to $100,000 (a 10% reduction), when calculating the optional Death Benefit
we will reduce your Highest Anniversary Value ($125,000) by 10% or
$12,500.
HIGHEST DAILY VALUE DEATH BENEFIT ("HDV")
If the Annuity has one Owner, the Owner must be age 79 or less at the time the
Highest Daily Value Death Benefit is elected. If the Annuity has joint Owners,
the older Owner must be age 79 or less. If there are Joint Owners, death of the
Owner refers to the first to die of the Joint Owners. If the Annuity is owned by
an entity, the Annuitant must be age 79 or less and death of the Owner refers to
the death of the Annuitant.
IF YOU ELECT THIS BENEFIT, YOU MUST ALLOCATE YOUR ACCOUNT VALUE IN
ACCORDANCE WITH AN ELIGIBLE MODEL UNDER OUR ASSET ALLOCATION PROGRAMS. Because
this benefit, once elected, may not be terminated, you must keep your Account
Value allocated to an eligible model throughout the life of the Annuity. You
may, however, switch from one eligible model to another eligible model. Our
asset allocation programs are generally described in the "Are Any Asset
Allocation Programs Available?" section above. For further information on asset
allocation programs, please consult with your Investment Professional or call
1-800-752-6342.
The HDV Death Benefit depends on whether death occurs before or after the
Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the basic Death Benefit described above; and
2. the HDV as of the Owner's date of death.
If the Owner dies on or after the Death Benefit Target Date, the Death
Benefit equals the greater of:
1. the basic Death Benefit described above; and
2. the HDV on the Death Benefit Target Date plus the sum of all
Purchase Payments less the sum of all proportional withdrawals since
the Death Benefit Target Date.
The amount determined by this calculation is increased by any Purchase
Payments received after the Owner's date of death and decreased by any
proportional withdrawals since such date.
THE HIGHEST DAILY VALUE DEATH BENEFIT DESCRIBED ABOVE IS CURRENTLY BEING OFFERED
IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL. CERTAIN TERMS
AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. THE HIGHEST DAILY
VALUE DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION,
GUARANTEED RETURN OPTION PLUS, THE "COMBINATION 5% ROLL-UP AND HIGHEST
ANNIVERSARY VALUE" DEATH BENEFIT, OR THE HIGHEST ANNIVERSARY VALUE DEATH
BENEFIT.
KEY TERMS USED WITH THE HIGHEST DAILY VALUE DEATH BENEFIT:
- - The Death Benefit Target Date for the Highest Daily Value Death Benefit is
the later of the Annuity anniversary on or after the 80th birthday of the
current Owner, or the older of either the joint Owner or the Annuitant, if
entity owned, or five years after the Issue Date of the Annuity.
- - The Highest Daily Value equals the highest of all previous "Daily Values"
less proportional withdrawals since such date and plus any Purchase
Payments since such date.
- - The Daily Value is the Account Value as of the end of each Valuation Day.
The Daily Value on the Issue Date is equal to your Purchase Payment.
- - Proportional withdrawals are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
Proportional withdrawals result in a reduction to the Highest Daily Value
by reducing such value in the same proportion as the Account Value was
reduced by the withdrawal as of the date the withdrawal occurred. For
example, if your Highest Daily Value is $125,000 and you subsequently
withdraw $10,000 at a time when your Account Value is equal to $100,000 (a
10% reduction), when calculating the optional Death Benefit we will reduce
your Highest Daily Value ($125,000) by 10% or $12,500.
Please see Appendix B to this prospectus for a hypothetical example of how
the HDV Death Benefit is calculated.
ANNUITIES WITH JOINT OWNERS
For Annuities with Joint Owners, the Death Benefits are calculated as shown
above except that the age of the oldest of the Joint Owners is used to
determine the Death Benefit Target Date. NOTE: If you and your spouse own the
Annuity jointly, we will pay the Death Benefit to the Beneficiary. If the sole
primary Beneficiary is the surviving spouse, then the surviving
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Death Benefit continued
spouse can elect to assume ownership of the Annuity and continue the Annuity
instead of receiving the Death Benefit.
ANNUITIES OWNED BY ENTITIES
For Annuities owned by an entity, the Death Benefits are calculated as shown
above except that the age of the Annuitant is used to determine the Death
Benefit Target Date. Payment of the Death Benefit is based on the death of the
Annuitant (or Contingent Annuitant, if applicable).
CAN I TERMINATE THE OPTIONAL DEATH BENEFITS? DO THE OPTIONAL DEATH BENEFITS
TERMINATE UNDER OTHER CIRCUMSTANCES?
You can terminate the Enhanced Beneficiary Protection Death Benefit and the
Highest Anniversary Value Death Benefit at any time. The "Combination 5%
Roll-up and HAV Death Benefit" and the HDV Death Benefit may not be terminated
once elected. The optional Death Benefits will terminate automatically on the
Annuity Date. We may also terminate any optional Death Benefit if necessary to
comply with our interpretation of the Code and applicable regulations.
WHAT ARE THE CHARGES FOR THE OPTIONAL DEATH BENEFITS?
We deduct a charge equal to 0.25% per year of the average daily net assets of
the Sub-accounts for each of the Highest Anniversary Value Death Benefit and the
Enhanced Beneficiary Protection Death Benefit and 0.50% per year of the average
daily net assets of the Sub-accounts for the "Combination 5% Roll-up and HAV
Death Benefit" and the HDV Death Benefit. We deduct the charge for each of these
benefits to compensate American Skandia for providing increased insurance
protection under the optional Death Benefits.
Please refer to the section entitled "Tax Considerations" for additional
considerations in relation to the optional Death Benefit.
AMERICAN SKANDIA'S ANNUITY REWARDS
WHAT IS THE ANNUITY REWARDS BENEFIT?
The Annuity Rewards benefit offers Owners the ability to capture any market
gains since the Issue Date of their Annuity as
an enhancement to their current Death Benefit so their Beneficiaries will not
receive less than the Annuity's value as of the effective date of the benefit.
Under the Annuity Rewards benefit, American Skandia guarantees that the Death
Benefit will not be less than:
- - your Account Value in the variable investment options plus the Interim
Value in any Fixed Allocations as of the effective date of the benefit
- - MINUS any proportional withdrawals* following the effective date of the
benefit
- - PLUS any additional Purchase Payments applied to the Annuity following the
effective date of the benefit.
The Annuity Rewards Death Benefit enhancement does not affect the
calculation of the basic Death Benefit or any Optional Death Benefits available
under the Annuity to the extent such benefit provides for a change in the method
of calculation based on the age of the decedent as of the date of death. If the
Death Benefit amount payable under your Annuity's basic Death Benefit or any
Optional Death Benefits you purchase is greater than the enhanced Death Benefit
under the Annuity Rewards benefit on the date the Death Benefit is calculated,
your Beneficiary will receive the higher amount.
WHO IS ELIGIBLE FOR THE ANNUITY REWARDS BENEFIT?
Owners can elect the Annuity Rewards Death Benefit enhancement following the
eighth (8th) anniversary of the Annuity's Issue Date. However, the Account
Value on the date that the Annuity Rewards Benefit is effective must be greater
than the amount that would be payable to their Beneficiary under the Death
Benefit (including any amounts payable under any Optional Death Benefit then in
effect). The effective date must occur before annuity payments begin. There can
only be one effective date for the Annuity Rewards Death Benefit enhancement.
There is no additional charge for electing the Annuity Rewards Death Benefit
enhancement.
* "Proportional withdrawals" are determined by calculating the percentage of the
Account Value that each withdrawal represented when withdrawn. For example, a
withdrawal of 50% of your Account Value would be treated as a 50% reduction in
the amount payable under the Death Benefit.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
PAYMENT OF DEATH BENEFITS
PAYMENT OF DEATH BENEFIT TO BENEFICIARY
Except in the case of a spousal assumption as described below, in the event of
your death, the death benefit must be distributed:
- - as a lump sum amount at any time within five (5) years of the date of
death; or
- - as a series of annuity payments not extending beyond the life expectancy
of the Beneficiary or over the life of the Beneficiary. Payments under
this option must begin within one year of the date of death.
Unless you have made an election prior to death benefit proceeds becoming
due, a Beneficiary can elect to receive the Death Benefit proceeds as a series
of fixed annuity payments (annuity payment options 1-4) or as a series of
variable annuity payments (annuity payment options 1-3 or 5 and 6). See the
section entitled "What Types of Annuity Options are Available."
SPOUSAL BENEFICIARY -- ASSUMPTION OF ANNUITY
You may name your spouse as your Beneficiary. If you and your spouse own the
Annuity jointly, we assume that the sole primary Beneficiary will be the
surviving spouse unless you elect an alternative Beneficiary designation. Unless
you elect an alternative Beneficiary designation, the spouse Beneficiary may
elect to assume ownership of the Annuity instead of taking the Death Benefit
payment. Any Death Benefit (including any optional Death Benefits) that would
have been payable to the Beneficiary will become the new Account Value as of the
date we receive due proof of death and any required proof of a spousal
relationship. As of the date the assumption is effective, the surviving spouse
will have all the rights and benefits that would be available under the Annuity
to a new purchaser of the same attained age. For purposes of determining any
future Death Benefit for the surviving spouse, the new Account Value will be
considered as the initial Purchase Payment. No CDSC will apply to the new
Account Value. However, any additional Purchase Payments applied after the date
the assumption is effective will be subject to all provisions of the Annuity,
including any CDSC that may apply to the additional Purchase Payments.
See the section entitled "Managing Your Annuity -- Spousal Contingent
Annuitant" for a discussion of the treatment of a spousal Contingent Annuitant
in the case of the death of the Annuitant in an entity owned Annuity.
QUALIFIED BENEFICIARY CONTINUATION OPTION
The Code provides for alternative death benefit payment options when an Annuity
is used as an IRA, 403(b) or other "qualified investment" that requires Minimum
Distributions. Upon the Owner's death under an IRA, 403(b) or other "qualified
investment", a Beneficiary may generally elect to continue the Annuity and
receive Minimum Distributions under the Annuity instead of receiving the death
benefit in a single payment. The available payment options will depend on
whether the Owner died on or before the date he or she was required to begin
receiving Minimum Distributions under the Code and whether the Beneficiary is
the surviving spouse.
- - If death occurs BEFORE the date Minimum Distributions must begin under the
Code, the Death Benefit can be paid out in either a lump sum, within five
years from the date of death, or over the life or life expectancy of the
designated Beneficiary (as long as payments begin by December 31st of the
year following the year of death). However, if the spouse is the
Beneficiary, the Death Benefit can be paid out over the life or life
expectancy of the spouse with such payments beginning no earlier than
December 31st of the year following the year of death or December 31st of
the year in which the deceased would have reached age 70 1/2, which ever
is later.
- - If death occurs AFTER the date Minimum Distributions must begin under the
Code, the Death Benefit must be paid out at least as rapidly as under the
method then in effect.
A Beneficiary has the flexibility to take out more each year than required
under the Minimum Distribution rules. Until withdrawn, amounts in an IRA, 403(b)
or other "qualified investment" continue to be tax deferred. Amounts withdrawn
each year, including amounts that are required to be withdrawn under the Minimum
Distribution rules, are subject to tax. You may wish to consult a professional
tax advisor for tax advice as to your particular situation.
Upon election of this Qualified Beneficiary Continuation option:
- - the Annuity contract will be continued in the Owner's name, for the
benefit of the Beneficiary.
- - the Beneficiary will be charged at an amount equal to 1.40% daily against
the average daily assets allocated to the Sub-accounts.
- - the Account Value will be equal to any Death Benefit (including any
optional Death Benefit) that would have been payable to the Beneficiary if
they had taken a lump sum distribution.
- - the Beneficiary may request transfers among Sub-accounts, subject to the
same limitations and restrictions that applied
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Death Benefit continued
to the Owner, except that the Sub-accounts offered will be those offered
under the Qualified Beneficiary Continuation option at the time the option
is elected.
- - the Fixed Allocations will be those offered under the Qualified
Beneficiary Continuation option at the time the option is elected.
- - no additional Purchase Payments can be applied to the Annuity.
- - other optional Benefits will be those offered under the Qualified
Beneficiary Continuation option at the time of election.
- - the basic Death Benefit and any optional Death Benefits elected by the
Owner will no longer apply to the Beneficiary.
- - the Beneficiary can request a withdrawal of all or a portion of the
Account Value at any time without application of a CDSC.
- - upon the death of the Beneficiary, any remaining Account Value will be
paid in a lump sum to the person(s) named by the Beneficiary.
- - all amounts in the Annuity must be paid out to the Beneficiary according
to the Minimum Distribution rules described above.
Your Beneficiary will be provided with a prospectus and settlement option that
will describe this option at the time he or she elects this option. Please
contact American Skandia for additional information on the availability,
restrictions and limitations that will apply to a Beneficiary under the
Qualified Beneficiary Continuation option.
ARE THERE ANY EXCEPTIONS TO THESE RULES FOR PAYING THE DEATH BENEFIT?
Yes, there are exceptions that apply no matter how your Death Benefit is
calculated. There are exceptions to the Death Benefit if the decedent was not
the Owner or Annuitant as of the Issue Date and did not become the Owner or
Annuitant due to the prior Owner's or Annuitant's death. Any Death Benefit
(including any optional Death Benefit) that applies will be suspended for a
two-year period from the date he or she first became Owner or Annuitant. After
the two-year suspension period is completed, the Death Benefit is the same as if
this person had been an Owner or Annuitant on the Issue Date.
WHEN DO YOU DETERMINE THE DEATH BENEFIT?
We determine the amount of the Death Benefit as of the date we receive "due
proof of death", any instructions we require to determine the method of payment
and any other written representations we require to determine the proper payment
of the Death Benefit to all Beneficiaries. "Due proof of death" may include a
certified copy of a death certificate, a certified copy of a decree of a court
of competent jurisdiction as to the finding of death or other satisfactory proof
of death. Upon our receipt of "due proof of death" we automatically transfer the
Death Benefit to the AST Money Market Sub-account until we further determine the
universe of eligible Beneficiaries. Once the universe of eligible Beneficiaries
has been determined each eligible Beneficiary may allocate his or her eligible
share of the Death Benefit to the Sub-accounts according to our rules.
Each Beneficiary must make an election as to the method they wish to
receive their portion of the Death Benefit. Absent an election of a Death
Benefit payment method, no Death Benefit can be paid to the Beneficiary. We may
require written acknowledgment of all named Beneficiaries before we can pay the
Death Benefit. DURING THE PERIOD FROM THE DATE OF DEATH UNTIL WE RECEIVE ALL
REQUIRED PAPER WORK, THE AMOUNT OF THE DEATH BENEFIT MAY BE SUBJECT TO MARKET
FLUCTUATIONS.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Valuing Your Investment
HOW IS MY ACCOUNT VALUE DETERMINED?
During the accumulation period, the Annuity has an Account Value. The Account
Value is determined separately for each Sub-account allocation and for each
Fixed Allocation. The Account Value is the sum of the values of each Sub-account
allocation and the value of each Fixed Allocation. The Account Value does not
reflect any CDSC that may apply to a withdrawal or surrender. When determining
the Account Value on a day more than 30 days prior to a Fixed Allocation's
Maturity Date, the Account Value may include any Market Value Adjustment that
would apply to a Fixed Allocation (if withdrawn or transferred) on that day.
WHAT IS THE SURRENDER VALUE OF MY ANNUITY?
The Surrender Value of your Annuity is the value available to you on any day
during the accumulation period. The Surrender Value is defined under "Glossary
of Terms" above.
HOW AND WHEN DO YOU VALUE THE SUB-ACCOUNTS?
When you allocate Account Value to a Sub-account, you are purchasing units of
the Sub-account. Each Sub-account invests exclusively in shares of an underlying
Portfolio. The value of the Units fluctuates with the market fluctuations of the
Portfolios. The value of the Units also reflects the daily accrual for the
Insurance Charge, the Distribution Charge (if applicable), and if you elected
one or more optional benefits whose annual charge is deducted daily, the
additional charge made for such benefits. There may be several different Unit
Prices for each Sub-account to reflect the Insurance Charge, Distribution Charge
and the charges for any optional benefits. The Unit Price for the Units you
purchase will be based on the total charges for the benefits that apply to your
Annuity. See the section entitled "What Happens to My Units When There is a
Change in Daily Asset-Based Charges?" for a detailed discussion of how Units are
purchased and redeemed to reflect changes in the daily charges that apply to
your Annuity.
Each Valuation Day, we determine the price for a Unit of each Sub-account,
called the "Unit Price." The Unit Price is used for determining the value of
transactions involving Units of the Sub-accounts. We determine the number of
Units involved in any transaction by dividing the dollar value of the
transaction by the Unit Price of the Sub-account as of the Valuation Day.
EXAMPLE
Assume you allocate $5,000 to a Sub-account. On the Valuation Day you make the
allocation, the Unit Price is $14.83. Your $5,000 buys 337.154 Units of the
Sub-account. Assume that later, you wish to transfer $3,000 of your Account
Value out of that Sub-account and into another Sub-account. On the Valuation Day
you request the transfer, the Unit Price of the original Sub-account has
increased to $16.79. To transfer $3,000, we sell 178.677 Units at the current
Unit Price, leaving you 158.477 Units. We then buy $3,000 of Units of the new
Sub-account at the Unit Price of $17.83. You would then have 168.255 Units of
the new Sub-account.
HOW DO YOU VALUE FIXED ALLOCATIONS?
During the Guarantee Period, we use the concept of an Interim Value. The Interim
Value can be calculated on any day and is equal to the initial value allocated
to a Fixed Allocation plus all interest credited to a Fixed Allocation as of the
date calculated. The Interim Value does not include the impact of any Market
Value Adjustment. If you made any transfers or withdrawals from a Fixed
Allocation, the Interim Value will reflect the withdrawal of those amounts and
any interest credited to those amounts before they were withdrawn. To determine
the Account Value of a Fixed Allocation on any day more than 30 days prior to
its Maturity Date, we multiply the Account Value of the Fixed Allocation times
the Market Value Adjustment factor.
WHEN DO YOU PROCESS AND VALUE TRANSACTIONS?
American Skandia is generally open to process financial transactions on those
days that the New York Stock Exchange (NYSE) is open for trading. There may be
circumstances where the NYSE does not open on a regularly scheduled date or time
or closes at an earlier time than scheduled (normally 4:00 p.m. EST). Financial
transactions requested before the close of the NYSE which meet our requirements
will be processed according to the value next determined following the close of
business. Financial transactions requested on a non-business day or after the
close of the NYSE will be processed based on the value next computed on the next
Valuation Day. There may be circumstances when the opening or closing time of
the NYSE is different than other major stock exchanges, such as NASDAQ or the
American Stock Exchange. Under such circumstances, the closing time of the NYSE
will be used when valuing and processing transactions.
There may be circumstances where the NYSE is open, however, due to
inclement weather, natural disaster or other circumstances beyond our control,
our offices may be closed or our business processing capabilities may be
restricted.
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Valuing Your Investment continued
Under those circumstances, your Account Value may fluctuate based on changes in
the Unit Values, but you may not be able to transfer Account Value, or make a
purchase or redemption request.
The NYSE is closed on the following nationally recognized holidays: New
Year's Day, Martin Luther King, Jr. Day, Washington's Birthday, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas. On those
dates, we will not process any financial transactions involving purchase or
redemption orders.
American Skandia will also not process financial transactions involving
purchase or redemption orders or transfers on any day that:
- - trading on the NYSE is restricted;
- - an emergency exists making redemption or valuation of securities held in
the separate account impractical; or
- - the SEC, by order, permits the suspension or postponement for the
protection of security holders.
INITIAL PURCHASE PAYMENTS: We are required to allocate your initial
Purchase Payment to the Sub-accounts within two (2) business days after we
receive all of our requirements at our office to issue the Annuity. If we do not
have all the required information to allow us to issue your Annuity, we may
retain the Purchase Payment while we try to reach you or your representative to
obtain all of our requirements. If we are unable to obtain all of our required
information within five (5) business days, we are required to return the
Purchase Payment to you at that time, unless you specifically consent to our
retaining the Purchase Payment while we gather the required information. Once we
obtain the required information, we will invest the Purchase Payment and issue
the Annuity within two (2) business days. During any period that we are trying
to obtain the required information, your money is not invested.
ADDITIONAL PURCHASE PAYMENTS: We will apply any additional Purchase
Payments on the Valuation Day that we receive the Purchase Payment at our office
with satisfactory allocation instructions. We will allocate any additional
Purchase Payments you make according to your most recent allocation instructions
if none are provided.
SCHEDULED TRANSACTIONS: "Scheduled" transactions include transfers under a
Dollar Cost Averaging, rebalancing, or asset allocation program, Systematic
Withdrawals, Minimum Distributions or annuity payments. Scheduled transactions
are processed and valued as of the date they are scheduled, unless the scheduled
day is not a Valuation Day. In that case, the transaction will be processed and
valued on the next Valuation Day, unless the next Valuation Day falls in the
subsequent calendar year, in which case the transaction will be processed and
valued on the prior Valuation Day.
UNSCHEDULED TRANSACTIONS: "Unscheduled" transactions include any other
non-scheduled transfers and requests for Partial Withdrawals or Free Withdrawals
or Surrenders. Unscheduled transactions are processed and valued as of the
Valuation Day we receive the request at our Office and have all of the required
information.
MEDICALLY-RELATED SURRENDERS & DEATH BENEFITS:
Medically-related surrender requests and Death Benefit claims require our review
and evaluation before processing. We price such transactions as of the date we
receive at our Office all supporting documentation we require for such
transactions and that are satisfactory to us.
TRANSACTIONS IN PROFUNDS VP SUB-ACCOUNTS: Generally, purchase or
redemption orders or transfer requests must be received by us by no later than
the close of the NYSE to be processed on the current Valuation Day. However, any
purchase or redemption order or transfer request involving the ProFunds VP
Sub-accounts must be received by us no later than one hour prior to any
announced closing of the applicable securities exchange (generally, 3:00 p.m.
Eastern time) to be processed on the current Valuation Day. The "cut-off" time
for such financial transactions involving a ProFunds VP Sub-account will be
extended to 1/2 hour prior to any announced closing (generally, 3:30 p.m.
Eastern time) for transactions submitted electronically through American
Skandia's Internet website (www.americanskandia.prudential.com). You cannot
request a transaction involving the purchase, redemption or transfer of units in
one of the ProFunds VP Sub-accounts between the applicable "cut-off" time and
4:00 p.m. Transactions received after 4:00 p.m. will be treated as received by
us on the next Valuation Day.
WHAT HAPPENS TO MY UNITS WHEN THERE IS A CHANGE IN DAILY ASSET-BASED CHARGES?
DISTRIBUTION CHARGE: The Distribution Charge is deducted under your Annuity
during Annuity Years 1-8. At the end of the 8th Annuity Year, we will no longer
deduct the Distribution Charge. On the date the charge no longer applies, your
Annuity will become subject to a different daily asset-based charge. We will
process a transaction where your Account Value allocated to the Sub-accounts
will be used to purchase new Units of the Sub-accounts that reflect the
Insurance Charge
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
(and the charge for any optional benefits you have elected) but not the
Distribution Charge. The number of Units attributed to your Annuity will be
decreased and the Unit Price of each unit of the Sub-accounts in which you
invested will be increased. THE ADJUSTMENT IN THE NUMBER OF UNITS AND UNIT PRICE
WILL NOT AFFECT YOUR ACCOUNT VALUE. Beginning on that date, your Account Value
will be determined based on the change in the value of Units that reflect the
Insurance Charge and any other optional benefits that you have elected.
TERMINATION OF OPTIONAL BENEFITS: Except for the Guaranteed Minimum Income
Benefit, the Combination 5% Roll-up and Highest Anniversary Value Death Benefit
and the Highest Daily Value Death Benefit, which cannot be terminated by the
owner once elected, if any optional benefit terminates, we will no longer deduct
the charge we apply to purchase the optional benefit. Certain optional benefits
may be added after you have purchased your Annuity. On the date a charge no
longer applies or a charge for an optional benefit begins to be deducted, your
Annuity will become subject to a different daily asset-based charge. This change
may result in the number of Units attributed to your Annuity and the value of
those Units being different than it was before the change, however, the
adjustment in the number of Units and Unit Price will not affect your Account
Value (although the change in charges that are deducted will affect your Account
Value).
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Tax Considerations
The tax considerations associated with the Annuity vary depending on whether the
contract is (i) owned by an individual and not associated with a tax-favored
retirement plan (including contracts held by a non-natural person, such as a
trust acting as an agent for a natural person), or (ii) held under a tax-favored
retirement plan. We discuss the tax considerations for these categories of
contracts below. The discussion is general in nature and describes only federal
income tax law (not state or other tax laws). It is based on current law and
interpretations, which may change. The discussion includes a description of
certain spousal rights under the contract and under tax-qualified plans. Our
administration of such spousal rights and related tax reporting accords with our
understanding of the Defense of Marriage Act (which defines a "marriage" as a
legal union between a man and a woman and a "spouse" as a person of the opposite
sex). The information provided is not intended as tax advice. You should consult
with a qualified tax advisor for complete information and advice. References to
purchase payments below relates to your cost basis in your contract. Generally,
your cost basis in a contract not associated with a tax-favored retirement plan
is the amount you pay into your contract, or into annuities exchanged for your
contract, on an after-tax basis less any withdrawals of such payments.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA or 403(b) account, which can hold other permissible assets other than the
annuity. The terms and administration of the trust or custodial account in
accordance with the laws and regulations for IRAs or 403(b)s, as applicable, are
the responsibility of the applicable trustee or custodian.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
TAXES PAYABLE BY YOU
We believe the contract is an annuity contract for tax purposes. Accordingly, as
a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates)
to you during the same calendar year must be treated as one annuity contract for
purposes of determining the amount subject to tax under the rules described
below.
It is possible that the Internal Revenue Service (IRS) would assert that
some or all of the charges for the optional benefits under the contract should
be treated for federal income tax purposes as a partial withdrawal from the
contract. If this were the case, the charge for this benefit could be deemed a
withdrawal and treated as taxable to the extent there are earnings in the
contract. Additionally, for owners under age 59 1/2, the taxable income
attributable to the charge for the benefit could be subject to a tax penalty.
If the IRS determines that the charges for one or more benefits under the
contract are taxable withdrawals, then the sole or surviving owner will be
provided with a notice from us describing available alternatives regarding these
benefits.
If you choose to defer the Annuity Date beyond the default date for your
Annuity, the IRS may not consider your contract to be an annuity under the tax
law. For more information, see "How and When Do I Choose the Annuity Payment
Option?".
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn. You
will generally be taxed on any withdrawals from the contract while you are
alive even if the withdrawal is paid to someone else.
If you assign or pledge all or part of your contract as collateral for a
loan, the part assigned generally will be treated as a withdrawal.
If you transfer your contract for less than full consideration, such as by
gift, you will trigger tax on any gain in the contract. This rule does not apply
if you transfer the contract to your spouse or under most circumstances if you
transfer the contract incident to divorce.
TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment you receive by a fraction, the
numerator of which is your purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the contract.
After the full amount of your purchase payments have been recovered
tax-free, the full amount of the annuity payments will be taxable. If annuity
payments stop due to the death of the annuitant before the full amount of your
purchase payments have been recovered, a tax deduction may be allowed for the
unrecovered amount.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
TAX PENALTY ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount you receive under your contract may be subject to a 10% tax
penalty. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled;
- - generally the amount paid or received is in the form of substantially
equal payments not less frequently than annually (Please note that
substantially equal payments must continue until the later of reaching age
59 1/2 or 5 years. Modification of payments during that time period will
result in retroactive application of the 10% tax penalty.); or
- - the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
SPECIAL RULES IN RELATION TO TAX-FREE EXCHANGES UNDER SECTION 1035
Section 1035 of the Internal Revenue Code of 1986, as amended (Code) permits
certain tax-free exchanges of a life insurance, annuity or endowment contract
for an annuity. If the annuity is purchased through a tax-free exchange of a
life insurance, annuity or endowment contract that was purchased prior to August
14, 1982, then any purchase payments made to the original contract prior to
August 14, 1982 will be treated as made to the new contract prior to that date.
(See Federal Tax Status section in the Statement of Additional Information.)
Partial surrenders may be treated in the same way as tax-free 1035
exchanges of entire contracts, therefore avoiding current taxation of any gains
in the contract as well as the 10% tax penalty on pre-age 59 1/2 withdrawals.
The IRS has reserved the right to treat transactions it considers abusive as
ineligible for this favorable partial 1035 exchange treatment. We do not know
what transactions may be considered abusive. For example we do not know how the
IRS may view early withdrawals or annuitizations after a partial exchange. In
addition, it is unclear how the IRS will treat a partial exchange from a life
insurance, endowment, or annuity contract into an immediate annuity. As of the
date of this prospectus, we will accept a partial 1035 exchange from a
non-qualified annuity into an immediate annuity as a "tax-free" exchange for
future tax reporting purposes, except to the extent that we, as a reporting and
withholding agent, believe that we would be expected to deem the transaction to
be abusive. However, some insurance companies may not recognize these partial
surrenders as tax-free exchanges and may report them as taxable distributions to
the extent of any gain distributed as well as subjecting the taxable portion of
the distribution to the 10% tax penalty. We strongly urge you to discuss any
transaction of this type with your tax advisor before proceeding with the
transaction.
TAXES PAYABLE BY BENEFICIARIES
The death benefit options are subject to income tax to the extent the
distribution exceeds the cost basis in the contract. The value of the death
benefit, as determined under federal law, is also included in the owner's
estate.
Generally, the same tax rules described above would also apply to amounts
received by your beneficiary. Choosing any option other than a lump sum death
benefit may defer taxes. Certain minimum distribution requirements apply upon
your death, as discussed further below.
Tax consequences to the beneficiary vary among the death benefit payment
options.
- Choice 1: the beneficiary is taxed on earnings in the contract.
- Choice 2: the beneficiary is taxed as amounts are withdrawn (in this
case earnings are treated as being distributed first).
- Choice 3: the beneficiary is taxed on each payment (part will be
treated as earnings and part as return of premiums).
CONSIDERATIONS FOR CONTINGENT ANNUITANTS: There may be adverse tax
consequences if a Contingent Annuitant succeeds an Annuitant when the Annuity is
owned by a trust that is neither tax exempt nor qualifies for preferred
treatment under certain sections of the Code. In general, the Code is designed
to prevent indefinite deferral of tax. Continuing the benefit of tax deferral by
naming one or more Contingent Annuitants when the Annuity is owned by a
non-qualified trust might be deemed an attempt to extend the tax deferral for an
indefinite period. Therefore, adverse tax treatment may depend on the terms of
the trust, who is named as Contingent Annuitant, as well as the particular facts
and circumstances. You should consult your tax advisor before naming a
Contingent Annuitant if you expect to use an Annuity in such a fashion.
REPORTING AND WITHHOLDING ON DISTRIBUTIONS
Taxable amounts distributed from your annuity contracts are subject to federal
and state income tax reporting and withholding. In general, we will withhold
federal income tax from the
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Tax Considerations continued
taxable portion of such distribution based on the type of distribution. In the
case of an annuity or similar periodic payment, we will withhold as if you are a
married individual with 3 exemptions unless you designate a different
withholding status. In the case of all other distributions, we will withhold at
a 10% rate. You may generally elect not to have tax withheld from your payments.
An election out of withholding must be made on forms that we provide.
State income tax withholding rules vary and we will withhold based on the
rules of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident aliens
at a 30% rate. A different withholding rate may be applicable to a nonresident
alien based on the terms of an existing income tax treaty between the United
States and the nonresident alien's country. Please refer to the discussion below
regarding withholding rules for tax favored plans (for example, an IRA).
Regardless of the amount withheld by us, you are liable for payment of
federal and state income tax on the taxable portion of annuity distributions.
You should consult with your tax advisor regarding the payment of the correct
amount of these income taxes and potential liability if you fail to pay such
taxes.
ANNUITY QUALIFICATION
Diversification And Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the assets underlying the
variable investment options of the annuity contract must be diversified,
according to certain rules. We believe these diversification rules will be met.
An additional requirement for qualification for the tax treatment
described above is that we, and not you as the contract owner, must have
sufficient control over the underlying assets to be treated as the owner of the
underlying assets for tax purposes. While we also believe these investor control
rules will be met, 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. It is unclear whether such guidelines, if in fact
promulgated, would have retroactive effect. It is also unclear what effect, if
any, such guidelines may have on transfers between the investment options
offered pursuant to this Prospectus. We will take any action, including
modifications to your Annuity or the investment options, required to comply with
such guidelines if promulgated.
Please refer to the Statement of Additional information for further
information on these Diversification and Investor Control issues.
Required Distributions Upon Your Death. Upon your death, certain
distributions must be made under the contract. The required distributions depend
on whether you die before you start taking annuity payments under the contract
or after you start taking annuity payments under the contract.
If you die on or after the annuity date, the remaining portion of the
interest in the contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract
must be distributed within 5 years after the date of death. However, if a
periodic payment option is selected by your designated beneficiary and if such
payments begin within 1 year of your death, the value of the contract may be
distributed over the beneficiary's life or a period not exceeding the
beneficiary's life expectancy. Your designated beneficiary is the person to whom
benefit rights under the contract pass by reason of death, and must be a natural
person in order to elect a periodic payment option based on life expectancy or a
period exceeding five years.
If the contract is payable to (or for the benefit of) your surviving
spouse, that portion of the contract may be continued with your spouse as the
owner.
Changes In The Contract. We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract owners and you will be
given notice to the extent feasible under the circumstances.
ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
- The contract is held by a corporation or other entity instead of by
an individual or as agent for an individual.
- Your contract was issued in exchange for a contract containing
purchase payments made before August 14, 1982.
- You transfer your contract to, or designate, a beneficiary who is
either 37 1/2 years younger than you or a grandchild.
- You purchased more than one annuity contract from the same insurer
within the same calendar year (other than contracts held by tax
favored plans).
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
Currently, the contract may be purchased for use in connection with
individual retirement accounts and annuities (IRAs) which are subject to
Sections 408(a), 408(b) and 408A of the Code. In addition, this contract may be
purchased for use in connection with a corporate Pension and Profit-sharing plan
(subject to 401(a) of the Code), H.R. 10 plans (also known as Keogh Plans,
subject to 401(a) of the Code), Tax Sheltered Annuities (subject to 403(b) of
the Code, also known as Tax Deferred Annuities or TDAs), and Section 457 plans
(subject to 457 of the Code). This description assumes that you have satisfied
the requirements for eligibility for these products.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA or 403(b) account, which can hold other permissible assets other than the
annuity. The terms and administration of the trust or custodial account in
accordance with the laws and regulations for IRAs or 403(b)s, as applicable, are
the responsibility of the applicable trustee or custodian.
You should be aware that tax favored plans such as IRAs generally provide
income tax deferral regardless of whether they invest in annuity contracts. This
means that when a tax favored plan invests in an annuity contract, it generally
does not result in any additional tax benefits (such as income tax deferral and
income tax free transfers).
TYPES OF TAX FAVORED PLANS
IRAs. If you buy a contract for use as an IRA, we will provide you a copy of the
prospectus and contract. The "IRA Disclosure Statement" contains information
about eligibility, contribution limits, tax particulars, and other IRA
information. In addition to this information (some of which is summarized
below), the IRS requires that you have a "free look" after making an initial
contribution to the contract. During this time, you can cancel the contract by
notifying us in writing, and we will refund all of the purchase payments under
the contract (or, if provided by applicable state law, the amount credited under
the contract, if greater), less any applicable federal and state income tax
withholding.
Contributions Limits/Rollovers. Because of the way the contract is
designed, you may purchase a contract for an IRA in connection with a "rollover"
of amounts from a qualified retirement plan, as a transfer from another IRA or
as a current contribution. In 2005 the limit is $4,000; increasing to $5,000 in
2008. After 2008 the contribution amount will be indexed for inflation. The tax
law also provides for a catch-up provision for individuals who are age 50 and
above. These taxpayers will be permitted to contribute an additional $500,
increasing to $1,000 in 2006 and years thereafter.
The "rollover" rules under the Code are fairly technical; however, an
individual (or his or her surviving spouse) may generally "roll over" certain
distributions from tax favored retirement plans (either directly or within 60
days from the date of these distributions) if he or she meets the requirements
for distribution. Once you buy the contract, you can make regular IRA
contributions under the contract (to the extent permitted by law). However, if
you make such regular IRA contributions, you should note that you will not be
able to treat the contract as a "conduit IRA," which means that you will not
retain possible favorable tax treatment if you subsequently "roll over" the
contract funds originally derived from a qualified retirement plan or TDA into
another Section 401(a) plan or TDA.
Required Provisions. Contracts that are IRAs (or endorsements that are
part of the contract) must contain certain provisions:
- You, as owner of the contract, must be the "annuitant" under the
contract (except in certain cases involving the division of property
under a decree of divorce);
- Your rights as owner are non-forfeitable;
- You cannot sell, assign or pledge the contract;
- The annual contribution you pay cannot be greater than the maximum
amount allowed by law, including catch-up contributions if
applicable (which does not include any rollover amounts);
- The date on which annuity payments must begin cannot be later than
April 1st of the calendar year after the calendar year you turn age
70 1/2; and
- Death and annuity payments must meet "minimum distribution
requirements" described below.
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
- A 10% "early distribution penalty" described below;
- Liability for "prohibited transactions" if you, for example, borrow
against the value of an IRA; or
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Tax Considerations continued
- Failure to take a minimum distribution also described below.
SEPs. SEPs are a variation on a standard IRA, and contracts issued to a
SEP must satisfy the same general requirements described under IRAs (above).
There are, however, some differences:
- If you participate in a SEP, you generally do not include in income
any employer contributions made to the SEP on your behalf up to the
lesser of (a) $42,000 in 2005 or (b) 25% of the employee's earned
income (not including contribution as "earned income" for these
purposes). However, for these purposes, compensation in excess of
certain limits established by the IRS will not be considered. In
2005, this limit is $210,000;
- SEPs must satisfy certain participation and nondiscrimination
requirements not generally applicable to IRAs; and
- SEPs for small employers permit salary deferrals up to $14,000 in
2005 with the employer making these contributions to the SEP.
However, no new "salary reduction" or "SARSEPs" can be established
after 1996. Individuals participating in a SARSEP who are age 50 or
above by the end of the year will be permitted to contribute an
additional $4,000 in 2005, increasing to $5,000 in 2006. Thereafter,
the amount is indexed for inflation.
You will also be provided the same information, and have the same "free
look" period, as you would have if you purchased the contract for a standard
IRA.
ROTH IRAs. Like standard IRAs, income within a Roth IRA accumulates
tax-free, and contributions are subject to specific limits. Roth IRAs have,
however, the following differences:
- Contributions to a Roth IRA cannot be deducted from your gross
income;
- "Qualified distributions" from a Roth IRA are excludable from gross
income. A "qualified distribution" is a distribution that satisfies
two requirements: (1) the distribution must be made (a) after the
owner of the IRA attains age 59 1/2; (b) after the owner's death;
(c) due to the owner's disability; or (d) for a qualified first time
homebuyer distribution within the meaning of Section 72(t)(2)(F) of
the Code; and (2) the distribution must be made in the year that is
at least five tax years after the first year for which a
contribution was made to any Roth IRA established for the owner or
five years after a rollover, transfer, or conversion was made from a
traditional IRA to a Roth IRA. Distributions from a Roth IRA that
are not qualified distributions will be treated as made first from
contributions and then from earnings, and taxed generally in the
same manner as distributions from a traditional IRA.
- If eligible (including meeting income limitations and earnings
requirements), you may make contributions to a Roth IRA after
attaining age 70 1/2, and distributions are not required to begin
upon attaining such age or at any time thereafter.
Because of the way the contract is designed, you may purchase a contract
for a Roth IRA in connection with a "rollover" of amounts of another traditional
IRA, conduit IRA, SEP, SIMPLE-IRA, a Roth IRA or with a current contribution.
The Code permits persons who meet certain income limitations (generally,
adjusted gross income under $100,000), and who receive certain qualifying
distributions from such non-Roth IRAs, to directly rollover or make, within 60
days, a "rollover" of all or any part of the amount of such distribution to a
Roth IRA which they establish. This conversion triggers current taxation (but is
not subject to a 10% early distribution penalty). Once the contract has been
purchased, regular Roth IRA contributions will be accepted to the extent
permitted by law.
TDAs. You may own a TDA generally if you are either an employer or
employee of a tax-exempt organization (as defined under Code Section 501 (c)(3))
or a public educational organization, and you may make contributions to a TDA so
long as the employee's rights to the annuity are nonforfeitable. Contributions
to a TDA, and any earnings, are not taxable until distribution. You may also
make contributions to a TDA under a salary reduction agreement, generally up to
a maximum of $14,000 in 2005. Individuals participating in a TDA who are age 50
or above by the end of the year will be permitted to contribute an additional
$4,000 in 2005, increasing to $5,000 in 2006. Thereafter, the amount is indexed
for inflation. Further, you may roll over TDA amounts to another TDA or an IRA.
You may also roll over TDA amounts to a qualified retirement plan, a SEP and a
457 government plan. A contract may only qualify as a TDA if distributions
(other than "grandfathered" amounts held as of December 31, 1988) may be made
only on account of:
- Your attainment of age 59 1/2;
- Your severance of employment;
- Your death;
- Your total and permanent disability; or
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
- Hardship (under limited circumstances, and only related to salary
deferrals and any earnings attributable to these amounts).
In any event, you must begin receiving distributions from your TDA by
April 1st of the calendar year after the calendar year you turn age 70 1/2 or
retire, whichever is later.
These distribution limits do not apply either to transfers or exchanges of
investments under the contract, or to any "direct transfer" of your interest in
the contract to another TDA or to a mutual fund "custodial account" described
under Code Section 403(b)(7).
Employer contributions to TDAs are subject to the same general
contribution, nondiscrimination, and minimum participation rules applicable to
"qualified" retirement plans.
MINIMUM DISTRIBUTION REQUIREMENTS AND PAYMENT OPTION
If you hold the contract under an IRA (or other tax-favored plan), IRS minimum
distribution requirements must be satisfied. This means that generally payments
must start by April 1 of the year after the year you reach age 70 1/2 and must
be made for each year thereafter. The amount of the payment must at least equal
the minimum required under the IRS rules. Several choices are available for
calculating the minimum amount. More information on the mechanics of this
calculation is available on request. Please contact us at a reasonable time
before the IRS deadline so that a timely distribution is made. Please note that
there is a 50% tax penalty on the amount of any minimum distribution not made in
a timely manner.
Effective in 2006, in accordance with recent changes in laws and
regulations, required minimum distributions will be calculated based on the sum
of the contract value and the actuarial value of any additional death benefits
and benefits from optional riders that you have purchased under the contract. As
a result, the required minimum distributions may be larger than if the
calculation were based on the contract value only, which may in turn result in
an earlier (but not before the required beginning date) distribution under the
Contract and an increased amount of taxable income distributed to the contract
owner, and a reduction of death benefits and the benefits of any optional
riders.
You can use the Minimum Distribution option to satisfy the IRS minimum
distribution requirements for this contract without either beginning annuity
payments or surrendering the contract. We will distribute to you this minimum
distribution amount, less any other partial withdrawals that you made during the
year.
Although the IRS rules determine the required amount to be distributed
from your IRA each year, certain payment alternatives are still available to
you. If you own more than one IRA, you can choose to satisfy your minimum
distribution requirement for each of your IRAs by withdrawing that amount from
any of your IRAs.
PENALTY FOR EARLY WITHDRAWALS
You may owe a 10% tax penalty on the taxable part of distributions received from
an IRA, SEP, Roth IRA, TDA or qualified retirement plan before you attain age
59 1/2. Amounts are not subject to this tax penalty if:
- the amount is paid on or after you reach age 59 1/2 or die;
- the amount received is attributable to your becoming disabled; or
- generally the amount paid or received is in the form of
substantially equal payments not less frequently than annually
(Please note that substantially equal payments must continue until
the later of reaching age 59 1/2 or 5 years. Modification of
payments during that time period will result in retroactive
application of the 10% tax penalty.).
Other exceptions to this tax may apply. You should consult your tax
advisor for further details.
WITHHOLDING
Unless a distribution is an eligible rollover distribution that is "directly"
rolled over into another qualified plan, IRA (including the IRA variations
described above), SEP, 457 government plan or TDA, we will withhold federal
income tax at the rate of 20%. This 20% withholding does not apply to
distributions from IRAs and Roth IRAs. For all other distributions, unless you
elect otherwise, we will withhold federal income tax from the taxable portion of
such distribution at an appropriate percentage. The rate of withholding on
annuity payments where no mandatory withholding is required is determined on the
basis of the withholding certificate that you file with us. If you do not file a
certificate, we will automatically withhold federal taxes on the following
basis:
- For any annuity payments not subject to mandatory withholding, you
will have taxes withheld by us as if you are a married individual,
with 3 exemptions; and
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Tax Considerations continued
- For all other distributions, we will withhold at a 10% rate.
We will provide you with forms and instructions concerning the right to
elect that no amount be withheld from payments in the ordinary course. However,
you should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should consult with
your tax advisor to find out more information on your potential liability if you
fail to pay such taxes. There may be additional state income tax withholding
requirements.
ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevents a fiduciary and other "parties in interest" with respect to a plan
(and, for these purposes, an IRA would also constitute a "plan") from receiving
any benefit from any party dealing with the plan, as a result of the sale of
the contract. Administrative exemptions under ERISA generally permit the sale
of insurance/annuity products to plans, provided that certain information is
disclosed to the person purchasing the contract. This information has to do
primarily with the fees, charges, discounts and other costs related to the
contract, as well as any commissions paid to any agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found in the applicable sections of this Prospectus.
Information about sales representatives and commissions may be found in
the sections of this Prospectus addressing distribution of the Annuity.
Please consult your tax advisor if you have any additional questions.
SPOUSAL CONSENT RULES FOR RETIREMENT PLANS -- QUALIFIED CONTRACTS
If you are married at the time your payments commence, you may be required by
federal law to choose an income option that provides survivor annuity income to
your spouse, unless your spouse waives that right. Similarly, if you are married
at the time of your death, federal law may require all or a portion of the death
benefit to be paid to your spouse, even if you designated someone else as your
beneficiary. A brief explanation of the applicable rules follows. For more
information, consult the terms of your retirement arrangement.
Defined Benefit Plans and Money Purchase Pension Plans. If you are married
at the time your payments commence, federal law requires that benefits be paid
to you in the form of a "qualified joint and survivor annuity" (QJSA), unless
you and your spouse waive that right, in writing. Generally, this means that you
will receive a reduced payment during your life and, upon your death, your
spouse will receive at least one-half of what you were receiving for life. You
may elect to receive another income option if your spouse consents to the
election and waives his or her right to receive the QJSA. If your spouse
consents to the alternative form of payment, your spouse may not receive any
benefits from the plan upon your death. Federal law also requires that the plan
pay a death benefit to your spouse if you are married and die before you begin
receiving your benefit. This benefit must be available in the form of an annuity
for your spouse's lifetime and is called a "qualified pre-retirement survivor
annuity" (QPSA). If the plan pays death benefits to other beneficiaries, you may
elect to have a beneficiary other than your spouse receive the death benefit,
but only if your spouse consents to the election and waives his or her right to
receive the QPSA. If your spouse consents to the alternate beneficiary, your
spouse will receive no benefits from the plan upon your death. Any QPSA waiver
prior to your attaining age 35 will become null and void on the first day of the
calendar year in which you attain age 35, if still employed.
Defined Contribution Plans (including 401(k) Plans and ERISA 403(b)
Annuities). Spousal consent to a distribution is generally not required. Upon
your death, your spouse will receive the entire death benefit, even if you
designated someone else as your beneficiary, unless your spouse consents in
writing to waive this right. Also, if you are married and elect an annuity as a
periodic income option, federal law requires that you receive a QJSA (as
described above), unless you and your spouse consent to waive this right.
IRAs, non-ERISA 403(b) Annuities, and 457 Plans. Spousal consent to a
distribution is not required. Upon your death, any death benefit will be paid to
your designated beneficiary.
ADDITIONAL INFORMATION
For additional information about federal tax law requirements applicable to tax
favored plans, see the IRA Disclosure Statement.
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
General Information
HOW WILL I RECEIVE STATEMENTS AND REPORTS?
We send any statements and reports required by applicable law or regulation to
you at your last known address of record. You should therefore give us prompt
notice of any address change. We reserve the right, to the extent permitted by
law and subject to your prior consent, to provide any prospectus, prospectus
supplements, confirmations, statements and reports required by applicable law or
regulation to you through our Internet Website at
http://www.americanskandia.prudential.com or any other electronic means,
including diskettes or CD ROMs. We send a confirmation statement to you each
time a transaction is made affecting Account Value, such as making additional
Purchase Payments, transfers, exchanges or withdrawals. We also send quarterly
statements detailing the activity affecting your Annuity during the calendar
quarter. We may confirm regularly scheduled transactions, such as the Annual
Maintenance Fee, systematic withdrawals (including 72(t) payments and required
minimum distributions), bank drafting, dollar cost averaging, and static
rebalancing, in quarterly statements instead of confirming them immediately. You
should review the information in these statements carefully. You may request
additional reports. We reserve the right to charge up to $50 for each such
additional report. We may also send an annual report and a semi-annual report
containing applicable financial statements for the Separate Account and the
Portfolios, as of December 31 and June 30, respectively, to Owners or, with your
prior consent, make such documents available electronically through our Internet
Website or other electronic means.
WHO IS AMERICAN SKANDIA?
American Skandia Life Assurance Corporation, a Prudential Financial Company
("American Skandia") is a stock life insurance company domiciled in Connecticut
with licenses in all 50 states, the District of Columbia and Puerto Rico.
American Skandia is a wholly-owned subsidiary of American Skandia, Inc. ("ASI"),
whose ultimate parent is Prudential Financial, Inc. American Skandia markets its
products to broker-dealers and financial planners through an internal field
marketing staff. In addition, American Skandia markets through and in
conjunction with financial institutions such as banks that are permitted
directly, or through affiliates, to sell annuities.
American Skandia is in the business of issuing annuity and life insurance
products. American Skandia currently offers the following products: (a) flexible
premium deferred annuities and single premium fixed deferred annuities that are
registered with the SEC; (b) certain other fixed deferred annuities that are not
registered with the SEC; and (c) both fixed and variable immediate adjustable
annuities.
Effective May 1, 2003, Skandia U.S. Inc., the sole shareholder of ASI,
which is the parent of American Skandia, was purchased by Prudential Financial,
Inc. Prudential Financial, Inc. is a New Jersey insurance holding company whose
subsidiary companies serve individual and institutional customers worldwide and
include The Prudential Insurance Company of America, one of the largest life
insurance companies in the U.S. These companies offer a variety of products and
services, including life insurance, property and casualty insurance, mutual
funds, annuities, pension and retirement related services and administration,
asset management, securities brokerage, banking and trust services, real estate
brokerage franchises, and relocation services.
No company other than American Skandia has any legal responsibility to pay
amounts that it owes under its annuity and variable life insurance contracts.
However, Prudential Financial exercises significant influence over the
operations and capital structure of American Skandia.
WHAT ARE SEPARATE ACCOUNTS?
The separate accounts are where American Skandia sets aside and invests the
assets of some of our annuities. In the accumulation period, assets supporting
Account Values of the Annuities are held in a separate account established
under the laws of the State of Connecticut. We are the legal owner of assets in
the separate accounts. In the payout period, assets supporting fixed annuity
payments and any adjustable annuity payments we make available are held in our
general account. Assets supporting variable annuity payment options may be
invested in our separate accounts. Income, gains and losses from assets
allocated to these separate accounts are credited to or charged against each
such separate account without regard to other income, gains or losses of
American Skandia or of any other of our separate accounts. These assets may
only be charged with liabilities which arise from the Annuities issued by
American Skandia. The amount of our obligation in relation to allocations to
the Sub-accounts is based on the investment performance of such Sub-accounts.
However, the obligations themselves are our general corporate obligations.
SEPARATE ACCOUNT B
During the accumulation period, the assets supporting obligations based on
allocations to the variable investment options
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
General Information continued
are held in Sub-accounts of American Skandia Life Assurance Corporation Variable
Account B, also referred to as "Separate Account B". Separate Account B was
established by us pursuant to Connecticut law on November 25, 1987. 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.
Separate Account B consists of multiple Sub-accounts. Each Sub-account
invests only in a single mutual fund or mutual fund portfolio. The name of each
Sub-account generally corresponds to the name of the underlying Portfolio. Each
Sub-account in Separate Account B may have several different Unit Prices to
reflect the Insurance Charge, Distribution Charge (when applicable) and the
charges for any optional benefits that are offered under this Annuity and other
annuities issued by us through Separate Account B. Separate Account B is
registered with the SEC under the Investment Company Act of 1940 ("Investment
Company Act") as a unit investment trust, which is a type of investment company.
The SEC does not supervise investment policies, management or practices of
Separate Account B.
Prior to November 18, 2002, Separate Account B was organized as a single
separate account with six different Sub-account classes, each of which was
registered as a distinct unit investment trust under the Investment Company Act.
Effective November 18, 2002, each Sub-account class of Separate Account B was
consolidated into the unit investment trust formerly named American Skandia Life
Assurance Corporation Variable Account B (Class 1 Sub-accounts), which was
subsequently renamed American Skandia Life Assurance Corporation Variable
Account B. Each Sub-account of Separate Account B has multiple Unit Prices to
reflect the daily charge deducted for each combination of the applicable
Insurance Charge, Distribution Charge (when applicable) and the charge for each
optional benefit offered under Annuity contracts funded through Separate Account
B. The consolidation of Separate Account B had no impact on Annuity Owners.
We reserve the right to make changes to the Sub-accounts available under
the Annuity as we determine appropriate. We may offer new Sub-accounts,
eliminate Sub-accounts, or combine Sub-accounts at our sole discretion. We may
also close Sub-accounts to additional Purchase Payments on existing Annuity
contracts or close Sub-accounts for Annuities purchased on or after specified
dates. We may also substitute an underlying mutual fund or portfolio of an
underlying mutual fund for another underlying mutual fund or portfolio of an
underlying mutual fund, subject to our receipt of any exemptive relief that we
are required to obtain under the Investment Company Act. We will notify Owners
of changes we make to the Sub-accounts available under the Annuity.
VALUES AND BENEFITS BASED ON ALLOCATIONS TO THE SUB-ACCOUNTS WILL VARY
WITH THE INVESTMENT PERFORMANCE OF THE UNDERLYING MUTUAL FUNDS OR FUND
PORTFOLIOS, AS APPLICABLE. WE DO NOT GUARANTEE THE INVESTMENT RESULTS OF ANY
SUB-ACCOUNT. YOUR ACCOUNT VALUE ALLOCATED TO THE SUB-ACCOUNTS MAY INCREASE OR
DECREASE. YOU BEAR THE ENTIRE INVESTMENT RISK. THERE IS NO ASSURANCE THAT THE
ACCOUNT VALUE OF YOUR ANNUITY WILL EQUAL OR BE GREATER THAN THE TOTAL OF THE
PURCHASE PAYMENTS YOU MAKE TO US.
SEPARATE ACCOUNT D
During the accumulation period, assets supporting our obligations based on Fixed
Allocations are held in American Skandia Life Assurance Corporation Separate
Account D, also referred to as "Separate Account D". Such obligations are based
on the fixed interest rates we credit to Fixed Allocations and the terms of the
Annuities. These obligations do not depend on the investment performance of the
assets in Separate Account D. Separate Account D was established by us pursuant
to Connecticut law.
There are no units in Separate Account D. The Fixed Allocations are
guaranteed by our general account. An Annuity Owner who allocates a portion of
their Account Value to Separate Account D does not participate in the investment
gain or loss on assets maintained in Separate Account D. Such gain or loss
accrues solely to us. We retain the risk that the value of the assets in
Separate Account D may drop below the reserves and other liabilities we must
maintain. Should the value of the assets in Separate Account D drop below the
reserve and other liabilities we must maintain in relation to the annuities
supported by such assets, we will transfer assets from our general account to
Separate Account D to make up the difference. We have the right to transfer to
our general account any assets of Separate Account D in excess of such reserves
and other liabilities. We maintain assets in Separate Account D supporting a
number of annuities we offer.
We currently employ investment managers to manage the assets maintained in
Separate Account D. Each manager we employ is responsible for investment
management of a different portion of Separate Account D. From time to time
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AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
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) and have sole discretion over the investment managers we
retain.
We are not obligated to invest according to specific guidelines or
strategies except as may be required by Connecticut and other state insurance
laws.
WHAT IS THE LEGAL STRUCTURE OF THE UNDERLYING FUNDS?
Each underlying mutual fund is registered as an open-end management investment
company under the Investment Company Act. Shares of the underlying mutual fund
portfolios are sold to separate accounts of life insurance companies offering
variable annuity and variable life insurance products. The shares may also be
sold directly to qualified pension and retirement plans.
VOTING RIGHTS
We are the legal owner of the shares of the underlying mutual funds in which the
Sub-accounts invest. However, under SEC rules, you have voting rights in
relation to Account Value maintained in the Sub-accounts. If an underlying
mutual fund portfolio requests a vote of shareholders, we will vote our shares
based on instructions received from Owners with Account Value allocated to that
Sub-account. Owners have the right to vote an amount equal to the number of
shares attributable to their contracts. If we do not receive voting instructions
in relation to certain shares, we will vote those shares in the same manner and
proportion as the shares for which we have received instructions. We will
furnish those Owners who have Account Value allocated to a Sub-account whose
underlying mutual fund portfolio has requested a "proxy" vote with proxy
materials and the necessary forms to provide us with their voting instructions.
Generally, you will be asked to provide instructions for us to vote on matters
such as changes in a fundamental investment strategy, adoption of a new
investment advisory agreement, or matters relating to the structure of the
underlying mutual fund that require a vote of shareholders.
American Skandia Trust (the "Trust") has obtained an exemption from the
Securities and Exchange Commission that permits its co-investment advisers,
American Skandia Investment Services, Incorporated ("ASISI") and Prudential
Investments LLC, subject to approval by the Board of Trustees of the Trust, to
change sub-advisors for a Portfolio and to enter into new sub-advisory
agreements, without obtaining shareholder approval of the changes. This
exemption (which is similar to exemptions granted to other investment companies
that are organized in a similar manner as the Trust) is intended to facilitate
the efficient supervision and management of the sub-advisors by ASISI,
Prudential Investments LLC and the Trustees. The Trust is required, under the
terms of the exemption, to provide certain information to shareholders following
these types of changes. We may add new Sub-accounts that invest in a series of
underlying funds other than the Trust that is managed by an affiliate. Such
series of funds may have a similar order from the SEC. You also should review
the prospectuses for the other underlying funds in which various Sub-accounts
invest as to whether they have obtained similar orders from the SEC.
MATERIAL CONFLICTS
It is possible that differences may occur between companies that offer shares of
an underlying mutual fund portfolio to their respective separate accounts
issuing variable annuities and/or variable life insurance products. Differences
may also occur surrounding the offering of an underlying mutual fund portfolio
to variable life insurance policies and variable annuity contracts that we
offer. Under certain circumstances, these differences could be considered
"material conflicts," in which case we would take necessary action to protect
persons with voting rights under our variable annuity contracts and variable
life insurance policies against persons with voting rights under other insurance
companies' variable insurance products. If a "material conflict" were to arise
between owners of variable annuity contracts and variable life insurance
policies issued by us we would take necessary action to treat such persons
equitably in resolving the conflict. "Material conflicts" could arise due to
differences in voting instructions between owners of variable life insurance and
variable annuity contracts of the same or different companies. We monitor any
potential conflicts that may exist.
SERVICE FEES PAYABLE TO AMERICAN SKANDIA
In addition, the investment adviser, sub-advisor or distributor of the
underlying Portfolios may also compensate us by providing reimbursement or
paying directly for, among other things, marketing and/or administrative
services and/or other services they provide in connection with the Annuity.
These services may include, but are not limited to: co-sponsoring various
meetings and seminars attended by broker-dealer firms' registered
representatives and creating marketing material discussing the Annuity and the
available options.
American Skandia or our affiliates have entered into agreements with the
investment adviser or distributor of the underlying Portfolios. Under the terms
of these agreements, American Skandia may provide administrative and support
services to the Portfolios for which it receives a fee of up to 0.75%
(currently) of the average assets allocated to the Portfolios under the Annuity
from the investment adviser, distributor and/or the fund. These agreements may
be different for each underlying mutual fund whose portfolios are offered as
Sub-accounts.
93
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
General Information continued
WHO DISTRIBUTES ANNUITIES OFFERED BY AMERICAN SKANDIA?
American Skandia Marketing, Incorporated ("ASM"), a wholly-owned subsidiary of
American Skandia, Inc., is the distributor and principal underwriter of the
securities offered through this prospectus. ASM acts as the distributor of a
number of annuity and life insurance products we offer and co-distributor of
American Skandia Trust and American Skandia Advisor Funds, Inc., a family of
retail mutual funds. ASM also acts as an introducing broker-dealer through which
it receives a portion of brokerage commissions in connection with purchases and
sales of securities held by portfolios of American Skandia Trust which are
offered as underlying investment options under the Annuity.
ASM's principal business address is One Corporate Drive, Shelton,
Connecticut 06484. ASM is registered as broker-dealer under the Securities
Exchange Act of 1934 ("Exchange Act") and is a member of the National
Association of Securities Dealers, Inc. ("NASD").
The Annuity is offered on a continuous basis. ASM enters into distribution
agreements with broker-dealers who are registered under the Exchange Act and
with entities that may offer the Annuity but are exempt from registration
("firms"). Applications for the Annuity are solicited by registered
representatives of those firms. Such representatives will also be our appointed
insurance agents under state insurance law. In addition, ASM may offer the
Annuity directly to potential purchasers.
Commissions are paid to firms on sales of the Annuity according to one or
more schedules. The individual representative will receive a portion of the
compensation, depending on the practice of his or her firm. Commissions are
generally based on a percentage of Purchase Payments made, up to a maximum of
5.5%. Alternative compensation schedules are available that provide a lower
initial commission plus ongoing annual compensation based on all or a portion of
Account Value. We may also provide compensation to the distributing firm for
providing ongoing service to you in relation to the Annuity. Commissions and
other compensation paid in relation to the Annuity do not result in any
additional charge to you or to the Separate Account.
In addition, in an effort to promote the sale of our products (which may
include the placement of American Skandia and/or the Annuity on a preferred or
recommended company or product list and/or access to the firm's registered
representatives), we or ASM may enter into compensation arrangements with
certain broker-dealer firms with respect to certain or all registered
representatives of such firms under which such firms may receive separate
compensation or reimbursement for, among other things, training of sales
personnel and/or marketing and/or administrative services and/or other services
they provide to us or our affiliates. These services may include, but are not
limited to: educating customers of the firm on the Annuity's features;
conducting due diligence and analysis, providing office access, operations and
systems support; holding seminars intended to educate the firm's registered
representatives and make them more knowledgeable about the Annuity; providing a
dedicated marketing coordinator; providing priority sales desk support; and
providing expedited marketing compliance approval. To the extent permitted by
NASD rules and other applicable laws and regulations, ASM may pay or allow other
promotional incentives or payments in the form of cash or non-cash compensation.
These arrangements may not be offered to all firms and the terms of such
arrangements may differ between firms. A list of the firms to whom American
Skandia pays an amount of greater than $10,000 for these arrangements is
provided in the Statement of Additional Information, which is available upon
request. You should note that firms and individual registered representatives
and branch managers within some firms participating in one of these compensation
arrangements might receive greater compensation for selling the Annuity than for
selling a different annuity that is not eligible for these compensation
arrangements. While compensation is generally taken into account as an expense
in considering the charges applicable to an annuity product, any such
compensation will be paid by us or ASM and will not result in any additional
charge to you. Overall compensation paid to the distributing firm does not
exceed, based on actuarial assumptions, 8.5% of the total Purchase Payments
made. Your registered representative can provide you with more information about
the compensation arrangements that apply upon the sale of the Annuity.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
American Skandia publishes annual and quarterly reports that are filed with the
SEC. These reports contain financial information about American Skandia that is
annually audited by an independent registered public accounting firm. American
Skandia's annual report for the year ended December 31, 2004, together with
subsequent periodic reports that American Skandia files with the SEC, are
incorporated by reference into this prospectus. You can obtain copies, at no
cost, of any and all of this information, including the American Skandia annual
report
94
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
that is not ordinarily mailed to contract owners, the more current reports and
any subsequently filed documents at no cost by contacting us at American Skandia
- -- Variable Annuities; P.O. Box 7960, Philadelphia, PA 19176 (Telephone:
203-926-1888). The SEC file number for American Skandia is 33-44202. You may
read and copy any filings made by American Skandia with the SEC at the SEC's
Public Reference Room at 450 Fifth Street, Washington, D.C. 20549-0102. You can
obtain information on the operation of the Public Reference Room by calling
(202) 942-8090. The SEC maintains an Internet site that contains reports, proxy
and information statements, and other information regarding issuers that file
electronically with the SEC at http://www.sec.gov.
FINANCIAL STATEMENTS
The financial statements of the separate account and American Skandia Life
Assurance Corporation are included in the Statement of Additional Information.
HOW TO CONTACT US
You can contact us by:
- calling our Customer Service Team at 1-800-752-6342 during our
normal business hours, 8:30 a.m. EST to 8:00 p.m. EST, Monday
through Friday, or Skandia's telephone automated response system at
1-800-766-4530.
- writing to us via regular mail at American Skandia -- Variable
Annuities, Attention: STAGECOACH ANNUITY, P.O. Box 7960,
Philadelphia, PA 19176 OR for express mail American Skandia --
Variable Annuities, Attention: STAGECOACH ANNUITY, 2101 Welsh Road,
Dresher, PA 19025. NOTE: Failure to send mail to the proper address
may result in a delay in our receiving and processing your request.
- sending an email to SERVICE@PRUDENTIAL.COM or visiting our Internet
Website at WWW.AMERICANSKANDIA.PRUDENTIAL.COM.
- accessing information about your Annuity through our Internet
Website at WWW.AMERICANSKANDIA.PRUDENTIAL.COM.
You can obtain account information by calling our automated response
system and at WWW.AMERICANSKANDIA.PRUDENTIAL.COM, our Internet Website. Our
Customer Service representatives are also available during business hours to
provide you with information about your account. You can request certain
transactions through our telephone voice response system, our Internet Website
or through a customer service representative. You can provide authorization for
a third party, including your attorney-in-fact acting pursuant to a power of
attorney, to access your account information and perform certain transactions on
your account. You will need to complete a form provided by us which identifies
those transactions that you wish to authorize via telephonic and electronic
means and whether you wish to authorize a third party to perform any such
transactions. Please note that unless you tell us otherwise, we deem that all
transactions that are directed by your investment professional with respect to
your Annuity have been authorized by you. We require that you or your
representative provide proper identification before performing transactions over
the telephone or through our Internet Website. This may include a Personal
Identification Number (PIN) that will be provided to you upon issue of your
Annuity or you may establish or change your PIN by calling our automated
response system and at WWW.AMERICANSKANDIA.PRUDENTIAL.COM, our Internet Website.
Any third party that you authorize to perform financial transactions on your
account will be assigned a PIN for your account.
Transactions requested via telephone are recorded. To the extent permitted
by law, we will not be responsible for any claims, loss, liability or expense in
connection with a transaction requested by telephone or other electronic means
if we acted on such transaction instructions after following reasonable
procedures to identify those persons authorized to perform transactions on your
Annuity using verification methods which may include a request for your Social
Security number, PIN or other form of electronic identification. We may be
liable for losses due to unauthorized or fraudulent instructions if we did not
follow such procedures.
American Skandia does not guarantee access to telephonic, facsimile,
Internet or any other electronic information or that we will be able to accept
transaction instructions via such means at all times. Regular and/or express
mail will be the only means by which we will accept transaction instructions
when telephonic, facsimile, Internet or any other electronic means are
unavailable or delayed. American Skandia reserves the right to limit, restrict
or terminate telephonic, facsimile, Internet or any other electronic transaction
privileges at any time.
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Securities Act") may be permitted to directors, officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed
95
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
General Information continued
that in the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
LEGAL PROCEEDINGS
As of the date of this Prospectus, American Skandia and its affiliates are not
involved in any legal proceedings outside of the ordinary course of business.
American Skandia and its affiliates are involved in pending and threatened
legal proceedings in the normal course of its business, however, we do not
anticipate that the outcome of any such legal proceedings will have a material
adverse affect on the Separate Account, or American Skandia's ability to meet
its obligations under the Annuity, or on the distribution of the Annuity.
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The following are the contents of the Statement of Additional Information:
General Information about American Skandia
- - American Skandia Life Assurance Corporation
- - American Skandia Life Assurance Corporation Variable Account B
- - American Skandia Life Assurance Corporation Separate Account D
Principal Underwriter/Distributor -- American Skandia Marketing, Incorporated
Payments made to Promote Sale of our Products
How the Unit Price is Determined
Additional Information on Fixed Allocations
- - How We Calculate the Market Value Adjustment
General Information
- - Voting Rights
- - Modification
- - Deferral of Transactions
- - Misstatement of Age or Sex
- - Ending the Offer
Annuitization
Experts
Legal Experts
Financial Statements
96
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B
Separate Account B consists of multiple Sub-accounts. Each Sub-account invests
only in a single mutual fund or mutual fund portfolio. All or some of these
Sub-accounts are available as investment options for other variable annuities we
offer pursuant to different prospectuses.
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 Sub-accounts of Separate Account
B that are being offered pursuant to this Prospectus; and (b) the number of
Units outstanding for each such Sub-account as of the dates shown. Since
November 18, 2002, we have been determining, on a daily basis, multiple Unit
Prices for each Sub-account of Separate Account B. We compute multiple Unit
Prices because several of our variable annuities invest in the same
Sub-accounts, and these annuities deduct varying charges that correspond to each
combination of the applicable Insurance Charge, Distribution Charge (when
applicable) and the charges for each optional benefit. Where an asset-based
charge corresponding to a particular Sub-account within a new annuity product is
identical to that in the same Sub-account within an existing annuity, the Unit
Price for the new annuity will be identical to that of the existing annuity. In
such cases, we will for reference purposes depict, in the condensed financial
information for the new annuity, Unit Prices of the existing annuity. The year
in which operations commenced in each such Sub-account is noted in parentheses.
To the extent a Sub-account commenced operations during a particular calendar
year, the Unit Price as of the end of the period reflects only the partial year
results from the commencement of operations until December 31st of the
applicable year. When a Unit Price was first calculated for a particular
Sub-account, we set the price of that Unit at $10.00 per Unit. Thereafter, Unit
Prices vary based on market performance. Unit Prices and Units are provided for
Sub-accounts that commenced operations prior to January 1, 2005.
A-1
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ------------------------------------------------------------ ---- ---- ---- ---- ----
Wells Fargo Variable Trust -- INTERNATIONAL EQUITY (1)(2000)
WITH NO OPTIONAL BENEFITS
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
Wells Fargo Variable Trust -- SMALL-CAP GROWTH(2)(1999)
WITH NO OPTIONAL BENEFITS
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-2
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
--------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ----------------------------------------- ------- ---- ---- ---- ----
Wells Fargo Variable Trust -- GROWTH (3)(1994)
WITH NO OPTIONAL BENEFITS
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.01 -- -- -- --
Number of Units 714 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
Wells Fargo Variable Trust -- LARGE COMPANY GROWTH (4)(1999)
WITH NO OPTIONAL BENEFITS
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMW B
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.50 -- -- -- --
Number of Units 6,708 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-3
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ----------------------------------------- --------- --------- ----- ----- ----
Wells Fargo Variable Trust -- EQUITY VALUE (5)(1998)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.99 $ 9.10 -- -- --
Number of Units 1,661 1,838 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMW B
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.37 -- -- -- --
Number of Units 931 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
Wells Fargo Variable Trust -- EQUITY INCOME (6)(1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 17.32 $ 15.79 -- -- --
Number of Units 19,612 10,586 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.48 $ 12.32 -- -- --
Number of Units 42,381 17,889 -- -- --
With GMWB
Unit Value $ 11.74 -- -- -- --
Number of Units 2,400 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.40 $ 12.28 -- -- --
Number of Units 4,433 1,089 -- -- --
With any one of EBP or HAV and GMW B
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.33 $ 12.25 -- -- --
Number of Units 39,530 5,900 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-4
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ----------------------------------------- --------- ---- ---- ---- ----
Wells Fargo Variable Trust -- ASSET ALLOCATION (7) (1994)
WITH NO OPTIONAL BENEFITS
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMW B
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.07 -- -- -- --
Number of Units 5,863 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
Wells Fargo Variable Trust -- TOTAL RETURN BOND (8)(1999)
WITH NO OPTIONAL BENEFITS
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMW B
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.26 -- -- -- --
Number of Units 1,190 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-5
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ---------------------------------------------- -------------- -------------- ------------ ------------ -----------
AST JP MORGAN INTERNATIONAL EQUITY PORTFOLIO
WITH NO OPTIONAL BENEFITS
Unit Price $ 8.24 $ 7.13 5.53 6.86 8.99
Number of Units 553,542 362,254 153,652 136,976 33,897
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.78 $ 12.81 9.96 -- --
Number of Units 192,576 57,874 19,651 -- --
With GMWB
Unit Value $ 12.46 $ 10.81 -- -- --
Number of Units 32,632 1,808 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.70 $ 12.77 9.95 -- --
Number of Units 22,423 8,138 293 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.42 $ 10.81 -- -- --
Number of Units 1,120 106 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.62 $ 12.74 -- -- --
Number of Units 217,166 17,098 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AST WILLIAM BLAIR INTERNATIONAL GROWTH (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 16.42 $ 14.32 10.35 14.1 18.68
Number of Units 1,953,908 1,166,396 7,064 5,277 6,782
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.35 $ 13.41 9.72 -- --
Number of Units 1,986,105 470,320 19,565 -- --
With GMWB
Unit Value $ 12.07 $ 10.56 -- -- --
Number of Units 216,886 18,507 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.26 $ 13.38 9.72 -- --
Number of Units 291,719 54,833 16,068 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.03 $ 10.56 -- -- --
Number of Units 38,033 6,110 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.18 $ 13.34 -- -- --
Number of Units 1,821,923 103,740 -- -- --
With HAV, EBP and GMWB
Unit Value $ 12.00 -- -- -- --
Number of Units 19,719 -- -- -- --
A-6
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ----------------------------------------- --------- --------- --------- --------- ------
AST LSV INTERNATIONAL VALUE (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.01 $ 5.86 4.43 5.41 8.08
Number of Units 233,045 91,736 32,967 29,954 20,311
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.40 $ 12.92 9.8 -- --
Number of Units 76,147 20,245 4,776 -- --
With GMWB
Unit Value $ 12.85 -- -- -- --
Number of Units 5,183 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.32 $ 12.88 9.79 -- --
Number of Units 6,471 632 279 -- --
With any one of EBP or HAV and GMW B
Unit Price $ 12.81 -- -- -- --
Number of Units 6,010 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.24 $ 12.85 -- -- --
Number of Units 69,494 5,504 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AST MFS GLOBAL EQUITY (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.98 $ 9.40 7.48 8.64 9.72
Number of Units 213,485 123,219 46,925 49,536 23,151
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.42 $ 12.36 9.87 -- --
Number of Units 143,889 34,777 1,488 -- --
With GMWB
Unit Value $ 12.54 $ 10.76 -- -- --
Number of Units 17,891 421 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.34 $ 12.33 -- -- --
Number of Units 19,007 416 -- -- --
With any one of EBP or HAV and GMW B
Unit Price $ 12.50 -- -- -- --
Number of Units 3,805 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.26 $ 12.29 -- -- --
Number of Units 98,046 4,306 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-7
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------------- -------- --------- ------- ------ -------
AST STATE STREET RESEARCH SMALL-CAP GROWTH(9)
WITH NO OPTIONAL BENEFITS
Unit Price $ 15.97 $ 17.38 12.12 18.7 20.25
Number of Units 107,136 145,364 6,331 2,439 978
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.43 $ 13.56 9.48 -- --
Number of Units 82,128 52,103 6,251 -- --
With GMWB
Unit Value $ 9.43 $ 10.30 -- -- --
Number of Units 8,600 3,356 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.37 $ 13.53 -- -- --
Number of Units 40,854 8,575 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 9.40 -- -- -- --
Number of Units 3,927 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.30 $ 13.49 --
Number of Units 113,913 9,676 --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AST DEAM SMALL-CAP GROWTH (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.41 $ 6.86 4.71 6.48 9.17
Number of Units 293,384 258,089 44,611 41,602 35,743
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.23 $ 14.13 9.72 -- --
Number of Units 78,039 27,101 2,506 -- --
With GMWB
Unit Value $ 11.15 $ 10.36 -- -- --
Number of Units 15,137 1,850 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.15 $ 14.09 9.72 -- --
Number of Units 35,100 7,018 277 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.12 $ 10.35 -- -- --
Number of Units 3,898 1,939 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.07 $ 14.05 -- -- --
Number of Units 56,414 1,850 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-8
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ----------------------------------------- ----------- --------- ------ ------ -------
AST FEDERATED AGGRESSIVE GROWTH (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.12 $ 8.33 4.98 7.12 9.08
Number of Units 1,169,995 859,909 25,040 10,912 243
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.97 $ 16.47 9.87 -- --
Number of Units 633,435 164,946 14,007 -- --
With GMWB
Unit Value $ 12.78 $ 10.55 -- -- --
Number of Units 70,619 8,491 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 19.86 $ 16.42 9.86 -- --
Number of Units 77,506 18,658 5,370 -- --
With any one of EBP or HAV and GMW B
Unit Price $ 12.74 $ 10.55 -- -- --
Number of Units 12,031 1,546 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 19.75 $ 16.38 -- -- --
Number of Units 562,771 37,078 -- -- --
With HAV, EBP and GMWB
Unit Value $ 12.70 -- -- -- --
Number of Units 6,328 -- -- -- --
AST SMALL-CAP VALUE (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 16.64 $ 14.47 10.79 12.06 11.41
Number of Units 1,293,786 962,965 66,744 33,608 15,339
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.47 $ 13.49 10.09 -- --
Number of Units 1,067,140 344,340 32,914 -- --
With GMWB
Unit Value $ 12.24 $ 10.69 -- -- --
Number of Units 120,010 14,484 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.39 $ 13.45 10.08 -- --
Number of Units 141,679 37,207 6,048 -- --
With any one of EBP or HAV and GMW B
Unit Price $ 12.21 $ 10.68 -- -- --
Number of Units 16,803 2,140 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.31 $ 13.41 -- -- --
Number of Units 1,007,926 100,155 -- -- --
With HAV, EBP and GMWB
Unit Value $ 12.17 -- -- -- --
Number of Units 7,974 -- -- -- --
A-9
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ----------------------------------------- ----------- --------- ------ ------ ------
AST DEAM SMALL-CAP VALUE (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.13 $ 10.89 7.69 -- --
Number of Units 138,078 131,066 124 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 17.14 $ 14.25 10.09 -- --
Number of Units 91,275 30,696 1,519 -- --
With GMWB
Unit Value $ 12.85 $ 10.70 -- -- --
Number of Units 9,395 1,456 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 17.05 $ 14.21 -- -- --
Number of Units 39,619 7,542 -- -- --
With any one of EBP or HAV and GMW B
Unit Price $ 12.81 -- -- -- --
Number of Units 4,319 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 16.96 $ 14.17 -- -- --
Number of Units 236,402 10,756 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AST GOLDMAN SACHS MID-CAP GROWTH (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 4.44 $ 3.87 2.98 4.15 7.03
Number of Units 2,232,502 1,535,565 28,812 17,882 2,473
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.68 $ 12.81 9.88 -- --
Number of Units 633,571 170,457 11,936 -- --
With GMWB
Unit Value $ 12.05 $ 10.52 -- -- --
Number of Units 55,808 4,600 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.60 $ 12.77 9.88 -- --
Number of Units 102,613 20,463 5,904 -- --
With any one of EBP or HAV and GMW B
Unit Price $ 12.01 $ 10.51 -- -- --
Number of Units 10,211 2,424 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.52 $ 12.73 -- -- --
Number of Units 516,261 37,400 -- -- --
With HAV, EBP and GMWB
Unit Value $ 11.97 -- -- -- --
Number of Units 5,270 -- -- -- --
A-10
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ------------------------------------------- ----------- --------- --------- ------- ------
AST NEUBERGER BERMAN MID-CAP GROWTH (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.14 $ 6.23 4.83 7.11 9.71
Number of Units 555,160 371,267 56,712 51,711 36,882
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.99 $ 12.24 9.52 -- --
Number of Units 238,963 96,132 4,640 -- --
With GMWB
Unit Value $ 11.83 -- -- -- --
Number of Units 20,882 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.92 $ 12.20 9.51 -- --
Number of Units 25,256 12,416 915 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.80 -- -- -- --
Number of Units 4,925 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.84 $ 12.17 -- -- --
Number of Units 153,923 16,702 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AST NEUBERGER BERMAN MID-CAP VALUE (1993)
WITH NO OPTIONAL BENEFITS
Unit Price $ 16.76 $ 13.82 10.26 11.62 12.13
Number of Units 1,116,503 781,348 69,657 56,219 16,574
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.22 $ 13.40 9.98 -- --
Number of Units 989,311 268,150 16,671 -- --
With GMWB
Unit Value $ 13.12 $ 10.86 -- -- --
Number of Units 108,730 7,071 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 16.13 $ 13.37 9.98 -- --
Number of Units 173,241 40,022 5,947 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 13.08 $ 10.85 -- -- --
Number of Units 22,361 4,186 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 16.04 $ 13.33 -- -- --
Number of Units 937,314 87,253 -- -- --
With HAV, EBP and GMWB
Unit Value $ 13.04 -- -- -- --
Number of Units 6,141 -- -- -- --
A-11
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ----------------------------------------- --------- --------- ------ ------ ------
AST ALGER ALL-CAP GROWTH (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 6.49 $ 6.06 4.53 7.14 8.68
Number of Units 214,092 200,264 61,001 56,649 30,915
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.36 $ 12.50 9.37 -- --
Number of Units 123,773 34,250 1,959 -- --
With GMWB
Unit Value $ 10.85 -- -- -- --
Number of Units 6,727 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.29 $ 12.47 -- -- --
Number of Units 7,519 2,323 -- -- --
With any one of EBP or HAV and GMW B
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.22 $ 12.43 -- -- --
Number of Units 119,566 10,356 -- -- --
With HAV, EBP and GMWB
Unit Value $ 10.79 -- -- -- --
Number of Units 964 -- -- -- --
AST GABELLI ALL-CAP VALUE (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.63 $ 10.21 7.61 9.72 10.07
Number of Units 256,401 140,873 38,982 26,857 12,895
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.27 $ 13.44 10.05 -- --
Number of Units 122,314 33,721 2,516 -- --
With GMWB
Unit Value $ 12.24 $ 10.79 -- -- --
Number of Units 4,942 1,880 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.19 $ 13.41 -- -- --
Number of Units 9,727 2,046 -- -- --
With any one of EBP or HAV and GMW B
Unit Price $ 12.21 -- -- -- --
Number of Units 6,426 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.11 $ 13.37 -- -- --
Number of Units 116,474 12,627 -- -- --
With HAV, EBP and GMWB
Unit Value $ 12.17 -- -- -- --
Number of Units 1,376 -- -- -- --
A-12
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ------------------------------------------- --------- --------- ------- ------ ------
AST T. ROWE PRICE NATURAL RESOURCES (1995)
WITH NO OPTIONAL BENEFITS
Unit Price $ 17.81 $ 13.75 10.42 11.18 11.24
Number of Units 192,336 75,013 4,994 1,879 --
With any one of GRO Plus, EBP or HAV
Unit Price $ 17.75 $ 13.74 10.44 -- --
Number of Units 148,837 20,929 1,940 -- --
With GMWB
Unit Value $ 14.52 $ 11.25 -- -- --
Number of Units 15,011 1,184 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 17.65 $ 13.70 -- -- --
Number of Units 37,223 1,910 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 14.48 -- -- -- --
Number of Units 1,819 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 17.56 $ 13.66 -- -- --
Number of Units 172,186 24,634 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AST ALLIANCE GROWTH(10) (1996)
WITH NO OPTIONAL BENEFITS
Unit Price $ 6.19 $ 5.93 4.86 7.12 8.46
Number of Units 326,194 263,698 106,056 106,762 97,356
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.86 $ 11.39 9.35 -- --
Number of Units 70,775 28,954 1,038 -- --
With GMWB
Unit Value $ 10.69 $ 10.27 -- -- --
Number of Units 21,990 7,530 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 11.80 $ 11.35 9.34 -- --
Number of Units 7,799 4,138 618 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 10.66 -- -- -- --
Number of Units 941 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.73 $ 11.32 -- -- --
Number of Units 84,417 2,206 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-13
APPENDIX A
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ----------------------------------------- ----------- ----------- --------- -------- --------
AST MFS GROWTH (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.04 $ 6.44 5.31 7.48 9.68
Number of Units 791,823 893,170 112,701 47,656 3,089
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.50 $ 11.47 9.47 -- --
Number of Units 305,582 188,109 18,241 -- --
With GMWB
Unit Value $ 11.13 $ 10.22 -- -- --
Number of Units 21,410 7,308 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.43 $ 11.43 -- -- --
Number of Units 26,773 6,479 -- -- --
With any one of EBP or HAV and GMW B
Unit Price $ 11.09 $ 10.21 -- -- --
Number of Units 4,350 1,319 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.37 $ 11.40 -- -- --
Number of Units 304,760 18,900 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AST MARSICO CAPITAL GROWTH (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.67 $ 8.46 6.5 7.8 10.09
Number of Units 5,717,404 4,075,719 228,033 182,904 114,992
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.07 $ 12.35 9.52 -- --
Number of Units 3,543,456 1,021,520 78,038 -- --
With GMWB
Unit Value $ 11.74 $ 10.31 -- -- --
Number of Units 386,737 35,775 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.00 $ 12.32 9.52 -- --
Number of Units 479,057 126,883 26,662 -- --
With any one of EBP or HAV and GMW B
Unit Price $ 11.70 $ 10.31 -- -- --
Number of Units 73,444 10,353 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.92 $ 12.28 -- -- --
Number of Units 3,136,818 215,988 -- -- --
With HAV, EBP and GMWB
Unit Value $ 11.66 -- -- -- --
Number of Units 32,384 -- -- -- --
A-14
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- -------------------------------------------- ----------- ----------- ------- ------- -------
AST GOLDMAN SACHS CONCENTRATED GROWTH (1992)
With No Optional Benefits
Unit Price $ 4.68 $ 4.57 3.69 5.33 7.9
Number of Units 733,920 604,491 405,437 404,404 235,747
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.93 $ 11.68 9.47 -- --
Number of Units 162,830 30,932 1,309 -- --
With GMWB
Unit Value $ 10.66 -- -- -- --
Number of Units 8,927 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 11.86 $ 11.65 -- -- --
Number of Units 25,285 2,681 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 10.63 -- -- -- --
Number of Units 884 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.80 $ 11.61 -- -- --
Number of Units 122,739 17,452 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AST DEAM LARGE-CAP VALUE (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.18 $ 9.58 7.67 9.17 9.83
Number of Units 191,637 85,554 7,126 1,696 442
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.49 $ 12.45 9.98 -- --
Number of Units 114,540 40,259 4,779 -- --
With GMWB
Unit Value $ 12.39 $ 10.66 -- -- --
Number of Units 19,713 2,495 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.41 $ 12.41 -- -- --
Number of Units 46,811 6,103 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.35 -- -- -- --
Number of Units 6,736 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.33 $ 12.38 -- -- --
Number of Units 175,087 9,674 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-15
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ------------------------------------------------- ----------- ----------- ------ ------ ----
AST ALLIANCE/BERNSTEIN GROWTH + VALUE (11) (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.66 $ 8.89 7.14 9.64 --
Number of Units 194,363 137,293 37,810 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.19 $ 12.16 9.79 -- --
Number of Units 71,486 29,927 2,021 -- --
With GMWB
Unit Value $ 11.28 -- -- -- --
Number of Units 16,087 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.12 $ 12.13 -- -- --
Number of Units 9,651 2,379 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.24 -- -- -- --
Number of Units 1,922 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.05 $ 12.09 -- -- --
Number of Units 72,365 5,118 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AST SANFORD BERNSTEIN CORE VALUE (12) (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.28 $ 10.91 8.61 10.05 --
Number of Units 603,508 453,569 82,054 18,453 --
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.30 $ 12.75 10.09 -- --
Number of Units 243,464 91,128 65,721 -- --
With GMWB
Unit Value $ 12.00 $ 10.70 -- -- --
Number of Units 45,483 4,032 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.23 $ 12.71 10.08 -- --
Number of Units 51,451 16,568 25,273 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.96 $ 10.70 -- -- --
Number of Units 7,978 1,276 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.15 $ 12.67 -- -- --
Number of Units 220,419 11,518 -- -- --
With HAV, EBP and GMWB
Unit Value $ 11.92 -- -- -- --
Number of Units 1,051 -- -- -- --
A-16
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- -------------------------------------------------- ----------- ----------- ------ ------ ------
AST COHEN & STEERS REALTY (1998)
WITH NO OPTIONAL BENEFITS
Unit Price $ 22.03 $ 16.17 11.91 11.75 11.57
Number of Units 281,181 149,582 25,464 16,487 16,557
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.00 $ 13.99 10.33 -- --
Number of Units 304,865 61,714 1,341 -- --
With GMWB
Unit Value $ 14.23 $ 10.48 -- -- --
Number of Units 36,159 4,313 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 18.90 $ 13.95 -- -- --
Number of Units 41,357 5,221 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 14.19 -- -- -- --
Number of Units 2,049 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 18.80 $ 13.91 -- -- --
Number of Units 184,027 13,615 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AST SANFORD BERNSTEIN MANAGED INDEX 500 (13) (1998)
WITH NO OPTIONAL BENEFITS
Unit Price $ 8.99 $ 8.28 6.59 8.41 9.46
Number of Units 642,882 554,156 90,506 39,414 9,941
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.33 $ 12.31 9.81 -- --
Number of Units 220,398 82,843 3,351 -- --
With GMWB
Unit Value $ 11.44 $ 10.57 -- -- --
Number of Units 18,801 853 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.26 $ 12.27 9.81 -- --
Number of Units 12,699 2,937 681 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.41 $ 10.57 -- -- --
Number of Units 4,398 644 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.19 $ 12.24 -- -- --
Number of Units 389,368 16,957 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-17
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- -------------------------------------------- ------------- ------------- ------- ------- ------
AST AMERICAN CENTURY INCOME & GROWTH (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.48 $ 8.52 6.7 8.47 9.36
Number of Units 613,910 339,653 124,168 113,372 70,887
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.92 $ 12.56 9.9 -- --
Number of Units 233,605 63,878 813 -- --
With GMWB
Unit Value $ 11.85 $ 10.70 -- -- --
Number of Units 45,084 2,828 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.85 $ 12.52 -- -- --
Number of Units 39,945 11,533 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.82 $ 10.69 -- -- --
Number of Units 3,722 2,487 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.77 $ 12.48 -- -- --
Number of Units 198,789 2,386 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AST ALLIANCE GROWTH AND INCOME (14) (1992)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.24 $ 10.25 7.84 10.35 10.53
Number of Units 4,119,501 3,076,626 142,152 205,232 34,439
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.03 $ 12.83 9.84 -- --
Number of Units 3,211,199 932,323 18,189 -- --
With GMWB
Unit Value $ 11.63 $ 10.64 -- -- --
Number of Units 361,569 38,248 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.96 $ 12.80 9.83 -- --
Number of Units 421,261 106,644 717 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.59 $ 10.64 -- -- --
Number of Units 53,860 10,811 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.88 $ 12.76 -- -- --
Number of Units 2,899,917 187,011 -- -- --
With HAV, EBP and GMWB
Unit Value $ 11.55 -- -- -- --
Number of Units 32,525 -- -- -- --
A-18
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ---------------------------------------- ----------- ----------- ------ ------ ------
AST HOTCHKIS & WILEY LARGE-CAP VALUE
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.25 $ 8.99 7.59 9.31 10.32
Number of Units 417,314 204,589 44,419 44,212 8,596
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.30 $ 11.70 9.9 -- --
Number of Units 126,725 38,215 5,087 -- --
With GMWB
Unit Value $ 11.88 -- -- -- --
Number of Units 27,234 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.23 $ 11.67 9.9 -- --
Number of Units 49,033 11,538 200 -- --
With any one of EBP or HAV and GMW B
Unit Price $ 11.84 $ 10.45 -- -- --
Number of Units 9,024 1,288 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.16 $ 11.63 -- -- --
Number of Units 173,888 21,961 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AST DEAM GLOBAL ALLOCATION (15) (1993)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.55 $ 8.71 7.38 8.84 10.14
Number of Units 78,619 61,801 34,451 38,208 30,678
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.81 $ 11.70 9.94 -- --
Number of Units 16,079 1,832 67 -- --
With GMWB
Unit Value $ 11.35 -- -- -- --
Number of Units 4,895 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.74 $ 11.67 -- -- --
Number of Units 14,649 1,259 -- -- --
With any one of EBP or HAV and GMW B
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.67 $ 11.64 -- -- --
Number of Units 35,622 483 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-19
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ----------------------------------------------- ----------- ----------- ------ ------ -----
AST AMERICAN CENTURY STRATEGIC BALANCED (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.56 $ 9.81 8.36 9.38 9.87
Number of Units 146,721 115,095 5,490 4,905 1,725
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.54 $ 11.68 9.97 -- --
Number of Units 102,109 30,366 2,914 -- --
With GMWB
Unit Value $ 11.10 -- -- -- --
Number of Units 2,728 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.47 $ 11.64 -- -- --
Number of Units 10,605 1,824 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.06 -- -- -- --
Number of Units 2,700 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.40 $ 11.61 -- -- --
Number of Units 175,763 18,977 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AST T. ROWE PRICE ASSET ALLOCATION (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.39 $ 10.37 8.47 9.52 10.12
Number of Units 357,085 222,150 13,799 13,152 2,412
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.33 $ 12.18 9.97 -- --
Number of Units 202,648 83,496 4,012 -- --
With GMWB
Unit Value $ 11.48 $ 10.49 -- -- --
Number of Units 57,827 427 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.26 $ 12.14 -- -- --
Number of Units 27,099 12,666 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.44 $ 10.49 -- -- --
Number of Units 4,487 2,847 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.19 $ 12.11 -- -- --
Number of Units 349,177 27,414 -- -- --
With HAV, EBP and GMWB
Unit Value $ 11.41 -- -- -- --
Number of Units 1,537 -- -- -- --
A-20
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ---------------------------------------- ----------- ----------- ------ ------ ------
AST T. ROWE PRICE GLOBAL BOND (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 14.73 $ 13.73 12.32 10.84 10.7
Number of Units 657,913 289,862 36,987 16,390 --
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.27 $ 11.47 10.32 -- --
Number of Units 759,419 92,875 2,954 -- --
With GMWB
Unit Value $ 11.06 $ 10.35 -- -- --
Number of Units 85,967 7,131 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.21 $ 11.44 10.31 -- --
Number of Units 103,452 13,487 4,861 -- --
With any one of EBP or HAV and GMW B
Unit Price $ 11.03 $ 10.34 -- -- --
Number of Units 9,789 1,457 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.14 $ 11.40 -- -- --
Number of Units 712,411 24,361 -- -- --
With HAV, EBP and GMWB
Unit Value $ 11.00 -- -- -- --
Number of Units 9,975 -- -- -- --
AST GOLDMAN SACHS HIGH YIELD PORTFOLIO
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.06 $ 10.99 9.16 9.27 9.37
Number of Units 957,756 906,947 73,614 45,297 12,929
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.46 $ 12.30 10.27 -- --
Number of Units 395,118 144,343 2,990 -- --
With GMWB
Unit Value $ 11.37 $ 10.40 -- -- --
Number of Units 51,737 11,264 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.38 $ 12.26 -- -- --
Number of Units 46,959 12,603 -- -- --
With any one of EBP or HAV and GMW B
Unit Price $ 11.34 $ 10.40 -- -- --
Number of Units 6,217 3,250 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.31 $ 12.23 -- -- --
Number of Units 426,333 27,535 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-21
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ---------------------------------------- ------------- ------------- ------- ------- ------
AST LORD ABBETT BOND-DEBENTURE (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.71 $ 11.98 10.22 10.3 10.13
Number of Units 1,012,739 814,135 43,077 16,628 425
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.67 $ 11.97 10.24 -- --
Number of Units 733,436 309,328 27,024 -- --
With GMWB
Unit Value $ 11.00 $ 10.41 -- -- --
Number of Units 92,187 12,397 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.60 $ 11.94 10.23 -- --
Number of Units 108,071 20,920 274 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 10.97 $ 10.41 -- -- --
Number of Units 14,516 1,266 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.53 $ 11.90 -- -- --
Number of Units 904,128 42,593 -- -- --
With HAV, EBP and GMWB
Unit Value $ 10.94 -- -- -- --
Number of Units 4,145 -- -- -- --
AST PIMCO TOTAL RETURN BOND (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.72 $ 13.23 12.72 11.8 10.97
Number of Units 3,074,732 2,301,863 362,294 275,317 37,918
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.91 $ 10.55 10.17 -- --
Number of Units 3,124,509 1,067,126 87,940 -- --
With GMWB
Unit Value $ 10.43 $ 10.10 -- -- --
Number of Units 329,463 37,841 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 10.85 $ 10.52 10.17 -- --
Number of Units 356,784 93,573 11,308 -- --
With any one of EBP or HAV and GMW B
Unit Price $ 10.40 $ 10.09 -- -- --
Number of Units 35,761 3,287 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.79 $ 10.49 -- -- --
Number of Units 3,495,678 378,676 -- -- --
With HAV, EBP and GMWB
Unit Value $ 10.37 -- -- -- --
Number of Units 19,700 -- -- -- --
A-22
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ---------------------------------------- ------------- ------------- ------- ------- ------
AST PIMCO LIMITED MATURITY BOND (1995)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.18 $ 12.08 10.09 11.29 10.59
Number of Units 2,189,975 956,856 38,260 112,948 1,940
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.32 $ 10.26 10.09 -- --
Number of Units 1,926,546 238,601 3,018 -- --
With GMWB
Unit Value $ 10.07 $ 10.03 -- -- --
Number of Units 264,755 23,203 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 10.26 $ 10.23 -- -- --
Number of Units 295,271 30,532 -- -- --
With any one of EBP or HAV and GMW B
Unit Price $ 10.04 $ 10.02 -- -- --
Number of Units 23,826 1,299 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.21 $ 10.21 -- -- --
Number of Units 2,764,809 36,640 -- -- --
With HAV, EBP and GMWB
Unit Value $ 10.01 -- -- -- --
Number of Units 11,324 -- -- -- --
AST MONEY MARKET (1992)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.46 $ 10.51 10.57 10.57 10.32
Number of Units 1,663,940 1,245,396 403,604 179,509 29,567
With any one of GRO Plus, EBP or HAV
Unit Price $ 9.84 $ 9.91 9.99 -- --
Number of Units 860,728 432,412 69,199 -- --
With GMWB
Unit Value $ 9.90 $ 9.98 -- -- --
Number of Units 167,246 5,609 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 9.79 $ 9.88 9.99 -- --
Number of Units 118,431 40,239 11,113 -- --
With any one of EBP or HAV and GMW B
Unit Price $ 9.87 -- -- -- --
Number of Units 6,752 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 9.73 $ 9.85 -- -- --
Number of Units 1,312,018 81,304 -- -- --
With HAV, EBP and GMWB
Unit Value $ 9.84 -- -- -- --
Number of Units 521 -- -- -- --
A-23
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ----------------------------------------------------- ----------- ----------- ------ ------ ------
Gartmore Variable Investment Trust -- GVIT DEVELOPING
MARKETS (1996)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.52 $ 10.59 6.71 7.53 8.19
Number of Units 264,541 122,136 6,530 6,555 3,293
With any one of GRO Plus, EBP or HAV
Unit Price $ 18.44 $ 15.63 -- -- --
Number of Units 118,837 20,956 -- -- --
With GMWB
Unit Value $ 12.85 $ 10.90 -- -- --
Number of Units 31,734 1,863 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 18.35 $ 15.59 -- -- --
Number of Units 26,850 167 -- -- --
With any one of EBP or HAV and GMW B
Unit Price $ 12.81 -- -- -- --
Number of Units 629 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 18.25 $ 15.54 -- -- --
Number of Units 161,653 12,503 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AIM V.I.--DYNAMICS (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 6.96 $ 6.22 4.57 6.8 9.99
Number of Units 188,184 137,600 18,808 15,825 22,264
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.71 $ 13.18 9.71 -- --
Number of Units 117,657 27,792 1,332 -- --
With GMWB
Unit Value $ 11.76 -- -- -- --
Number of Units 7,898 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.64 $ 13.14 -- -- --
Number of Units 8,375 1,003 -- -- --
With any one of EBP or HAV and GMW B
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.56 $ 13.11 -- -- --
Number of Units 61,543 4,848 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-24
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ---------------------------------------- ---------- ---------- ------ ------ ------
AIM V.I.--TECHNOLOGY (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 3.32 $ 3.21 2.24 4.27 7.98
Number of Units 78,567 42,720 30,448 35,767 25,984
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.83 -- -- -- --
Number of Units 216 -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMW B
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AIM V.I. -- HEALTH SCIENCES (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.34 $ 10.68 8.46 11.35 13.14
Number of Units 92,506 59,116 19,405 27,104 32,969
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.69 $ 11.98 9.52 -- --
Number of Units 39,343 16,675 892 -- --
With GMWB
Unit Value $ 11.50 $ 10.87 -- -- --
Number of Units 8,859 1,773 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.63 $ 11.95 9.52 -- --
Number of Units 6,838 2,812 223 -- --
With any one of EBP or HAV and GMW B
Unit Price $ 11.47 -- -- -- --
Number of Units 63 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.56 $ 11.91 -- -- --
Number of Units 87,037 2,077 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-25
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ------------------------------------------- ---------- ---------- ----- ----- -----
AIM V.I. -- FINANCIAL SERVICES (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.72 $ 11.85 9.26 11.02 12.38
Number of Units 44,091 48,538 7,204 8,536 9,786
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.56 $ 12.67 9.93 -- --
Number of Units 19,908 9,201 979 -- --
With GMWB
Unit Value $ 11.20 -- -- -- --
Number of Units 4,380 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.49 $ 12.63 9.92 -- --
Number of Units 8,738 2,426 190 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.17 -- -- -- --
Number of Units 1,383 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.42 $ 12.60 -- -- --
Number of Units 67,581 20,268 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
Evergreen VA -- INTERNATIONAL EQUITY (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.31 $ 10.46 -- -- --
Number of Units 62,400 24,847 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.27 $ 10.45 -- -- --
Number of Units 24,314 5,552 -- -- --
With GMWB
Unit Value $ 12.26 -- -- -- --
Number of Units 14,337 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.24 $ 10.45 -- -- --
Number of Units 7,296 1,075 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- $ 10.45 -- -- --
Number of Units -- 970 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.21 $ 10.45 -- -- --
Number of Units 32,858 827 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-26
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ---------------------------------------- ---------- ---------- ----- ----- ----
EVERGREEN VA -- SPECIAL EQUITY(16) (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.57 $ 9.16 6.1 8.49 9.35
Number of Units 92,559 69,344 5,427 5,085 --
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.38 $ 14.76 9.86 -- --
Number of Units 71,520 19,312 295 -- --
With GMWB
Unit Value $ 10.64 $ 10.22 -- -- --
Number of Units 8,000 2,186 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.30 $ 14.71 -- -- --
Number of Units 27,564 1,917 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.22 $ 14.67 -- -- --
Number of Units 46,748 3,620 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
EVERGREEN VA -- OMEGA (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.75 $ 9.21 -- 9.04 --
Number of Units 26,849 15,743 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.01 $ 13.27 -- -- --
Number of Units 22,947 3,320 -- -- --
With GMWB
Unit Value $ 11.04 -- -- -- --
Number of Units 1,787 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.93 $ 13.23 -- -- --
Number of Units 263 27 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.00 -- -- -- --
Number of Units 3,387 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.86 $ 13.19 -- -- --
Number of Units 31,153 283 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-27
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- --------- ----- ----- ----
ProFund VP -- EUROPE 30 (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.90 $ 7.00 5.11 6.97 9.3
Number of Units 201,444 75,543 2,539 7,317 --
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.93 $ 13.26 9.7 -- --
Number of Units 13,634 2,495 69 -- --
With GMWB
Unit Value $ 12.49 -- -- -- --
Number of Units 2,913 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.85 -- -- -- --
Number of Units 19,592 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.45 -- -- -- --
Number of Units 140 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.77 $ 13.18 -- -- --
Number of Units 99,557 13,365 -- -- --
With HAV, EBP and GMWB
Unit Value $ 12.41 -- -- -- --
Number of Units 562 -- -- -- --
ProFund VP -- ASIA 30 (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.43 $ 12.66 -- -- --
Number of Units 63,254 47,272 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.71 $ 16.03 -- -- --
Number of Units 20,171 6,176 -- -- --
With GMWB
Unit Value $ 10.22 -- -- -- --
Number of Units 7,026 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.62 $ 15.99 -- -- --
Number of Units 18,117 173 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 10.19 -- -- -- --
Number of Units 98 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.54 $ 15.94 -- -- --
Number of Units 74,988 10,432 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-28
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- --------- ----- ----- ----
ProFund VP -- JAPAN (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.65 $ 9.09 -- -- --
Number of Units 87,251 28,579 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.52 $ 12.76 -- -- --
Number of Units 11,573 7,868 -- -- --
With GMWB
Unit Value $ 10.44 -- -- -- --
Number of Units 3,086 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.45 -- -- -- --
Number of Units 19,547 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.38 $ 12.69 -- -- --
Number of Units 35,968 1,883 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- BANKS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.11 $ 10.97 -- -- --
Number of Units 12,480 8,886 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.22 $ 12.92 -- -- --
Number of Units 12,919 4,576 -- -- --
With GMWB
Unit Value $ 11.67 -- -- -- --
Number of Units 2,773 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.15 -- -- -- --
Number of Units 2,561 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.07 -- -- -- --
Number of Units 8,847 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-29
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- --------- ----- ----- ----
ProFund VP -- BASIC MATERIALS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.00 $ 11.02 -- -- --
Number of Units 42,597 53,759 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.56 $ 13.41 10.35 -- --
Number of Units 17,377 3,940 70 -- --
With GMWB
Unit Value $ 12.54 -- -- -- --
Number of Units 9,417 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.48 -- -- -- --
Number of Units 648 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.40 $ 13.33 -- -- --
Number of Units 23,555 8,054 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- BIOTECHNOLOGY (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.73 $ 7.14 5.17 8.38 --
Number of Units 32,726 20,329 460 3,279 --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-30
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- --------- ----- ----- ----
ProFund VP -- CONSUMER SERVICES (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.67 $ 9.10 -- -- --
Number of Units 20,288 13,935 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.41 $ 11.71 9.38 -- --
Number of Units 27,094 2,321 686 -- --
With GMWB
Unit Value $ 10.78 -- -- -- --
Number of Units 10,848 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.35 -- -- -- --
Number of Units 65 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.28 -- -- -- --
Number of Units 17,197 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- CONSUMER GOODS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.47 $ 9.71 -- -- --
Number of Units 7,578 3,821 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.44 $ 11.56 9.91 -- --
Number of Units 8,109 1,762 74 -- --
With GMWB
Unit Value $ 11.49 -- -- -- --
Number of Units 3,092 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.37 $ 11.53 -- -- --
Number of Units 147 1,780 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.31 $ 11.49 -- -- --
Number of Units 8,437 954 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-31
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- --------- ----- ----- ----
ProFund VP -- OIL & GAS (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.62 $ 9.10 -- 9.2 --
Number of Units 186,654 50,155 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.53 $ 12.19 10.12 -- --
Number of Units 66,223 2,523 641 -- --
With GMWB
Unit Value $ 13.91 -- -- -- --
Number of Units 8,976 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.45 $ 12.16 -- -- --
Number of Units 23,701 239 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.37 $ 12.12 -- -- --
Number of Units 58,804 4,007 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- FINANCIALS (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.77 $ 9.88 7.76 9.23 --
Number of Units 70,662 32,283 3,258 8,154 --
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.60 $ 12.51 9.85 -- --
Number of Units 33,262 3,980 73 -- --
With GMWB
Unit Value $ 11.36 -- -- -- --
Number of Units 6,588 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.52 $ 12.47 9.84 -- --
Number of Units 20,343 388 401 -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.45 $ 12.44 -- -- --
Number of Units 17,749 1,060 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-32
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- --------- ----- ----- ----
ProFund VP -- HEALTH CARE (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 8.38 $ 8.29 7.15 9.37 --
Number of Units 91,641 23,591 1,235 2,564 --
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.19 $ 11.10 9.6 -- --
Number of Units 43,276 11,578 1,177 -- --
With GMWB
Unit Value $ 10.74 -- -- -- --
Number of Units 490 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 11.13 $ 11.07 9.6 -- --
Number of Units 31,097 402 416 -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.07 $ 11.04 -- -- --
Number of Units 8,570 1,969 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- INDUSTRIALS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.27 $ 10.08 -- -- --
Number of Units 22,333 11,186 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.40 $ 12.91 10.21 -- --
Number of Units 15,368 3,639 72 -- --
With GMWB
Unit Value $ 12.18 -- -- -- --
Number of Units 6,290 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.32 -- -- -- --
Number of Units 3,396 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.24 -- -- -- --
Number of Units 4,426 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-33
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- --------- ----- ----- ----
ProFund VP -- INTERNET (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 18.08 $ 15.10 -- -- --
Number of Units 20,851 8,287 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- PHARMACEUTICALS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 8.02 $ 8.95 -- -- --
Number of Units 27,913 24,743 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 8.96 $ 10.02 -- -- --
Number of Units 40,402 6,951 -- -- --
With GMWB
Unit Value $ 9.51 $ 10.65 -- -- --
Number of Units 2,904 955 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 8.91 -- -- -- --
Number of Units 32 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 8.86 $ 9.96 -- -- --
Number of Units 23,137 2,871 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-34
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- --------- ----- ----- ----
ProFund VP -- PRECIOUS METALS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.90 $ 13.38 9.73 -- --
Number of Units 102,230 89,687 1,179 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.76 $ 15.51 11.31 -- --
Number of Units 18,961 6,099 65 -- --
With GMWB
Unit Value $ 10.26 -- -- -- --
Number of Units 5,163 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.69 $ 15.46 -- -- --
Number of Units 22,059 158 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 10.23 -- -- -- --
Number of Units 842 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.61 -- -- -- --
Number of Units 42,627 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- REAL ESTATE (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 17.58 $ 14.00 10.65 10.78 --
Number of Units 53,006 18,355 2,230 2,306 --
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.78 $ 13.39 10.21 -- --
Number of Units 32,379 5,332 73 -- --
With GMWB
Unit Value $ 13.17 -- -- -- --
Number of Units 9,348 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 16.69 $ 13.35 -- -- --
Number of Units 2,337 850 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 16.60 $ 13.31 -- -- --
Number of Units 58,062 3,835 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-35
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- --------- ----- ------ ----
ProFund VP -- SEMICONDUCTOR (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.23 $ 9.58 -- -- --
Number of Units 52,485 17,621 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- TECHNOLOGY (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 4.91 $ 5.00 -- 5.92 --
Number of Units 88,720 74,180 -- 12,704 --
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.10 -- -- -- --
Number of Units 114 -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-36
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- --------- ----- ---- ----
ProFund VP -- TELECOMMUNICATIONS (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 5.04 $ 4.41 -- 7.11 --
Number of Units 118,731 30,179 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.53 $ 10.13 -- -- --
Number of Units 16,606 4,026 -- -- --
With GMWB
Unit Value $ 12.64 -- -- -- --
Number of Units 3,263 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 11.47 $ 10.10 -- -- --
Number of Units 24,292 334 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.40 -- -- -- --
Number of Units 6,379 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- UTILITIES (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 8.75 $ 7.32 6.11 8.13 --
Number of Units 79,702 18,902 491 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.13 $ 12.69 10.62 -- --
Number of Units 74,584 7,430 836 -- --
With GMWB
Unit Value $ 12.61 -- -- -- --
Number of Units 7,469 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.05 $ 12.65 -- -- --
Number of Units 4,044 2,920 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.97 $ 12.62 -- -- --
Number of Units 57,208 8,137 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-37
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- --------- ----- ----- ----
ProFund VP -- BULL (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.65 $ 9.91 -- -- --
Number of Units 412,259 394,427 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.93 $ 12.07 -- -- --
Number of Units 182,468 18,458 -- -- --
With GMWB
Unit Value $ 11.34 -- -- -- --
Number of Units 26,383 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.86 $ 12.03 -- -- --
Number of Units 15,572 2,154 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.31 -- -- -- --
Number of Units 40 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.79 $ 12.00 -- -- --
Number of Units 171,187 1,179 -- -- --
With HAV, EBP and GMWB
Unit Value $ 11.27 -- -- -- --
Number of Units 1,158 -- -- -- --
ProFund VP -- BEAR (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.09 $ 10.26 13.78 11.55 --
Number of Units 16,155 28,299 2,012 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 6.65 $ 7.53 10.14 -- --
Number of Units 5,797 3,186 658 -- --
With GMWB
Unit Value $ 8.21 -- -- -- --
Number of Units 1,186 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 6.62 $ 7.51 -- -- --
Number of Units 42,157 2,165 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 8.19 -- -- -- --
Number of Units 532 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 6.58 -- -- -- --
Number of Units 41,480 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-38
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- --------- ----- ---- ----
ProFund VP -- ULTRABULL (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 8.25 $ 7.13 4.72 7.48 --
Number of Units 305,666 56,257 2,988 -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- OTC (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 5.44 $ 5.07 -- 5.77 --
Number of Units 293,311 257,947 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.47 $ 13.54 9.36 -- --
Number of Units 105,135 12,607 205 -- --
With GMWB
Unit Value $ 11.00 -- -- -- --
Number of Units 32,794 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.39 $ 13.50 -- -- --
Number of Units 67,576 4,836 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.31 $ 13.46 -- -- --
Number of Units 128,923 5,378 -- -- --
With HAV, EBP and GMWB
Unit Value $ 10.94 -- -- -- --
Number of Units 2,991 -- -- -- --
A-39
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- ----------- --------- ----- ------ -----
ProFund VP -- SHORT OTC (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 5.99 $ 6.83 11.03 -- --
Number of Units 77,280 40,617 934 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 5.64 $ 6.45 -- -- --
Number of Units 7,841 10,811 -- -- --
With GMWB
Unit Value $ 8.31 -- -- -- --
Number of Units 265 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 5.61 -- -- -- --
Number of Units 36 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 5.58 -- -- -- --
Number of Units 7,191 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- ULTRAOTC (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 0.87 $ 0.77 -- 1.25 4.06
Number of Units 6,405,048 890,270 -- 58,556 3,787
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.53 -- -- -- --
Number of Units 90 -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-40
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- ---------- ----- ---- ----
ProFund VP -- MID-CAP VALUE (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.80 $ 10.30 -- -- --
Number of Units 87,968 59,964 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.38 $ 13.46 10.07 -- --
Number of Units 64,251 18,261 2,821 -- --
With GMWB
Unit Value $ 12.30 -- -- -- --
Number of Units 3,276 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.29 -- -- -- --
Number of Units 10,601 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.26 -- -- -- --
Number of Units 215 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.21 $ 13.39 -- -- --
Number of Units 110,312 4,164 -- -- --
With HAV, EBP and GMWB
Unit Value $ 12.23 -- -- -- --
Number of Units 216 -- -- -- --
ProFund VP -- MID-CAP GROWTH (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.70 $ 9.75 -- -- --
Number of Units 80,520 24,107 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.54 $ 12.38 9.82 -- --
Number of Units 55,896 17,202 2,879 -- --
With GMWB
Unit Value $ 11.21 -- -- -- --
Number of Units 2,696 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.47 -- -- -- --
Number of Units 27,151 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.18 -- -- -- --
Number of Units 88 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.39 $ 12.31 -- -- --
Number of Units 53,472 2,028 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-41
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- ---------- ----- ---- ----
ProFund VP -- ULTRAMID-CAP (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.13 $ 9.62 -- -- --
Number of Units 115,073 34,556 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 20.80 $ 16.53 -- -- --
Number of Units 28,117 5,328 -- -- --
With GMWB
Unit Value $ 13.97 -- -- -- --
Number of Units 4,794 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 20.68 $ 16.49 -- -- --
Number of Units 853 1,873 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 13.92 -- -- -- --
Number of Units 19 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 20.57 $ 16.44 -- -- --
Number of Units 101,493 3,746 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- SMALL-CAP VALUE (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.22 $ 9.46 -- -- --
Number of Units 123,988 105,751 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.93 $ 13.47 10.15 -- --
Number of Units 75,890 27,349 568 -- --
With GMWB
Unit Value $ 12.63 -- -- -- --
Number of Units 18,991 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.85 $ 13.43 -- -- --
Number of Units 24,538 4,300 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.59 -- -- -- --
Number of Units 45 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.76 $ 13.39 -- -- --
Number of Units 163,443 24,769 -- -- --
With HAV, EBP and GMWB
Unit Value $ 12.55 -- -- -- --
Number of Units 974 -- -- -- --
A-42
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------- --------- ---------- ---- ---- -----
ProFund VP -- SMALL-CAP GROWTH (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.11 $ 10.23 -- -- --
Number of Units 237,000 65,882 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.47 $ 13.11 -- -- --
Number of Units 63,321 24,983 -- -- --
With GMWB
Unit Value $ 12.32 -- -- -- --
Number of Units 14,604 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.39 $ 13.07 -- -- --
Number of Units 32,374 4,774 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.29 -- -- -- --
Number of Units 162 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.31 $ 13.04 -- -- --
Number of Units 170,800 21,997 -- -- --
With HAV, EBP and GMWB
Unit Value $ 12.25 -- -- -- --
Number of Units 938 -- -- -- --
ProFund VP -- ULTRASMALL-CAP (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.28 $ 9.49 4.82 8.5 9.32
Number of Units 143,175 60,051 953 -- 3,174
With any one of GRO Plus, EBP or HAV
Unit Price $ 25.20 -- -- -- --
Number of Units 4,066 -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-43
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------------- --------- ---------- ----- ---- ----
ProFund VP -- U.S. GOVERNMENT PLUS (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 11.91 $ 11.15 11.59 -- --
Number of Units 42,782 20,058 1,005 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.43 $ 9.79 10.2 -- --
Number of Units 11,478 6,691 592 -- --
With GMWB
Unit Value $ 10.89 -- -- -- --
Number of Units 3,036 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 10.38 $ 9.76 -- -- --
Number of Units 1,887 818 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.32 $ 9.73 -- -- --
Number of Units 120,311 14,956 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- RISING RATES OPPORTUNITY (2002)
WITH NO OPTIONAL BENEFITS
Unit Price $ 6.70 $ 7.61 -- -- --
Number of Units 266,169 78,428 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 8.04 $ 9.16 9.7 -- --
Number of Units 168,043 31,892 3,456 -- --
With GMWB
Unit Value $ 8.37 -- -- -- --
Number of Units 25,505 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 8.00 $ 9.13 -- -- --
Number of Units 21,280 1,988 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 8.35 -- -- -- --
Number of Units 7,572 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 7.95 $ 9.11 -- -- --
Number of Units 333,355 4,991 -- -- --
With HAV, EBP and GMWB
Unit Value $ 8.32 -- -- -- --
Number of Units 307 -- -- -- --
A-44
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
----------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- -------------------------------------- --------- ---- ---- ---- ----
ProFund VP -- LARGE-CAP GROWTH
WITH NO OPTIONAL BENEFITS
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.38 -- -- -- --
Number of Units 368 -- -- -- --
With GMWB
Unit Value $ 10.38 -- -- -- --
Number of Units 1,497 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.37 -- -- -- --
Number of Units 2,860 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- LARGE-CAP VALUE
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.37 -- -- -- --
Number of Units 3,839 -- -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.37 -- -- -- --
Number of Units 1,527 -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.36 -- -- -- --
Number of Units 3,802 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-45
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
----------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- -------------------------------------- --------- ---- ---- ---- ----
ProFund VP -- SHORT MID-CAP
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.70 -- -- -- --
Number of Units 571 -- -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
ProFund VP -- SHORT SMALL-CAP
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.55 -- -- -- --
Number of Units 7,859 -- -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ -- -- -- --
Number of Units -- -- -- --
With GMWB
Unit Value $ -- -- -- --
Number of Units -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ -- -- -- --
Number of Units -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value $ -- -- -- --
Number of Units -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ -- -- -- --
Number of Units -- -- -- --
With HAV, EBP and GMWB
Unit Value $ -- -- -- --
Number of Units -- -- -- --
A-46
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ---------------------------------------- ---------- --------- ------ ------ ------
FIRST TRUST(R) 10 UNCOMMON VALUES (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 4.38 $ 3.99 2.95 4.73 7.44
Number of Units 33,075 22,064 23,080 31,543 32,451
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
FIRST TRUST TARGET MANAGED VIP (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 14.64 $ 13.20 -- -- --
Number of Units 695,591 476,951 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.56 -- -- -- --
Number of Units 246,099 -- -- -- --
With GMWB
Unit Value $ 11.33 -- -- -- --
Number of Units 142,741 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.48 -- -- -- --
Number of Units 168,841 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value $ 11.31 -- -- -- --
Number of Units 8,734 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.30 -- -- -- --
Number of Units 1,057,901 -- -- -- --
With HAV, EBP and GMWB
Unit Value $ 11.29 -- -- -- --
Number of Units 16,433 -- -- -- --
A-47
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ---------------------------------------- --------- ---------- ---- ---- ----
FIRST TRUST THE DOW DART(SM)(10) (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.35 $ 12.05 -- -- --
Number of Units 24,245 10,069 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.29 -- -- -- --
Number of Units 25,135 -- -- -- --
With GMWB
Unit Value $ 10.48 -- -- -- --
Number of Units 4,769 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.22 -- -- -- --
Number of Units 19,324 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.47 -- -- -- --
Number of Units 1,597 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.46 -- -- -- --
Number of Units 78,082 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
FIRST TRUST GLOBAL TARGET 15 (17) (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 16.05 $ 12.96 -- -- --
Number of Units 22,405 8,569 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.96 -- -- -- --
Number of Units 22,182 -- -- -- --
With GMWB
Unit Value $ 11.85 -- -- -- --
Number of Units 927 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.88 -- -- -- --
Number of Units 16,155 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value $ 11.83 -- -- -- --
Number of Units 638 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.82 -- -- -- --
Number of Units 108,014 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-48
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- ---------------------------------------- --------- ---------- ---- ---- ----
FIRST TRUST S&P TARGET 24 (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.34 $ 11.89 -- -- --
Number of Units 43,536 5,532 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.27 -- -- -- --
Number of Units 37,547 -- -- -- --
With GMWB
Unit Value $ 10.75 -- -- -- --
Number of Units 5,280 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.20 -- -- -- --
Number of Units 27,172 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.73 -- -- -- --
Number of Units 1,630 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.72 -- -- -- --
Number of Units 38,677 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
FIRST TRUST NASDAQ TARGET 15 (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.54 -- -- -- --
Number of Units 7,266 -- -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-49
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
-----------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
- --------------------------------------------- ---------- ---- ---- ---- ----
FIRST TRUST VALUE LINE(R) -- TARGET 25 (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 16.61 -- -- -- --
Number of Units 33,213 -- -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- -- -- --
Number of Units -- -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
SP WILLIAM BLAIR INTERNATIONAL GROWTH
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.53 -- -- -- --
Number of Units 18,568 -- -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.53 -- -- -- --
Number of Units 18,201 -- -- -- --
With GMWB
Unit Value $ 10.53 -- -- -- --
Number of Units 89 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.53 -- -- -- --
Number of Units 3 -- -- -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.53 -- -- -- --
Number of Units 2,276 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.53 -- -- -- --
Number of Units 73,031 -- -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-50
APPENDIX A
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
1: Effective May 2, 2005 the name of the Wells Fargo Variable Trust
International Equity Portfolio has changed to Wells Fargo Variable Trust
Advantage International Core Portfolio.
2: Effective May 2, 2005 the name of the Wells Fargo Variable Trust Small-Cap
Growth Portfolio has changed to Wells Fargo Variable Trust Advantage Small-Cap
Growth Portfolio.
3: Effective May 2, 2005 the name of the Wells Fargo Variable Trust Growth
Portfolio has changed to Wells Fargo Variable Trust Advantage Large Company Core
Portfolio.
4: Effective May 2, 2005 the name of the Wells Fargo Variable Trust Large
Company Growth Portfolio has changed to Wells Fargo Variable Trust Advantage
Large Company Growth Portfolio.
5: Effective May 2, 2005 the name of the Wells Fargo Variable Trust Equity Value
Portfolio has changed to Wells Fargo Variable Trust Advantage C&B Large-Cap
Value Portfolio.
6: Effective May 2, 2005 the name of the Wells Fargo Variable Trust Equity
Income Portfolio has changed to Wells Fargo Variable Trust Advantage Equity
Income Portfolio.
7: Effective May 2, 2005 the name of the Wells Fargo Variable Trust Asset
Allocation Portfolio has changed to Wells Fargo Variable Trust Advantage Asset
Allocation Portfolio.
8: Effective May 2, 2005 the name of the Wells Fargo Variable Trust Total Return
Bond Portfolio has changed to Wells Fargo Variable Trust Advantage Total Return
Bond Portfolio.
9: Effective May 2, 2005 the name of the AST State Street Research Small-Cap
Growth Portfolio has changed to AST Small-Cap Growth Portfolio.
10: Effective May 2, 2005 the name of the AST Alliance Growth Portfolio has
changed to AST AllianceBernstein Large-Cap Growth Portfolio.
11: Effective May 2, 2005 the name of the AST Alliance/Bernstein Growth + Value
Portfolio has changed to AST AllianceBernstein Growth + Value Portfolio.
12: Effective May 2, 2005 the name of the AST Sanford Bernstein Core Value
Portfolio has changed to AST AllianceBernstein Core Value Portfolio.
13: Effective May 2, 2005 the name of the AST Sanford Bernstein Managed Index
500 Portfolio has changed to AST AllianceBernstein Managed Index 500 Portfolio.
14: Effective May 2, 2005 the name of the AST Alliance Growth and Income
Portfolio has changed to AST AllianceBernstein Growth & Income Portfolio.
15: Effective May 2, 2005 the name of the AST DeAM Global Allocation Portfolio
has changed to AST Global Allocation Portfolio.
16: Effective April 15, 2005 the name of the Evergreen VA--Special Equity
Portfolio has changed to Evergreen VA Growth Portfolio.
17: Effective May 2, 2005 the name of the First Trust Global Target 15 Portfolio
has changed to First Trust Global Dividend Target 15 Portfolio.
A-51
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APPENDIX B
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits
EXAMPLES OF ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT CALCULATION
The following are examples of how the Enhanced Beneficiary Protection Optional
Death Benefit is calculated. Each example assumes that a $50,000 initial
Purchase Payment is made. Each example assumes that there is one Owner who is
age 50 on the Issue Date and that all Account Value is maintained in the
variable investment options. The formula for determining the Enhanced
Beneficiary Protection Optional Death Benefit is as follows:
Account Value of variable
Growth = investment options plus Interim minus Purchase Payments -
Value of Fixed Allocations proportional withdrawals
(no MVA applies)
Example with market increase
Assume that the Owner has made no withdrawals and that the Account Value has
been increasing due to positive market performance. On the date we receive due
proof of death, the Account Value is $75,000. The basic Death Benefit is
calculated as Purchase Payments minus proportional withdrawals, or Account
Value, which ever is greater. Therefore, the basic Death Benefit is equal to
$75,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to
the amount payable under the basic Death Benefit ($75,000) PLUS 40% of the
"Growth" under the Annuity.
Growth = $ 75,000 - [$50,000 - $0]
= $ 25,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death
Benefit = 40% of Growth
= $ 25,000 x 0.40
= $ 10,000
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $ 85,000
Examples with market decline
Assume that the Owner has made no withdrawals and that the Account Value has
been decreasing due to declines in market performance. On the date we receive
due proof of death, the Account Value is $45,000. The basic Death Benefit is
calculated as Purchase Payments minus proportional withdrawals, or Account
Value, which ever is greater. Therefore, the basic Death Benefit is equal to
$50,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to
the amount payable under the basic Death Benefit ($50,000) PLUS the "Growth"
under the Annuity.
Growth = $ 45,000 - [$50,000 - $0]
= $ -5,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death
Benefit = 40% of Growth
NO BENEFIT IS PAYABLE
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $ 50,000
B-1
APPENDIX B
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits continued
IN THIS EXAMPLE YOU WOULD RECEIVE NO ADDITIONAL BENEFIT FROM PURCHASING THE
ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT.
Example with market increase and withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 5 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $90,000. The basic Death Benefit is calculated as Purchase
Payments minus proportional withdrawals, or Account Value, which ever is
greater. Therefore, the basic Death Benefit is equal to $90,000. The Enhanced
Beneficiary Protection Optional Death Benefit is equal to the amount payable
under the basic Death Benefit ($90,000) PLUS 40% of the "Growth" under the
Annuity.
Growth = $90,000 - [$50,000 - ($50,000 x $15,000/$75,000)]
= $90,000 - [$50,000 - $10,000]
= $90,000 - $40,000
= $ 50,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death
Benefit = 40% of Growth
= $50,000 x 0.40
= $ 20,000
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $ 110,000
EXAMPLES OF HIGHEST ANNIVERSARY VALUE DEATH BENEFIT CALCULATION
The following are examples of how the Highest Anniversary Value Death Benefit is
calculated. Each example assumes an initial Purchase Payment of $50,000. Each
example assumes that there is one Owner who is age 70 on the Issue Date and that
all Account Value is maintained in the variable investment options.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the date
we receive due proof of death, the Account Value is $75,000; however, the
Anniversary Value on the 5th anniversary of the Issue Date was $90,000. Assume
as well that the Owner has died before the Death Benefit Target Date. The Death
Benefit is equal to the greater of the Highest Anniversary Value or the basic
Death Benefit. The Death Benefit would be the Highest Anniversary Value
($90,000) because it is greater than the amount that would have been payable
under the basic Death Benefit ($75,000).
Example with withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $80,000; however, the Anniversary Value on the 5th anniversary
of the Issue Date was $90,000. Assume as well that the Owner has died before the
Death Benefit Target Date. The Death Benefit is equal to the greater of the
Highest Anniversary Value or the basic Death Benefit.
Highest Anniversary Value = $90,000 - [$90,000 x $15,000/$75,000]
= $90,000 - $18,000
= $ 72,000
Basic Death Benefit = max [$80,000, $50,000
- ($50,000 x $15,000/$75,000)]
= max [$80,000, $40,000]
= $ 80,000
The Death Benefit therefore is $80,000.
B-2
APPENDIX B
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Example with death after Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals had been made prior to the
Death Benefit Target Date. Further assume that the Owner dies after the Death
Benefit Target Date, when the Account Value is $75,000. The Highest Anniversary
Value on the Death Benefit Target Date was $80,000; however, following the Death
Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had
taken a withdrawal of $5,000 when the Account Value was $70,000. The Death
Benefit is equal to the greater of the Highest Anniversary Value plus Purchase
Payments minus proportional withdrawals after the Death Benefit Target Date or
the basic Death Benefit.
Highest Anniversary Value = $80,000 + $15,000 - [($80,000 + $15,000)
x $5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $ 88,214
Basic Death Benefit = max [$75,000, ($50,000 + $15,000)
- {($50,000 + $15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $ 75,000
The Death Benefit therefore is $88,214.
EXAMPLES OF COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
CALCULATION
The following are examples of how the Combination 5% Roll-Up and Highest
Anniversary Value Death Benefit are calculated. Each example assumes an initial
Purchase Payment of $50,000. Each example assumes that there is one Owner who is
age 70 on the Issue Date and that all Account Value is maintained in the
variable investment options.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the 7th
anniversary of the Issue Date we receive due proof of death, at which time the
Account Value is $75,000; however, the Anniversary Value on the 5th anniversary
of the Issue Date was $90,000. Assume as well that the Owner has died before the
Death Benefit Target Date. The Roll-Up Value is equal to initial Purchase
Payment accumulated at 5% for 6 years, or $67,005. The Death Benefit is equal to
the greatest of the Roll-Up Value, Highest Anniversary Value or the basic Death
Benefit. The Death Benefit would be the Highest Anniversary Value ($90,000)
because it is greater than both the Roll-Up Value ($67,005) and the amount that
would have been payable under the basic Death Benefit ($75,000).
Example with withdrawals
Roll-Up Value = {($67,005 - $3,350) - [($67,005 - $3,350)
x $1,650/($45,000 - $3,350)]} x 1.05
= ($63,655 - $2,522) x 1.05
= $ 64,190
Highest Anniversary Value = $70,000 - [$70,000 x $5,000/$45,000]
= $70,000 - $7,778
= $ 62,222
Basic Death Benefit = max [$43,000, $50,000 - ($50,000
x $5,000/$45,000)]
= max [$43,000, $44,444]
= $ 44,444
The Death Benefit therefore is $64,190.
B-3
APPENDIX B
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits continued
Example with death after Death Benefit Target Date
Assume that the Owner has not made any withdrawals prior to the Death Benefit
Target Date. Further assume that the Owner dies after the Death Benefit Target
Date, when the Account Value is $75,000. The Roll-Up Value on the Death Benefit
Target Date (the contract anniversary on or following the Owner's 80th birthday)
is equal to initial Purchase Payment accumulated at 5% for 10 years, or $81,445.
The Highest Anniversary Value on the Death Benefit Target Date was $85,000;
however, following the Death Benefit Target Date, the Owner made a Purchase
Payment of $15,000 and later had taken a withdrawal of $5,000 when the Account
Value was $70,000. The Death Benefit is equal to the greatest of the Roll-Up
Value, Highest Anniversary Value or the basic Death Benefit as of the Death
Benefit Target Date; each increased by subsequent purchase payments and reduced
proportionally for subsequent withdrawals.
Roll-Up Value = $81,445 + $15,000 - [($81,445 + $15,000)
x $5,000/$70,000]
= $81,445 + $15,000 - $6,889
= $89,556
Highest Anniversary Value = $85,000 + $15,000 - [($85,000 + $15,000)
x $5,000/$70,000]
= $85,000 + $15,000 - $7,143
= $92,857
Basic Death Benefit = max [$75,000, $50,000 + $15,000
- {($50,000 + $15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $75,000
The Death Benefit therefore is $92,857.
EXAMPLES OF HIGHEST DAILY VALUE DEATH BENEFIT CALCULATION
The following are examples of how the HDV Death Benefit is calculated. Each
example assumes an initial Purchase Payment of $50,000. Each example assumes
that there is one Owner who is age 70 on the Issue Date.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the date
we receive due proof of death, the Account Value is $75,000; however, the
Highest Daily Value was $90,000. Assume, as well, that the Owner has died before
the Death Benefit Target Date. The Death Benefit is equal to the greater of the
Highest Daily Value or the basic Death Benefit. The Death Benefit would be the
HDV ($90,000) because it is greater than the amount that would have been payable
under the basic Death Benefit ($75,000).
Example with withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $80,000; however, the Highest Daily Value ($90,000) was
attained during the fifth Annuity Year. Assume, as well, that the Owner has died
before the Death Benefit Target Date. The Death Benefit is equal to the greater
of the Highest Daily Value (proportionally reduced by the subsequent withdrawal)
or the basic Death Benefit.
Highest Daily Value = $90,000 - [$90,000 x $15,000/$75,000]
= $90,000 - $18,000
= $ 72,000
Basic Death Benefit = max [$80,000, $50,000 - ($50,000 x $15,000/$75,000)]
= max [$80,000, $40,000]
= $ 80,000
The Death Benefit therefore is $80,000.
B-4
APPENDIX B
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Example with death after Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals had been made prior to the
Death Benefit Target Date. Further assume that the Owner dies after the Death
Benefit Target Date, when the Account Value is $75,000. The Highest Daily Value
on the Death Benefit Target Date was $80,000; however, following the Death
Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had
taken a withdrawal of $5,000 when the Account Value was $70,000. The Death
Benefit is equal to the greater of the Highest Daily Value on the Death Benefit
Target Date plus Purchase Payments minus proportional withdrawals after the
Death Benefit Target Date or the basic Death Benefit.
Highest Daily Value = $80,000 + $15,000 - [($80,000 + $15,000)
x $5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $ 88,214
Basic Death Benefit = max [$75,000, ($50,000 + $15,000)
- {($50,000 + $15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $ 75,000
The Death Benefit therefore is $88,214.
B-5
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APPENDIX C
AMERICAN SKANDIA STAGECOACH ADVISOR PLAN III PROSPECTUS
Appendix C -- Additional Information on Asset Allocation Programs
PROGRAM RULES
- - You can elect an asset allocator program where the Sub-accounts for each
asset class in each model portfolio are designated based on an evaluation
of available Sub-accounts. If you elect the Lifetime Five Benefit ("LT5")
or the Highest Daily Value Death Benefit ("HDV"), you must enroll in one
of the eligible model portfolios. Asset allocation is a sophisticated
method of diversification that allocates assets among asset classes in
order to manage investment risk and potentially enhance returns over the
long term. However, asset allocation does not guarantee a profit or
protect against a loss.
HOW THE ASSET ALLOCATION PROGRAM WORKS
- - Amounts will automatically be allocated in accordance with the percentages
and to Sub-accounts indicated for the model portfolio that you choose. If
you allocate your Account Value or transfer your Account Value among any
Sub-accounts that are outside of your model portfolio, we will allocate
these amounts according to the allocation percentages of the applicable
model portfolio upon the next rebalancing. You may only choose one model
portfolio at a time. When you enroll in the asset allocation program and
upon each rebalance thereafter, 100% of your Account Value allocated to
the variable Sub-accounts will be allocated to the asset allocation
program. Any Account Value not invested in the Sub-accounts will not be
part of the program.
- - ADDITIONAL PURCHASE PAYMENTS: Unless otherwise requested, any additional
Purchase Payments applied to the variable Sub-accounts in the Annuity will
be allocated to the Sub-accounts according to the allocation percentages
for the model portfolio you choose. Allocation of additional Purchase
Payments outside of your model portfolio but into a Sub-account, will be
reallocated according to the allocation percentages of the applicable
model portfolio upon the next rebalancing.
- - REBALANCING YOUR MODEL PORTFOLIO: Changes in the value of the Sub-account
will cause your Account Value allocated to the Sub-accounts to vary from
the percentage allocations of the model portfolio you select. By selecting
the asset allocation program, you have directed us to periodically (e.g.,
quarterly) rebalance your Account Value allocated to the Sub-accounts in
accordance with the percentage allocations assigned to each Sub-account
within your model portfolio at the time you elected the program or as
later modified with your consent. Some asset allocation programs will only
require that a rebalancing occur when the percent of your Account Value
allocated to the Sub-accounts are outside of the acceptable range
permitted under such asset allocation program. Note -- Any Account Value
not invested in the Sub-accounts will not be affected by any rebalance.
- - SUB-ACCOUNT CHANGES WITHIN THE MODEL PORTFOLIOS: From time to time you may
be notified of a suggested change in a Sub-account or percentage allocated
to a Sub-account within your model portfolio. If you consent (in the
manner that is then permitted or required) to the suggested change, then
it will be implemented upon the next rebalance. If you do not consent then
rebalancing will continue in accordance with your unchanged model
portfolio, unless the Sub-account is no longer available under your
Annuity, in which case your lack of consent will be deemed a request to
terminate the asset allocation program and the provisions under
"Termination or Modification of the Asset Allocation Program" will apply.
- - OWNER CHANGES IN CHOICE OF MODEL PORTFOLIO: You may change from the model
portfolio that you have elected to any other currently available model
portfolio at any time. The change will be implemented on the date we
receive all required information in the manner that is then permitted or
required.
TERMINATION OR MODIFICATION OF THE ASSET ALLOCATION PROGRAM:
- - You may request to terminate your asset allocation program at any time.
Any termination will be effective on the date that American Skandia
receives your termination request in good order. If you are enrolled in
HDV or LT5, termination of your asset allocation program must coincide
with enrollment in a then currently available and approved asset
allocation program or other approved option. However, if you are enrolled
in LT5 you may terminate the LT5 benefit in order to then terminate your
asset allocation program. American Skandia reserves the right to terminate
or modify the asset allocation program at any time with respect to any
programs.
RESTRICTIONS ON ELECTING THE ASSET ALLOCATION:
- - You cannot participate in auto-rebalancing or a DCA program while enrolled
in an asset allocation program. Upon election of an asset allocation
program, American Skandia will automatically terminate your enrollment in
any auto-rebalancing or DCA program. Finally, Systematic Withdrawals can
only be made as flat dollar amounts.
C-1
PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS FURTHER
DETAILS ABOUT THE AMERICAN SKANDIA ANNUITY DESCRIBED IN PROSPECTUS
WFVASAPIII-PROS (05/2005).
____________________________________________________
(print your name)
____________________________________________________
(address)
____________________________________________________
(city/state/zip code)
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Variable Annuity Issued by: Variable Annuity Distributed by:
AMERICAN SKANDIA LIFE AMERICAN SKANDIA
ASSURANCE CORPORATION MARKETING, INCORPORATED
A Prudential Financial Company A Prudential Financial Company
One Corporate Drive One Corporate Drive
Shelton, Connecticut 06484 Shelton, Connecticut 06484
Telephone: 1-800-752-6342 Telephone: 203-926-1888
http://www.americanskandia.prudential.com http://www.americanskandia.prudential.com
MAILING ADDRESSES:
AMERICAN SKANDIA -- VARIABLE ANNUITIES
Attention: STAGECOACH ANNUITY
P.O. Box 7960
Philadelphia, PA 19176
EXPRESS MAIL:
AMERICAN SKANDIA -- VARIABLE ANNUITIES
Attention: STAGECOACH ANNUITY
2101 Welsh Road
Dresher, PA 19025
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
A Prudential Financial Company
One Corporate Drive, Shelton, Connecticut 06484
OPTIMUM ANNUITY(SM)
Flexible Premium Deferred Annuity
PROSPECTUS: MAY 2, 2005
This Prospectus describes the Optimum Annuity(SM), a flexible premium deferred
annuity (the "Annuity") offered by American Skandia Life Assurance Corporation
("American Skandia", "we", "our" or "us") exclusively through Linsco/Private
Ledger, Corp. The Annuity may be offered as an individual annuity contract or as
an interest in a group annuity. This Prospectus describes the important features
of the Annuity and what you should consider before purchasing the Annuity. THE
ANNUITY OR CERTAIN OF ITS INVESTMENT OPTIONS AND/OR FEATURES MAY NOT BE
AVAILABLE IN ALL STATES. VARIOUS RIGHTS AND BENEFITS MAY DIFFER BETWEEN STATES
TO MEET APPLICABLE LAWS AND/OR REGULATIONS. For more information about
variations applicable to your state, please refer to your Annuity contract or
consult your Investment Professional. Certain terms are capitalized in this
Prospectus. Those terms are either defined in the Glossary of Terms or in the
context of the particular section.
American Skandia offers several different annuities which your investment
professional may be authorized to offer to you. Each annuity has different
features and benefits that may be appropriate for you based on your financial
situation, your age and how you intend to use the annuity. The different
features and benefits include variations in death benefit protection and the
ability to access your annuity's account value. The fees and charges you pay and
compensation paid to your Investment Professional may also be different between
each annuity.
The Variable Investment Options
The variable investment options, each a Sub-account of American Skandia Life
Assurance Corporation Variable Account B, invest in an underlying mutual fund
portfolio. Currently, portfolios of the following underlying mutual funds are
being offered: American Skandia Trust and Evergreen Variable Annuity Trust.
Please Read This Prospectus
PLEASE READ THIS PROSPECTUS AND THE CURRENT PROSPECTUS FOR THE UNDERLYING MUTUAL
FUNDS. KEEP THEM FOR FUTURE REFERENCE. If you are purchasing the Annuity as a
replacement for existing variable annuity or variable life coverage, you should
consider any surrender or penalty charges you may incur when replacing your
existing coverage and that this Annuity may be subject to a contingent deferred
sales charge if you elect to surrender the Annuity or take a partial withdrawal.
You should consider your need to access the Annuity's Account Value and whether
the annuity's liquidity features will satisfy that need.
Available Information
We have also filed a Statement of Additional Information that is available from
us, without charge, upon your request. The contents of the Statement of
Additional Information are described on page 80.
This Prospectus is part of the registration statement we filed with the SEC
regarding this offering. Additional information on us and this offering is
available in the registration statement and the exhibits thereto. You may review
and 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. These
documents, as well as documents incorporated by reference, may also be obtained
through the SEC's Internet Website (http://www.sec.gov) for this registration
statement as well as for other registrants that file electronically with the
SEC.
For Further Information call:
- -> 1-800-752-6342
THESE ANNUITIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ISSUED, GUARANTEED OR
ENDORSED BY, ANY BANK, ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC), THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY. AN INVESTMENT IN THIS ANNUITY INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF VALUE, EVEN WITH RESPECT TO AMOUNTS ALLOCATED TO THE AST MONEY
MARKET SUB-ACCOUNT.
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.
OPTIMUM ANNUITY(SM) IS A SERVICE MARK OF LINSCO/PRIVATE LEDGER, CORP.
Prospectus Dated: May 2, 2005
ASAP3LPLPROS505
Statement of Additional Information Dated: May 2, 2005
LPLOAPROS
PLEASE SEE OUR PRIVACY POLICY AND IRA DISCLOSURE STATEMENT ATTACHED TO THE BACK
COVER OF THIS PROSPECTUS.
Contents
Introduction ............................................................................. 1
Why Would I Choose to Purchase This Annuity? ........................................... 1
What Are Some of the Key Features of This Annuity? ..................................... 1
How Do I Purchase This Annuity? ........................................................ 2
Glossary of Terms ........................................................................ 3
Summary of Contract Fees and Charges ..................................................... 4
Expense Examples ......................................................................... 10
Investment Options ....................................................................... 11
What are the Investment Objectives and Policies of the Portfolios? ..................... 11
What are the Fixed Allocations? ........................................................ 14
Fees and Charges ......................................................................... 15
What are the Contract Fees and Charges? ................................................ 15
What Charges Apply Solely to the Variable Investment Options? .......................... 16
What Fees and Expenses are Incurred by the Portfolios? ................................. 17
What Charges Apply to the Fixed Allocations? ........................................... 17
What Charges Apply if I Choose an Annuity Payment Option? .............................. 17
Exceptions/Reductions to Fees and Charges .............................................. 17
Purchasing Your Annuity .................................................................. 18
What are Our Requirements for Purchasing the Annuity? .................................. 18
Managing Your Annuity .................................................................... 19
May I Change the Owner, Annuitant and Beneficiary Designations? ........................ 19
May I Return the Annuity if I Change My Mind? .......................................... 19
May I Make Additional Purchase Payments? ............................................... 19
May I Make Scheduled Payments Directly from My Bank Account? ........................... 19
May I Make Purchase Payments Through a Salary Reduction Program? ....................... 20
Managing Your Account Value .............................................................. 21
How and When are Purchase Payments Invested? ........................................... 21
Are There Restrictions or Charges on Transfers Between Investment Options? ............. 21
Do You Offer Dollar Cost Averaging? .................................................... 23
Do You Offer Any Automatic Rebalancing Programs? ....................................... 23
Are Any Asset Allocation Programs Available? ........................................... 23
Do You Offer Programs Designed to Guarantee a "Return of Premium" at a Future Date? .... 24
May I Give My Investment Professional Permission to Manage My Account Value? ........... 25
May I Authorize My Third Party Investment Advisor to Manage My Account? ................ 25
How Do the Fixed Allocations Work? ..................................................... 26
How Do You Determine Rates for Fixed Allocations? ...................................... 27
How Does the Market Value Adjustment Work? ............................................. 27
What Happens When My Guarantee Period Matures? ......................................... 28
Access To Account Value .................................................................. 29
What Types of Distributions are Available to Me? ....................................... 29
Are There Tax Implications for Distributions? .......................................... 29
Can I Withdraw a Portion of My Annuity? ................................................ 29
How Much Can I Withdraw as a Free Withdrawal? .......................................... 30
Is There a Charge for a Partial Withdrawal? ............................................ 30
Can I Make Periodic Withdrawals from the Annuity During the Accumulation Period? ....... 30
Do You Offer a Program for Withdrawals Under Section 72(t) of the Internal Revenue
Code? ................................................................................ 31
What are Minimum Distributions and When Would I Need to Make Them? ..................... 31
Can I Surrender My Annuity for Its Value? .............................................. 31
What is a Medically-Related Surrender and How Do I Qualify? ............................ 31
What Types of Annuity Options are Available? ........................................... 32
How and When Do I Choose the Annuity Payment Option? ................................... 33
(i)
Contents
How are Annuity Payments Calculated? ............................................... 33
Living Benefit Programs .............................................................. 35
Do You Offer Programs Designed to Provide Investment Protection for Owners While
They are Alive? .................................................................. 35
Guaranteed Return Option Plus(SM) (GRO Plus(SM)) ................................... 36
Guaranteed Return Option (GRO) ..................................................... 41
Guaranteed Minimum Withdrawal Benefit (GMWB) ....................................... 44
Guaranteed Minimum Income Benefit (GMIB) ........................................... 48
Lifetime Five Income Benefit (Lifetime Five) ....................................... 52
Death Benefit ........................................................................ 58
What Triggers the Payment of a Death Benefit? ...................................... 58
Basic Death Benefit ................................................................ 58
Optional Death Benefits ............................................................ 58
American Skandia's Annuity Rewards ................................................. 62
Payment of Death Benefits .......................................................... 63
Valuing Your Investment .............................................................. 65
How is My Account Value Determined? ................................................ 65
What is the Surrender Value of My Annuity? ......................................... 65
How and When Do You Value the Sub-Accounts? ........................................ 65
How Do You Value Fixed Allocations? ................................................ 65
When Do You Process and Value Transactions? ........................................ 65
What Happens to My Units When There is a Change in Daily Asset-Based Charges? ...... 66
Tax Considerations ................................................................... 68
General Information .................................................................. 75
How Will I Receive Statements and Reports? ......................................... 75
Who is American Skandia? ........................................................... 75
What are Separate Accounts? ........................................................ 76
What is the Legal Structure of the Underlying Funds? ............................... 77
Who Distributes Annuities Offered by American Skandia? ............................. 78
Incorporation of Certain Documents by Reference .................................... 79
Financial Statements ............................................................... 79
How to Contact Us .................................................................. 79
Indemnification .................................................................... 80
Legal Proceedings .................................................................. 80
Contents of the Statement of Additional Information ................................ 80
Appendix A -- Condensed Financial Information About Separate Account B ............... A-1
Appendix B -- Calculation of Previously Offered Optional Death Benefits .............. B-1
Appendix C -- Additional Information on Asset Allocation Programs .................... C-1
(ii)
OPTIMUM ANNUITY PROSPECTUS
Introduction
Why Would I Choose to Purchase This Annuity?
This Annuity is frequently used for retirement planning because it allows you to
accumulate retirement savings and also offers annuity payment options when you
are ready to begin receiving income. The Annuity also offers a choice of
different optional benefits, for an additional charge, that can provide
principal protection or guaranteed minimum income protection for Owners while
they are alive and one or more death benefits that can protect your retirement
savings if you die during a period of declining markets. It may be used as an
investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Roth
IRA, Section 401(a) plans (defined benefit plans and defined contribution plans
such as 401(k), profit sharing and money purchase plans) or Tax Sheltered
Annuity (or 403(b)). It may also be used as an investment vehicle for
"non-qualified" investments. The Annuity allows you to invest your money in a
number of variable investment options as well as in one or more fixed
allocations.
When an Annuity is purchased as a "NON-QUALIFIED" investment, you generally are
not taxed on any investment gains the Annuity earns until you make a withdrawal
or begin to receive annuity payments. This feature, referred to as
"tax-deferral", can be beneficial to the growth of your Account Value because
money that would otherwise be needed to pay taxes on investment gains each year
remains invested and can earn additional money. However, because the Annuity is
designed for long-term retirement savings, a 10% penalty tax may be applied on
withdrawals you make before you reach age 59 1/2. Annuities purchased as a
non-qualified investment are not subject to the maximum contribution limits that
may apply to a qualified investment, and are not subject to required minimum
distributions after age 70 1/2.
When an Annuity is purchased as a "QUALIFIED" investment, you should consider
that the Annuity does not provide any tax advantages in addition to the
preferential treatment already available through your retirement plan under the
Internal Revenue Code. An Annuity may offer features and benefits in addition to
providing tax deferral that other investment vehicles may not offer, including
death benefit protection for your beneficiaries, lifetime income options, and
the ability to make transfers between numerous variable investment options
offered under the Annuity. You should consult with your investment professional
as to whether the overall benefits and costs of the Annuity are appropriate
considering your overall financial plan.
What Are Some of the Key Features of This Annuity?
- - This Annuity is a "flexible premium deferred annuity." It is called
"flexible premium" because you have considerable flexibility in the timing
and amount of premium payments. Generally, investors "defer" receiving
annuity payments until after an accumulation period.
- - This Annuity offers both variable investment options and Fixed Allocations.
If you allocate your Account Value to variable investment options, the value
of your Annuity will vary daily to reflect the investment performance of the
underlying investment options. Fixed Allocations of different durations are
offered that are guaranteed by us, but may have a Market Value Adjustment if
you withdraw or transfer your Account Value before the Maturity Date.
- - The Annuity features two distinct periods -- the accumulation period and the
payout period. During the accumulation period your Account Value is
allocated to one or more investment options.
- - During the payout period, commonly called "annuitization," you can elect to
receive annuity payments (1) for life; (2) for life with a guaranteed
minimum number of payments; (3) based on joint lives; or (4) for a
guaranteed number of payments. We currently make annuity payments available
on a fixed or variable basis.
- - This Annuity offers optional benefits, for an additional charge, that can
provide principal protection or guaranteed minimum income protection for
Owners while they are alive.
- - This Annuity offers a basic Death Benefit. It also offers optional Death
Benefits that provide an enhanced level of protection for your
beneficiary(ies) for an additional charge.
- - You are allowed to withdraw a limited amount of money from your Annuity on
an annual basis without any charges, although any optional guaranteed
benefit you elect may be reduced. Other product features allow you to access
your Account Value as necessary, although a charge may apply. After Annuity
Year 8, you are allowed to make unlimited withdrawals from your Annuity
without any charges.
- - Transfers between investment options are tax-free. Currently, you may make
twenty transfers each year free of charge. We also offer several programs
that enable you to manage your Account Value as your financial needs and
investment performance change.
1
OPTIMUM ANNUITY PROSPECTUS
Introduction continued
How Do I Purchase This Annuity?
We sell the Annuity through licensed, registered investment professionals. You
must complete an application and submit a minimum initial purchase payment of
$1,000. We may allow you to make a lower initial purchase payment provided you
establish a bank drafting program under which purchase payments received in the
first Annuity Year total at least $1,000. If the Annuity is owned by an
individual or individuals, the oldest of those Owners must be age 80 or under,
as of the Issue Date of the Annuity. If the Annuity is owned by an entity, the
annuitant must be age 80 or under, as of the Issue Date of the Annuity. The
availability and level of protection of certain optional benefits may vary based
on the age of the Owner on the Issue Date of the Annuity or the date of the
Owner's death.
2
OPTIMUM ANNUITY PROSPECTUS
Glossary of Terms
Many terms used within this Prospectus are described within the text where they
appear. The description of those terms are not repeated in this Glossary of
Terms.
ACCOUNT VALUE
The value of each allocation to a Sub-account (also referred to as "variable
investment option") or a Fixed Allocation prior to the Annuity Date, plus any
earnings, and/or less any losses, distributions and charges. The Account Value
is calculated before we assess any applicable Contingent Deferred Sales Charge
("CDSC" or "surrender charge") and/or, other than on a contract anniversary, any
fee that is deducted from the contract annually in arrears. The Account Value is
determined separately for each Sub-account and for each Fixed Allocation, and
then totaled to determine the Account Value for your entire Annuity. The Account
Value of each Fixed Allocation on other than its Maturity Date may be calculated
using a market value adjustment.
ANNUITIZATION
The application of Account Value (or Protected Income Value for the Guaranteed
Minimum Income Benefit, if applicable) to one of the available annuity options
for the Annuitant to begin receiving periodic payments for life, for a
guaranteed minimum number of payments or for life with a guaranteed minimum
number of payments.
ANNUITY DATE
The date you choose for annuity payments to commence. A maximum Annuity Date may
apply.
ANNUITY YEAR
A 12-month period commencing on the Issue Date of the Annuity and each
successive 12-month period thereafter.
CODE
The Internal Revenue Code of 1986, as amended from time to time.
FIXED ALLOCATION
An allocation of Account Value that is to be credited a fixed rate of interest
for a specified Guarantee Period during the accumulation period.
GUARANTEE PERIOD
A period of time during the accumulation period where we credit a fixed rate of
interest on a Fixed Allocation.
INTERIM VALUE
The value of a Fixed Allocation on any date other than the Maturity Date. The
Interim Value is equal to the initial value allocated to the Fixed Allocation
plus all interest credited to the Fixed Allocation as of the date calculated,
less any transfers or withdrawals from the Fixed Allocation.
ISSUE DATE
The effective date of your Annuity.
MVA
A market value adjustment used in the determination of Account Value of each
Fixed Allocation on any day more than 30 days prior to the Maturity Date of such
Fixed Allocation.
OWNER
With an Annuity issued as an individual annuity contract, the Owner is either an
eligible entity or person named as having ownership rights in relation to the
Annuity. With an Annuity issued as a certificate under a group annuity contract,
the "Owner" refers to the person or entity who has the rights and benefits
designated as to the "Participant" in the certificate.
SURRENDER VALUE
The value of your Annuity available upon surrender prior to the Annuity Date. It
equals the Account Value as of the date we price the surrender minus any
applicable CDSC, Annual Maintenance Fee, Tax Charge and the charge for any
optional benefits. The surrender value may be calculated using a Market Value
Adjustment with respect to amounts in any Fixed Allocation.
UNIT
A measure used to calculate your Account Value in a Sub-account during the
accumulation period.
VALUATION DAY
Every day the New York Stock Exchange is open for trading or any other day the
Securities and Exchange Commission requires mutual funds or unit investment
trusts to be valued.
3
OPTIMUM ANNUITY PROSPECTUS
Summary of Contract Fees and Charges
Below is a summary of the fees and charges for the Annuity. Some fees and
charges are assessed against your Annuity while others are assessed against
assets allocated to the variable investment options. The fees and charges that
are assessed against the Annuity include the Contingent Deferred Sales Charge,
Transfer Fee, Tax Charge and Annual Maintenance Fee. The charges that are
assessed against the variable investment options are the mortality and expense
risk charge, the charge for administration of the Annuity, the Distribution
Charge and the charge for certain optional benefits you elect, other than the
Guaranteed Minimum Income Benefit, which is assessed against the Protected
Income Value. Each underlying mutual fund portfolio assesses a charge for
investment management, other expenses and with some mutual funds, a 12b-1
charge. The prospectus for each underlying mutual fund provides more detailed
information about the expenses for the underlying mutual funds.
The following table provides a summary of the fees and charges you will pay if
you surrender the Annuity or transfer Account Value among investment options.
These fees and charges are described in more detail within this Prospectus.
YOUR TRANSACTION FEES AND CHARGES
(ASSESSED AGAINST THE ANNUITY)
FEE/CHARGE AMOUNT DEDUCTED
- ---------------------------------------------------------------------------------------------------------------
Contingent Deferred Sales Charge* 7.5%
The charge is a percentage of each applicable Purchase Payment deducted
upon surrender or withdrawal. The period during which a particular
percentage applies is measured from the Issue Date of the Annuity.
Transfer Fee $10.00 (currently, $15.00 maximum) (Currently, we deduct the fee after
the 20th transfer each Annuity Year. We guarantee that the number of
charge free transfers per Annuity Year will never be less than 8.)
Tax Charge Up to 3.5% of the value that is annuitized, depending on the requirements
of the applicable jurisdiction. This charge is deducted Tax Charge generally
at the time you annuitize your contract.
* The following are the Contingent Deferred Sales Charges (as a percentage of
each applicable Purchase Payment) upon surrender or withdrawal. For purposes of
calculating this charge we consider the year following the Issue Date of your
Annuity as Year 1.
Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8 Yr. 9+
- ----- ----- ----- ----- ----- ----- ----- ----- ------
7.5% 7.0% 6.5% 6.0% 5.0% 4.0% 3.0% 2.0% 0.0%
4
OPTIMUM ANNUITY PROSPECTUS
The following table provides a summary of the periodic fees and charges you will
pay while you own the Annuity, excluding the underlying mutual fund Portfolio
annual expenses. These fees and charges are described in more detail within this
Prospectus.
YOUR PERIODIC FEES AND CHARGES
ANNUAL FEES/CHARGES ASSESSED AGAINST THE ANNUITY
FEE/CHARGE AMOUNT DEDUCTED
- -------------------------------------------------------------------------------------------------------
Annual Maintenance Fee Smaller of $35 or 2% of Account Value (Only
applicable if Account Value is less than $100,000)
(Assessed annually on the Annuity's anniversary date
or upon surrender)
ANNUAL FEES/CHARGES OF THE SUB-ACCOUNT(1)
(AS A PERCENTAGE OF THE AVERAGE DAILY NET ASSETS OF THE SUB-ACCOUNTS)
FEE/CHARGE AMOUNT DEDUCTED
- ---------------------------------------------------------------------------------------------------------------------
Mortality & Expense Risk Charge(2) 0.50%
Administration Charge(2) 0.15%
Distribution Charge(3) 0.60% in Annuity Years 1-8
Settlement Service Charge(4) 1.40% per year of the value of each Sub-account if the Owner's
beneficiary elects the Qualified Beneficiary
Continuation Option5 ("Qualified BCO")
Total Annual Charges of the Sub-accounts 1.25% per year of the value of each Sub-account in Annuity Years
1-8; 0.65% in Annuity Years 9 and later
(1.40% per year if you are a beneficiary electing the Qualified BCO)
1: These charges are deducted daily and apply to Variable Investment Options
only.
2: The combination of the Mortality and Expense Risk Charge and Administration
Charge is referred to as the "Insurance Charge" elsewhere in this Prospectus.
3: The Distribution Charge in Annuity Years 9+ is 0.00%.
4: The Mortality & Expense Risk Charge, the Administration Charge and the
Distribution Charge do not apply if you are a beneficiary under the Qualified
Beneficiary Continuation Option. The Settlement Service Charge applies only if
your beneficiary elects the Qualified Beneficiary Continuation Option.
5: When an Annuity is used as an IRA, 403(b) or other "qualified investment",
upon the Owner's death a beneficiary may generally elect to continue the Annuity
and receive Minimum Distributions under the Annuity instead of receiving the
death benefit in a single payment. If a beneficiary elects this option, the
beneficiary will incur the Settlement Service Charge. Please refer to the
section of this Prospectus that describes the Qualified Beneficiary Continuation
Option for more detailed information about this option, including certain
restrictions and limitations that may apply.
5
OPTIMUM ANNUITY PROSPECTUS
Summary of Contract Fees and Charges continued
The following table provides a summary of the fees and charges you will pay if
you elect any of the following optional benefits. Not all optional benefits may
be purchased in combination with one another. You may only elect one optional
living benefit. The optional living benefits are the Guaranteed Return Option
Plus program (and where not available, Guaranteed Return Option), the Guaranteed
Minimum Withdrawal Benefit, the Guaranteed Minimum Income Benefit and the
Lifetime Five(SM) Income Benefit. For the optional death benefits, you may elect
the Highest Anniversary Value Death Benefit or the Highest Daily Value Death
Benefit together with the Enhanced Beneficiary Protection Death Benefit, or any
of these three benefits individually, but the Combination 5% Roll-up and HAV
Death Benefit may only be purchased individually. The fees and charges of each
of the optional benefits are described in more detail within this Prospectus.
YOUR OPTIONAL BENEFIT FEES AND CHARGES
OPTIONAL
BENEFIT FEE/ TOTAL ANNUAL
OPTIONAL BENEFIT CHARGE CHARGE*
- ------------------------------------------------------------------------------------------------------------------------------------
GUARANTEED RETURN OPTION PLUS(SM) (GRO PLUS(SM))/GUARANTEED RETURN OPTION
We offer a program that guarantees a "return of premium" at a future date, 0.25% of average daily 1.50% in Annuity
while allowing you to allocate all or a portion of your Account Value to net assets of the Sub- Years 1-8; 0.90%
certain Sub-accounts. accounts in Annuity Years
9 and later; 1.65%
for Qualified BCO
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
We offer a program that guarantees your ability to withdraw amounts over 0.35% of average daily 1.60% in Annuity
time equal to an initial principal value, regardless of the impact of market net assets of the Sub- Years 1-8; 1.00%
performance on your Account Value. accounts in Annuity Years 9
and later; 1.75%
for Qualified BCO
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)**
We offer a program that, after a seven-year waiting period, guarantees your 0.50% per year of the 1.25% in Annuity
ability to begin receiving income from your Annuity in the form of annuity average Protected Years 1-8; 0.65% in
payments based on your total Purchase Payments and an annual increase of Income Value during Annuity Years 9 and later
5% on such Purchase Payments adjusted for withdrawals (called the each year; deducted PLUS
"Protected Income Value"), regardless of the impact of market performance annually in arrears each 0.50% per year of average
on your Account Value. Annuity Year Protected Income Value
LIFETIME FIVE INCOME BENEFIT**
We offer a program that guarantees your ability to withdraw amounts equal 0.60% of average daily 1.85% in Annuity Years 1-8;
to a percentage of an initial principal value, regardless of the impact of net assets of the Sub- 1.25% in Annuity Years 9
market performance on your Account Value, subject to our program rules accounts and later
regarding the timing and amount of withdrawals.
ENHANCED BENEFICIARY PROTECTION DEATH BENEFIT**
We offer an Optional Death Benefit that provides an enhanced level of 0.25% of average daily 1.50% in Annuity
protection for your beneficiary(ies) by providing amounts in addition to the net assets of the Sub- Years 1-8; 0.90%
basic Death Benefit that can be used to offset federal and state taxes accounts in Annuity Years 9 and later
payable on any taxable gains in your Annuity at the time of your death.
6
OPTIMUM ANNUITY PROSPECTUS
OPTIONAL
BENEFIT FEE/ TOTAL ANNUAL
OPTIONAL BENEFIT CHARGE CHARGE*
- ------------------------------------------------------------------------------------------------------------------------------------
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT ("HAV")**
We offer an Optional Death Benefit that provides an enhanced level of 0.25% of average daily 1.50% in Annuity
protection for your beneficiary(ies) by providing a death benefit equal to the net assets of the Sub- Years 1-8; 0.90%
greater of the basic Death Benefit and the Highest Anniversary Value, less accounts in Annuity Years 9 and later
proportional withdrawals.
COMBINATION 5% ROLL-UP AND HAV DEATH BENEFIT**
We offer an Optional Death Benefit that provides an enhanced level of 0.50% of average daily 1.75% in Annuity
protection for your beneficiary(ies) by providing the greater of the Highest net assets of the Sub- Years 1-8; 1.15%
Anniversary Value Death Benefit and a 5% annual increase on Purchase accounts in Annuity Years 9 and later
Payments adjusted for withdrawals.
HIGHEST DAILY VALUE DEATH BENEFIT ("HDV")**
We offer an Optional Death Benefit that provides an enhanced level of 0.50% of average daily 1.75% in Annuity Years 1-8;
protection for your beneficiary(ies) by providing a death benefit equal to the net assets of the Sub- 1.15% in Annuity Years 9
greater of the basic Death Benefit and the Highest Daily Value, less accounts and later
proportional withdrawals.
Please refer to the section of this Prospectus that describes each optional
benefit for a complete description of the benefit, including any restrictions or
limitations that may apply.
* The Total Annual Charge includes the Insurance Charge and Distribution Charge
assessed against the average daily net assets allocated to the Sub-accounts. If
you elect more than one optional benefit, the Total Annual Charge would be
increased to include the charge for each optional benefit.
** These optional benefits are not available under the Qualified BCO.
The following table provides the range (minimum and maximum) of the total annual
expenses for the underlying mutual funds ("Portfolios") as of December 31, 2004.
Each figure is stated as a percentage of the underlying Portfolio's average
daily net assets.
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES
MINIMUM MAXIMUM
- -------------------------------------------------------------
TOTAL PORTFOLIO OPERATING EXPENSE 0.63% 3.06%
The following are the investment management fees, other expenses, 12b-1 fees (if
applicable), and the total annual expenses for each underlying mutual fund
("Portfolio") as of December 31, 2004, except as noted. Each figure is stated as
a percentage of the underlying Portfolio's average daily net assets. For certain
of the underlying Portfolios, a portion of the management fee has been waived
and/or other expenses have been partially reimbursed. Any such fee waivers
and/or reimbursements have been reflected in the footnotes. The "Total Annual
Portfolio Operating Expenses" reflect the combination of the underlying
Portfolio's investment management fee, other expenses and any 12b-1 fees. The
following expenses are deducted by the underlying Portfolio before it provides
American Skandia with the daily net asset value. Any footnotes about expenses
appear after the list of all the Portfolios. The underlying Portfolio
information was provided by the underlying mutual funds and has not been
independently verified by us. See the prospectuses or statements of additional
information of the underlying Portfolios for further details. The current
prospectus and statement of additional information for the underlying Portfolios
can be obtained by calling 1-800-752-6342.
7
OPTIMUM ANNUITY PROSPECTUS
Summary of Contract Fees and Charges continued
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS)
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
AMERICAN SKANDIA TRUST:(2, 3)
AST William Blair International Growth 1.00% 0.22% None 1.22%
AST LSV International Value(4) 1.00% 0.37% None 1.37%
AST Small-Cap Growth(5) 0.90% 0.24% None 1.14%
AST DeAM Small-Cap Growth 0.95% 0.22% None 1.17%
AST Federated Aggressive Growth 0.95% 0.24% None 1.19%
AST Small-Cap Value(6) 0.90% 0.18% None 1.08%
AST Goldman Sachs Mid-Cap Growth 1.00% 0.25% None 1.25%
AST Neuberger Berman Mid-Cap Value 0.90% 0.15% None 1.05%
AST MFS Growth 0.90% 0.20% None 1.10%
AST Marsico Capital Growth 0.90% 0.14% None 1.04%
AST AllianceBernstein Core Value(7) 0.75% 0.24% None 0.99%
AST Hotchkis & Wiley Large-Cap Value 0.75% 0.19% None 0.94%
AST Lord Abbett Bond-Debenture 0.80% 0.22% None 1.02%
AST PIMCO Total Return Bond 0.65% 0.16% None 0.81%
AST PIMCO Limited Maturity Bond 0.65% 0.17% None 0.82%
AST Money Market 0.50% 0.13% None 0.63%
EVERGREEN VARIABLE ANNUITY TRUST:
International Equity 0.42% 0.30% None 0.72%
Omega 0.52% 0.16% None 0.68%
1: As noted above, shares of the Portfolios generally are purchased through
variable insurance products. Many of the Portfolios and/or their investment
advisers and/or distributors have entered into arrangements with us as the
issuer of the Annuity under which they compensate us for providing ongoing
services in lieu of the Trust providing such services. Amounts paid by a
Portfolio under those arrangements are included under "Other Expenses." For more
information see the prospectus for each underlying portfolio and, "Service Fees
payable to American Skandia," later in this prospectus.
2: The Portfolios' total actual annual operating expenses for the year ended
December 31, 2004 were less than the amount shown in the table due to fee
waivers, reimbursement of expenses and expense offset arrangements. These
waivers, reimbursements, and offset arrangements are voluntary and may be
terminated by American Skandia Investment Services, Inc. and Prudential
Investments LLC at any time. After accounting for the waivers, reimbursements
and offset arrangements, the Portfolios' actual annual operating expenses were:
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
AST William Blair International Growth 1.11%
AST LSV International Value 1.22%
AST DeAM Small-Cap Growth 1.02%
AST Goldman Sachs Mid-Cap Growth 1.13%
AST Neuberger Berman Mid-Cap Value 1.04%
AST MFS Growth 1.07%
AST Marsico Capital Growth 1.02%
AST Hotchkis & Wiley Large-Cap Value 0.90%
AST Lord Abbett Bond-Debenture Portfolio 0.97%
AST PIMCO Total Return Bond 0.78%
AST PIMCO Limited Maturity Bond 0.79%
AST Money Market 0.58%
8
OPTIMUM ANNUITY PROSPECTUS
3: Until November 18, 2004, the Trust had a Distribution Plan under Rule 12b-1
to permit an affiliate of the Trust's Investment Managers to receive brokerage
commissions in connection with purchases and sales of securities held by the
Portfolios, and to use these commissions to promote the sale of shares of the
Portfolio. The Distribution Plan was terminated effective November 18, 2004. The
total annual portfolio operating expenses do not reflect any brokerage
commissions paid pursuant to the Distribution Plan prior to the Plan's
termination.
4: Effective November 18, 2004, LSV Asset Management became the Sub-advisor of
the Portfolio. Prior to November 18, 2004, Deutsche Asset Management, Inc.
served as Sub-advisor of the Portfolio, then named "AST DeAM International
Equity Portfolio."
5: Effective May 1, 2005, Eagle Asset Management and Neuberger Berman
Management, Inc. became Co-Sub-advisors of the Portfolio. Prior to May 1, 2005,
State Street Research and Management Company served as Sub-advisor of the
Portfolio, then named "AST State Street Research Small-Cap Growth Portfolio."
6: Effective November 18, 2004, Integrity Asset Management, Lee Munder Capital
Group, J.P. Morgan Fleming Asset Management became Co-Sub-advisors of the
Portfolio. Prior to November 18, 2004, GAMCO Advisors Inc. served as Sub-advisor
of the Portfolio, then named "AST Gabelli Small-Cap Value Portfolio."
7: Effective May 1, 2005, the name of the Portfolio was changed from "AST
Sanford Bernstein Core Value Portfolio" to "AST AllianceBernstein Core Value
Portfolio."
9
OPTIMUM ANNUITY PROSPECTUS
Expense Examples
These examples are designed to assist you in understanding the various expenses
you may incur with the Annuity over certain periods of time based on specific
assumptions. The examples reflect the Contingent Deferred Sales Charges (when
applicable), Annual Maintenance Fee, Insurance Charge, Distribution Charge (when
applicable), and the highest total annual portfolio operating expenses for any
underlying Portfolio offered under the product, as well as the maximum charges
for the optional benefits that are offered under the Annuity that can be elected
in combination with one another.
Below are examples showing what you would pay in expenses at the end of the
stated time periods had you invested $10,000 in the Annuity and received a 5%
annual return on assets, and elected all optional benefits available.
The examples shown assume that: (a) you only allocate Account Value to the
Sub-account with the maximum total annual portfolio operating expenses for the
underlying Portfolio (shown above), not to a Fixed Allocation; (b) the Insurance
Charge is assessed as 0.65% per year; (c) the Distribution Charge is assessed as
0.60% per year in Annuity Years 1-8; (d) the Annual Maintenance Fee is reflected
as an asset-based charge based on an assumed average contract size; (e) you make
no withdrawals of Account Value during the period shown; (f) you make no
transfers or other transactions for which we charge a fee during the period
shown; (g) no tax charge applies; (h) the highest total annual portfolio
operating expenses for any underlying Portfolio offered under the product
applies; and (i) the charge for each optional benefit is reflected as an
additional charge equal to 0.60% per year of the average daily net assets of the
Sub-accounts for the Lifetime Five Income Benefit, 0.50% per year of the average
daily net assets of the Sub-accounts for the Highest Daily Value Death Benefit
and 0.25% of the average daily net assets of the Sub-accounts for the Enhanced
Beneficiary Protection Death Benefit. Amounts shown in the examples are rounded
to the nearest dollar.
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 WILL BE LESS THAN THOSE SHOWN IF YOU ELECT A
DIFFERENT COMBINATION OF OPTIONAL BENEFITS THAN INDICATED IN THE EXAMPLES OR IF
YOU ALLOCATE ACCOUNT VALUE TO ANY OTHER AVAILABLE SUB-ACCOUNTS.
Expense Examples are provided as follows: 1.) if you surrender the Annuity at
the end of the stated time period; 2.) if you annuitize at the end of the stated
time period; and 3.) if you do not surrender your Annuity. A table of
accumulation values appears in Appendix A to this prospectus.
IF YOU SURRENDER YOUR ANNUITY AT IF YOU ANNUITIZE YOUR ANNUITY AT IF YOU DO NOT SURRENDER
THE END OF THE APPLICABLE TIME PERIOD: THE END OF THE APPLICABLE TIME PERIOD: YOUR ANNUITY:
- --------------------------------------- -------------------------------------- ---------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$1,084 $1,823 $2,533 $4,138 $409 $1,238 $2,083 $4,138 $409 $1,238 $2,083 $4,138
10
OPTIMUM ANNUITY PROSPECTUS
Investment Options
WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE PORTFOLIO?
Each variable investment option is a Sub-account of American Skandia Life
Assurance Corporation Variable Account B (see "What are Separate Accounts" for
more detailed information). Each Sub-account invests exclusively in one
Portfolio. You should carefully read the prospectus for any Portfolio in which
you are interested. The following chart classifies each of the Portfolios based
on our assessment of their investment style (as of the date of this Prospectus).
The chart also provides a description of each Portfolio's investment objective
(in italics) and a short, summary description of their key policies to assist
you in determining which Portfolios may be of interest to you. There is no
guarantee that any underlying Portfolio will meet its investment objective.
The name of the advisor/sub-advisor for each Portfolio appears next to the
description. Those Portfolios whose name includes the prefix "AST" are
Portfolios of American Skandia Trust. The investment managers for AST are
American Skandia Investment Services, Incorporated, a Prudential Financial
Company, and Prudential Investments LLC, affiliated companies of American
Skandia. However, a sub-advisor, as noted below, is engaged to conduct
day-to-day investment decisions.
The Portfolios are not publicly traded mutual funds. They are only
available as investment options in variable annuity contracts and variable life
insurance policies issued by insurance companies, or in some cases, to
participants in certain qualified retirement plans. However, some of the
Portfolios available as Sub-accounts under the Annuity are managed by the same
portfolio advisor or sub-advisor as a retail mutual fund of the same or similar
name that the Portfolio may have been modeled after at its inception. Certain
retail mutual funds may also have been modeled after a Portfolio. While the
investment objective and policies of the retail mutual funds and the Portfolios
may be substantially similar, the actual investments will differ to varying
degrees. Differences in the performance of the funds can be expected, and in
some cases could be substantial. You should not compare the performance of a
publicly traded mutual fund with the performance of any similarly named
Portfolio offered as a Sub-account. Details about the investment objectives,
policies, risks, costs and management of the Portfolios are found in the
prospectuses for the underlying mutual funds. The current prospectus and
statement of additional information for the underlying Portfolios can be
obtained by calling 1-800-752-6342.
11
OPTIMUM ANNUITY PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL AST WILLIAM BLAIR INTERNATIONAL GROWTH: seeks long-term capital William Blair &
EQUITY appreciation. The Portfolio invests primarily in stocks of large and medium-sized Company, L.L.C.
companies located in countries included in the Morgan Stanley Capital
International All Country World Ex-U.S. Index.
INTERNATIONAL AST LSV INTERNATIONAL VALUE (formerly AST DeAM International Equity): seeks Deutsche Asset
EQUITY capital growth. The Portfolio pursues its objective by primarily investing at least Management, Inc.
80% of the value of its assets in the equity securities of companies in
developed non-U.S. countries that are represented in the MSCI EAFE Index.
SMALL CAP AST SMALL-CAP GROWTH (formerly AST State Street Research Small-Cap Eagle Asset
GROWTH Growth): seeks long-term capital growth. The Portfolio pursues its objective by Management,
primarily investing in the common stocks of small-capitalization companies. Neuberger Berman
Management, Inc.
SMALL CAP AST DEAM SMALL-CAP GROWTH: seeks maximum growth of investors' capital Deutsche Asset
GROWTH from a portfolio of growth stocks of smaller companies. The Portfolio pursues its Management, Inc.
objective, under normal circumstances, by primarily investing
at least 80% of its total assets in the equity securities of
small-sized companies included in the Russell 2000
Growth(R) Index.
SMALL CAP AST FEDERATED AGGRESSIVE GROWTH: seeks capital growth. The Portfolio Federated Equity
GROWTH pursues its investment objective by investing primarily in the stocks of small Management
companies that are traded on national security exchanges, the NASDAQ stock Company of
exchange and the over-the-counter-market. Pennsylvania/
Federated Global
Investment
Management Corp.
SMALL CAP AST SMALL-CAP VALUE (formerly AST Gabelli Small-Cap Value): seeks to provide Integrity Asset
VALUE long-term capital growth by investing primarily in small-capitalization stocks that Management, Lee
appear to be undervalued. The Portfolio will have a non-fundamental policy to Munder Capital
invest, under normal circumstances, at least 80% of the value of its assets in Group, J.P. Morgan
small capitalization companies. Fleming Asset
Management
MID CAP AST GOLDMAN SACHS MID-CAP GROWTH: seeks long-term capital growth. The Goldman Sachs
GROWTH Portfolio pursues its investment objective, by investing primarily in equity Asset Management,
securities selected for their growth potential, and normally invests at least 80% L.P.
of the value of its assets in medium capitalization companies.
MID CAP VALUE AST NEUBERGER BERMAN MID-CAP VALUE: seeks capital growth. Under normal Neuberger Berman
market conditions, the Portfolio primarily invests at least 80% of its net assets Management Inc.
in the common stocks of mid-cap companies. Under the Portfolio's value-oriented
investment approach, the Sub-advisor looks for well-managed companies whose stock
prices are undervalued and that may rise before other investors realize their worth.
12
OPTIMUM ANNUITY PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------------------
LARGE CAP AST MFS GROWTH: seeks long-term capital growth and future income. Under Massachusetts
GROWTH normal market conditions, the Portfolio invests at least 80% of its total assets in Financial Services
common stocks and related securities, such as preferred stocks, convertible Company
securities and depositary receipts, of companies that the Sub-advisor believes
offer better than average prospects for long-term growth.
LARGE CAP AST MARSICO CAPITAL GROWTH: seeks capital growth. Income realization is Marsico Capital
GROWTH not an investment objective and any income realized on the Portfolio's Management, LLC
investments, therefore, will be incidental to the Portfolio's
objective. The Portfolio will pursue its objective by
investing primarily in common stocks of larger, more
established companies.
LARGE CAP AST ALLIANCEBERNSTEIN CORE VALUE (formerly AST Sanford Bernstein Core Alliance Capital
GROWTH VALUE Value): seeks long-term capital growth by investing primarily in common Management, L.P.
stocks. The Sub-advisor expects that the majority of the Portfolio's assets
will be invested in the common stocks of large companies that appear to be
undervalued.
LARGE CAP AST HOTCHKIS & Wiley Large-Cap Value: seeks current income and long-term Hotchkis and Wiley
VALUE growth of income, as well as capital appreciation. The Portfolio invests, under Capital
normal circumstances, at least 80% of its net assets plus borrowings for Management, LLC
investment purposes in common stocks, of large cap U.S. companies, that have a
high cash dividend or payout yield relative to the market.
FIXED INCOME AST LORD ABBETT BOND-DEBENTURE: seeks high current income and the Lord, Abbett & Co.
opportunity for capital appreciation to produce a high total return. To pursue its LLC
objective, the Portfolio will invest, under normal circumstances, at least 80% of
the value of its assets in fixed income securities and normally invests primarily
in high yield and investment grade debt securities, securities convertible into
common stock and preferred stocks.
FIXED INCOME AST PIMCO TOTAL RETURN BOND: seeks to maximize total return consistent with Pacific Investment
preservation of capital and prudent investment management. The Portfolio will Management
invest in a diversified portfolio of fixed-income securities of varying maturities. Company LLC
The average portfolio duration of the Portfolio generally will vary within a three- (PIMCO)
to six-year time frame based on the Sub-advisor's forecast for interest rates.
FIXED INCOME AST PIMCO LIMITED MATURITY BOND: seeks to maximize total return consistent Pacific Investment
with preservation of capital and prudent investment management. The Portfolio Management
will invest in a diversified portfolio of fixed-income securities of varying Company LLC
maturities. The average portfolio duration of the Portfolio generally will vary (PIMCO)
within a one- to three-year time frame based on the Sub-advisor's forecast for
interest rates.
FIXED INCOME AST MONEY MARKET: seeks high current income while maintaining high levels Wells Capital
of liquidity. The Portfolio attempts to accomplish its objective by maintaining a Management, Inc.
dollar-weighted average maturity of not more than 90 days and by investing in
securities which have effective maturities of not more than 397 days.
13
OPTIMUM ANNUITY PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- --------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EVERGREEN VA INTERNATIONAL EQUITY (formerly Evergreen VA International Evergreen
EQUITY Growth): seeks long-term capital growth and secondarily, modest income. The Investment
Portfolio normally invests 80% of its assets in equity securities issued by
Management established, quality, non-U.S. companies located in countries with
developed Company, LLC markets and may purchase across all market capitalizations.
The Portfolio normally invests at least 65% of its assets in securities of companies
in at least three different countries (other than the U.S.).
SPECIALTY EVERGREEN VA OMEGA: seeks long-term capital growth. The Portfolio invests Evergreen
primarily, and under normal conditions, substantially all of its assets in common Investment
stocks and securities convertible into common stocks of U.S. companies across Management
all market capitalizations. Company, LLC
WHAT ARE THE FIXED ALLOCATIONS?
We offer Fixed Allocations of different durations during the accumulation
period. These "Fixed Allocations" earn a guaranteed fixed rate of interest for a
specified period of time, called the "Guarantee Period." In most states, we
offer Fixed Allocations with Guarantee Periods from 1 to 10 years. We may also
offer special purpose Fixed Allocations for use with certain optional investment
programs. We guarantee the fixed rate for the entire Guarantee Period. However,
if you withdraw or transfer Account Value before the end of the Guarantee
Period, we will adjust the value of your withdrawal or transfer based on a
formula, called a "Market Value Adjustment." The Market Value Adjustment can
either be positive or negative, depending on the movement of applicable interest
rates payable on Strips of the appropriate duration. Please refer to the section
entitled "How does the Market Value Adjustment Work?" for a description of the
formula along with examples of how it is calculated. You may allocate Account
Value to more than one Fixed Allocation at a time.
Fixed Allocations may not be available in all states. Availability of
Fixed Allocations is subject to change and may differ by state and by the
annuity product you purchase. Please call American Skandia at 1-800-752-6342 to
determine availability of Fixed Allocations in your state and for your annuity
product.
14
OPTIMUM ANNUITY PROSPECTUS
Fees and Charges
The charges under the contracts are designed to cover, in the aggregate, our
direct and indirect costs of selling, administering and providing benefits under
the contracts. They are also designed, in the aggregate, to compensate us for
the risks of loss we assume pursuant to the contracts. If, as we expect, the
charges that we collect from the contracts exceed our total costs in connection
with the contracts, we will earn a profit. Otherwise we will incur a loss. For
example, American Skandia may make a profit on the Insurance Charge if, over
time, the actual costs of providing the guaranteed insurance obligations under
the Annuity are less than the amount we deduct for the Insurance Charge. To the
extent we make a profit on the Insurance Charge, such profit may be used for any
other corporate purpose, including payment of other expenses that American
Skandia incurs in promoting, distributing, issuing and administering the
Annuity.
The rates of certain of our charges have been set with reference to
estimates of the amount of specific types of expenses or risks that we will
incur. In most cases, this prospectus identifies such expenses or risks in the
name of the charge; however, the fact that any charge bears the name of, or is
designed primarily to defray a particular expense or risk does not mean that the
amount we collect from that charge will never be more than the amount of such
expense or risk, nor does it mean that we may not also be compensated for such
expense or risk out of any other charges we are permitted to deduct by the terms
of the contract. A portion of the proceeds that American Skandia receives from
charges that apply solely to the variable investment options may include amounts
based on market appreciation of the variable investment option values.
WHAT ARE THE CONTRACT FEES AND CHARGES?
CONTINGENT DEFERRED SALES CHARGE: We do not deduct a sales charge from Purchase
Payments you make to your Annuity. However, we may deduct a CDSC if you
surrender your Annuity or when you make a partial withdrawal. The CDSC
reimburses us for expenses related to sales and distribution of the Annuity,
including commissions, marketing materials and other promotional expenses. The
CDSC is calculated as a percentage of your Purchase Payment being surrendered or
withdrawn during the applicable Annuity Year. For purposes of calculating the
CDSC, we consider the year following the Issue Date of your Annuity as Year 1.
The amount of the CDSC decreases over time, measured from the Issue Date of the
Annuity. The CDSC percentages are shown below.
YEARS 1 2 3 4 5 6 7 8 9+
- -------------------------------------------------------------------------------------------------------------------
CHARGE (%) 7.5% 7.0% 6.5% 6.0% 5.0% 4.0% 3.0% 2.0% 0.0%
THE CDSC PERIOD IS BASED ON THE ISSUE DATE OF THE ANNUITY, NOT ON THE DATE
EACH PURCHASE PAYMENT IS APPLIED TO THE ANNUITY. Purchase Payments applied to
the Annuity after the Issue Date do not have their own CDSC period. During the
first eight (8) Annuity Years, under certain circumstances you can withdraw a
limited amount of Account Value without paying a CDSC. This is referred to as a
"Free Withdrawal." After eight (8) complete Annuity Years, you can surrender
your Annuity or make a partial withdrawal without a CDSC being deducted from the
amount being withdrawn. Free Withdrawals are not treated as a withdrawal of
Purchase Payments for purposes of calculating the CDSC on a subsequent
withdrawal or surrender. Withdrawals of amounts greater than the maximum Free
Withdrawal amount are treated as a withdrawal of Purchase Payments and will be
assessed a CDSC during Annuity Years 1 through 8. For purposes of calculating
the CDSC on a surrender, the Purchase Payments being withdrawn may be greater
than your remaining Account Value or the amount of your withdrawal request. This
is most likely to occur if you have made prior withdrawals under the Free
Withdrawal provision or if your Account Value has declined in value due to
negative market performance.
We may waive the CDSC under certain medically-related circumstances or
when taking a Minimum Distribution from an Annuity purchased as a "qualified"
investment. Free Withdrawals, Medically-Related Surrenders and Minimum
Distributions are each explained more fully in the section entitled "Access to
Your Account Value".
TRANSFER FEE: Currently, you may make twenty (20) free transfers between
investment options each Annuity Year. We will charge $10.00 for each transfer
after the twentieth in each Annuity Year. We do not consider transfers made as
part of a dollar cost averaging, automatic rebalancing or asset allocation
program when we count the twenty free transfers. All transfers made on the same
day will be treated as one (1) transfer. Renewals or transfers of Account Value
from a Fixed Allocation at the end of its Guarantee Period are not subject to
the Transfer Fee and are not counted toward the twenty free transfers. We may
reduce the number of free transfers allowable each Annuity Year (subject to a
minimum of eight) without charging a Transfer Fee unless you make use of
electronic means to
15
OPTIMUM ANNUITY PROSPECTUS
Fees and Charges continued
transmit your transfer requests. We may eliminate the Transfer Fee for transfer
requests transmitted electronically or through other means that reduce our
processing costs. If enrolled in any program that does not permit transfer
requests to be transmitted electronically, the Transfer Fee will not be waived.
ANNUAL MAINTENANCE FEE: During the accumulation period we deduct an Annual
Maintenance Fee. The Annual Maintenance Fee is $35.00 or 2% of your Account
Value invested in the variable investment options, whichever is less. This fee
will be deducted annually on the anniversary of the Issue Date of your Annuity
or, if you surrender your Annuity during the Annuity Year, the fee is deducted
at the time of surrender. Currently, the Annual Maintenance Fee is only deducted
if your Account Value is less than $100,000 on the anniversary of the Issue Date
or at the time of surrender. We may increase the Annual Maintenance Fee.
However, any increase will only apply to Annuities issued after the date of the
increase.
TAX CHARGE: Several states and some municipalities charge premium taxes or
similar taxes on annuities that we are required to pay. The amount of tax will
vary from jurisdiction to jurisdiction and is subject to change. The tax charge
currently ranges up to 3 1/2% of your premium and is designed to approximate the
taxes that we are required to pay. We generally will deduct the charge at the
time the tax is imposed, but may also decide to deduct the charge from each
Purchase Payment at the time of a withdrawal or surrender of your Annuity or at
the time you elect to begin receiving annuity payments. We may assess a charge
against the Sub-accounts and the Fixed Allocations equal to any taxes which may
be imposed upon the separate accounts.
We will pay company income taxes on the taxable corporate earnings created
by this separate account product. While we may consider company income taxes
when pricing our products, we do not currently include such income taxes in the
tax charges you pay under the contract. We will periodically review the issue of
charging for these taxes and may impose a charge in the future.
In calculating our corporate income tax liability, we derive certain
corporate income tax benefits associated with the investment of company assets,
including separate account assets, which are treated as company assets under
applicable income tax law. These benefits reduce our overall corporate income
tax liability. Under current law, such benefits may include foreign tax credits
and corporate dividends received deductions. We do not pass these tax benefits
through to holders of the separate account annuity contracts because (i) the
contract owners are not the owners of the assets generating these benefits under
applicable income tax law and (ii) we do not currently include company income
taxes in the tax charges you pay under the contract.
WHAT CHARGES APPLY SOLELY TO THE VARIABLE INVESTMENT OPTIONS?
INSURANCE CHARGE: We deduct an Insurance Charge daily. The charge is assessed
against the average daily assets allocated to the Sub-accounts and is equal to
0.65% on an annual basis. The Insurance Charge is the combination of the
Mortality & Expense Risk Charge (0.50%) and the Administration Charge (0.15%).
The Insurance Charge is intended to compensate American Skandia for providing
the insurance benefits under the Annuity, including the Annuity's basic death
benefit that provides guaranteed benefits to your beneficiaries even if the
market declines and the risk that persons we guarantee annuity payments to will
live longer than our assumptions. The charge also covers administrative costs
associated with providing the Annuity benefits, including preparation of the
contract, confirmation statements, annual account statements and annual reports,
legal and accounting fees as well as various related expenses. Finally, the
charge covers the risk that our assumptions about the mortality risks and
expenses under this Annuity are incorrect and that we have agreed not to
increase these charges over time despite our actual costs. We may increase the
portion of the total Insurance Charge that is deducted for administrative costs;
however, any increase will only apply to Annuities issued after the date of the
increase.
The Insurance Charge is not deducted against assets allocated to a Fixed
Allocation. However, the amount we credit to Fixed Allocations may also reflect
similar assumptions about the insurance guarantees provided under the Annuity.
DISTRIBUTION CHARGE: We deduct a Distribution Charge daily. The charge is
assessed against the average assets allocated to the Sub-accounts and is equal
to 0.60% on an annual basis in Annuity Years 1 through 8. After the end of the
first eight Annuity Years, the 0.60% charge for distribution will no longer be
assessed. The Distribution Charge is intended to compensate us for a portion of
our acquisition expenses under the Annuity, including promotion and distribution
of the Annuity. The Distribution Charge is deducted against your Annuity's
Account Value and any increases or decreases in your Account Value based on
market fluctuations of the Sub-accounts will affect the charge.
16
OPTIMUM ANNUITY PROSPECTUS
OPTIONAL BENEFITS FOR WHICH WE ASSESS A CHARGE SOLELY AGAINST THE VARIABLE
INVESTMENT OPTIONS: If you elect to purchase certain optional benefits, we will
deduct an additional charge on a daily basis solely from your Account Value
allocated to the Sub-accounts. The additional charge is included in the daily
calculation of the Unit Price for each Sub-account. We may assess charges for
other optional benefits on a different basis as described elsewhere in the
prospectus. Please refer to the sections entitled "Living Benefit Programs" and
"Death Benefit" for a description of the charge for each Optional Benefit.
WHAT FEES AND EXPENSES ARE INCURRED BY THE PORTFOLIOS?
Each Portfolio incurs total annual operating expenses comprised of an investment
management fee, other expenses and any distribution and service (12b-1) fees
that may apply. These fees and expenses are reflected daily by each Portfolio
before it provides American Skandia with the net asset value as of the close of
business each day. More detailed information about fees and expenses can be
found in the prospectuses for the Portfolios.
WHAT CHARGES APPLY TO THE FIXED ALLOCATIONS?
No specific fee or expenses are deducted when determining the rate we credit to
a Fixed Allocation. However, for some of the same reasons that we deduct the
Insurance Charge against Account Value allocated to the Sub-accounts, we also
take into consideration mortality, expense, administration, profit and other
factors in determining the interest rates we credit to Fixed Allocations. Any
CDSC or Tax Charge applies to amounts that are taken from the variable
investment options or the Fixed Allocations. A Market Value Adjustment may also
apply to transfers, certain withdrawals, surrender or annuitization from a Fixed
Allocation.
WHAT CHARGES APPLY IF I CHOOSE AN ANNUITY PAYMENT OPTION?
If you select a fixed payment option, the amount of each fixed payment will
depend on the Account Value of your Annuity when you elected to annuitize. There
is no specific charge deducted from these payments; however, the amount of each
annuity payment reflects assumptions about our insurance expenses. If you select
a variable payment option that we may offer, then the amount of your benefits
will reflect changes in the value of your Annuity and will be subject to charges
that apply under the variable immediate annuity option. Also, a tax charge may
apply (see "Tax Charge" above).
EXCEPTIONS/REDUCTIONS TO FEES AND CHARGES
We may reduce or eliminate certain fees and charges or alter the manner in which
the particular fee or charge is deducted. For example, we may reduce the amount
of the CDSC or the length of time it applies, reduce or eliminate the amount of
the Annual Maintenance Fee or reduce the portion of the total Insurance Charge
that is deducted as an Administration Charge. Generally, these types of changes
will be based on a reduction to our sales, maintenance or administrative
expenses due to the nature of the individual or group purchasing the Annuity.
Some of the factors we might consider in making such a decision are: (a) the
size and type of group; (b) the number of Annuities purchased by an Owner; (c)
the amount of Purchase Payments or likelihood of additional Purchase Payments;
and/or (d) other transactions where sales, maintenance or administrative
expenses are likely to be reduced. We will not discriminate unfairly between
Annuity purchasers if and when we reduce any fees and charges.
17
OPTIMUM ANNUITY PROSPECTUS
Purchasing Your Annuity
WHAT ARE OUR REQUIREMENTS FOR PURCHASING THE ANNUITY?
INITIAL PURCHASE PAYMENT: You must make a minimum initial Purchase Payment of
$1,000. However, if you decide to make payments under a systematic investment or
"bank drafting" program, we will accept a lower initial Purchase Payment
provided that, within the first Annuity Year, you make at least $1,000 in total
Purchase Payments.
Where allowed by law, we must approve any initial and additional Purchase
Payments of $1,000,000 or more. We may apply certain limitations and/or
restrictions on the Annuity as a condition of our acceptance, including limiting
the liquidity features or the Death Benefit protection provided under the
Annuity, limiting the right to make additional Purchase Payments, changing the
number of transfers allowable under the Annuity or restricting the Sub-accounts
or Fixed Allocations that are available. Other limitations and/or restrictions
may apply.
Except as noted below, Purchase Payments must be submitted by check drawn
on a U.S. bank, in U.S. dollars, and made payable to American Skandia. Purchase
Payments may also be submitted via 1035 exchange or direct transfer of funds.
Under certain circumstances, Purchase Payments may be transmitted to American
Skandia via wiring funds through your investment professional's broker-dealer
firm. Additional Purchase Payments may also be applied to your Annuity under an
arrangement called "bank drafting" where you authorize us to deduct money
directly from your bank account. We may reject any payment if it is received in
an unacceptable form. Our acceptance of a check is subject to our ability to
collect funds.
AGE RESTRICTIONS: The Owner must be age 80 or under as of the Issue Date
of the Annuity. If the Annuity is owned jointly, the oldest of the Owners must
be age 80 or under on the Issue Date. If the Annuity is owned by an entity, the
Annuitant must be age 80 or under as of the Issue Date. You should consider your
need to access your Account Value and whether the Annuity's liquidity features
will satisfy that need. If you take a distribution prior to age 59 1/2, you may
be subject to a 10% penalty in addition to ordinary income taxes on any gain.
The availability and level of protection of certain optional benefits may vary
based on the age of the Owner on the Issue Date of the Annuity or the date of
the Owner's death.
OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS: We will ask you to name the
Owner(s), Annuitant and one or more Beneficiaries for your Annuity.
- - Owner: The Owner(s) holds all rights under the Annuity. You may name up to
two Owners in which case all ownership rights are held jointly. Generally,
joint owners are required to act jointly; however, if each owner provides
us with an instruction that we find acceptable, we will permit each owner
to act separately. All information and documents that we are required to
send you will be sent to the first named owner. This Annuity does not
provide a right of survivorship. Refer to the Glossary of Terms for a
complete description of the term "Owner."
- - Annuitant: The Annuitant is the person we agree to make annuity payments to
and upon whose life we continue to make such payments. You must name an
Annuitant who is a natural person. We do not accept a designation of joint
Annuitants during the accumulation period. Where allowed by law, you may
name one or more Contingent Annuitants. A Contingent Annuitant will become
the Annuitant if the Annuitant dies before the Annuity Date. Please refer
to the discussion of "Considerations for Contingent Annuitants" in the Tax
Considerations section of the Prospectus.
- - Beneficiary: The Beneficiary is the person(s) or entity you name to
receive the death benefit. Your beneficiary designation must be the exact
name of your beneficiary, not only a reference to the beneficiary's
relationship to you. For example, a designation of "surviving spouse"
would not be acceptable. If no beneficiary is named the death benefit will
be paid to you or your estate.
Your right to make certain designations may be limited if your Annuity is
to be used as an IRA or other "qualified" investment that is given beneficial
tax treatment under the Code. You should seek competent tax advice on the
income, estate and gift tax implications of your designations.
18
OPTIMUM ANNUITY PROSPECTUS
Managing Your Annuity
MAY I CHANGE THE OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS?
You may change the Owner, Annuitant and Beneficiary designations by sending us a
request in writing. Upon an ownership change, any automated investment or
withdrawal programs will be canceled. The new owner must submit the applicable
program enrollment if they wish to participate in such a program. Where allowed
by law, such changes will be subject to our acceptance. Some of the changes we
will not accept include, but are not limited to:
- - a new Owner subsequent to the death of the Owner or the first of any joint
Owners to die, except where a spouse-Beneficiary has become the Owner as a
result of an Owner's death;
- - a new Annuitant subsequent to the Annuity Date;
- - for "non-qualified" investments, a new Annuitant prior to the Annuity Date
if the Annuity is owned by an entity; and
- - a change in Beneficiary if the Owner had previously made the designation
irrevocable.
SPOUSAL OWNERS/SPOUSAL BENEFICIARIES
If an Annuity is co-owned by spouses, we will assume that the sole primary
Beneficiary is the surviving spouse that was named as the co-owner unless you
elect an alternative Beneficiary designation. Unless you elect an alternative
Beneficiary designation, upon the death of either spousal Owner, the surviving
spouse may elect to assume ownership of the Annuity instead of taking the Death
Benefit payment. The Death Benefit that would have been payable will be the new
Account Value of the Annuity as of the date of due proof of death and any
required proof of a spousal relationship. As of the date the assumption is
effective, the surviving spouse will have all the rights and benefits that would
be available under the Annuity to a new purchaser of the same attained age. For
purposes of determining any future Death Benefit for the beneficiary of the
surviving spouse, the new Account Value will be considered as the initial
Purchase Payment. No CDSC will apply to the new Account Value. However, any
additional Purchase Payments applied after the date the assumption is effective
will be subject to all provisions of the Annuity, including the CDSC when
applicable.
SPOUSAL CONTINGENT ANNUITANT
If the Annuity is owned by an entity and the surviving spouse is named as a
Contingent Annuitant, upon the death of the Annuitant, the surviving spouse that
was named as the Contingent Annuitant will become the Annuitant. NO DEATH
BENEFIT IS PAYABLE UPON THE DEATH OF THE ANNUITANT. However, the Account Value
of the Annuity as of the date of due proof of death of the Annuitant (and any
required proof of the spousal relationship) will reflect the amount that would
have been payable had a Death Benefit been paid.
MAY I RETURN THE ANNUITY IF I CHANGE MY MIND?
If after purchasing your Annuity you change your mind and decide that you do not
want it, you may return it to us within a certain period of time known as a
right to cancel period. This is often referred to as a "free-look." Depending on
the state in which you purchased your Annuity and, in some states, if you
purchased the Annuity as a replacement for a prior contract, the right to cancel
period may be ten (10) days, twenty-one (21) days or longer, measured from the
time that you received your Annuity. If you return your Annuity during the
applicable period, we will refund your current Account Value plus any tax charge
deducted, and depending on your state's requirements, any applicable insurance
charges deducted. The amount may be higher or lower than, the Purchase
Payment(s) applied during the right to cancel period. Where required by law, we
will return your Purchase Payment(s), or the greater of your current Account
Value and the amount of your Purchase Payment(s) applied during the right to
cancel period.
MAY I MAKE ADDITIONAL PURCHASE PAYMENTS?
The minimum amount that we accept as an additional Purchase Payment is $100
unless you participate in American Skandia's Systematic Investment Plan or a
periodic purchase payment program. Unless you participate in an asset allocation
program, or unless you have provided us with other specific allocation
instructions for one, more than one, or all subsequent purchase payments, we
will allocate any additional Purchase Payments you make according to your
initial purchase payment allocation instructions. If you so instruct us, we will
allocate subsequent purchase payments according to any new allocation
instructions. Purchase payments made while you participate in an asset
allocation program will be allocated in accordance with such program. Additional
Purchase Payments may be paid at any time before the Annuity Date.
MAY I MAKE SCHEDULED PAYMENTS DIRECTLY FROM MY BANK ACCOUNT?
You can make additional Purchase Payments to your Annuity by authorizing us to
deduct money directly from your bank account and applying it to your Annuity.
This type of program is often called "bank drafting". We call our bank drafting
program "American Skandia's Systematic Investment Plan." Purchase Payments made
through bank drafting may only be allocated to the variable investment options
when applied. Bank drafting allows you to invest in your Annuity with a lower
initial Purchase
19
OPTIMUM ANNUITY PROSPECTUS
Managing Your Annuity continued
Payment, as long as you authorize payments that will equal at least $1,000
during the first 12 months of your Annuity. We may suspend or cancel bank
drafting privileges if sufficient funds are not available from the applicable
financial institution on any date that a transaction is scheduled to occur.
MAY I MAKE PURCHASE PAYMENTS THROUGH A SALARY REDUCTION PROGRAM?
These types of programs are only available with certain types of qualified
investments. If your employer sponsors such a program, we may agree to accept
periodic Purchase Payments through a salary reduction program as long as the
allocations are made only to variable investment options and the periodic
Purchase Payments received in the first year total at least $1,000.
20
OPTIMUM ANNUITY PROSPECTUS
Managing Your Account Value
HOW AND WHEN ARE PURCHASE PAYMENTS INVESTED?
(See "Valuing Your Investment" for a description of our procedure for pricing
initial and subsequent Purchase Payments.)
INITIAL PURCHASE PAYMENT: Once we accept your application, we invest your
net Purchase Payment in the Annuity. The net Purchase Payment is your initial
Purchase Payment minus any tax charges that may apply. On your application we
ask you to provide us with instructions for allocating your Account Value. You
can allocate Account Value to one or more variable investment options or Fixed
Allocations.
SUBSEQUENT PURCHASE PAYMENTS: Unless you participate in an asset
allocation program, or unless you have provided us with other specific
allocation instructions for one, more than one, or all subsequent Purchase
Payments, we will allocate any additional Purchase Payments you make according
to your initial Purchase Payment allocation instructions. If you so instruct us,
we will allocate subsequent Purchase Payments according to any new allocation
instructions. Unless you tell us otherwise, Purchase Payments made while you
participate in an asset allocation program will be allocated in accordance with
such program.
ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?
During the accumulation period you may transfer Account Value between investment
options. Transfers are not subject to taxation on any gain. We may require a
minimum of $500 in each Sub-account you allocate Account Value to at the time of
any allocation or transfer. If you request a transfer and, as a result of the
transfer, there would be less than $500 in the Sub-account, we may transfer the
remaining Account Value in the Sub-account pro- rata to the other investment
options to which you transferred.
We may impose specific restrictions on financial transactions (including
transfer requests) for certain Portfolios based on the Portfolio's investment
and/or transfer restrictions. We may do so to conform to any present or future
restriction that is imposed by any portfolio available under this Annuity.
Currently, we charge $10.00 for each transfer after the twentieth (20th)
in each Annuity Year. Transfers made as part of a dollar cost averaging,
automatic rebalancing or asset allocation program do not count toward the twenty
free transfer limit. Renewals or transfers of Account Value from a Fixed
Allocation at the end of its Guarantee Period are not subject to the transfer
charge. We may reduce the number of free transfers allowable each Annuity Year
(subject to a minimum of eight) without charging a Transfer Fee. We may also
increase the Transfer Fee that we charge to $15.00 for each transfer after the
number of free transfers has been used up.
Once you have made 20 transfers among the Sub-accounts during an Annuity
Year, we will accept any additional transfer request during that year only if
the request is submitted to us in writing with an original signature and
otherwise is in good order. For purposes of this 20 transfer limit, we (i) do
not view a facsimile transmission as a "writing", (ii) will treat multiple
transfer requests submitted on the same business day as a single transfer, and
(iii) do not count any transfer that solely involves Sub-accounts corresponding
to the AST Money Market Portfolio, or any transfer that involves one of our
systematic programs, such as asset allocation and automated withdrawals.
Frequent transfers among Sub-accounts in response to short-term
fluctuations in markets, sometimes called "market timing," can make it very
difficult for a Portfolio manager to manage a Portfolio's investments. Frequent
transfers may cause the Portfolio to hold more cash than otherwise necessary,
disrupt management strategies, increase transaction costs, or affect
performance.
In light of the risks posed to Owners and other investors by frequent
transfers, we reserve the right to limit the number of transfers in any Annuity
Year for all existing or new Owners and to take the other actions discussed
below. We also reserve the right to limit the number of transfers in any Annuity
Year or to refuse any transfer request for an Owner or certain Owners if: (a) we
believe that excessive transfer activity (as we define it) or a specific
transfer request or group of transfer requests may have a detrimental effect on
Unit Values or the share prices of the Portfolios; or (b) we are informed by a
Portfolio (e.g., by the Portfolio's portfolio manager) that the purchase or
redemption of shares in the Portfolio must be restricted because the Portfolio
believes the transfer activity to which such purchase and redemption relates
would have a detrimental effect on the share prices of the affected Portfolio.
Without limiting the above, the most likely scenario where either of the above
could occur would be if the aggregate amount of a trade or trades represented a
relatively large proportion of the total assets of a particular Portfolio. In
furtherance of our general authority to restrict transfers as described
21
OPTIMUM ANNUITY PROSPECTUS
Managing Your Account Value continued
above, and without limiting other actions we may take in the future, we have
adopted the following specific restrictions:
- - With respect to each Sub-account (other than the AST Money Market
Sub-account), we track amounts exceeding a certain dollar threshold that
were transferred into the Sub-account. If you transfer such amount into a
particular Sub-account, and within 30 calendar days thereafter transfer
(the "Transfer Out") all or a portion of that amount into another
Sub-account, then upon the Transfer Out, the former Sub-account becomes
restricted (the "Restricted Sub-account"). Specifically, we will not
permit subsequent transfers into the Restricted Sub-account for 90
calendar days after the Transfer Out if the Restricted Sub-account invests
in a non-international Portfolio, or 180 calendar days after the Transfer
Out if the Restricted Sub-account invests in an international Portfolio.
For purposes of this rule, we (i) do not count transfers made in
connection with one of our systematic programs, such as asset allocation
and automated withdrawals; (ii) do not count any transfer that solely
involves Sub-accounts corresponding to any ProFund Portfolio and/or the
AST Money Market Portfolio; and (iii) do not categorize as a transfer the
first transfer that you make after the Issue Date, if you make that
transfer within 30 calendar days after the Issue Date. Even if an amount
becomes restricted under the foregoing rules, you are still free to redeem
the amount from your Annuity at any time.
- - We reserve the right to effect exchanges on a delayed basis for all
contracts. That is, we may price an exchange involving the Sub-accounts on
the Valuation Day subsequent to the Valuation Day on which the exchange
request was received. Before implementing such a practice, we would issue
a separate written notice to Owners that explains the practice in detail.
- - If we deny one or more transfer requests under the foregoing rules, we
will inform you or your investment professional promptly of the
circumstances concerning the denial.
- - Contract owners in New York who purchased their contracts prior to March
15, 2004 are not subject to the specific restrictions outlined in bulleted
paragraphs immediately above. In addition, there are contract owners of
different variable annuity contracts that are funded through the same
Separate Account that are not subject to the above-referenced transfer
restrictions and, therefore, might make more numerous and frequent
transfers than contract owners who are subject to such limitations.
Finally, there are contract owners of other variable annuity contracts or
variable life contracts that are issued by American Skandia as well as
other insurance companies that have the same underlying mutual fund
portfolios available to them. Since some contract owners are not subject
to the same transfer restrictions, unfavorable consequences associated
with such frequent trading within the underlying mutual fund (e.g.,
greater portfolio turnover, higher transaction costs, or performance or
tax issues) may affect all contract owners. Similarly, while contracts
managed by an investment professional or third party investment advisor
are subject to the restrictions on transfers between investment options
that are discussed above, if the advisor manages a number of contracts in
the same fashion unfavorable consequences may be associated with
management activity since it may involve the movement of a substantial
portion of an underlying mutual fund's assets which may affect all
contract owners invested in the affected options. Apart from
jurisdiction-specific and contract differences in transfer restrictions,
we will apply these rules uniformly (including contracts managed by an
investment professional or third party investment advisor), and will not
waive a transfer restriction for any contract owner.
ALTHOUGH OUR TRANSFER RESTRICTIONS ARE DESIGNED TO PREVENT EXCESSIVE
TRANSFERS, THEY ARE NOT CAPABLE OF PREVENTING EVERY POTENTIAL OCCURRENCE OF
EXCESSIVE TRANSFER ACTIVITY.
22
OPTIMUM ANNUITY PROSPECTUS
DO YOU OFFER DOLLAR COST AVERAGING?
Yes. We offer Dollar Cost Averaging during the accumulation period. Dollar Cost
Averaging allows you to systematically transfer an amount periodically from one
investment option to one or more other investment options. You can choose to
transfer earnings only, principal plus earnings or a flat dollar amount. You may
elect a Dollar Cost Averaging program that transfers amounts monthly, quarterly,
semi-annually, or annually from variable investment options, or a program that
transfers amounts monthly from Fixed Allocations. By investing amounts on a
regular basis instead of investing the total amount at one time, Dollar Cost
Averaging may decrease the effect of market fluctuation on the investment of
your purchase payment. This may result in a lower average cost of units over
time. However, there is no guarantee that Dollar Cost Averaging will result in a
profit or protect against a loss in a declining market. There is no minimum
Account Value required to enroll in a Dollar Cost Averaging program and we do
not deduct a charge for participating in a Dollar Cost Averaging program.
You can Dollar Cost Average from variable investment options or Fixed
Allocations. Dollar Cost Averaging from Fixed Allocations is subject to a number
of rules that include, but are not limited to the following:
- - You may only use Fixed Allocations with Guarantee Periods of 1, 2 or 3
years.
- - You may only Dollar Cost Average earnings or principal plus earnings. If
transferring principal plus earnings, the program must be designed to last
the entire Guarantee Period for the Fixed Allocation.
- - Dollar Cost Averaging transfers from Fixed Allocations are not subject to
a Market Value Adjustment.
NOTE: When a Dollar Cost Averaging program is established from a Fixed
Allocation, the fixed rate of interest we credit to your Account Value is
applied to a declining balance due to the transfers of Account Value to the
Sub-accounts during the Guarantee Period. This will reduce the effective rate of
return on the Fixed Allocation over the Guarantee Period.
The Dollar Cost Averaging program is not available if you elect the
Guaranteed Return Option Plus(SM), the Guaranteed Return Option or the automatic
rebalancing programs when it involves transfers out of the Fixed Allocations and
is also is not available when you have elected an asset allocation program.
DO YOU OFFER ANY AUTOMATIC REBALANCING PROGRAMS?
Yes. During the accumulation period, we offer automatic rebalancing among the
variable investment options you choose. You can choose to have your Account
Value rebalanced monthly, quarterly, semi-annually, or annually. On the
appropriate date, the variable investment options you chose are rebalanced to
the allocation percentages you requested. With automatic rebalancing, we
transfer the appropriate amount from the "overweighted" Sub-accounts to the
"underweighted" Sub-accounts to return your allocations to the percentages you
request. For example, over time the performance of the variable investment
options will differ, causing your percentage allocations to shift. Any transfer
to or from any variable investment option that is not part of your automatic
rebalancing program, will be made; however, that variable investment option will
not become part of your rebalancing program unless we receive instructions from
you indicating that you would like such option to become part of the program.
There is no minimum Account Value required to enroll in automatic
rebalancing. All rebalancing transfers as part of an automatic rebalancing
program are not included when counting the number of transfers each year toward
the maximum number of free transfers. We do not deduct a charge for
participating in an automatic rebalancing program. Participation in the
Automatic Rebalancing program may be restricted if you are enrolled in certain
other optional programs.
ARE ANY ASSET ALLOCATION PROGRAMS AVAILABLE?
Yes. Certain "static asset allocation programs" are available for use with the
Annuity. These programs are considered static because once you have selected a
model portfolio, the Sub-accounts and the percentage of contract value allocated
to each sub-account cannot be changed without your consent. The programs are
available at no additional charge. Under these programs, the Sub-account for
each asset class in each model portfolio is designated for you. Under the
programs, the values in the Sub-accounts will be rebalanced periodically back to
the indicated percentages for the applicable asset class within the model
portfolio that you have selected. For more information on the asset allocation
programs, see the Appendix entitled "Additional Information on the Asset
Allocation Programs".
23
OPTIMUM ANNUITY PROSPECTUS
Managing Your Account Value continued
Asset allocation is a sophisticated method of diversifica- tion, which
allocates assets among asset classes in order to manage investment risk and
enhance returns over the long term. However, asset allocation does not guarantee
a profit or protect against a loss. NO PERSONALIZED INVESTMENT ADVICE IS
PROVIDED IN CONNECTION WITH THE ASSET ALLOCATION PROGRAMS AND YOU SHOULD NOT
RELY ON THESE PROGRAMS AS PROVIDING INDIVIDUALIZED INVESTMENT RECOMMENDATIONS TO
YOU. THE ASSET ALLOCATION PROGRAMS DO NOT GUARANTEE BETTER INVESTMENT RESULTS.
WE RESERVE THE RIGHT TO TERMINATE OR CHANGE THE ASSET ALLOCATION PROGRAMS AT ANY
TIME. YOU SHOULD CONSULT WITH YOUR INVESTMENT PROFESSIONAL BEFORE ELECTING ANY
ASSET ALLOCATION PROGRAM.
DO YOU OFFER PROGRAMS DESIGNED TO GUARANTEE A "RETURN OF PREMIUM" AT A FUTURE
DATE?
Yes. We offer two different programs for investors who wish to invest in the
variable investment options but also wish to protect their principal, as of a
specific date in the future. They are the Balanced Investment Program and the
Guaranteed Return Option Plus(SM). (The Guaranteed Return Option Plus (GRO
Plus(SM)) is not available in all states. In some states where GRO Plus is not
available we offer the Guaranteed Return Option (GRO).) Both the Balanced
Investment Program and GRO Plus allow you to allocate a portion of your Account
Value to the available variable investment options while ensuring that your
Account Value will at least equal your contributions adjusted for withdrawals
and transfers on a specified date. Under GRO Plus, Account Value is allocated to
and maintained in Fixed Allocations to the extent we, in our sole discretion,
deem it is necessary to support our guarantee under the program. This differs
from the Balanced Investment Program where a set amount is allocated to a Fixed
Allocation regardless of the performance of the underlying Sub-accounts or the
interest rate environment after the amount is allocated to a Fixed Allocation.
Generally, more of your Account Value will be allocated to the variable
investment options under the GRO Plus program than under the Balanced Investment
Program (although in periods of poor market performance, low interest rates
and/or as the option progresses to its maturity date, this may not be the case).
You may not want to use either of these programs if you expect to begin taking
annuity payments before the program would be completed. In addition, as with
most return of premium programs, amounts that are available to allocate to the
variable investment options may be substantially less than they would be if you
did not elect a return of premium program. This means that, if investment
experience in the variable investment options were positive, your Account Value
would grow at a slower rate than if you did not elect a return of premium
program and allocated all of your Account Value to the variable investment
options.
BALANCED INVESTMENT PROGRAM
We offer a balanced investment program where a portion of your Account Value is
allocated to a Fixed Allocation and the remaining Account Value is allocated to
the variable investment options that you select. When you enroll in the Balanced
Investment Program, you choose the duration that you wish the program to last.
This determines the duration of the Guarantee Period for the Fixed Allocation.
Based on the fixed rate for the Guarantee Period chosen, we calculate the
portion of your Account Value that must be allocated to the Fixed Allocation to
grow to a specific "principal amount" (such as your initial Purchase Payment).
We determine the amount based on the rates then in effect for the Guarantee
Period you choose. If you continue the program until the end of the Guarantee
Period and make no withdrawals or transfers, at the end of the Guarantee Period,
the Fixed Allocation will have grown to equal the "principal amount".
Withdrawals or transfers from the Fixed Allocation before the end of the
Guarantee Period will terminate the program and may be subject to a Market Value
Adjustment. You can transfer the Account Value that is not allocated to the
Fixed Allocation between any of the Sub-accounts available under the Annuity.
Account Value you allocate to the variable investment options is subject to
market fluctuations and may increase or decrease in value. We do not deduct a
charge for participating in the Balanced Investment Program.
EXAMPLE
Assume you invest $100,000. You choose a 10-year program and allocate a
portion of your Account Value to a Fixed Allocation with a 10-year
Guarantee Period. The rate for the 10-year Guarantee Period is 2.50%*.
Based on the fixed interest rate for the Guarantee Period chosen, the
factor is 0.781198 for determining how much of your Account Value will be
allocated to the Fixed Allocation. That means that $78,120 will be
allocated to the Fixed Allocation and the remaining Account Value
($21,880) will be allocated to the variable investment options. Assuming
that you do not make any withdrawals or transfers from the Fixed
Allocation, it will
* The rate in this example is hypothetical and may not reflect the current rate
for Guarantee Periods of this duration.
24
OPTIMUM ANNUITY PROSPECTUS
grow to $100,000 at the end of the Guarantee Period. Of course we cannot
predict the value of the remaining Account Value that was allocated to the
variable investment options.
THE GUARANTEED RETURN OPTION PLUS (GRO PLUS) guarantees that, after a
seven-year period following commencement of the program ("maturity date") and on
each anniversary of the maturity date thereafter, your Account Value will not be
less than the Account Value on the effective date of the program. The program
also offers you the option to elect a second, enhanced guarantee amount at a
higher Account Value subject to a separate maturity period (and its
anniversaries). The GRO Plus program may be appropriate if you wish to protect a
principal amount (called the "Protected Principal Value") against market
downturns as of a specific date in the future, but also wish to exercise control
of your available Account Value among the variable investment options to
participate in market experience. Under the GRO Plus program, you give us the
right to allocate amounts to Fixed Allocations as needed to support the
guarantees provided. The available Account Value is the amount not allocated to
the Fixed Allocations to support the guarantees provided. There is a fee
associated with this program. See "Living Benefit Programs," later in this
Prospectus, for more information about this program.
MAY I GIVE MY INVESTMENT PROFESSIONAL PERMISSION TO MANAGE MY ACCOUNT VALUE?
Yes. Your Investment Professional may direct the allocation of your Account
Value and request financial transactions between investment options while you
are living, subject to our rules and unless you tell us otherwise. IF YOUR
INVESTMENT PROFESSIONAL HAS THIS AUTHORITY, WE DEEM THAT ALL TRANSACTIONS THAT
ARE DIRECTED BY YOUR INVESTMENT PROFESSIONAL WITH RESPECT TO YOUR ANNUITY HAVE
BEEN AUTHORIZED BY YOU. You must contact us immediately if and when you revoke
such authority. We will not be responsible for acting on instructions from your
Investment Professional until we receive notification of the revocation of such
person's authority. We may also suspend, cancel or limit these privileges at any
time. We will notify you if we do.
MAY I AUTHORIZE MY THIRD PARTY INVESTMENT ADVISOR TO MANAGE MY ACCOUNT?
Yes. You may engage your own investment advisor to manage your account. These
investment advisors may be firms or persons who also are appointed by us, or
whose affiliated broker-dealers are appointed by us, as authorized sellers of
the Annuity. EVEN IF THIS IS THE CASE, HOWEVER, PLEASE NOTE THAT THE INVESTMENT
ADVISOR YOU ENGAGE TO PROVIDE ADVICE AND/OR MAKE TRANSFERS FOR YOU, IS NOT
ACTING ON OUR BEHALF, BUT RATHER IS ACTING ON YOUR BEHALF. We do not offer
advice about how to allocate your Account Value under any circumstance. As such,
we are not responsible for any recommendations such investment advisors make,
any investment models or asset allocation programs they choose to follow or any
specific transfers they make on your behalf.
Any fee that is charged by your investment advisor is in addition to the
fees and expenses that apply under your Annuity. If you authorize your
investment advisor to withdraw amounts from your Annuity (to the extent
permitted) to pay for the investment advisor's fee, as with any other withdrawal
from your Annuity, you may incur adverse tax consequences, a CDSC and/or a
market value adjustment. Withdrawals to pay your investment advisor generally
will also reduce the level of various living and death benefit guarantees
provided (e.g. the withdrawals will reduce proportionately the Annuity's
guaranteed minimum death benefit.) WE ARE NOT A PARTY TO THE AGREEMENT YOU HAVE
WITH YOUR INVESTMENT ADVISOR AND DO NOT VERIFY THAT AMOUNTS WITHDRAWN FROM YOUR
ANNUITY, INCLUDING AMOUNTS WITHDRAWN TO PAY FOR THE INVESTMENT ADVISOR'S FEE,
ARE WITHIN THE TERMS OF YOUR AGREEMENT WITH YOUR INVESTMENT ADVISOR. You will,
however, receive confirmations of transactions that affect your Annuity. If your
investment advisor has also acted as your investment professional with respect
to the sale of your Annuity, he or she may be receiving compensation for
services provided both as an investment professional and investment advisor.
Alternatively, the investment advisor may compensate the investment professional
from whom you purchased your annuity for the referral that led you to enter into
your investment advisory relationship with the investment advisor. If you are
interested in the details about the compensation that your investment advisor
and/or your investment professional receive in connection with your Annuity, you
should ask them for more details.
We or an affiliate of ours may provide administrative support to licensed,
registered investment professionals or investment advisors who you authorize to
make financial transactions on your behalf. We may require investment
professionals or investment advisors, who are authorized by multiple contract
owners to make financial transactions, to enter into an administrative agreement
with American Skandia as a condition of our accepting transactions on your
behalf. The administrative
25
OPTIMUM ANNUITY PROSPECTUS
Managing Your Account Value continued
agreement may impose limitations on the investment professional's or investment
advisor's ability to request financial transactions on your behalf. These
limitations are intended to minimize the detrimental impact of an investment
professional who is in a position to transfer large amounts of money for
multiple clients in a particular Portfolio or type of portfolio or to comply
with specific restrictions or limitations imposed by a Portfolio(s) of American
Skandia. Contracts managed by your investment professional also are subject to
the restrictions on transfers between investment options that are discussed in
the section entitled "ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN
INVESTMENT OPTIONS?" Since transfer activity under contracts managed by an
investment professional or third party investment adviser may result in
unfavorable consequences to all contract owners invested in the affected options
we reserve the right to limit the investment options available to a particular
Owner whose contract is managed by the advisor or impose other transfer
restrictions we deem necessary. The administrative agreement may limit the
available investment options, require advance notice of large transactions, or
impose other trading limitations on your investment professional. Your
investment professional will be informed of all such restrictions on an ongoing
basis. We may also require that your investment professional transmit all
financial transactions using the electronic trading functionality available
through our Internet website (www.americanskandia.prudential.com). LIMITATIONS
THAT WE MAY IMPOSE ON YOUR INVESTMENT PROFESSIONAL OR INVESTMENT ADVISOR UNDER
THE TERMS OF THE ADMINISTRATIVE AGREEMENT DO NOT APPLY TO FINANCIAL TRANSACTIONS
REQUESTED BY AN OWNER ON THEIR OWN BEHALF, EXCEPT AS OTHERWISE DESCRIBED IN THIS
PROSPECTUS.
HOW DO THE FIXED ALLOCATIONS WORK?
We credit the fixed interest rate to the Fixed Allocation throughout a set
period of time called a "Guarantee Period." Fixed Allocations currently are
offered with Guarantee Periods from 1 to 10 years. We may make Fixed Allocations
of different durations available in the future, including Fixed Allocations
offered exclusively for use with certain optional investment programs. Fixed
Allocations may not be available in all states and may not always be available
for all Guarantee Periods depending on market factors and other considerations.
The interest rate credited to a Fixed Allocation is the rate in effect
when the Guarantee Period begins and does not change during the Guarantee
Period. The rates are an effective annual rate of interest. We determine the
interest rates for the various Guarantee Periods. At the time that we confirm
your Fixed Allocation, we will advise you of the interest rate in effect and the
date your Fixed Allocation matures. We may change the rates we credit new Fixed
Allocations at any time. Any change in interest rate does not affect Fixed
Allocations that were in effect before the date of the change. To inquire as to
the current rates for Fixed Allocations, please call 1-800-752-6342.
A Guarantee Period for a Fixed Allocation begins:
- - when all or part of a net Purchase Payment is allocated to that particular
Guarantee Period;
- - upon transfer of any of your Account Value to a Fixed Allocation for that
particular Guarantee Period; or
- - when you "renew" a Fixed Allocation by electing a new Guarantee Period.
To the extent permitted by law, we may establish different interest rates
for Fixed Allocations offered to a class of Owners who choose to participate in
various optional investment programs we make available. This may include, but is
not limited to, Owners who elect to use Fixed Allocations under a dollar cost
averaging program (see "Do You Offer Dollar Cost Averaging?") or a balanced
investment program (see "Do you offer programs designed to guarantee a "Return
of Premium" at a future date?"). The interest rate credited to Fixed Allocations
offered to this class of purchasers may be different than those offered to other
purchasers who choose the same Guarantee Period but who do not participate in an
optional investment program. Any such program is at our sole discretion.
AMERICAN SKANDIA MAY OFFER FIXED ALLOCATIONS WITH GUARANTEE PERIODS OF 3
MONTHS OR 6 MONTHS EXCLUSIVELY FOR USE AS A SHORT-TERM FIXED ALLOCATION
("SHORT-TERM FIXED ALLOCATIONS"). SHORT-TERM FIXED ALLOCATIONS MAY ONLY BE
ESTABLISHED WITH YOUR INITIAL PURCHASE PAYMENT OR ADDITIONAL PURCHASE
PAYMENTS. YOU MAY NOT TRANSFER EXISTING ACCOUNT VALUE TO A SHORT-TERM FIXED
ALLOCATION. WE RESERVE THE RIGHT TO TERMINATE OFFERING THESE SPECIAL PURPOSE
FIXED ALLOCATIONS AT ANY TIME.
On the Maturity Date of the Short-term Fixed Allocation, the Account Value
will be transfered to the Sub-account(s) you choose at the inception of the
program. If no instructions are provided, such Account Value will be transfered
to the AST Money Market Sub-account. Short-term Fixed Allocations may not be
renewed on the Maturity Date. If you surrender the
26
OPTIMUM ANNUITY PROSPECTUS
Annuity or transfer any Account Value from the Short-term Fixed Allocation to
any other investment option before the end of the Guarantee Period, a Market
Value Adjustment will apply.
HOW DO YOU DETERMINE RATES FOR FIXED ALLOCATIONS?
We do not have a specific formula for determining the fixed interest rates for
Fixed Allocations. Generally the interest rates we offer for Fixed Allocations
will reflect the investment returns available on the types of investments we
make to support our fixed rate guarantees. These investment types may include
cash, debt securities guaranteed by the United States government and its
agencies and instrumentalities, money market instruments, corporate debt
obligations of different durations, private placements, asset-backed obligations
and municipal bonds. In determining rates we also consider factors such as the
length of the Guarantee Period for the Fixed Allocation, regulatory and tax
requirements, liquidity of the markets for the type of investments we make,
commissions, administrative and investment expenses, our insurance risks in
relation to the Fixed Allocations, general economic trends and competition. Some
of these considerations are similar to those we consider in determining the
Insurance Charge that we deduct from Account Value allocated to the
Sub-accounts.
We will credit interest on a new Fixed Allocation in an existing Annuity
at a rate not less than the rate we are then crediting to Fixed Allocations for
the same Guarantee Period selected by new Annuity purchasers in the same class.
The interest rate we credit for a Fixed Allocation is subject to a
minimum. Please refer to the Statement of Additional Information. In certain
states the interest rate may be subject to a minimum under state law or
regulation.
HOW DOES THE MARKET VALUE ADJUSTMENT WORK?
If you transfer or withdraw Account Value from a Fixed Allocation more than 30
days before the end of its Guarantee Period, we will adjust the value of your
investment based on a formula, called a "Market Value Adjustment" or "MVA". The
amount of any Market Value Adjustment can be either positive or negative,
depending on the movement of a combination of Strip Yields on Strips and an
Option-adjusted Spread (each as defined below) between the time that you
purchase the Fixed Allocation and the time you make a transfer or withdrawal.
The Market Value Adjustment formula compares the combination of Strip Yields for
Strips and the Option-adjusted Spreads as of the date the Guarantee Period began
with the combination of Strip Yields for Strips and the Option-adjusted Spreads
as of the date the MVA is being calculated. In certain states the amount of any
Market Value Adjustment may be limited under state law or regulation. If your
Annuity is governed by the laws of that state, any Market Value Adjustment that
applies will be subject to our rules for complying with such law or regulation.
- - "Strips" are a form of security where ownership of the interest portion of
United States Treasury securities are separated from ownership of the
underlying principal amount or corpus.
- - "Strip Yields" are the yields payable on coupon Strips of United States
Treasury securities.
- - "Option-adjusted Spread" is the difference between the yields on corporate
debt securities (adjusted to disregard options on such securities) and
government debt securities of comparable duration. We currently use the
Merrill Lynch 1 to 10 year Investment Grade Corporate Bond Index of
Option-adjusted Spreads.
MVA FORMULA
The MVA formula is applied separately to each Fixed Allocation to determine the
Account Value of the Fixed Allocation on a particular date. The formula is as
follows:
[(1+I) / (1+J+0.0010)](N/365)
where:
I is the Strip Yield as of the start date of the Guarantee Period for
coupon Strips maturing at the end of the applicable Guarantee Period plus
the Option-adjusted Spread. If there are no Strips maturing at that time,
we will 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 being applied for
coupon Strips maturing at the end of the applicable Guarantee Period plus
the Option-adjusted Spread. If there are no Strips maturing at that time,
we will 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 the original Guarantee Period.
If you surrender your Annuity under the right to cancel provision, the MVA
formula is:
[(1 + I)/(1 + J)](N/365).
27
OPTIMUM ANNUITY PROSPECTUS
Managing Your Account Value continued
MVA EXAMPLES
The following hypothetical examples show the effect of the MVA in determining
Account Value. Assume the following:
- - You allocate $50,000 into a Fixed Allocation (we refer to this as the
"Allocation Date" in these examples) with a Guarantee Period of 5 years
(we refer to this as the "Maturity Date" in these examples).
- - The Strip Yields for coupon Strips beginning on Allocation Date and
maturing on Maturity Date plus the Option-adjusted Spread is 5.50% (I =
5.50%).
- - You make no withdrawals or transfers until you decide to withdraw the
entire Fixed Allocation after exactly three (3) years, at which point 730
days remain before the Maturity Date (N = 730).
EXAMPLE OF POSITIVE MVA
Assume that at the time you request the withdrawal, the Strip Yields for Strips
maturing on the Maturity Date plus the Option-adjusted Spread is 4.00% (J =
4.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0010)](N/365) =
[1.055/1.041](2) = 1.027078
Interim Value = $57,881.25
Account Value after MVA = Interim Value x MVA
Factor = $59,448.56
EXAMPLE OF NEGATIVE MVA
Assume that at the time you request the withdrawal, the Strip Yields for Strips
maturing on the Maturity Date plus the Option-adjusted Spread is 7.00% (J =
7.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0010)](N/365) =
[1.055/1.071)](2) = 0.970345
Interim Value = $57,881.25
Account Value after MVA = Interim Value x MVA
Factor = $56,164.78.
WHAT HAPPENS WHEN MY GUARANTEE PERIOD MATURES?
The "Maturity Date" for a Fixed Allocation is the last day of the Guarantee
Period. Before the Maturity Date, you may choose to renew the Fixed Allocation
for a new Guarantee Period of the same or different length or you may transfer
all or part of that Fixed Allocation's Account Value to another Fixed Allocation
or to one or more Sub-accounts. We will not charge a MVA if you choose to renew
a Fixed Allocation on its Maturity Date or transfer the Account Value to one or
more variable investment options. We will notify you before the end of the
Guarantee Period about the fixed interest rates that we are currently crediting
to all Fixed Allocations that are being offered. The rates being credited to
Fixed Allocations may change before the Maturity Date.
IF YOU DO NOT SPECIFY HOW YOU WANT A FIXED ALLOCATION TO BE ALLOCATED ON
ITS MATURITY DATE, WE WILL THEN TRANSFER THE ACCOUNT VALUE OF THE FIXED
ALLOCATION TO THE AST MONEY MARKET SUB-ACCOUNT. You can then elect to allocate
the Account Value to any of the Sub-accounts or to a new Fixed Allocation.
28
OPTIMUM ANNUITY PROSPECTUS
Access To Account Value
WHAT TYPES OF DISTRIBUTIONS ARE AVAILABLE TO ME?
During the accumulation period you can access your Account Value through partial
withdrawals, Systematic Withdrawals, and where required for tax purposes,
Minimum Distributions. You can also surrender your Annuity at any time. We may
deduct a portion of the Account Value being withdrawn or surrendered as a CDSC.
The CDSC will be assessed on the amount of Purchase Payments, not on the Account
Value at the time of the withdrawal or surrender. If you surrender your Annuity,
in addition to any CDSC, we may deduct the Annual Maintenance Fee, any Tax
Charge that applies and the charge for any optional benefits. We may also apply
a Market Value Adjustment to any Fixed Allocations being withdrawn or
surrendered. Certain amounts may be available to you each Annuity Year that are
not subject to a CDSC. These are called "Free Withdrawals." In addition, under
certain circumstances, we may waive the CDSC for surrenders made for qualified
medical reasons or for withdrawals made to satisfy Minimum Distribution
requirements. Unless you notify us differently, withdrawals are taken pro-rata
based on the Account Value in the investment options at the time we receive your
withdrawal request. Each of these types of distributions is described more fully
below.
ARE THERE TAX IMPLICATIONS FOR DISTRIBUTIONS?
(For more information, see "Tax Considerations.")
DURING THE ACCUMULATION PERIOD
A distribution during the accumulation period is deemed to come first from any
"gain" in your Annuity and second as a return of your "tax basis", if any.
Distributions from your Annuity are generally subject to ordinary income
taxation on the amount of any investment gain unless the distribution qualifies
as a non-taxable exchange or transfer. If you take a distribution prior to the
taxpayer's age 59 1/2, you may be subject to a 10% penalty in addition to
ordinary income taxes on any gain. You may wish to consult a professional tax
advisor for advice before requesting a distribution.
DURING THE ANNUITIZATION PERIOD
During the annuitization period, a portion of each annuity payment is taxed as
ordinary income at the tax rate you are subject to at the time of the payment.
The Code and regulations have "exclusionary rules" that we use to determine what
portion of each annuity payment should be treated as a return of any tax basis
you have in the Annuity. Once the tax basis in the Annuity has been distributed,
the remaining annuity payments are taxable as ordinary income. The tax basis in
the Annuity may be based on the tax-basis from a prior contract in the case of a
1035 exchange or other qualifying transfer.
CAN I WITHDRAW A PORTION OF MY ANNUITY?
Yes, you can make a withdrawal during the accumulation period.
- - To meet liquidity needs, you can withdraw a limited amount from your
Annuity during each of Annuity Years 1-8 without a CDSC being applied. We
call this the "Free Withdrawal" amount. The Free Withdrawal amount is not
available if you choose to surrender your Annuity. Amounts withdrawn as a
Free Withdrawal do not reduce the amount of CDSC that may apply upon a
subsequent withdrawal or surrender of the Annuity. The minimum Free
Withdrawal you may request is $100.
- - You can also make withdrawals in excess of the Free Withdrawal amount. The
maximum amount that you may withdraw will depend on the Annuity's
Surrender Value as of the date we process the withdrawal request. After
any partial withdrawal, your Annuity must have a Surrender Value of at
least $1,000, or we may treat the partial withdrawal request as a request
to fully surrender your Annuity. The minimum partial withdrawal you may
request is $100.
When we determine if a CDSC applies to partial withdrawals and Systematic
Withdrawals, we will first determine what, if any, amounts qualify as a Free
Withdrawal. Those amounts are not subject to the CDSC. Partial withdrawals or
Systematic Withdrawals of amounts greater than the maximum Free Withdrawal
amount will be subject to a CDSC.
You may request a withdrawal for an exact dollar amount after deduction of
any CDSC that applies (called a "net withdrawal") or request a gross withdrawal
from which we will deduct any CDSC that applies, resulting in less money being
payable to you than the amount you requested. If you request a net withdrawal,
the amount deducted from your Account Value to pay the CDSC may also be subject
to a CDSC.
Partial withdrawals may also be available following annuitization but only
if you choose certain annuity payment options.
To request the forms necessary to make a withdrawal from your Annuity,
call 1-800-752-6342 or visit our Internet Website at
www.americanskandia.prudential.com.
29
OPTIMUM ANNUITY PROSPECTUS
Access To Account Value continued
HOW MUCH CAN I WITHDRAW AS A FREE WITHDRAWAL?
ANNUITY YEARS 1-8
The maximum Free Withdrawal amount during each of Annuity Years 1 through 8
(when a CDSC would otherwise apply to a partial withdrawal or surrender of your
initial Purchase Payments) is 10% of all Purchase Payments. We may apply a
Market Value Adjustment to any Fixed Allocations. Withdrawals of amounts greater
than the maximum Free Withdrawal amount are treated as a withdrawal of Purchase
Payments and will be assessed a CDSC during Annuity Years 1 through 8. If,
during Annuity Years 1 through 8, all Purchase Payments withdrawn are subject to
a CDSC, then any subsequent withdrawals will be withdrawn from any gain in the
Annuity. If you do not make a Free Withdrawal during an Annuity Year, you are
not allowed to carry over the Free Withdrawal amount to the next Annuity Year.
ANNUITY YEARS 9+
After Annuity Year 8, you can surrender your Annuity or make a partial
withdrawal without a CDSC being deducted from the amount being withdrawn.
NOTE: Amounts that you have withdrawn as a Free Withdrawal will not reduce
the amount of any CDSC that we deduct if, during the first eight (8) Annuity
Years, you make a partial withdrawal or choose to surrender the Annuity.
EXAMPLES
1. Assume you make an initial Purchase Payment of $10,000 and make no
additional Purchase Payments. The maximum Free Withdrawal amount during
each of the first eight Annuity Years would be 10% of $10,000, or $1,000.
2. Assume you make an initial Purchase Payment of $10,000 and make an
additional Purchase Payment of $5,000 in Annuity Year 6. The maximum Free
Withdrawal amount during Annuity Years 7 and 8 would be 10% of $15,000, or
$1,500. Beginning in Annuity Year 9 and thereafter, you can surrender your
Annuity or make a partial withdrawal without a CDSC being deducted from
the amount being withdrawn.
3. Assume you make an initial Purchase Payment of $10,000 and take a Free
Withdrawal of $500 in Annuity Year 6 and $1,000 in Annuity Year 7. If you
surrender your Annuity in Annuity Year 8, the CDSC will be assessed
against the initial Purchase Payment amount ($10,000), not the amount of
Purchase Payments reduced by the amounts that were withdrawn under the
Free Withdrawal provision.
IS THERE A CHARGE FOR A PARTIAL WITHDRAWAL?
A CDSC may be assessed against a partial withdrawal during the first eight (8)
Annuity Years. Whether a CDSC applies and the amount to be charged depends on
whether the partial withdrawal exceeds any Free Withdrawal amount and, if so,
the number of years that have elapsed since the Issue Date of the Annuity.
1. If you request a partial withdrawal, we determine if the amount you
requested is available as a Free Withdrawal (in which case it would not be
subject to a CDSC);
2. If the amount requested exceeds the available Free Withdrawal amount, we
determine if a CDSC will apply to the partial withdrawal based on the
number of years that have elapsed since the Annuity was issued. The
maximum Free Withdrawal amount during each of Annuity Years 1 through 8 is
10% of all Purchase Payments. Withdrawals of amounts greater than the
maximum Free Withdrawal amount are treated as a withdrawal of Purchase
Payments and will be assessed a CDSC. If, during Annuity Years 1 through
8, all Purchase Payments are withdrawn subject to a CDSC, then any
subsequent withdrawals will be withdrawn from any gain in the Annuity.
CAN I MAKE PERIODIC WITHDRAWALS FROM THE ANNUITY DURING THE ACCUMULATION PERIOD?
Yes. We call these "Systematic Withdrawals." You can receive Systematic
Withdrawals of earnings only, principal plus earnings or a flat dollar amount.
Systematic Withdrawals during the first eight (8) Annuity Years may be subject
to a CDSC. We will determine whether a CDSC applies and the amount in the same
way as we would for a partial withdrawal.
Systematic Withdrawals can be made from Account Value allocated to the
variable investment options or Fixed Allocations. Generally, Systematic
Withdrawals from Fixed Allocations are limited to earnings accrued after the
program of Systematic Withdrawals begins, or payments of fixed dollar amounts
that do not exceed such earnings. Systematic Withdrawals are available on a
monthly, quarterly, semi-annual or annual basis. The Surrender Value of your
Annuity must be at least $20,000 before we will allow you to begin a program of
Systematic Withdrawals.
The minimum amount for each Systematic Withdrawal is $100. If any
scheduled Systematic Withdrawal is for less than $100 (which may occur under a
program that provides payment of an amount equal to the earnings in the Annuity
for the
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OPTIMUM ANNUITY PROSPECTUS
period requested), we may postpone the withdrawal and add the expected amount to
the amount that is to be withdrawn on the next scheduled Systematic Withdrawal.
DO YOU OFFER A PROGRAM FOR WITHDRAWALS UNDER SECTION 72(t) OF THE INTERNAL
REVENUE CODE?
Yes. If your Annuity is used as a funding vehicle for certain retirement plans
that receive special tax treatment under Sections 401, 403(b) or 408 of the
Code, Section 72(t) of the Code may provide an exception to the 10% penalty tax
on distributions made prior to age 59 1/2 if you elect to receive distributions
as a series of "substantially equal periodic payments". Distributions received
under this provision in any Annuity Year that exceed the maximum amount
available as a free withdrawal will be subject to a CDSC. We may apply a Market
Value Adjustment to any Fixed Allocations. To request a program that complies
with Section 72(t), you must provide us with certain required information in
writing on a form acceptable to us. We may require advance notice to allow us to
calculate the amount of 72(t) withdrawals. The Surrender Value of your Annuity
must be at least $20,000 before we will allow you to begin a program for
withdrawals under Section 72(t). The minimum amount for any such withdrawal is
$100.
You may also annuitize your contract and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments before age 59 1/2 that are not subject to the 10% penalty.
WHAT ARE MINIMUM DISTRIBUTIONS AND WHEN WOULD I NEED TO MAKE THEM?
(See "Tax Considerations" for a further discussion of Minimum Distributions.)
Minimum Distributions are a type of Systematic Withdrawal we allow to meet
distribution requirements under Sections 401, 403(b) or 408 of the Code. Under
the Code, you may be required to begin receiving periodic amounts from your
Annuity. In such case, we will allow you to make Systematic Withdrawals in
amounts that satisfy the minimum distribution rules under the Code. We do not
assess a CDSC on Minimum Distributions from your Annuity if you are required by
law to take such Minimum Distributions from your Annuity at the time it is
taken. However, a CDSC may be assessed on that portion of a Systematic
Withdrawal that is taken to satisfy the minimum distribution requirements in
relation to other savings or investment plans under other qualified retirement
plans not maintained with American Skandia.
The amount of the required Minimum Distribution for your particular
situation may depend on other annuities, savings or investments. We will only
calculate the amount of your required Minimum Distribution based on the value of
your Annuity. We require three (3) days advance written notice to calculate and
process the amount of your payments. You may elect to have Minimum Distributions
paid out monthly, quarterly, semi-annually or annually. The $100 minimum amount
that applies to Systematic Withdrawals applies to monthly minimum distributions
but does not apply to minimum distributions taken out on a quarterly,
semi-annual or annual basis.
You may also annuitize your contract and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments and satisfying the Minimum Distribution requirements under the Code.
CAN I SURRENDER MY ANNUITY FOR ITS VALUE?
Yes. During the accumulation period you can surrender your Annuity at any time.
Upon surrender, you will receive the Surrender Value. Upon surrender of your
Annuity, you will no longer have any rights under the Annuity.
For purposes of calculating the CDSC on surrender, the Purchase Payments
being withdrawn may be greater than your remaining Account Value or the amount
of your withdrawal request. This is most likely to occur if you have made prior
withdrawals under the Free Withdrawal provision or if your Account Value has
declined in value due to negative market performance. We may apply a Market
Value Adjustment to any Fixed Allocations.
Under certain annuity payment options, you may be allowed to surrender
your Annuity for its then current value.
To request the forms necessary to surrender your Annuity, call
1-800-752-6342 or visit our Internet Website at
www.americanskandia.prudential.com.
WHAT IS A MEDICALLY-RELATED SURRENDER AND HOW DO I QUALIFY?
Where permitted by law, you may request to surrender your Annuity prior to the
Annuity Date without application of any CDSC upon occurrence of a
medically-related "Contingency Event". We may apply a Market Value Adjustment to
any Fixed Allocations. The amount payable will be your Account Value.
This waiver of any applicable CDSC is subject to our rules, including but
not limited to the following:
- - The Annuitant must have been named or any change of Annuitant must have
been accepted by us, prior to the
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OPTIMUM ANNUITY PROSPECTUS
Access To Account Value continued
"Contingency Event" described below in order to qualify for a
medically-related surrender.
- - the Annuitant must be alive as of the date we pay the proceeds of such
surrender request;
- - if the Owner is one or more natural persons, all such Owners must also be
alive at such time;
- - we must receive satisfactory proof of the Annuitant's confinement in a
Medical Care Facility or Fatal Illness in writing on a form satisfactory
to us; and
- - this benefit is not available if the total Purchase Payments received
exceed $500,000 for all annuities issued by us with this benefit where the
same person is named as Annuitant.
A "Contingency Event" occurs if the Annuitant is:
- - first confined in a "Medical Care Facility" while your Annuity is in force
and remains confined for at least 90 days in a row; or
- - first diagnosed as having a "Fatal Illness" while your Annuity is in
force.
The definitions of "Medical Care Facility" and "Fatal Illness," as well as
additional terms and conditions, are provided in your Annuity. Specific details
and definitions in relation to this benefit may differ in certain jurisdictions.
WHAT TYPES OF ANNUITY OPTIONS ARE AVAILABLE?
We currently make annuity options available that provide fixed annuity payments,
variable payments or adjustable payments. Fixed options provide the same amount
with each payment. Variable options generally provide a payment which may
increase or decrease depending on the investment performance of the
Sub-accounts. However, currently, we also make a variable payment option that
has a guarantee feature. Adjustable options provide a fixed payment that is
periodically adjusted based on current interest rates. WE DO NOT GUARANTEE TO
MAKE ANY ANNUITY PAYMENT OPTIONS AVAILABLE IN THE FUTURE OTHER THAN THOSE FIXED
ANNUITIZATION OPTIONS GUARANTEED IN YOUR ANNUITY. Please refer to the
"Guaranteed Minimum Income Benefit" and the "Lifetime Five Income Benefit" under
"Living Benefits" below for a description of annuity options that are available
when you elect these benefits. For additional information on annuity payment
options you may request a Statement of Additional Information.
When you purchase an Annuity, or at a later date, you may choose an
Annuity Date, an annuity option and the frequency of annuity payments. You may
change your choices before the Annuity Date under the terms of your contract. A
maximum Annuity Date may be required by law. The Annuity Date may depend on the
annuity option you choose. Certain annuity options may not be available
depending on the age of the Annuitant.
Certain of these annuity options may be available to Beneficiaries who
choose to receive the Death Benefit proceeds as a series of payments instead of
a lump sum payment.
OPTION 1
PAYMENTS FOR LIFE: Under this option, income is payable periodically until the
death of the "key life". The "key life" (as used in this section) is the person
or persons upon whose life annuity payments are based. No additional annuity
payments are made after the death of the key life. Since no minimum number of
payments is guaranteed, this option offers the largest amount of periodic
payments of the life contingent annuity options. It is possible that only one
payment will be payable if the death of the key life occurs before the date the
second payment was due, and no other payments nor death benefits would be
payable. THIS OPTION IS CURRENTLY AVAILABLE ON A FIXED OR VARIABLE BASIS. Under
this option, you cannot make a partial or full surrender of the annuity.
OPTION 2
PAYMENTS BASED ON JOINT LIVES: Under this option, income is payable periodically
during the joint lifetime of two key lives, and thereafter during the remaining
lifetime of the survivor, ceasing with the last payment prior to the survivor's
death. No minimum number of payments is guaranteed under this option. It is
possible that only one payment will be payable if the death of all the key lives
occurs before the date the second payment was due, and no other payments or
death benefits would be payable. THIS OPTION IS CURRENTLY AVAILABLE ON A FIXED
OR VARIABLE BASIS. Under this option, you cannot make a partial or full
surrender of the annuity.
OPTION 3
PAYMENTS FOR LIFE WITH A CERTAIN PERIOD: Under this option, income is payable
until the death of the key life. However, if the key life dies before the end of
the period selected (5, 10 or 15 years), the remaining payments are paid to the
Beneficiary until the end of such period. THIS OPTION IS CURRENTLY AVAILABLE ON
A FIXED OR VARIABLE BASIS. If you elect to receive payments on a variable basis
under this option, you can request partial or full surrender of the annuity and
receive its then current cash value (if any) subject to our rules.
OPTION 4
FIXED PAYMENTS FOR A CERTAIN PERIOD: Under this option, income is payable
periodically for a specified number of years. If the payee dies before the end
of the specified number of
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OPTIMUM ANNUITY PROSPECTUS
years, the remaining payments are paid to the Beneficiary until the end of such
period. Note that under this option, payments are not based on any assumptions
of life expectancy. Therefore, that portion of the Insurance Charge assessed to
cover the risk that key lives outlive our expectations provides no benefit to an
Owner selecting this option. Under this option, you cannot make a partial or
full surrender of the annuity.
OPTION 5
VARIABLE PAYMENTS FOR LIFE WITH A CASH VALUE: Under this option, benefits are
payable periodically until the death of the key life. Benefits may increase or
decrease depending on the investment performance of the Sub-accounts. This
option has a cash value that also varies with the investment performance of the
Sub-account. The cash value provides a "cushion" from volatile investment
performance so that negative investment performance does not automatically
result in a decrease in the annuity payment each month, and positive investment
performance does not automatically result in an increase in the annuity payment
each month. The cushion generally "stabilizes" monthly annuity payments. Any
cash value remaining on the death of the key life is paid to the Beneficiary in
a lump sum or as periodic payments. Under this option, you can request partial
or full surrender of the Annuity and receive its then current cash value (if
any) subject to our rules.
OPTION 6
VARIABLE PAYMENTS FOR LIFE WITH A CASH VALUE AND GUARANTEE: Under this option,
benefits are payable as described in Option 5; except that, while the key life
is alive, the annuity payment will not be less than a guaranteed amount, which
generally is equal to the first annuity payment. WE CHARGE AN ADDITIONAL AMOUNT
FOR THIS GUARANTEE. Under this option, any cash value remaining on the death of
the key life is paid to the Beneficiary in a lump sum or as periodic payments.
Under this option, you can request partial or full surrender of the Annuity and
receive its then current cash value (if any) subject to our rules.
We may make additional annuity payment options available in the future.
HOW AND WHEN DO I CHOOSE THE ANNUITY PAYMENT OPTION?
Unless prohibited by law, we require that you elect either a life annuity or an
annuity with a certain period of at least 5 years if any CDSC would apply were
you to surrender your Annuity on the Annuity Date. Therefore, choosing an
Annuity Date within eight (8) years of the Issue Date of the Annuity may limit
the available annuity payment options. Certain annuity payment options may not
be available if your Annuity Date occurs during the period that a CDSC would
apply.
You have a right to choose your annuity start date. If you have not
provided us with your Annuity Date or annuity payment option in writing, then:
- - a default date for the Annuity Date will be the first day of the calendar
month following the later of the Annuitant's 85th birthday or the fifth
anniversary of our receipt of your request to purchase an Annuity; and
- - the annuity payments, where allowed by law, will be calculated on a fixed
basis under Option 3, Payments for Life with 10 years certain.
If you choose to defer the Annuity Date beyond the default date, the IRS
may not consider your Annuity to be an annuity under the tax law. If that should
occur, all gain in your Annuity at that time will become immediately taxable to
you. Further, each subsequent year's increase in Account Value would be taxable
in that year. By choosing to continue to defer after the default date, you will
assume the risk that your Annuity will not be considered an annuity for federal
income tax purposes.
HOW ARE ANNUITY PAYMENTS CALCULATED?
Fixed Annuity Payments (Options 1-4)
If you choose to receive fixed annuity payments, you will receive equal
fixed-dollar payments throughout the period you select. The amount of the fixed
payment will vary depending on the annuity payment option and payment frequency
you select. Generally, the first annuity payment is determined by multiplying
the Account Value, minus any state premium taxes that may apply, by the factor
determined from our table of annuity rates. The table of annuity rates differs
based on the type of annuity chosen and the frequency of payment selected. Our
rates will not be less than our guaranteed minimum rates. These guaranteed
minimum rates are derived from the a2000 Individual Annuity Mortality Table 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.
VARIABLE ANNUITY PAYMENTS
Generally, we offer three different types of variable annuity payment options.
The first annuity payment will be calculated based upon the assumed investment
return ("AIR"). You select the AIR before we start to make annuity payments. You
will not receive annuity payments until you choose an AIR. The remaining annuity
payments will fluctuate based on the performance of the
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OPTIMUM ANNUITY PROSPECTUS
Access To Account Value continued
Sub-accounts relative to the AIR, as well as other factors described below. The
greater the AIR, the greater the first annuity payment. A higher AIR may result
in smaller potential growth in the annuity payments. A lower AIR results in a
lower initial annuity payment. Within payment options 1-3, if the Sub-accounts
you choose perform exactly the same as the AIR, then subsequent annuity payments
will be the same as the first annuity payment. If the Sub-accounts you choose
perform better than the AIR, then subsequent annuity payments will be higher
than the first annuity payment. If the Sub-accounts you choose perform worse
than the AIR, then subsequent annuity payments will be lower than the first.
Within payment options 5 and 6, the cash value for the Annuitant (while alive)
and a variable period of time during which annuity payments will be made whether
or not the Annuitant is still alive are adjusted based on the performance of the
Sub-accounts relative to the AIR; however, subsequent annuity payments do not
always increase or decrease based on the performance of the Sub-accounts
relative to the AIR.
- VARIABLE PAYMENTS (OPTIONS 1-3)
We calculate each annuity payment amount by multiplying the number
of units scheduled to be redeemed under a schedule of units for each
Sub-account by the Unit Value of each Sub-account on the annuity
payment date. We determine the schedule of units based on your
Account Value (minus any premium tax that applies) at the time you
elect to begin receiving annuity payments. The schedule of units
will vary based on the annuity payment option selected, the length
of any certain period (if applicable), the Annuitant's age and
gender (if annuity payments are due for the life of the Annuitant)
and the Unit Value of the Sub-accounts you initially selected on the
Issue Date. The calculation is performed for each Sub-account, and
the sum of the Sub-account calculations equals the amount of your
annuity payment. Other than to fund annuity payments, the number of
units allocated to each Sub-account will not change unless you
transfer among the Sub-accounts or make a withdrawal (if allowed).
You can select one of three AIRs for these options: 3%, 5% or 7%.
- STABILIZED VARIABLE PAYMENTS (OPTION 5)
This option provides guaranteed payments for life, a cash value for
the Annuitant (while alive) and a variable period of time during
which annuity payments will be made whether or not the Annuitant is
still alive. We calculate the initial annuity payment amount by
multiplying the number of units scheduled to be redeemed under a
schedule of units by the Unit Values determined on the annuitization
date. The schedule of units is established for each Sub-account you
choose on the annuitization date based on the applicable benchmark
rate, meaning the AIR, and the annuity factors. The annuity factors
reflect our assumptions regarding the costs we expect to bear in
guaranteeing payments for the lives of the Annuitant and will depend
on the benchmark rate, the annuitant's attained age and gender
(where permitted). Unlike variable payments (described above) where
each payment can vary based on Sub-account performance, this payment
option cushions the immediate impact of Sub-account performance by
adjusting the length of the time during which annuity payments will
be made whether or not the Annuitant is alive while generally
maintaining a level annuity payment amount. Sub-account performance
that exceeds a benchmark rate will generally extend this time
period, while Sub-account performance that is less than a benchmark
rate will generally shorten the period. If the period reaches zero
and the Annuitant is still alive, Annuity Payments continue,
however, the annuity payment amount will vary depending on
Sub-account performance, similar to conventional variable payments.
The AIR for this option is 4%.
- STABILIZED VARIABLE PAYMENTS WITH A GUARANTEED MINIMUM (OPTION 6)
This option provides guaranteed payments for life in the same manner
as Stabilized Variable Payments (described above). In addition to
the stabilization feature, this option also guarantees that variable
annuity payments will not be less than the initial annuity payment
amount regardless of Sub-account performance. The AIR for this
option is 3%.
The variable annuity payment options are described in greater detail in a
separate prospectus which will be provided to you at the time you elect one of
the variable annuity payment options.
ADJUSTABLE ANNUITY PAYMENTS
We may make an adjustable annuity payment option available. Adjustable annuity
payments are calculated similarly to fixed annuity payments except that on every
fifth (5th) anniversary of receiving annuity payments, the annuity payment
amount is adjusted upward or downward depending on the rate we are currently
crediting to annuity payments. The adjustment in the annuity payment amount does
not affect the duration of remaining annuity payments, only the amount of each
payment.
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OPTIMUM ANNUITY PROSPECTUS
Living Benefit Programs
DO YOU OFFER PROGRAMS DESIGNED TO PROVIDE INVESTMENT PROTECTION FOR OWNERS WHILE
THEY ARE ALIVE?
American Skandia offers different optional benefits, for an additional charge,
that can provide investment protection for Owners while they are alive.
Notwithstanding the additional protection provided under the optional Living
Benefit Programs, the additional cost has the impact of reducing net performance
of the investment options. Each optional benefit offers a distinct type of
guarantee, regardless of the performance of variable investment options, that
may be appropriate for you depending on the manner in which you intend to make
use of your annuity while you are alive. Depending on which optional benefit you
choose, you can have substantial flexibility to invest in variable investment
options while:
- - protecting a principal amount from decreases in value as of specified
future dates due to investment performance;
- - taking withdrawals with a guarantee that you will be able to withdraw not
less than a principal amount over time; or
- - guaranteeing a minimum amount of growth will be applied to your principal,
if it is to be used as the basis for lifetime income payments beginning
after a waiting period.
Below is a brief summary of the "living benefits" that American Skandia
offers. Please refer to the benefit description for a complete description of
the terms, conditions and limitations of each optional benefit. You should
consult with your investment professional to determine if any of these optional
benefits may be appropriate for you based on your financial needs. There are
many factors to consider, but we note that among them you may want to evaluate
the tax implications of these different approaches to meeting your needs, both
between these benefits and in comparison to other potential solutions to your
needs (e.g., comparing the tax implications of the withdrawal benefit and
annuity payments).
I. The GUARANTEED RETURN OPTION PLUS(SM) (GRO PLUS(SM)) guarantees that,
after a seven-year period following commencement of the program ("maturity
date") and on each anniversary of the maturity date thereafter, your
Account Value will not be less than the Account Value on the effective
date of the program. The program also offers you the option to elect a
second, enhanced guarantee amount at a higher Account Value subject to a
separate maturity period (and its anniversaries). The GRO Plus(SM) program
may be appropriate if you wish to protect a principal amount (called the
"Protected Principal Value") against market downturns as of a specific
date in the future, but also wish to exercise control of your available
Account Value among the variable investment options to participate in
market experience. Under the GRO Plus(SM) program, you give us the right
to allocate amounts to Fixed Allocations as needed to support the
guarantees provided. The available Account Value that may be allocated
among your variable investment options are those amounts not allocated to
the Fixed Allocations to support the guarantees provided.
II. The GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) guarantees your ability
to make cumulative withdrawals over time equal to an initial principal
value (called the "Protected Value"), regardless of decreases in your
Account Value due to market losses. The GMWB program may be appropriate if
you intend to make periodic withdrawals from your Annuity and wish to
ensure that market performance will not affect your ability to receive
guaranteed minimum withdrawals. Taking income as withdrawals, rather than
annuity payments, may be less tax efficient for non-qualified uses of the
Annuity, but provides greater control over the timing and amount of
withdrawals during the accumulation period, as well as continuing the
Annuity's other benefits, such as the death benefit.
III. THE GUARANTEED MINIMUM INCOME BENEFIT (GMIB) guarantees your ability,
after a minimum seven-year waiting period, to begin receiving income from
the Annuity in the form of annuity payments based on your total purchase
payments under the Annuity and an annual increase of 5% on such Purchase
Payments, adjusted for withdrawals, regardless of the impact of market
performance on your Account Value. The GMIB program may be appropriate if
you anticipate using your Annuity as a future source of periodic fixed
income payments for the remainder of your life and wish to ensure that the
basis upon which your income payments will be calculated will achieve at
least a minimum amount despite fluctuations in market performance.
IV. The LIFETIME FIVE INCOME BENEFIT guarantees your ability to withdraw
amounts equal to a percentage of a "Protected Withdrawal Value" regardless
of decreases in your Account Value due to market losses. The Lifetime Five
Benefit may be appropriate if you intend to make periodic withdrawals from
your Annuity and wish to ensure that market performance will not affect
your ability to receive guaranteed minimum withdrawals. Taking income as
withdrawals, rather than
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OPTIMUM ANNUITY PROSPECTUS
Living Benefit Programs continued
annuity payments, may be less tax efficient for non-qualified uses of the
Annuity, but provides greater control over the timing and amount of
withdrawals during the accumulation period, as well as continuing the
Annuity's other benefits, such as the death benefit.
GUARANTEED RETURN OPTION Plus(SM) (GRO Plus(SM))
THE GUARANTEED RETURN OPTION PLUS DESCRIBED BELOW IS ONLY BEING OFFERED IN THOSE
JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL, AND WILL BE OFFERED
SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY APPROVAL IN THOSE
JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS
ONCE APPROVED. THE PROGRAM CAN BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF
THEIR ANNUITY, AND CAN BE ELECTED BY EXISTING ANNUITY OWNERS ON EITHER THE
ANNIVERSARY OF THE ISSUE DATE OF THEIR ANNUITY OR ON A DATE OTHER THAN THAT
ANNIVERSARY, AS DESCRIBED BELOW UNDER "ELECTION OF THE PROGRAM". THE GUARANTEED
RETURN OPTION PLUS IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION
PROGRAM (AND IT IS CURRENTLY ACTIVE), THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT
RIDER, THE GUARANTEED MINIMUM INCOME BENEFIT RIDER, THE LIFETIME FIVE INCOME
BENEFIT RIDER, THE HIGHEST DAILY VALUE DEATH BENEFIT, OR THE DOLLAR COST
AVERAGING PROGRAM IF IT INVOLVES TRANSFERS OUT OF THE FIXED ALLOCATIONS.
We offer a program that, after a seven-year period following commencement
of the program (we refer to the end of that period and any applicable subsequent
period as the "maturity date") and on each anniversary of the maturity date
thereafter while the program remains in effect, guarantees your Account Value
will not be less than your Account Value on the effective date of your program
(called the "Protected Principal Value"). The program also offers you the
opportunity to elect a second, enhanced guaranteed amount at a later date if
your Account Value has increased, while preserving the guaranteed amount
established on the effective date of your program. The enhanced guaranteed
amount (called the "Enhanced Protected Principal Value") guarantees that, after
a separate period following election of the enhanced guarantee and on each
anniversary thereafter while this enhanced guarantee amount remains in effect,
your Account Value will not be less than your Account Value on the effective
date of your election of the enhanced guarantee.
The program monitors your Account Value daily and, if necessary,
systematically transfers amounts between variable investment options you choose
and Fixed Allocations used to support the Protected Principal Value(s). The
program may be appropriate if you wish to protect a principal amount against
market downturns as of a specific date in the future, but also wish to invest in
the variable investment options to participate in market performance. There is
an additional charge if you elect the Guaranteed Return Option Plus program.
The guarantees provided by the program exist only on the applicable
maturity date(s) and on each anniversary of the maturity date(s) thereafter.
However, due to the ongoing monitoring of your Account Value and the transfer of
Account Value between the variable investment options and the Fixed Allocations
to support our future guarantees, the program may provide some protection from
significant market losses if you choose to surrender the Annuity or begin
receiving annuity payments prior to a maturity date. For this same reason, the
program may limit your ability to benefit from market increases while it is in
effect.
KEY FEATURE -- PROTECTED PRINCIPAL VALUE/ENHANCED PROTECTED PRINCIPAL VALUE
The Guaranteed Return Option Plus offers a base guarantee as well as the option
of electing an enhanced guarantee at a later date.
- - BASE GUARANTEE: Under the base guarantee, American Skandia guarantees that
on the maturity date and on each anniversary of the maturity date
thereafter that the program remains in effect, your Account Value will be
no less than the Protected Principal Value. On the maturity date and on
each anniversary after the maturity date that the program remains in
effect, if your Account Value is below the Protected Principal Value,
American Skandia will apply additional amounts to your Annuity from its
general account to increase your Account Value to be equal to the
Protected Principal Value.
- - ENHANCED GUARANTEE: On any anniversary following commencement of the
program, you can establish an enhanced guaranteed amount based on your
current Account Value. Under the enhanced guarantee, American Skandia
guarantees that at the end of a specified period following the election of
the enhanced guarantee (also referred to as its "maturity
36
OPTIMUM ANNUITY PROSPECTUS
date"), and on each anniversary of the maturity date thereafter that the
enhanced guaranteed amount remains in effect, your Account Value will be
no less than the Enhanced Protected Principal Value. YOU CAN ELECT AN
ENHANCED GUARANTEE MORE THAN ONCE; HOWEVER, A SUBSEQUENT ELECTION
SUPERSEDES THE PRIOR ELECTION OF AN ENHANCED GUARANTEE. ELECTION OF AN
ENHANCED GUARANTEE DOES NOT IMPACT THE BASE GUARANTEE. IN ADDITION, YOU
MAY ELECT AN "AUTO STEP-UP" FEATURE THAT WILL AUTOMATICALLY CREATE AN
ENHANCED GUARANTEE (OR INCREASE YOUR ENHANCED GUARANTEE, IF PREVIOUSLY
ELECTED) ON EACH ANNIVERSARY OF THE PROGRAM (AND CREATE A NEW MATURITY
PERIOD FOR THE NEW ENHANCED GUARANTEE) IF THE ACCOUNT VALUE AS OF THAT
ANNIVERSARY EXCEEDS THE PROTECTED PRINCIPAL VALUE OR ENHANCED PROTECTED
PRINCIPAL VALUE BY 7% OR MORE. YOU MAY ALSO ELECT TO TERMINATE AN ENHANCED
GUARANTEE. IF YOU ELECT TO TERMINATE THE ENHANCED GUARANTEE, THE BASE
GUARANTEE WILL REMAIN IN EFFECT. If you have elected the enhanced
guarantee, on the guarantee's maturity date and on each anniversary of the
maturity date thereafter that the enhanced guarantee amount remains in
effect, if your Account Value is below the Enhanced Protected Principal
Value, American Skandia will apply additional amounts to your Annuity from
its general account to increase your Account Value to be equal to the
Enhanced Protected Principal Value.
Any amounts added to your Annuity to support our guarantees under the
program will be applied to any Fixed Allocations first and then to the
sub-accounts pro rata, based on your most recent allocation instructions in
accordance with the allocation mechanism we use under the program. We will
notify you of any amounts added to your Annuity under the program. If our
assumptions are correct and the operations relating to the administration of the
program work properly, we do not expect that we will need to add additional
amounts to the Annuity. The Protected Principal Value is referred to as the
"Base Guarantee" and the Enhanced Protected Principal Value is referred to as
the "Step-up Guarantee" in the rider we issue for this benefit.
WITHDRAWALS UNDER YOUR ANNUITY
Withdrawals from your Annuity, while the program is in effect, will reduce the
base guarantee under the program as well as any enhanced guarantee. Cumulative
annual withdrawals up to 5% of the Protected Principal Value as of the effective
date of the program (adjusted for any subsequent Purchase Payments) will reduce
the applicable guaranteed amount by the actual amount of the withdrawal
(referred to as the "dollar-for-dollar limit"). If the amount withdrawn is
greater than the dollar-for-dollar limit, the portion of the withdrawal equal to
the dollar-for-dollar limit will be treated as described above, and the portion
of the withdrawal in excess of the dollar-for-dollar limit will reduce the base
guarantee and the enhanced guarantee proportionally, according to the formula as
described in the rider for this benefit (see the examples of this calculation
below). Withdrawals other than Systematic Withdrawals will be taken pro-rata
from the variable investment options and any Fixed Allocations. Systematic
Withdrawals will be taken pro-rata from the variable investment options and any
Fixed Allocations up to growth attributable to the Fixed Allocations and
thereafter pro-rata solely from the variable investment options. Withdrawals
will be subject to all other provisions of the Annuity, including any Contingent
Deferred Sales Charge and Market Value Adjustment that would apply.
Charges for other optional benefits under the Annuity that are deducted as
an annual charge in arrears will not reduce the applicable guaranteed amount
under the Guaranteed Return Option Plus program, however, any partial
withdrawals in payment of charges for the Plus40(TM) Optional Life Insurance
Rider (not currently offered for sale) and any third party investment advisory
service will be treated as withdrawals and will reduce the applicable guaranteed
amount.
The following examples of dollar-for-dollar and proportional reductions
assume that: 1.) the Issue Date and the effective date of the GRO Plus(SM)
program are October 13, 2004; 2.) an initial Purchase Payment of $250,000; 3.) a
base guarantee amount of $250,000; and 4.) a dollar-for-dollar limit of $12,500
(5% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 29, 2004 (in the first Annuity Year).
No prior withdrawals have been taken. As the amount withdrawn is less than the
Dollar-for-dollar Limit:
- - The base guarantee amount is reduced by the amount withdrawn (i.e., by
$10,000, from $250,000 to $240,000).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance
of the first Annuity Year is also reduced by the amount withdrawn (from
$12,500 to $2,500).
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OPTIMUM ANNUITY PROSPECTUS
Living Benefit Programs continued
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on December 18, 2004 (still within the
first Annuity Year). The Account Value immediately before the withdrawal is
$180,000. As the amount withdrawn exceeds the Remaining Limit of $2,500 from
Example 1:
- - the base guarantee amount is first reduced by the Remaining Limit (from
$240,000 to $237,500);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the Remaining Limit ($10,000 - $2,500,
or $7,500).
- B is the Account Value less the Remaining Limit ($180,000 - $2,500, or
$177,500).
The resulting base guarantee amount is: $237,500 x (1 - $7,500 / $177,500),
or $227,464.79.
- - The Remaining Limit is set to zero (0) for the balance of the first Annuity
Year.
EXAMPLE 3. RESET OF THE DOLLAR-FOR-DOLLAR LIMIT
A $10,000 withdrawal is made on December 19, 2005 (second Annuity Year). The
Remaining Limit has been reset to the dollar-for-dollar limit of $12,500. As the
amount withdrawn is less than the dollar-for-dollar limit:
- - The base guarantee amount is reduced by the amount withdrawn (i.e.,
reduced by $10,000, from $227,464.79 to $217,464.79).
- - The Remaining Limit for the balance of the second Annuity Year is also
reduced by the amount withdrawn (from $12,500 to $2,500).
KEY FEATURE -- ALLOCATION OF ACCOUNT VALUE
Account Value is transferred to and maintained in Fixed Allocations to the
extent we, in our sole discretion, deem it is necessary to support our
guarantee(s) under the program. We monitor fluctuations in your Account Value
each Valuation Day, as well as the prevailing interest rates on Fixed
Allocations, the remaining duration(s) until the applicable maturity date(s) and
the amount of Account Value allocated to Fixed Allocation(s) relative to a
"reallocation trigger", which determines whether Account Value must be
transferred to or from Fixed Allocation(s). While you are not notified when your
Account Value reaches a reallocation trigger, you will receive a confirmation
statement indicating the transfer of a portion of your Account Value either to
or from Fixed Allocation(s).
- - IF YOUR ACCOUNT VALUE IS GREATER THAN OR EQUAL TO THE REALLOCATION TRIGGER,
your Account Value in the variable investment options will remain allocated
according to your most recent instructions. If a portion of Account Value
was previously allocated to a Fixed Allocation to support the applicable
guaranteed amount, all or a portion of those amounts may be transferred
from the Fixed Allocation and re-allocated to the variable investment
options pro-rata according to your most recent allocation instructions
(including the model allocations under any asset allocation program you may
have elected). A Market Value Adjustment will apply when we reallocate
Account Value from a Fixed Allocation to the variable investment options,
which may result in a decrease or increase in your Account Value.
- - IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER, a portion of
your Account Value in the variable investment options will be transferred
from your variable investment options pro rata according to your
allocations to a new Fixed Allocation(s) to support the applicable
guaranteed amount. The new Fixed Allocation(s) will have a Guarantee Period
equal to the time remaining until the applicable maturity date(s). The
Account Value allocated to the new Fixed Allocation(s) will be credited
with the fixed interest rate(s) then being credited to a new Fixed
Allocation(s) maturing on the applicable maturity date(s) (rounded to the
next highest yearly duration). The Account Value will remain invested in
each applicable Fixed Allocation until the applicable maturity date unless,
at an earlier date, your Account Value is greater than or equal to the
reallocation trigger and, therefore, amounts can be transferred to the
variable investment options while maintaining the guaranteed protection
under the program (as described above).
38
OPTIMUM ANNUITY PROSPECTUS
IF A SIGNIFICANT AMOUNT OF YOUR ACCOUNT VALUE IS SYSTEMATICALLY TRANSFERRED TO
FIXED ALLOCATIONS TO SUPPORT THE PROTECTED PRINCIPAL VALUE AND/OR THE ENHANCED
PROTECTED PRINCIPAL VALUE DURING PERIODS OF MARKET DECLINES, LOW INTEREST RATES,
AND/OR AS THE PROGRAM NEARS ITS MATURITY DATE, LESS OF YOUR ACCOUNT VALUE MAY BE
AVAILABLE TO PARTICIPATE IN THE INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT
OPTIONS IF THERE IS A SUBSEQUENT MARKET RECOVERY. DURING PERIODS CLOSER TO THE
MATURITY DATE OF THE BASE GUARANTEE OR ANY ENHANCED GUARANTEE, OR ANY
ANNIVERSARY OF SUCH MATURITY DATE(S), A SIGNIFICANT PORTION OF YOUR ACCOUNT
VALUE MAY BE ALLOCATED TO FIXED ALLOCATIONS TO SUPPORT ANY APPLICABLE GUARANTEED
AMOUNT(S). IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER AND NEW
FIXED ALLOCATIONS MUST BE ESTABLISHED DURING PERIODS WHERE THE INTEREST RATE(S)
BEING CREDITED TO SUCH FIXED ALLOCATIONS IS LOW, A LARGER PORTION OF YOUR
ACCOUNT VALUE MAY NEED TO BE TRANSFERRED TO FIXED ALLOCATIONS TO SUPPORT THE
APPLICABLE GUARANTEED AMOUNT(S), CAUSING LESS OF YOUR ACCOUNT VALUE TO BE
AVAILABLE TO PARTICIPATE IN THE INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT
OPTIONS.
Separate Fixed Allocations may be established in support of the Protected
Principal Value and the Enhanced Protected Principal Value (if elected). There
may also be circumstances when a Fixed Allocation will be established only in
support of the Protected Principal Value or the Enhanced Protected Principal
Value. If you elect an enhanced guarantee, it is more likely that a portion of
your Account Value may be allocated to Fixed Allocations and will remain
allocated for a longer period of time to support the Enhanced Protected
Principal Value, even during a period of positive market performance and/or
under circumstances where Fixed Allocations would not be necessary to support
the Protected Principal Value. Further, there may be circumstances where Fixed
Allocations in support of the Protected Principal Value or Enhanced Protected
Principal Value are transferred to the variable investment options differently
than each other because of the different guarantees they support.
American Skandia uses an allocation mechanism based on assumptions of
expected and maximum market volatility, interest rates and time left to the
maturity of the program to determine the reallocation trigger. The allocation
mechanism is used to determine the allocation of Account Value between Fixed
Allocations and the Sub-accounts you choose. American Skandia reserves the right
to change the allocation mechanism and the reallocation trigger at its
discretion, subject to regulatory approval where required. Changes to the
allocation mechanism and/or the reallocation trigger may be applied to existing
programs where allowed by law.
ELECTION OF THE PROGRAM
The Guaranteed Return Option Plus program can be elected at the time that you
purchase your Annuity, or on any Valuation Day thereafter (prior to
annuitization). If you elect the program after the Issue Date of your Annuity,
the program will be effective as of the Valuation Day that we receive the
required documentation in good order at our home office, and the guaranteed
amount will be based on your Account Value as of that date. If you previously
elected the Guaranteed Return Option program and wish to elect the Guaranteed
Return Option Plus program, your prior Guaranteed Return Option program will be
terminated. Termination of the Guaranteed Return Option for the purpose of
electing the Guaranteed Return Option Plus will be treated as any other
termination of the Guaranteed Return Option (see below), including the
termination of any guaranteed amount, and application of any applicable Market
Value Adjustment when amounts are transferred to the variable investment options
as a result of the termination. The Guaranteed Return Option Plus program will
then be added to your Annuity BASED ON THE CURRENT ACCOUNT VALUE.
TERMINATION OF THE PROGRAM
You can elect to terminate the enhanced guarantee but maintain the protection
provided by the base guarantee. You also can terminate the Guaranteed Return
Option Plus program entirely. If you terminate the program entirely, you can
subsequently elect to participate in the program again (based on the Account
Value on that date) by furnishing the documentation we require. In a rising
market, you could, for example, terminate the program on a given Valuation Day
and two weeks later reinstate the program with a higher base guarantee (and a
new maturity date). However, your ability to reinstate the program is limited by
the following: (A) in any Annuity Year, we do not permit more than two program
elections (including any election made effective on the Annuity issue date and
any election made by a surviving spouse) and (B) a program reinstatement cannot
be effected on the same business day on which a program termination was
effected. Upon termination, any Account Value in the Fixed Allocations will be
transferred to the variable investment options pro-rata based on the Account
39
OPTIMUM ANNUITY PROSPECTUS
Living Benefit Programs continued
Values in such variable investment options, or in accordance with any effective
asset allocation program. A Market Value Adjustment will apply.
The program will terminate automatically upon: (a) the death of the Owner
or the Annuitant (in an entity owned contract); (b) as of the date Account Value
is applied to begin annuity payments; or (c) upon full surrender of the Annuity.
If you elect to terminate the program, the Guaranteed Return Option Plus will no
longer provide any guarantees. The surviving spouse may elect the benefit at any
time, subject to the limitations described above, after the death of the Annuity
Owner. The surviving spouse's election will be effective on the Valuation Day
that we receive the required documentation in good order at our home office, and
the Account Value on that Valuation Day will be the Protected Principal Value.
The charge for the Guaranteed Return Option Plus program will no longer be
deducted from your Account Value upon termination of the program.
SPECIAL CONSIDERATIONS UNDER THE GUARANTEED RETURN OPTION PLUS
This program is subject to certain rules and restrictions, including, but not
limited to the following:
- - Upon inception of the program, 100% of your Account Value must be allocated
to the variable investment options. No Fixed Allocations may be in effect
as of the date that you elect to participate in the program. However, the
reallocation trigger may transfer Account Value to Fixed Allocations as of
the effective date of the program under some circumstances.
- - You cannot allocate any portion of Purchase Payments or transfer Account
Value to or from a Fixed Allocation while participating in the program;
however, all or a portion of any Purchase Payments may be allocated by us
to Fixed Allocations to support the amount guaranteed. You cannot
participate in any dollar cost averaging program that transfers Account
Value from a Fixed Allocation to a variable investment option.
- - Transfers from Fixed Allocations made as a result of the allocation
mechanism under the program will be subject to the Market Value Adjustment
formula under the Annuity; however, the 0.10% liquidity factor in the
formula will not apply. A Market Value Adjustment may be either positive or
negative. Transfer amounts will be taken from the most recently established
Fixed Allocation.
- - Transfers from the Sub-accounts to Fixed Allocations or from Fixed
Allocations to the Sub-accounts under the program will not count toward the
maximum number of free transfers allowable under the Annuity.
- - Any amounts applied to your Account Value by American Skandia on the
maturity date or any anniversary of the maturity date will not be treated
as "investment in the contract" for income tax purposes.
- - Low interest rates may require allocation to Fixed Allocations even when
the current Account Value exceeds the guarantee.
- - As the time remaining until the applicable maturity date gradually
decreases the program will become increasingly sensitive to moves to Fixed
Allocations.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to an
eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible investment
options will not be counted in determining the number of free transfers
during an Annuity Year. We may also require that you allocate your Account
Value according to an asset allocation model.
CHARGES UNDER THE PROGRAM
We deduct a charge equal to 0.25% of the average daily net assets of the
Sub-accounts for participation in the Guaranteed Return Option Plus program. The
annual charge is deducted daily. Account Value allocated to Fixed Allocations
under the program is not subject to the charge. The charge is deducted to
compensate American Skandia for: (a) the risk that your Account Value on the
maturity date is less than the amount guaranteed; and (b) administration of the
program.
40
OPTIMUM ANNUITY PROSPECTUS
GUARANTEED RETURN OPTION (GRO)
THE GUARANTEED RETURN OPTION DESCRIBED BELOW IS OFFERED ONLY IN THOSE
JURISDICTIONS WHERE WE HAVE NOT YET RECEIVED REGULATORY APPROVAL FOR THE
GUARANTEED RETURN OPTION PLUS AS OF THE DATE THE ELECTION OF THE OPTION IS MADE.
CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS. THE PROGRAM CAN
BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY, AND CAN BE
ELECTED BY EXISTING ANNUITY OWNERS ON EITHER THE ANNIVERSARY OF THE ISSUE DATE
OF THEIR ANNUITY OR ON A DATE OTHER THAN THAT ANNIVERSARY, AS DESCRIBED BELOW
UNDER "ELECTION OF THE PROGRAM". THE GUARANTEED RETURN OPTION IS NOT AVAILABLE
IF YOU ELECT THE GRO PLUS RIDER, THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT
RIDER, THE GUARANTEED MINIMUM INCOME BENEFIT RIDER, THE LIFETIME FIVE INCOME
BENEFIT RIDER, THE HIGHEST DAILY VALUE DEATH BENEFIT, OR THE DOLLAR COST
AVERAGING PROGRAM IF IT INVOLVES TRANSFERS OUT OF THE FIXED ALLOCATIONS.
We offer a program that, after a seven-year period following commencement
of the program (we refer to the end of that period as the "maturity date")
guarantees your Account Value will not be less than your Account Value on the
effective date of your program (called the "Protected Principal Value").
The program monitors your Account Value daily and, if necessary,
systematically transfers amounts between variable investment options you choose
and the Fixed Allocation used to support the Protected Principal Value. The
program may be appropriate if you wish to protect a principal amount against
market downturns as of a specific date in the future, but also wish to invest in
the variable investment options to participate in market performance. There is
an additional charge if you elect the Guaranteed Return Option program.
The guarantee provided by the program exists only on the applicable
maturity date. However, due to the ongoing monitoring of your Account Value and
the transfer of Account Value between the variable investment options and the
Fixed Allocation to support our future guarantee, the program may provide some
protection from significant market losses if you choose to surrender the Annuity
or begin receiving annuity payments prior to a maturity date. For this same
reason, the program may limit your ability to benefit from market increases
while it is in effect.
KEY FEATURE -- PROTECTED PRINCIPAL VALUE
- - Under the GRO option, American Skandia guarantees that on the maturity
date, your Account Value will be no less than the Protected Principal
Value. On the maturity date if your Account Value is below the Protected
Principal Value, American Skandia will apply additional amounts to your
Annuity from its general account to increase your Account Value to be equal
to the Protected Principal Value.
Any amounts added to your Annuity to support our guarantee under the
program will be applied to the Fixed Allocation first and then to the
Sub-accounts pro rata, based on your most recent allocation instructions in
accordance with the allocation mechanism we use under the program. We will
notify you of any amounts added to your Annuity under the program. If our
assumptions are correct and the operations relating to the administration of the
program work properly, we do not expect that we will need to add additional
amounts to the Annuity. The Protected Principal Value is generally referred to
as the "Guaranteed Amount" in the rider we issue for this benefit.
KEY FEATURE -- ALLOCATION OF ACCOUNT VALUE
Account Value is transferred to and maintained in a Fixed Allocation to the
extent we, in our sole discretion, deem it is necessary to support our guarantee
under the program. We monitor fluctuations in your Account Value each Valuation
Day, as well as the prevailing interest rate on the Fixed Allocation, the
remaining duration until the applicable maturity date and the amount of Account
Value allocated to the Fixed Allocation relative to a "reallocation trigger",
which determines whether Account Value must be transferred to or from the Fixed
Allocation. While you are not notified when your Account Value reaches a
reallocation trigger, you will receive a confirmation statement indicating the
transfer of a portion of your Account Value either to or from the Fixed
Allocation.
- - IF YOUR ACCOUNT VALUE IS GREATER THAN OR EQUAL TO THE REALLOCATION TRIGGER,
your Account Value in the variable investment options will remain allocated
according to your most recent instructions. If a portion of Account Value
was previously allocated to the Fixed Allocation to support the guaranteed
amount, all or a portion of those amounts may be transferred from the Fixed
Allocation and re-allocated to the variable investment options pro-rata
according to your most recent allocation instructions (including the model
allocations under any asset allocation program you may
41
OPTIMUM ANNUITY PROSPECTUS
Living Benefit Programs continued
have elected). A Market Value Adjustment will apply when we reallocate
Account Value from the Fixed Allocation to the variable investment options,
which may result in a decrease or increase in your Account Value.
- - IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER, a portion of
your Account Value in the variable investment options will be transferred
from your variable investment options pro rata according to your
allocations to a new Fixed Allocation to support the guaranteed amount. The
new Fixed Allocation will have a Guarantee Period equal to the time
remaining until the applicable maturity date. The Account Value allocated
to the new Fixed Allocation will be credited with the fixed interest rate
then being credited to a new Fixed Allocation maturing on the applicable
maturity date (rounded to the next highest yearly duration). The Account
Value will remain invested in the Fixed Allocation until the maturity date
unless, at an earlier date, your Account Value is greater than or equal to
the reallocation trigger and, therefore, amounts can be transferred to the
variable investment options while maintaining the guaranteed protection
under the program (as described above).
IF A SIGNIFICANT AMOUNT OF YOUR ACCOUNT VALUE IS SYSTEMATICALLY TRANSFERRED TO
THE FIXED ALLOCATION TO SUPPORT THE PROTECTED PRINCIPAL VALUE DURING PERIODS OF
MARKET DECLINES, LOW INTEREST RATES, AND/OR AS THE PROGRAM NEARS ITS MATURITY
DATE, LESS OF YOUR ACCOUNT VALUE MAY BE AVAILABLE TO PARTICIPATE IN THE
INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS IF THERE IS A
SUBSEQUENT MARKET RECOVERY. DURING PERIODS CLOSER TO THE MATURITY DATE OF THE
GUARANTEE A SIGNIFICANT PORTION OF YOUR ACCOUNT VALUE MAY BE ALLOCATED TO THE
FIXED ALLOCATION TO SUPPORT ANY APPLICABLE GUARANTEED AMOUNT. IF YOUR ACCOUNT
VALUE IS LESS THAN THE REALLOCATION TRIGGER AND A NEW FIXED ALLOCATION MUST BE
ESTABLISHED DURING PERIODS WHERE THE INTEREST RATE BEING CREDITED TO SUCH FIXED
ALLOCATION IS LOW, A LARGER PORTION OF YOUR ACCOUNT VALUE MAY NEED TO BE
TRANSFERRED TO THE FIXED ALLOCATION TO SUPPORT THE GUARANTEED AMOUNT, CAUSING
LESS OF YOUR ACCOUNT VALUE TO BE AVAILABLE TO PARTICIPATE IN THE INVESTMENT
EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS.
American Skandia uses an allocation mechanism based on assumptions of
expected and maximum market volatility, interest rates and time left to the
maturity of the program to determine the reallocation trigger. The allocation
mechanism is used to determine the allocation of Account Value between the Fixed
Allocation and the Sub-accounts you choose. American Skandia reserves the right
to change the allocation mechanism and the reallocation trigger at its
discretion, subject to regulatory approval where required. Changes to the
allocation mechanism and/or the reallocation trigger may be applied to existing
programs where allowed by law.
ELECTION OF THE PROGRAM
The Guaranteed Return Option can be elected at the time that you purchase your
Annuity, or on any Valuation Day thereafter (prior to annuitization). If you
elect the program after the Issue Date of your Annuity, the program will be
effective as of the business day that we receive the required documentation in
good order at our home office, and the guaranteed amount will be based on your
Account Value as of that date.
TERMINATION OF THE PROGRAM
The Annuity Owner also can terminate the Guaranteed Return Option program. Upon
termination, any Account Value in the Fixed Allocation will be transferred to
the variable investment options pro rata based on the Account Values in such
variable investment options, or in accordance with any effective asset
allocation program. A Market Value Adjustment will apply.
The program will terminate automatically upon: (a) the death of the Owner
or the Annuitant (in an entity owned contract); (b) as of the date Account Value
is applied to begin annuity payments; or (c) upon full surrender of the Annuity.
If you elect to terminate the program, the Guaranteed Return Option will no
longer provide any guarantees. If the surviving spouse assumes the Annuity,
he/she may re-elect the benefit on any anniversary of the Issue Date of the
Annuity or, if the deceased Owner had not previously elected the benefit, may
elect the benefit at any time. The surviving spouse's election will be effective
on the Valuation Day that we receive the required documentation in good order at
our home office, and the Account Value on that Valuation Day will be the
Protected Principal Value.
The charge for the Guaranteed Return Option program will no longer be
deducted from your Account Value upon termination of the program.
42
OPTIMUM ANNUITY PROSPECTUS
SPECIAL CONSIDERATIONS UNDER THE GUARANTEED RETURN OPTION
This program is subject to certain rules and restrictions, including, but not
limited to the following:
- - Upon inception of the program, 100% of your Account Value must be allocated
to the variable investment options. The Fixed Allocation may not be in
effect as of the date that you elect to participate in the program.
However, the reallocation trigger may transfer Account Value to the Fixed
Allocation as of the effective date of the program under some
circumstances.
- - Annuity Owners cannot allocate any portion of Purchase Payments or transfer
Account Value to or from the Fixed Allocation while participating in the
program; however, all or a portion of any Purchase Payments may be
allocated by us to the Fixed Allocation to support the amount guaranteed.
You cannot participate in any dollar cost averaging program that transfers
Account Value from a Fixed Allocation to a variable investment option.
- - Transfers from the Fixed Allocation made as a result of the allocation
mechanism under the program will be subject to the Market Value Adjustment
formula under the Annuity; however, the 0.10% liquidity factor in the
formula will not apply. A Market Value Adjustment may be either positive or
negative. Transfer amounts will be taken from the most recently established
Fixed Allocation.
- - Transfers from the Sub-accounts to the Fixed Allocation or from the Fixed
Allocation to the Sub-accounts under the program will not count toward the
maximum number of free transfers allowable under the Annuity.
- - Any amounts applied to your Account Value by American Skandia on the
maturity date or any anniversary of the maturity date will not be treated
as "investment in the contract" for income tax purposes.
- - Low interest rates may require allocation to the Fixed Allocation even when
the current Account Value exceeds the guarantee.
- - As the time remaining until the applicable maturity date gradually
decreases the program will become increasingly sensitive to moves to the
Fixed Allocation.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to an
eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible investment
options will not be counted in determining the number of free transfers
during an Annuity Year. We may also require that you allocate your Account
Value according to an asset allocation model.
CHARGES UNDER THE PROGRAM
We deduct a charge equal to 0.25% of the average daily net assets of the
Sub-accounts for participation in the Guaranteed Return Option program. The
annual charge is deducted daily. In those states where the daily deduction of
the charge has not yet been approved, the annual charge is deducted annually, in
arrears. Account Value allocated to the Fixed Allocation under the program is
not subject to the charge. The charge is deducted to compensate American Skandia
for: (a) the risk that your Account Value on the maturity date is less than the
amount guaranteed; and (b) administration of the program.
43
OPTIMUM ANNUITY PROSPECTUS
Living Benefit Programs continued
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL AND
WILL BE OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY
APPROVAL IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. CURRENTLY, THE PROGRAM CAN ONLY BE ELECTED BY NEW
PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY. WE MAY OFFER THE PROGRAM TO
EXISTING ANNUITY OWNERS IN THE FUTURE, SUBJECT TO OUR ELIGIBILITY RULES AND
RESTRICTIONS. THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT PROGRAM IS NOT AVAILABLE
IF YOU ELECT THE GUARANTEED RETURN OPTION, GUARANTEED RETURN OPTION PLUS, THE
GUARANTEED MINIMUM INCOME BENEFIT RIDER OR THE LIFETIME FIVE INCOME BENEFIT
RIDER.
We offer a program that guarantees your ability to withdraw amounts equal to an
initial principal value (called the "Protected Value"), regardless of the impact
of market performance on your Account Value, subject to our program rules
regarding the timing and amount of withdrawals. The program may be appropriate
if you intend to make periodic withdrawals from your Annuity and wish to ensure
that market performance will not affect your ability to protect your principal.
You are not required to make withdrawals as part of the program -- the guarantee
is not lost if you withdraw less than the maximum allowable amount of principal
each year under the rules of the program. There is an additional charge if you
elect the GMWB program; however, the charge may be waived under certain
circumstances described below.
KEY FEATURE -- PROTECTED VALUE
The Protected Value is the total amount that we guarantee will be available to
you through withdrawals from your Annuity and/or benefit payments, regardless of
the impact of market performance on your Account Value. The Protected Value is
reduced with each withdrawal you make until the Protected Value is reduced to
zero. When the Protected Value is reduced to zero due to your withdrawals, the
GMWB program terminates. Additionally, the Protected Value is used to determine
the maximum annual amount that you can withdraw from your Annuity, called the
Protected Annual Withdrawal Amount, without triggering an adjustment in the
Protected Value on a proportional basis. The Protected Value is referred to as
the "Benefit Base" in the rider we issue for this benefit.
The Protected Value is determined as of the date you make your first
withdrawal under the Annuity following your election of the GMWB program. The
initial Protected Value is equal to the greater of (A) the Account Value on the
date you elect the GMWB program, plus any additional Purchase Payments before
the date of your first withdrawal; or (B) the Account Value as of the date of
the first withdrawal from your Annuity. The Protected Value may be enhanced by
increases in your Account Value due to market performance during the period
between your election of the GMWB program and the date of your first withdrawal.
- - If you elect the GMWB program at the time you purchase your Annuity, the
Account Value will be your initial Purchase Payment.
- - IF WE OFFER THE GMWB PROGRAM TO EXISTING ANNUITY OWNERS, the Account Value
on the anniversary of the Issue Date of your Annuity following your
election of the GMWB program will be used to determine the initial
Protected Value.
- - If you make additional Purchase Payments after your first withdrawal, the
Protected Value will be increased by the amount of the additional Purchase
Payment.
You may elect to step-up your Protected Value if, due to positive market
performance, your Account Value is greater than the Protected Value. You are
eligible to step-up the Protected Value on or after the 5th contract anniversary
following the first withdrawal under the GMWB program. The Protected Value can
be stepped up again on or after the 5th contract anniversary following the
preceding step-up. If you elect to step-up the Protected Value, you must do so
during the 30-day period prior to your eligibility date. If you elect to step-up
the Protected Value under the program, and on the date you elect to step-up, the
charges under the GMWB program have changed for new purchasers, your program may
be subject to the new charge going forward.
Upon election of the step-up, we reset the Protected Value to be equal to
the then current Account Value. For example, assume your initial Protected Value
was $100,000 and you have made cumulative withdrawals of $40,000, reducing the
Protected Value to $60,000. On the date you are eligible to step-up the
Protected Value, your Account Value is equal to $75,000. You could elect to
step-up the Protected Value to $75,000 on the date you are eligible. Upon
election of the
44
OPTIMUM ANNUITY PROSPECTUS
step-up, we also reset the Protected Annual Withdrawal Amount (discussed
immediately below) to be equal to the greater of (A) the Protected Annual
Withdrawal Amount immediately prior to the reset; and (B) 7% of the Protected
Value immediately after the reset.
KEY FEATURE -- PROTECTED ANNUAL WITHDRAWAL AMOUNT
The initial Protected Annual Withdrawal Amount is equal to 7% of the Protected
Value. Under the GMWB program, if your cumulative withdrawals each Annuity Year
are less than or equal to the Protected Annual Withdrawal Amount, your Protected
Value will be reduced on a "dollar-for-dollar" basis (the Protected Value is
reduced by the actual amount of the withdrawal, including any CDSC or MVA that
may apply). Cumulative withdrawals in any Annuity Year that exceed the Protected
Annual Withdrawal Amount trigger a proportional adjustment to both the Protected
Value and the Protected Annual Withdrawal Amount, as described in the rider for
this benefit (see the examples of this calculation below). The Protected Annual
Withdrawal Amount is referred to as the "Maximum Annual Benefit" in the rider we
issue for this benefit.
THE GMWB PROGRAM DOES NOT AFFECT YOUR ABILITY TO MAKE WITHDRAWALS UNDER
YOUR ANNUITY OR LIMIT YOUR ABILITY TO REQUEST WITHDRAWALS THAT EXCEED THE
PROTECTED ANNUAL WITHDRAWAL AMOUNT. YOU ARE NOT REQUIRED TO WITHDRAW ALL OR ANY
PORTION OF THE PROTECTED ANNUAL WITHDRAWAL AMOUNT EACH ANNUITY YEAR.
- - If, cumulatively, you withdraw an amount less than the Protected Annual
Withdrawal Amount in any Annuity Year, you cannot carry-over the unused
portion of the Protected Annual Withdrawal Amount to subsequent Annuity
Years. However, because the Protected Value is only reduced by the actual
amount of withdrawals you make under these circumstances, any unused
Protected Annual Withdrawal Amount may extend the period of time until the
remaining Protected Value is reduced to zero.
- - Additional Purchase Payments will increase the Protected Annual Withdrawal
Amount by 7% of the applicable Purchase Payment.
- - If the Protected Annual Withdrawal Amount after an adjustment exceeds the
Protected Value, the Protected Annual Withdrawal Amount will be set equal
to the Protected Value.
The following examples of dollar-for dollar and proportional reductions and
the reset of the Maximum Annual Benefit assume that: 1.) the Issue Date and the
effective date of the GMWB program are October 13, 2004; 2.) an initial Purchase
Payment of $250,000; 3.) a Protected Value of $250,000; and 4.) a Protected
Annual Withdrawal Amount of $17,500 (7% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 13, 2004 (in the first Annuity Year).
No prior withdrawals have been taken. As the amount withdrawn is less than the
Protected Annual Withdrawal Amount:
- - The Protected Value is reduced by the amount withdrawn (i.e., by $10,000,
from $250,000 to $240,000).
- - The remaining Protected Annual Withdrawal Amount for the balance of the
first Annuity Year is also reduced by the amount withdrawn (from $17,500 to
$7,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on December 13, 2004 (still within the
first Annuity Year). The Account Value immediately before the withdrawal is
$220,000. As the amount withdrawn exceeds the remaining Protected Annual
Withdrawal Amount of $7,500 from Example 1:
- - the Protected Value is first reduced by the remaining Protected Annual
Withdrawal Amount (from $240,000 to $232,500);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the remaining Protected Annual
Withdrawal Amount ($10,000 - $7,500, or $2,500).
- B is the Account Value less the remaining Protected Annual Withdrawal
Amount ($220,000 - $7,500, or $212,500).
The resulting Protected Value is: $232,500 x (1 - $2,500 / $212,500), or
$229,764.71.
- - the Protected Annual Withdrawal Amount is also reduced by the ratio of A to
B: The resulting Protected Annual Withdrawal Amount is:
$17,500 x (1 - $2,500 / $212,500), or $17,294.12.
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OPTIMUM ANNUITY PROSPECTUS
Living Benefit Programs continued
- - The remaining Protected Annual Withdrawal Amount is set to zero (0) for the
balance of the first Annuity Year.
EXAMPLE 3. RESET OF THE MAXIMUM ANNUAL BENEFIT
A $10,000 withdrawal is made on October 13, 2005 (second Annuity Year). The
remaining Protected Annual Withdrawal Amount has been reset to the Protected
Annual Withdrawal Amount of $17,294.12 from Example 2. As the amount withdrawn
is less than the remaining Protected Annual Withdrawal Amount:
- - the Protected Value is reduced by the amount withdrawn (i.e., reduced by
$10,000, from $229,764.71 to $219,764.71).
- - The remaining Protected Annual Withdrawal Amount for the balance of the
second Annuity Year is also reduced by the amount withdrawn (from
$17,294.12 to $7,294.12).
BENEFITS UNDER THE GMWB PROGRAM
- - In addition to any withdrawals you make under the GMWB program, market
performance may reduce your Account Value. If your Account Value is equal
to zero, and you have not received all of your Protected Value in the form
of withdrawals from your Annuity, we will continue to make payments equal
to the remaining Protected Value in the form of fixed, periodic payments
until the remainder of the Protected Value is paid, at which time the rider
terminates. The fixed, periodic payments will each be equal to the
Protected Annual Withdrawal Amount, except for the last payment which may
be equal to the remaining Protected Value. We will determine the duration
for which periodic payments will continue by dividing the Protected Value
by the Protected Annual Withdrawal Amount. You will not have the right to
make additional Purchase Payments or receive the remaining Protected Value
in a lump sum. You can elect the frequency of payments, subject to our
rules then in effect.
- - If the death benefit under the Annuity becomes payable before you have
received all of your Protected Value in the form of withdrawals from your
Annuity, your Beneficiary has the option to elect to receive the remaining
Protected Value as an alternate death benefit payout in lieu of the amount
payable under any other death benefit provided under the Annuity. The
remaining Protected Value will be payable in the form of fixed, periodic
payments. Your beneficiary can elect the frequency of payments, subject to
our rules then in effect. We will determine the duration for which periodic
payments will continue by dividing the Protected Value by the Protected
Annual Withdrawal Amount. THE PROTECTED VALUE IS NOT EQUAL TO THE ACCOUNT
VALUE FOR PURPOSES OF THE ANNUITY'S OTHER DEATH BENEFIT OPTIONS. THE GMWB
PROGRAM DOES NOT INCREASE OR DECREASE THE AMOUNT OTHERWISE PAYABLE UNDER
THE ANNUITY'S OTHER DEATH BENEFIT OPTIONS. GENERALLY, THE GMWB PROGRAM
WOULD BE OF VALUE TO YOUR BENEFICIARY ONLY WHEN THE PROTECTED VALUE AT
DEATH EXCEEDS ANY OTHER AMOUNT AVAILABLE AS A DEATH BENEFIT.
- - If you elect to begin receiving annuity payments before you have received
all of your Protected Value in the form of withdrawals from your Annuity,
an additional annuity payment option will be available that makes fixed
annuity payments for a certain period, determined by dividing the Protected
Value by the Protected Annual Withdrawal Amount. If you elect to receive
annuity payments calculated in this manner, the assumed interest rate used
to calculate such payments will be 0%, which is less than the assumed
interest rate on other annuity payment options we offer. This 0% assumed
interest rate results in lower annuity payments than what would have been
paid if the assumed interest rate was higher than 0%. YOU CAN ALSO ELECT TO
TERMINATE THE GMWB PROGRAM AND BEGIN RECEIVING ANNUITY PAYMENTS BASED ON
YOUR THEN CURRENT ACCOUNT VALUE (NOT THE REMAINING PROTECTED VALUE) UNDER
ANY OF THE AVAILABLE ANNUITY PAYMENT OPTIONS.
OTHER IMPORTANT CONSIDERATIONS
- - Withdrawals under the GMWB program are subject to all of the terms and
conditions of the Annuity, including any CDSC and MVA that may apply.
- - Withdrawals made while the GMWB program is in effect will be treated, for
tax purposes, in the same way as any other withdrawals under the Annuity.
- - The GMWB program does not directly affect the Annuity's Account Value or
Surrender Value, but any withdrawal will decrease the Account Value by the
amount of the withdrawal. If you surrender your Annuity, you will receive
the current Surrender Value, not the Protected Value.
- - You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the GMWB program. The GMWB program
provides a guarantee that if your Account Value declines due to market
perfor-
46
OPTIMUM ANNUITY PROSPECTUS
mance, you will be able to receive your Protected Value in the form of
periodic benefit payments.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to an
eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible investment
options will not be counted in determining the number of free transfers
during an Annuity Year. We may also require that you allocate your Account
Value according to an asset allocation model.
ELECTION OF THE PROGRAM
Currently, the GMWB program can only be elected at the time that you purchase
your Annuity. In the future, we may offer existing Annuity Owners the option to
elect the GMWB program after the Issue Date of their Annuity, subject to our
eligibility rules and restrictions. If you elect the GMWB program after the
Issue Date of your Annuity, the program will be effective as of the next
anniversary date. Your Account Value as of such anniversary date will be used to
calculate the initial Protected Value and the initial Protected Annual
Withdrawal Amount.
We reserve the right to restrict the maximum amount of Protected Value that
may be covered under the GMWB program under this Annuity or any other annuities
that you own that are issued by American Skandia or its affiliated companies.
TERMINATION OF THE PROGRAM
The program terminates automatically when your Protected Value reaches zero
based on your withdrawals. You may terminate the program at any time by
notifying us. If you terminate the program, any guarantee provided by the
benefit will terminate as of the date the termination is effective. The program
terminates upon your surrender of the Annuity, upon due proof of death (unless
your surviving spouse elects to continue the Annuity and the GMWB program or
your Beneficiary elects to receive the amounts payable under the GMWB program in
lieu of the death benefit) or upon your election to begin receiving annuity
payments.
The charge for the GMWB program will no longer be deducted from your
Account Value upon termination of the program.
CHARGES UNDER THE PROGRAM
Currently, we deduct a charge equal to 0.35% of the average daily net assets of
the Sub-accounts per year to purchase the GMWB program. The annual charge is
deducted daily. Account Value allocated to Fixed Allocations under the program
is not subject to the charge.
- - If, during the seven years following the effective date of the program, you
do not make any withdrawals, and do not make any additional Purchase
Payments after a five-year period following the effective date of the
program, the program will remain in effect; however, we will waive the
annual charge going forward. If you make an additional Purchase Payment
following the waiver of the annual charge, we will begin charging for the
program. After year seven (7) following the effective date of the program,
withdrawals will not cause a charge to be re-imposed.
- - If you elect to step-up the Protected Value under the program, and on the
date you elect to step-up, the charges under the program have changed for
new purchasers, your program may be subject to the new charge level for the
benefit.
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS
If you purchase an Annuity as an investment vehicle for "qualified" investments,
including an IRA, SEP-IRA, Roth IRA or Tax Sheltered Annuity (or 403(b)), the
minimum distribution rules under the Code require that you begin receiving
periodic amounts from your Annuity beginning after age 70 1/2. The amount
required under the Code may exceed the Protected Annual Withdrawal Amount, which
will cause us to recalculate the Protected Value and the Protected Annual
Withdrawal Amount, resulting in a lower amount payable in future Annuity Years.
In addition, the amount and duration of payments under the annuity payment and
death benefit provisions may be adjusted so that the payments do not trigger any
penalty or excise taxes due to tax considerations such as minimum distribution
requirements.
47
OPTIMUM ANNUITY PROSPECTUS
Living Benefit Programs continued
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
THE GUARANTEED MINIMUM INCOME BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL, AND
WILL BE OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY
APPROVAL IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. CURRENTLY, THE PROGRAM CAN ONLY BE ELECTED BY NEW
PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY. WE MAY OFFER THE PROGRAM TO
EXISTING ANNUITY OWNERS IN THE FUTURE, SUBJECT TO OUR ELIGIBILITY RULES AND
RESTRICTIONS. THE GUARANTEED MINIMUM INCOME BENEFIT PROGRAM IS NOT AVAILABLE IF
YOU ELECT THE GUARANTEED RETURN OPTION PROGRAM, GUARANTEED RETURN OPTION PLUS
PROGRAM, THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT RIDER OR THE LIFETIME FIVE
INCOME BENEFIT RIDER.
We offer a program that, after a seven-year waiting period, guarantees your
ability to begin receiving income from your Annuity in the form of annuity
payments based on a guaranteed minimum value (called the "Protected Income
Value") that increases after the waiting period begins, regardless of the impact
of market performance on your Account Value. The program may be appropriate for
you if you anticipate using your Annuity as a future source of periodic fixed
income payments for the remainder of your life and wish to ensure that the basis
upon which your income payments will be calculated will achieve at least a
minimum amount despite fluctuations in market performance. There is an
additional charge if you elect the GMIB program.
KEY FEATURE -- PROTECTED INCOME VALUE
The Protected Income Value is the minimum amount that we guarantee will be
available (net of any applicable tax charge), after a waiting period of at least
seven years, as a basis to begin receiving fixed annuity payments. The Protected
Income Value is initially established on the effective date of the GMIB program
and is equal to your Account Value on such date. Currently, since the GMIB
program may only be elected at issue, the effective date is the Issue Date of
the Annuity. The Protected Income Value is increased daily based on an annual
growth rate of 5%, subject to the limitations described below. The Protected
Income Value is referred to as the "Protected Value" in the rider we issue for
this benefit. The 5% annual growth rate is referred to as the "Roll-Up
Percentage" in the rider we issue for this benefit.
The Protected Income Value is subject to a limit of 200% (2X) of the sum of
the Protected Income Value established on the effective date of the GMIB
program, or the effective date of any step-up value, plus any additional
Purchase Payments made after the waiting period begins ("Maximum Protected
Income Value"), minus the sum of any reductions in the Protected Income Value
due to withdrawals you make from the Annuity after the waiting period begins.
- - Subject to the maximum age/durational limits described immediately below,
we will no longer increase the Protected Income Value by the 5% annual
growth rate once you reach the Maximum Protected Income Value. However, we
will increase the Protected Income Value by the amount of any additional
Purchase Payments after you reach the Maximum Protected Income Value.
Further, if you make withdrawals after you reach the Maximum Protected
Income Value, we will reduce the Protected Income Value and the Maximum
Protected Income Value by the proportional impact of the withdrawal on your
Account Value.
- - Subject to the Maximum Protected Income Value, we will no longer increase
the Protected Income Value by the 5% annual growth rate after the later of
the anniversary date on or immediately following the Annuitant's 80th
birthday or the 7th anniversary of the later of the effective date of the
GMIB program or the effective date of the most recent step-up. However, we
will increase the Protected Income Value by the amount of any additional
Purchase Payments. Further, if you make withdrawals after the Annuitant
reaches the maximum age/duration limits, we will reduce the Protected
Income Value and the Maximum Protected Income Value by the proportional
impact of the withdrawal on your Account Value.
- - Subject to the Maximum Protected Income Value, if you make an additional
Purchase Payment, we will increase the Protected Income Value by the amount
of the Purchase Payment and will apply the 5% annual growth rate on the new
amount from the date the Purchase Payment is applied.
48
OPTIMUM ANNUITY PROSPECTUS
- - As described below, after the waiting period begins, cumu- lative
withdrawals each Annuity Year that are up to 5% of the Protected Income
Value on the prior anniversary of the Annuity will reduce the Protected
Income Value by the amount of the withdrawal. Cumulative withdrawals each
Annuity Year in excess of 5% of the Protected Income Value on the prior
anniversary of the Annuity, will reduce the Protected Income Value
proportionately. All withdrawals after the Maximum Protected Income Value
is reached will reduce the Protected Income Value proportionately. The 5%
annual growth rate will be applied to the reduced Protected Income Value
from the date of the withdrawal.
Stepping-Up the Protected Income Value -- You may elect to "step-up" or
"reset" your Protected Income Value if your Account Value is greater than the
current Protected Income Value. Upon exercise of the step-up provision, your
initial Protected Income Value will be reset equal to your current Account
Value. From the date that you elect to step-up the Protected Income Value, we
will apply the 5% annual growth rate to the stepped-up Protected Income Value,
as described above. You can exercise the step-up provision twice while the GMIB
program is in effect, and only while the Annuitant is less than age 76.
- - A new seven-year waiting period will be established upon the effective date
of your election to step-up the Protected Income Value. You cannot exercise
your right to begin receiving annuity payments under the GMIB program until
the end of the new waiting period.
- - The Maximum Protected Income Value will be reset as of the effective date
of any step-up. The new Maximum Protected Income Value will be equal to
200% of the sum of the Protected Income Value as of the effective date of
the step-up plus any subsequent Purchase Payments, minus the impact of any
withdrawals after the date of the step-up.
- - When determining the guaranteed annuity purchase rates for annuity payments
under the GMIB program, we will apply such rates based on the number of
years since the most recent step-up.
- - If you elect to step-up the Protected Income Value under the program, and
on the date you elect to step-up, the charges under the GMIB program have
changed for new purchasers, your program may be subject to the new charge
going forward.
- - A step-up will increase the dollar for dollar limit on the anniversary of
the Issue Date of the Annuity following such step-up.
Impact of Withdrawals on the Protected Income Value -- Cumulative
withdrawals each Annuity Year up to 5% of the Protected Income Value will reduce
the Protected Income Value on a "dollar-for-dollar" basis (the Protected Income
Value is reduced by the actual amount of the withdrawal). Cumulative withdrawals
in any Annuity Year in excess of 5% of the Protected Income Value will reduce
the Protected Income Value proportionately (see the examples of this calculation
below). The 5% annual withdrawal amount is determined on each anniversary of the
Issue Date (or on the Issue Date for the first Annuity Year) and applies to any
withdrawals during the Annuity Year. This means that the amount available for
withdrawals each Annuity Year on a "dollar-for-dollar" basis is adjusted on each
Annuity anniversary to reflect changes in the Protected Income Value during the
prior Annuity Year.
The following examples of dollar-for-dollar and proportional reductions
assume that: 1.) the Issue Date and the effective date of the GMIB program are
October 13, 2005; 2.) an initial Purchase Payment of $250,000; 3.) an initial
Protected Income Value of $250,000; and 4.) a dollar-for-dollar limit of $12,500
(5% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 13, 2005 (in the first Annuity Year).
No prior withdrawals have been taken. Immediately prior to the withdrawal, the
Protected Income Value is $251,038.10 (the initial value accumulated for 31 days
at an annual effective rate of 5%). As the amount withdrawn is less than the
dollar-for-dollar limit:
- - the Protected Income Value is reduced by the amount withdrawn (i.e., by
$10,000, from $251,038.10 to $241,038.10).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance
of the first Annuity Year is also reduced by the amount withdrawn (from
$12,500 to $2,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on December 13, 2005 (still within the
first Annuity Year). Immediately before the withdrawal, the Account Value is
$220,000 and the Protected
49
OPTIMUM ANNUITY PROSPECTUS
Living Benefit Programs continued
Income Value is $242,006.64. As the amount withdrawn exceeds the Remaining Limit
of $2,500 from Example 1:
- - the Protected Income Value is first reduced by the Remaining Limit (from
$242,006.64 to $239,506.64);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the Remaining Limit ($10,000 - $2,500,
or $7,500).
- B is the Account Value less the Remaining Limit ($220,000 - $2,500, or
$217,500).
The resulting Protected Income Value is: $239,506.64 x (1 - $7,500 /
$217,500), or $231,247.79.
- - The Remaining Limit is set to zero (0) for the balance of the first Annuity
Year.
EXAMPLE 3. RESET OF THE DOLLAR-FOR-DOLLAR LIMIT
A $10,000 withdrawal is made on the first anniversary of the Issue Date, October
13, 2006 (second Annuity Year). Prior to the withdrawal, the Protected Income
Value is $240,838.37. The Remaining Limit is reset to 5% of this amount, or
$2,041.92. As the amount withdrawn is less than the dollar-for-dollar limit:
- - the Protected Income Value is reduced by the amount withdrawn (i.e.,
reduced by $10,000, from $240,838.37 to $230,838.37).
- - The Remaining Limit for the balance of the second Annuity Year is also
reduced by the amount withdrawn (from $12,041.92 to $2,041.92).
KEY FEATURE -- GMIB ANNUITY PAYMENTS
You can elect to apply the Protected Income Value to one of the available GMIB
Annuity Payment Options on any anniversary date following the initial waiting
period, or any subsequent waiting period established upon your election to
step-up the Protected Income Value. Once you have completed the waiting period,
you will have a 30-day period each year, prior to the Annuity anniversary,
during which you may elect to begin receiving annuity payments under one of the
available GMIB Annuity Payment Options. You must elect one of the GMIB Annuity
Payment Options by the anniversary of the Annuity's Issue Date on or immediately
following the Annuitant's 95th birthday, except for Annuities used as a funding
vehicle for an IRA, SEP IRA or 403(b), in which case you must elect one of the
GMIB Annuity Payment Options by the anniversary of the Annuity's Issue Date on
or immediately following the Annuitant's 92nd birthday.
The amount of each GMIB Annuity Payment will be determined based on the age
and, where permitted by law, sex of the Annuitant by applying the Protected
Income Value (net of any applicable tax charge that may be due) to the GMIB
Annuity Payment Option you choose. We use special annuity purchase rates to
calculate the amount of each payment due under the GMIB Annuity Payment Options.
These special rates for the GMIB Annuity Payment Options are calculated using an
assumed interest rate factor that provides for lower growth in the value applied
to produce annuity payments than if you elected an annuity payment option that
is not part of the GMIB program. These special rates also are calculated using
other factors such as "age setbacks" (use of an age lower than the Annuitant's
actual age) that result in lower payments than would result if you elected an
annuity payment option that is not part of the GMIB program. Use of an age
setback entails a longer assumed life for the Annuitant which in turn results in
lower annuity payments.
ON THE DATE THAT YOU ELECT TO BEGIN RECEIVING GMIB ANNUITY PAYMENTS, WE
GUARANTEE THAT YOUR PAYMENTS WILL BE CALCULATED BASED ON YOUR ACCOUNT VALUE AND
OUR THEN CURRENT ANNUITY PURCHASE RATES IF THE PAYMENT AMOUNT CALCULATED ON THIS
BASIS WOULD BE HIGHER THAN IT WOULD BE BASED ON THE PROTECTED INCOME VALUE AND
THE SPECIAL GMIB ANNUITY PURCHASE RATES.
GMIB ANNUITY PAYMENT OPTION 1 -- PAYMENTS FOR LIFE WITH A CERTAIN PERIOD
Under this option, monthly annuity payments will be made until the death of the
Annuitant. If the Annuitant dies before having received 120 monthly annuity
payments, the remainder of the 120 monthly annuity payments will be made to the
Beneficiary.
GMIB ANNUITY PAYMENT OPTION 2 -- PAYMENTS FOR JOINT LIVES WITH A CERTAIN PERIOD
Under this option, monthly annuity payments will be made until the death of both
the Annuitant and the Joint Annuitant. If the Annuitant and the Joint Annuitant
die before having received 120 monthly annuity payments, the remainder of the
120 monthly annuity payments will be made to the Beneficiary.
- - If the Annuitant dies first, we will continue to make payments until the
later of the death of the Joint Annuitant and the end of the period
certain. However, if the Joint Annuitant is still receiving annuity
payments following the end of the certain period, we will reduce the amount
of each subsequent payment to 50% of the original payment amount.
50
OPTIMUM ANNUITY PROSPECTUS
- - If the Joint Annuitant dies first, we will continue to make payments until
the later of the death of the Annuitant and the end of the period certain.
You cannot withdraw your Account Value or the Protected Income Value under
either GMIB Annuity Payment Option once annuity payments have begun. We may make
other payout frequencies available, such as quarterly, semi-annually or
annually.
OTHER IMPORTANT CONSIDERATIONS
- - YOU SHOULD NOTE THAT GMIB IS DESIGNED TO PROVIDE A TYPE OF INSURANCE THAT
SERVES AS A SAFETY NET ONLY IN THE EVENT YOUR ACCOUNT VALUE DECLINES
SIGNIFICANTLY DUE TO NEGATIVE INVESTMENT PERFORMANCE. IF YOUR CONTRACT
VALUE IS NOT SIGNIFICANTLY AFFECTED BY NEGATIVE INVESTMENT PERFORMANCE, IT
IS UNLIKELY THAT THE PURCHASE OF THE GMIB WILL RESULT IN YOUR RECEIVING
LARGER ANNUITY PAYMENTS THAN IF YOU HAD NOT PURCHASED GMIB. This is because
the assumptions that we use in computing the GMIB, such as the annuity
purchase rates, (which include assumptions as to age-setbacks and assumed
interest rates), are more conservative than the assumptions that we use in
computing annuity payout options outside of GMIB. Therefore, you may
generate higher income payments if you were to annuitize a lower Account
Value at the current annuity purchase rates, than if you were to annuitize
under the GMIB with a higher Protected Value than your Account Value but,
at the annuity purchase rates guaranteed under the GMIB. The GMIB program
does not directly affect the Annuity's Account Value, Surrender Value or
the amount payable under either the basic death benefit provision of the
Annuity or any optional death benefit provision. If you surrender your
Annuity, you will receive the current Surrender Value, not the Protected
Income Value. The Protected Income Value is only applicable if you elect to
begin receiving annuity payments under one of the GMIB annuity options
after the waiting period.
- - The Annuity offers other annuity payment options that you can elect which
do not impose an additional charge, but which do not offer to guarantee a
minimum value on which to make annuity payments.
- - Where allowed by law, we reserve the right to limit subsequent purchase
payments if we determine, at our sole discretion, that based on the timing
of your Purchase Payments and withdrawals, your Protected Income Value is
increasing in ways we did not intend. In determining whether to limit
Purchase Payments, we will look at Purchase Payments which are
disproportionately larger than your initial Purchase Payment and other
actions that may artificially increase the Protected Income Value.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to an
eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible investment
options will not be counted in determining the number of free transfers
during an Annuity Year. We may also require that you allocate your Account
Value according to an asset allocation model.
- - If you change the Annuitant after the effective date of the GMIB program,
the period of time during which we will apply the 5% annual growth rate may
be changed based on the age of the new Annuitant. If the new Annuitant
would not be eligible to elect the GMIB program based on his or her age at
the time of the change, then the GMIB program will terminate.
- - Annuity payments made under the GMIB program are subject to the same tax
treatment as any other annuity payment.
- - At the time you elect to begin receiving annuity payments under the GMIB
program or under any other annuity payment option we make available, the
protection provided by the Annuity's basic death benefit or any optional
death benefit provision you elected will no longer apply.
ELECTION OF THE PROGRAM
Currently, the GMIB program can only be elected at the time that you purchase
your Annuity. The Annuitant must be age 75 or less as of the effective date of
the GMIB program. In the future, we may offer existing Annuity Owners the option
to elect the GMIB program after the Issue Date of their Annuity, subject to our
eligibility rules and restrictions. If you elect the GMIB program after the
Issue Date of your Annuity, the program will be effective as of the date of
election. Your Account Value as of that date will be used to calculate the
Protected Income Value as of the effective date of the program.
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OPTIMUM ANNUITY PROSPECTUS
Living Benefit Programs continued
TERMINATION OF THE PROGRAM
The GMIB program cannot be terminated by the Owner once elected. The GMIB
program automatically terminates as of the date the Annuity is fully
surrendered, on the date the death benefit is payable to your Beneficiary
(unless your surviving spouse elects to continue the Annuity), or on the date
that your Account Value is transferred to begin making annuity payments. The
GMIB program may also be terminated if you designate a new Annuitant who would
not be eligible to elect the GMIB program based on his or her age at the time of
the change.
Upon termination of the GMIB program we will deduct the charge from your
Account Value for the portion of the Annuity Year since the prior anniversary of
the Annuity's Issue Date (or the Issue Date if in the first Annuity Year).
CHARGES UNDER THE PROGRAM
Currently, we deduct a charge equal to 0.50% per year of the average Protected
Income Value for the period the charge applies. Because the charge is calculated
based on the average Protected Income Value, it does not increase or decrease
based on changes to the Annuity's Account Value due to market performance. The
dollar amount you pay each year will increase in any year the Protected Income
Value increases, and it will decrease in any year the Protected Income Value
decreases due to withdrawal, irrespective of whether your Account Value
increases or decreases.
The charge is deducted annually in arrears each Annuity Year on the
anniversary of the Issue Date of the Annuity. We deduct the amount of the charge
pro-rata from the Account Value allocated to the variable investment options and
the Fixed Allocations. No MVA will apply to Account Value deducted from a Fixed
Allocation. If you surrender your Annuity, begin receiving annuity payments
under the GMIB program or any other annuity payment option we make available
during an Annuity Year, or the GMIB program terminates, we will deduct the
charge for the portion of the Annuity Year since the prior anniversary of the
Annuity's Issue Date (or the Issue Date if in the first Annuity Year).
No charge applies after the Annuity Date.
LIFETIME FIVE INCOME BENEFIT (LIFETIME FIVE)
THE LIFETIME FIVE INCOME BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING OFFERED
IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL AND WILL BE
OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY APPROVAL
IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. CURRENTLY, LIFETIME FIVE CAN BE ELECTED ONLY ONCE
EACH ANNUITY YEAR, AND ONLY WHERE THE ANNUITANT AND THE OWNER ARE THE SAME
PERSON OR, IF THE ANNUITY OWNER IS AN ENTITY, WHERE THERE IS ONLY ONE ANNUITANT.
WE RESERVE THE RIGHT TO LIMIT THE ELECTION FREQUENCY IN THE FUTURE. BEFORE
MAKING ANY SUCH CHANGE TO THE ELECTION FREQUENCY, WE WILL PROVIDE PRIOR NOTICE
TO OWNERS WHO HAVE AN EFFECTIVE LIFETIME FIVE INCOME BENEFIT. THE ANNUITANT MUST
BE AT LEAST 45 YEARS OLD WHEN THE PROGRAM IS ELECTED. THE LIFETIME FIVE INCOME
BENEFIT PROGRAM IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION,
GUARANTEED RETURN OPTION PLUS, GUARANTEED MINIMUM WITHDRAWAL BENEFIT OR THE
GUARANTEED MINIMUM INCOME BENEFIT RIDER. AS LONG AS YOUR LIFETIME FIVE INCOME
BENEFIT IS IN EFFECT, YOU MUST ALLOCATE YOUR ACCOUNT VALUE IN ACCORDANCE WITH AN
ELIGIBLE MODEL UNDER OUR ASSET ALLOCATION PROGRAMS, WHICH ARE GENERALLY
DESCRIBED IN THE "ARE ANY ASSET ALLOCATION PROGRAMS AVAILABLE?" SECTION ABOVE.
FOR FURTHER INFORMATION ON ASSET ALLOCATION PROGRAMS, PLEASE CONSULT WITH YOUR
INVESTMENT PROFESSIONAL OR CALL 1-800-752-6342.
We offer a program that guarantees your ability to withdraw amounts equal
to a percentage of an initial principal value (called the "Protected Withdrawal
Value"), regardless of the impact of market performance on your Account Value,
subject to our program rules regarding the timing and amount of withdrawals.
There are two options -- one is designed to provide an annual withdrawal amount
for life (the "Life Income Benefit") and the other is designed to provide a
greater annual withdrawal amount as long as there is Protected Withdrawal
52
OPTIMUM ANNUITY PROSPECTUS
Value (adjusted as described below) (the "Withdrawal Benefit"). If there is no
Protected Withdrawal Value, the withdrawal benefit will be zero. You do not
choose between these two options; each option will continue to be available as
long as the Annuity has an Account Value and the Lifetime Five is in effect.
Certain benefits under Lifetime Five may remain in effect even if the Account
Value of the Annuity is zero. The program may be appropriate if you intend to
make periodic withdrawals from your Annuity and wish to ensure that market
performance will not affect your ability to receive annual payments. You are not
required to make withdrawals as part of the program -- the guarantees are not
lost if you withdraw less than the maximum allowable amount each year under the
rules of the program.
KEY FEATURE -- PROTECTED WITHDRAWAL VALUE
The Protected Withdrawal Value is initially used to determine the amount of each
initial annual payment under the Life Income Benefit and the Withdrawal Benefit.
The initial Protected Withdrawal Value is determined as of the date you make
your first withdrawal under the Annuity following your election of Lifetime
Five. The initial Protected Withdrawal Value is equal to the greater of (A) the
Account Value on the date you elect Lifetime Five, plus any additional Purchase
Payments each growing at 5% per year from the date of your election of the
program, or application of the Purchase Payment to your Annuity, as applicable,
until the date of your first withdrawal or the 10th anniversary of the benefit
effective date, if earlier (B) the Account Value as of the date of the first
withdrawal from your Annuity, prior to the withdrawal, and (C) the highest
Account Value on each Annuity anniversary prior to the first withdrawal or on
the first 10 Annuity anniversaries if earlier than the date of your first
withdrawal after the benefit effective date. Each value is increased by the
amount of any subsequent Purchase Payments.
- - If you elect the Lifetime Five program at the time you purchase your
Annuity, the Account Value will be your initial Purchase Payment.
- - For existing Owners who are electing the Lifetime Five benefit, the Account
Value on the date of your election of the Lifetime Five program will be
used to determine the initial Protected Withdrawal Value.
- - If you make additional Purchase Payments after your first withdrawal, the
Protected Withdrawal Value will be increased by the amount of each
additional Purchase Payment.
You may elect to step-up your Protected Withdrawal Value if, due to
positive market performance, your Account Value is greater than the Protected
Withdrawal Value. You are eligible to step-up the Protected Withdrawal Value on
or after the 5th anniversary of the first withdrawal under the Lifetime Five
program. The Protected Withdrawal Value can be stepped up again on or after the
5th anniversary following the preceding step-up. If you elect to step-up the
Protected Withdrawal Value under the program, and on the date you elect to
step-up, the charges under the Lifetime Five program have changed for new
purchasers, your program may be subject to the new charge going forward.
Upon election of the step-up, we increase the Protected Withdrawal Value to
be equal to the then current Account Value. For example, assume your initial
Protected Withdrawal Value was $100,000 and you have made cumulative withdrawals
of $40,000, reducing the Protected Withdrawal Value to $60,000. On the date you
are eligible to step-up the Protected Withdrawal Value, your Account Value is
equal to $75,000. You could elect to step-up the Protected Withdrawal Value to
$75,000 on the date you are eligible. If your current Annual Income Amount and
Annual Withdrawal Amount are less than they would be if we did not reflect the
step-up in Protected Withdrawal Value, then we will increase these amounts to
reflect the step-up as described below.
The Protected Withdrawal Value is reduced each time a withdrawal is made on
a dollar-for-dollar basis up to 7% per Annuity Year of the Protected Withdrawal
Value and on the greater of a dollar-for-dollar basis or a pro rata basis for
withdrawals in an Annuity Year in excess of that amount until the Protected
Withdrawal Value is reduced to zero. At that point the Annual Withdrawal Amount
will be zero until such time (if any) as the Annuity reflects a Protected
Withdrawal Value (for example, due to a step-up or additional Purchase Payments
being made into the Annuity).
KEY FEATURE -- Annual Income Amount under the Life Income Benefit
The initial Annual Income Amount is equal to 5% of the initial Protected
Withdrawal Value. Under the Lifetime Five program, if your cumulative
withdrawals in an Annuity Year are less than or equal to the Annual Income
Amount, they will not reduce your Annual Income Amount in subsequent Annuity
Years. If your cumulative withdrawals are in excess of the Annual Income Amount
("Excess Income"), your Annual Income Amount in subsequent years will be reduced
(except with regard to
53
OPTIMUM ANNUITY PROSPECTUS
Living Benefit Programs continued
required minimum distributions) by the result of the ratio of the Excess Income
to the Account Value immediately prior to such withdrawal (see examples of this
calculation below). Reductions include the actual amount of the withdrawal,
including any CDSC that may apply. A withdrawal can be considered Excess Income
under the Life Income Benefit even though it does not exceed the Annual
Withdrawal Amount under the Withdrawal Benefit. When you elect a step-up, your
Annual Income Amount increases to equal 5% of your Account Value after the
step-up if such amount is greater than your Annual Income Amount. Your Annual
Income Amount also increases if you make additional Purchase Payments. The
amount of the increase is equal to 5% of any additional Purchase Payments. Any
increase will be added to your Annual Income Amount beginning on the day that
the step-up is effective or the Purchase Payment is made. A determination of
whether you have exceeded your Annual Income Amount is made at the time of each
withdrawal; therefore a subsequent increase in the Annual Income Amount will not
offset the effect of a withdrawal that exceeded the Annual Income Amount at the
time the withdrawal was made.
KEY FEATURE -- ANNUAL WITHDRAWAL AMOUNT UNDER THE WITHDRAWAL BENEFIT
The initial Annual Withdrawal Amount is equal to 7% of the initial Protected
Withdrawal Value. Under the Lifetime Five program, if your cumulative
withdrawals each Annuity Year are less than or equal to the Annual Withdrawal
Amount, your Protected Withdrawal Value will be reduced on a dollar-for-dollar
basis. If your cumulative withdrawals are in excess of the Annual Withdrawal
Amount ("Excess Withdrawal"), your Annual Withdrawal Amount will be reduced
(except with regard to required minimum distributions) by the result of the
ratio of the Excess Withdrawal to the Account Value immediately prior to such
withdrawal (see the examples of this calculation below). Reductions include the
actual amount of the withdrawal, including any CDSC that may apply. When you
elect a step-up, your Annual Withdrawal Amount increases to equal 7% of your
Account Value after the step-up if such amount is greater than your Annual
Withdrawal Amount. Your Annual Withdrawal Amount also increases if you make
additional Purchase Payments. The amount of the increase is equal to 7% of any
additional Purchase Payments. A determination of whether you have exceeded your
Annual Withdrawal Amount is made at the time of each withdrawal; therefore, a
subsequent increase in the Annual Withdrawal Amount will not offset the effect
of a withdrawal that exceeded the Annual Withdrawal Amount at the time the
withdrawal was made.
The Lifetime Five program does not affect your ability to make withdrawals
under your Annuity or limit your ability to request withdrawals that exceed the
Annual Income Amount and the Annual Withdrawal Amount. You are not required to
withdraw all or any portion of the Annual Withdrawal Amount or Annual Income
Amount in each Annuity Year.
- - If, cumulatively, you withdraw an amount less than the Annual Withdrawal
Amount under the Withdrawal Benefit in any Annuity Year, you cannot
carry-over the unused portion of the Annual Withdrawal Amount to subsequent
Annuity Years. However, because the Protected Withdrawal Value is only
reduced by the actual amount of withdrawals you make under these
circumstances, any unused Annual Withdrawal Amount may extend the period of
time until the remaining Protected Withdrawal Value is reduced to zero.
- - If, cumulatively, you withdraw an amount less than the Annual Income Amount
under the Life Income Benefit in any Annuity Year, you cannot carry-over
the unused portion of the Annual Income Amount to subsequent Annuity Years.
However, because the Protected Withdrawal Value is only reduced by the
actual amount of withdrawals you make under these circumstances, any unused
Annual Income Amount may extend the period of time until the remaining
Protected Withdrawal Value is reduced to zero.
The following examples of dollar-for-dollar and proportional reductions and the
step-up of the Protected Withdrawal Value, Annual Withdrawal Amount and Annual
Income Amount assume: 1.) the Issue Date and the Effective Date of the Lifetime
Five program are February 1, 2005; 2.) an initial Purchase Payment of $250,000;
3.) the Account Value on February 1, 2006 is equal to $265,000; 4.) the first
withdrawal occurs on March 1, 2006 when the Account Value is equal to $263,000;
and 5.) the Account Value on March 1, 2011 is equal to $240,000.
The initial Protected Withdrawal Value is calculated as the greatest of
(a), (b) and (c):
(a) Purchase payment accumulated at 5% per year from February 1, 2005
until March 1, 2006 (393 days) = $250,000 x 1.05(393/365) =
$263,484.33
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OPTIMUM ANNUITY PROSPECTUS
(b) Account Value on March 1, 2006 (the date of the first withdrawal) =
$263,000
(c) Account Value on February 1, 2006 (the first Annuity Anniversary) =
$265,000
Therefore, the initial Protected Withdrawal Value is equal to $265,000. The
Annual Withdrawal Amount is equal to $18,550 under the Withdrawal Benefit (7% of
$265,000). The Annual Income Amount is equal to $13,250 under the Life Income
Benefit (5% of $265,000).
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
If $10,000 was withdrawn (less than both the Annual Income Amount and the Annual
Withdrawal Amount) on March 1, 2006, then the following values would result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 -
$10,000 = $8,550
Annual Withdrawal Amount for future Annuity Years remains at $18,550
- - Remaining Annual Income Amount for current Annuity Year = $13,250 - $10,000
= $3,250
Annual Income Amount for future Annuity Years remains at $13,250
- - Protected Withdrawal Value is reduced by $10,000 from $265,000 to $255,000
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
(a) If $15,000 was withdrawn (more than the Annual Income Amount but less
than the Annual Withdrawal Amount) on March 1, 2006, then the
following values would result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 -
$15,000 = $3,550
Annual Withdrawal Amount for future Annuity Years remains at $18,550
- - Remaining Annual Income Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Income Amount ($15,000 - $13,250
= $1,750) reduces Annual Income Amount for future Annuity Years.
- - Reduction to Annual Income Amount = Excess Income/ Account Value before
Excess Income x Annual Income Amount = $1,750 / ($263,000 - $13,250) x
$13,250 = $93 Annual Income Amount for future Annuity Years = $13,250 - $93
= $13,157
- - Protected Withdrawal Value is reduced by $15,000 from $265,000 to $250,000
(b) If $25,000 was withdrawn (more than both the Annual Income Amount and
the Annual Withdrawal Amount) on March 1, 2006, then the following
values would result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Withdrawal Amount ($25,000 - $18,550
= $6,450) reduces Annual Withdrawal Amount for future Annuity Years.
- - Reduction to Annual Withdrawal Amount = Excess Withdrawal/Account Value
before Excess Withdrawal x Annual Withdrawal Amount = $6,450 / ($263,000 -
$18,550) x $18,550 = $489 Annual Withdrawal Amount for future Annuity Years
= $18,550 - $489 = $18,061
- - Remaining Annual Income Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Income Amount ($25,000 - $13,250 =
$11,750) reduces Annual Income Amount for future Annuity Years.
- - Reduction to Annual Income Amount = Excess Income/ Account Value before
Excess Income x Annual Income Amount = $11,750 / ($263,000 - $13,250) x
$13,250 = $623 Annual Income Amount for future Annuity Years = $13,250 -
$623 = $12,627
- - Protected Withdrawal Value is first reduced by the Annual Withdrawal Amount
($18,550) from $265,000 to $246,450. It is further reduced by the greater
of a dollar-for-dollar reduction or a proportional reduction.
Dollar-for-dollar reduction = $25,000 - $18,550 = $6,450
- - Proportional reduction = Excess Withdrawal / Account Value before Excess
Withdrawal x Protected Withdrawal Value = $6,450 / ($263,000 - $18,550) x
$246,450 = $6,503 Protected Withdrawal Value = $246,450 - max {$6,450,
$6,503} = $239,947
EXAMPLE 3. STEP-UP OF THE PROTECTED WITHDRAWAL VALUE
If the Annual Income Amount ($13,250) is withdrawn each year starting on March
1, 2006 for a period of 5 years, the Protected Withdrawal Value on March 1, 2011
would be reduced to $198,750 {$265,000 - ($13,250 x 5)}. If a step-up is elected
on March 1, 2011, then the following values would result:
- - Protected Withdrawal Value = Account Value on March 1, 2011 = $240,000
55
OPTIMUM ANNUITY PROSPECTUS
Living Benefit Programs continued
- - Annual Income Amount is equal to the greater of the current Annual Income
Amount or 5% of the stepped up Protected Withdrawal Value. Current Annual
Income Amount is $13,250. 5% of the stepped up Protected Withdrawal Value
is 5% of $240,000, which is $12,000. Therefore, the Annual Income Amount
remains $13,250.
- - Annual Withdrawal Amount is equal to the greater of the current Annual
Withdrawal Amount or 7% of the stepped up Protected Withdrawal Value.
Current Annual Withdrawal Amount is $18,550. 7% of the stepped-up Protected
Withdrawal Value is 7% of $240,000, which is $16,800. Therefore the Annual
Withdrawal Amount remains $18,550.
BENEFITS UNDER THE LIFETIME FIVE PROGRAM
- - If your Account Value is equal to zero, and the cumulative withdrawals in
the current Annuity Year are greater than the Annual Withdrawal Amount, the
Lifetime Five program will terminate. To the extent that your Account Value
was reduced to zero as a result of cumulative withdrawals that are equal to
or less than the Annual Income Amount and amounts are still payable under
both the Life Income Benefit and the Withdrawal Benefit, you will be given
the choice of receiving the payments under the Life Income Benefit or under
the Withdrawal Benefit. Once you make this election we will make an
additional payment for that Annuity Year equal to either the remaining
Annual Income Amount or Annual Withdrawal Amount for the Annuity Year, if
any, depending on the option you choose. In subsequent Annuity Years we
make payments that equal either the Annual Income Amount or the Annual
Withdrawal Amount as described in this Prospectus. You will not be able to
change the option after your election and no further Purchase Payments will
be accepted under your Annuity. If you do not make an election, we will pay
you annually under the Life Income Benefit. To the extent that cumulative
withdrawals in the current Annuity Year that reduced your Account Value to
zero are more than the Annual Income Amount but less than or equal to the
Annual Withdrawal Amount and amounts are still payable under the Withdrawal
Benefit, you will receive the payments under the Withdrawal Benefit. In the
year of a withdrawal that reduced your Account Value to zero, we will make
an additional payment to equal any remaining Annual Withdrawal Amount and
make payments equal to the Annual Withdrawal Amount in each subsequent year
(until the Protected Withdrawal Value is depleted). Once your Account Value
equals zero no further Purchase Payments will be accepted under your
Annuity.
- - If annuity payments are to begin under the terms of your Annuity or if you
decide to begin receiving annuity payments and there is any Annual Income
Amount due in subsequent Annuity Years or any remaining Protected
Withdrawal Value, you can elect one of the following three options:
(1) apply your Account Value to any annuity option available; or
(2) request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We make
such annuity payments until the Annuitant's death; or
(3) request that, as of the date annuity payments are to begin, we pay out
any remaining Protected Withdrawal Value as annuity payments. Each
year such annuity payments will equal the Annual Withdrawal Amount or
the remaining Protected Withdrawal Value if less. We make such annuity
payments until the earlier of the Annuitant's death or the date the
Protected Withdrawal Value is depleted.
We must receive your request in a form acceptable to us at our office.
- - In the absence of an election when mandatory annuity payments are to begin,
we will make annual annuity payments as a single life fixed annuity with
five payments certain using the greater of the annuity rates then currently
available or the annuity rates guaranteed in your Annuity. The amount that
will be applied to provide such annuity payments will be the greater of:
(1) the present value of future Annual Income Amount payments. Such
present value will be calculated using the greater of the single life
fixed annuity rates then currently available or the single life fixed
annuity rates guaranteed in your Annuity; and
(2) the Account Value.
- - If no withdrawal was ever taken, we will determine a Protected Withdrawal
Value and calculate an Annual Income Amount and an Annual Withdrawal Amount
as if you made your first withdrawal on the date the annuity payments are
to begin.
OTHER IMPORTANT CONSIDERATIONS
- - Withdrawals under the Lifetime Five program are subject to all of the terms
and conditions of the Annuity, including any CDSC.
- - Withdrawals made while the Lifetime Five program is in effect will be
treated, for tax purposes, in the same way as any other
56
OPTIMUM ANNUITY PROSPECTUS
withdrawals under the Annuity. The Lifetime Five program does not directly
affect the Annuity's Account Value or Surrender Value, but any withdrawal
will decrease the Account Value by the amount of the withdrawal (plus any
applicable CDSC). If you surrender your Annuity, you will receive the
current Surrender Value, not the Protected Withdrawal Value.
- - You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the Lifetime Five program. The
Lifetime Five program provides a guarantee that if your Account Value
declines due to market performance, you will be able to receive your
Protected Withdrawal Value or Annual Income Amount in the form of periodic
benefit payments.
- - You must allocate your Account Value in accordance with an eligible model
under an available asset allocation program or in accordance with other
options that we may permit in order to elect and maintain the Lifetime Five
program. Asset allocation programs are described generally in the "Are Any
Asset Allocation Programs Available?" section above. For further
information on asset allocation programs, please consult with your
Investment Professional or call 1-800-752-6342.
ELECTION OF THE PROGRAM
The Lifetime Five program can be elected at the time that you purchase your
Annuity. We also offer existing Owners the option to elect the Lifetime Five
program after the Issue Date of their Annuity, subject to our eligibility rules
and restrictions. Your Account Value as the date of election will be used as a
basis to calculate the initial Protected Withdrawal Value, the initial Protected
Annual Withdrawal Amount, and the Annual Income Amount.
TERMINATION OF THE PROGRAM
The program terminates automatically when your Protected Withdrawal Value and
Annual Income Amount equals zero. You may terminate the program at any time by
notifying us. If you terminate the program, any guarantee provided by the
benefit will terminate as of the date the termination is effective. The program
terminates upon your surrender of the Annuity, upon the death of the Annuitant
(but your surviving spouse may elect a new Lifetime Five if your spouse elects
the spousal continuance option and your spouse would then be eligible to elect
the benefit if he or she was a new purchaser), upon a change in ownership of the
Annuity that changes the tax identification number of the Owner, upon change in
the Annuitant or upon your election to begin receiving annuity payments.
The charge for the Lifetime Five program will no longer be deducted from
your Account Value upon termination of the program.
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS
If you purchase an Annuity as an investment vehicle for "qualified" investments,
including an IRA, SEP-IRA, or Tax Sheltered Annuity (or 403(b)), the minimum
distribution rules under the Code require that you begin receiving periodic
amounts from your Annuity beginning after age 70 1/2. The amount required under
the Code may exceed the Annual Withdrawal Amount and the Annual Income Amount,
which will cause us to increase the Annual Income Amount and the Annual
Withdrawal Amount in any Annuity Year that required minimum distributions due
from your Annuity are greater than such amounts. Any such payments will reduce
your Protected Withdrawal Value. In addition, the amount and duration of
payments under the annuity payment and death benefit provisions may be adjusted
so that the payments do not trigger any penalty or excise taxes due to tax
considerations such as minimum distribution requirements.
57
OPTIMUM ANNUITY PROSPECTUS
Death Benefit
WHAT TRIGGERS THE PAYMENT OF A DEATH BENEFIT?
The Annuity provides a Death Benefit during its accumulation period. IF THE
ANNUITY IS OWNED BY ONE OR MORE NATURAL PERSONS, THE DEATH BENEFIT IS PAYABLE
UPON THE FIRST DEATH OF AN OWNER. IF THE ANNUITY IS OWNED BY AN ENTITY, THE
DEATH BENEFIT IS PAYABLE UPON THE ANNUITANT'S DEATH, IF THERE IS NO CONTINGENT
ANNUITANT. If a Contingent Annuitant was designated before the Annuitant's death
and the Annuitant dies, then the Contingent Annuitant becomes the Annuitant and
a Death Benefit will not be paid at that time. The person upon whose death the
Death Benefit is paid is referred to below as the "decedent."
BASIC DEATH BENEFIT
The Annuity provides a basic Death Benefit at no additional charge. The
Insurance Charge we deduct daily from your Account Value allocated to the
Sub-accounts is used, in part, to pay us for the risk we assume in providing the
basic Death Benefit guarantee under the Annuity. The Annuity also offers three
different optional Death Benefits that can be purchased for an additional
charge. The additional charge is deducted to compensate American Skandia for
providing increased insurance protection under the optional Death Benefits.
NOTWITHSTANDING THE ADDITIONAL PROTECTION PROVIDED UNDER THE OPTIONAL DEATH
BENEFITS, THE ADDITIONAL COST HAS THE IMPACT OF REDUCING THE NET PERFORMANCE OF
THE INVESTMENT OPTIONS.
The BASIC DEATH BENEFIT is the greater of:
- - The sum of all Purchase Payments less the sum of all proportional
withdrawals.
- - The sum of your Account Value in the variable investment options and your
Interim Value in the Fixed Allocations.
"PROPORTIONAL WITHDRAWALS" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn. For
example, a withdrawal of 50% of Account Value would be considered as a 50%
reduction in Purchase Payments for purposes of calculating the basic Death
Benefit.
OPTIONAL DEATH BENEFITS
Three optional Death Benefits are offered for purchase with your Annuity to
provide an enhanced level of protection for your beneficiaries.
CURRENTLY, THESE BENEFITS ARE ONLY OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE
RECEIVED REGULATORY APPROVAL AND MUST BE ELECTED AT THE TIME THAT YOU PURCHASE
YOUR ANNUITY. WE MAY, AT A LATER DATE, ALLOW EXISTING ANNUITY OWNERS TO PURCHASE
AN OPTIONAL DEATH BENEFIT SUBJECT TO OUR RULES AND ANY CHANGES OR RESTRICTIONS
IN THE BENEFITS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS
ONCE APPROVED AND IF YOU PURCHASE YOUR ANNUITY AS PART OF AN EXCHANGE,
REPLACEMENT OR TRANSFER, IN WHOLE OR IN PART, FROM ANY OTHER ANNUITY WE ISSUE.
THE "COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE" DEATH BENEFIT MAY
ONLY BE ELECTED INDIVIDUALLY, AND CANNOT BE ELECTED IN COMBINATION WITH ANY
OTHER OPTIONAL DEATH BENEFIT.
ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT
The Enhanced Beneficiary Protection Optional Death Benefit can provide
additional amounts to your Beneficiary that may be used to offset federal and
state taxes payable on any taxable gains in your Annuity at the time of your
death. Whether this benefit is appropriate for you may depend on your particular
circumstances, including other financial resources that may be available to your
Beneficiary to pay taxes on your Annuity should you die during the accumulation
period. No benefit is payable if death occurs on or after the Annuity Date.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT PROVIDES A
BENEFIT THAT IS PAYABLE IN ADDITION TO THE BASIC DEATH BENEFIT. If the Annuity
has one Owner, the Owner must be age 75 or less at the time the benefit is
purchased. If the Annuity has joint Owners, the oldest Owner must be age 75 or
less. If the Annuity is owned by an entity, the Annuitant must be age 75 or
less.
CALCULATION OF ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT
If you purchase the Enhanced Beneficiary Protection Optional Death Benefit, the
Death Benefit is calculated as follows:
1. the BASIC DEATH BENEFIT described above; PLUS
2. 40% of your "GROWTH" under the Annuity, as defined below.
"GROWTH" means the sum of your Account Value in the variable investment
options and your Interim Value in the Fixed
58
OPTIMUM ANNUITY PROSPECTUS
Allocations, minus the total of all Purchase Payments reduced by the sum of all
proportional withdrawals.
"PROPORTIONAL WITHDRAWALS" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT IS SUBJECT TO A
MAXIMUM OF 100% OF ALL PURCHASE PAYMENTS APPLIED TO THE ANNUITY AT LEAST 12
MONTHS PRIOR TO THE DEATH OF THE DECEDENT THAT TRIGGERS THE PAYMENT OF THE DEATH
BENEFIT.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT IS BEING OFFERED IN
THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL. CERTAIN TERMS
AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. PLEASE REFER TO
THE SECTION ENTITLED "TAX CONSIDERATIONS" FOR A DISCUSSION OF SPECIAL TAX
CONSIDERATIONS FOR PURCHASERS OF THIS BENEFIT. THE ENHANCED BENEFICIARY
PROTECTION DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT THE "COMBINATION 5%
ROLL-UP AND HIGHEST ANNIVERSARY VALUE" DEATH BENEFIT.
See Appendix B for examples of how the Enhanced Beneficiary Protection
Optional Death Benefit is calculated.
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT ("HAV")
If the Annuity has one Owner, the Owner must be age 79 or less at the time the
Highest Anniversary Value Optional Death Benefit is purchased. If the Annuity
has joint Owners, the oldest Owner must be age 79 or less. If the Annuity is
owned by an entity, the Annuitant must be age 79 or less.
CERTAIN OF THE PORTFOLIOS OFFERED AS SUB-ACCOUNTS UNDER THE ANNUITY ARE NOT
AVAILABLE IF YOU ELECT THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT. IN ADDITION,
WE RESERVE THE RIGHT TO REQUIRE YOU TO USE CERTAIN ASSET ALLOCATION MODEL(S) IF
YOU ELECT THIS DEATH BENEFIT.
CALCULATION OF HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
The HAV Death Benefit depends on whether death occurs before or after the Death
Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value as of the Owner's date of death.
If the Owner dies on or after the Death Benefit Target Date, the Death
Benefit equals the greater of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value on the Death Benefit Target Date plus
the sum of all Purchase Payments less the sum of all proportional
withdrawals since the Death Benefit Target Date.
THE AMOUNT DETERMINED BY THIS CALCULATION IS INCREASED BY ANY PURCHASE
PAYMENTS RECEIVED AFTER THE OWNER'S DATE OF DEATH AND DECREASED BY ANY
PROPORTIONAL WITHDRAWALS SINCE SUCH DATE.
THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT DESCRIBED ABOVE IS CURRENTLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL.
CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. THE
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT THE
"COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE" OR THE "HIGHEST DAILY
VALUE" DEATH BENEFIT.
Please refer to the definition of Death Benefit Target Date below. This
death benefit may not be an appropriate feature where the Owner's age is near
the age specified in the Death Benefit Target Date. This is because the benefit
may not have the same potential for growth as it otherwise would, since there
will be fewer contract anniversaries before the death benefit target date is
reached. The death benefit target date under this death benefit is earlier than
the death benefit target date under the Combination 5% Roll-up and Highest
Anniversary Value Death Benefit for Owners who are age 76 or older when the
Annuity is issued, which may result in a lower value on the death benefit, since
there will be fewer contract anniversaries before the death benefit target date
is reached.
See Appendix B for examples of how the Highest Anniversary Value Death
Benefit is calculated.
COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
If the Annuity has one Owner, the Owner must be age 79 or less at the time the
Combination 5% Roll-up and HAV Optional Death Benefit is purchased. If the
Annuity has joint Owners,
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OPTIMUM ANNUITY PROSPECTUS
Death Benefit continued
the oldest Owner must be age 79 or less. If the Annuity is owned by an entity,
the Annuitant must be age 79 or less.
CERTAIN OF THE PORTFOLIOS OFFERED AS SUB-ACCOUNTS UNDER THE ANNUITY ARE
NOT AVAILABLE IF YOU ELECT THE COMBINATION 5% ROLL-UP AND HAV DEATH BENEFIT. IN
ADDITION, WE RESERVE THE RIGHT TO REQUIRE YOU TO USE CERTAIN ASSET ALLOCATION
MODEL(S) IF YOU ELECT THIS DEATH BENEFIT.
CALCULATION OF THE COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH
BENEFIT
The Combination 5% Roll-up and HAV Death Benefit equals the greatest of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value death benefit described above, and
3. 5% Roll-up described below.
The calculation of the 5% Roll-up depends on whether death occurs before or
after the Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date the 5% Roll up is
equal to:
- - all Purchase Payments increasing at an annual effective interest rate of 5%
starting on the date that each Purchase Payment is made and ending on the
Owner's date of death;
MINUS
- - the sum of all withdrawals, dollar for dollar up to 5% of the death
benefit's value as of the prior contract anniversary (or issue date if the
withdrawal is in the first contract year). Any withdrawals in excess of the
5% dollar for dollar limit are proportional.
If the Owner dies on or after the Death Benefit Target Date the 5% Roll-up
is equal to:
- - the 5% Roll-up value as of the Death Benefit Target Date increased by total
Purchase Payments made after the Death Benefit Target Date;
MINUS
- - the sum of all withdrawals which reduce the 5% Roll-up proportionally.
PLEASE REFER TO THE DEFINITIONS OF DEATH BENEFIT TARGET DATE BELOW. THIS
DEATH BENEFIT MAY NOT BE AN APPROPRIATE FEATURE WHERE THE OWNER'S AGE IS NEAR
THE AGE SPECIFIED IN THE DEATH BENEFIT TARGET DATE. THIS IS BECAUSE THE BENEFIT
MAY NOT HAVE THE SAME POTENTIAL FOR GROWTH AS IT OTHERWISE WOULD, SINCE THERE
WILL BE FEWER ANNUITY ANNIVERSARIES BEFORE THE DEATH BENEFIT TARGET DATE IS
REACHED.
THE "COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE" DEATH BENEFIT
DESCRIBED ABOVE IS CURRENTLY BEING OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE
RECEIVED REGULATORY APPROVAL. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. THE "COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY
VALUE" DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT ANY OTHER OPTIONAL DEATH
BENEFIT.
See Appendix B for examples of how the Combination 5% Roll-up and Highest
Anniversary Value Death Benefit is calculated.
KEY TERMS USED WITH THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT AND THE
COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT:
- - The Death Benefit Target Date for the Highest Anniversary Value Death
Benefit is the contract anniversary on or after the 80th birthday of the
current Owner, the oldest of either joint Owner or the Annuitant, if entity
owned.
- - The Death Benefit Target Date for the Combination 5% Roll-up and HAV Death
Benefit is the later of the contract anniversary on or after the 80th
birthday of the current Owner, the oldest of either joint Owner or the
Annuitant, if entity owned, or five years after the Issue Date of the
Annuity.
- - The Highest Anniversary Value equals the highest of all previous
"Anniversary Values" less proportional withdrawals since such anniversary
and plus any Purchase Payments since such anniversary.
- - The Anniversary Value is the Account Value as of each anniversary of the
Issue Date of the Annuity. The Anniversary Value on the Issue Date is equal
to your Purchase Payment.
- - Proportional withdrawals are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
Proportional withdrawals result in a reduction to the Highest Anniversary
Value or 5% Roll-up value by reducing such value in the same proportion as
the Account Value was reduced by the withdrawal as of the date the
withdrawal occurred. For example, if your Highest Anniversary Value or 5%
Roll-up value is $125,000 and you subsequently withdraw $10,000 at a time
when your Account Value is equal to $100,000 (a 10% reduction), when
calculating the optional Death Benefit we will reduce your Highest
Anniversary Value ($125,000) by 10% or $12,500.
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OPTIMUM ANNUITY PROSPECTUS
HIGHEST DAILY VALUE DEATH BENEFIT ("HDV")
IF THE ANNUITY HAS ONE OWNER, THE OWNER MUST BE AGE 79 OR LESS AT THE TIME THE
HIGHEST DAILY VALUE DEATH BENEFIT IS ELECTED. IF THE ANNUITY HAS JOINT OWNERS,
THE OLDER OWNER MUST BE AGE 79 OR LESS. IF THERE ARE JOINT OWNERS, DEATH OF THE
OWNER REFERS TO THE FIRST TO DIE OF THE JOINT OWNERS. IF THE ANNUITY IS OWNED BY
AN ENTITY, THE ANNUITANT MUST BE AGE 79 OR LESS AND DEATH OF THE OWNER REFERS TO
THE DEATH OF THE ANNUITANT.
IF YOU ELECT THIS BENEFIT, YOU MUST ALLOCATE YOUR ACCOUNT VALUE IN
ACCORDANCE WITH AN ELIGIBLE MODEL UNDER AN AVAILABLE ASSET ALLOCATION PROGRAM OR
IN ACCORDANCE WITH OTHER OPTIONS THAT WE MAY PERMIT. Because this benefit, once
elected, may not be terminated, you must keep your Account Value allocated to an
eligible model throughout the life of the Annuity. You may, however, switch from
one eligible model to another eligible model. Our asset allocation programs are
generally described in the "Are Any Asset Allocation Programs Available?"
section above. For further information on asset allocation programs, please
consult with your Investment Professional or call 1-800-752-6342.
The HDV Death Benefit depends on whether death occurs before or after the
Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the basic Death Benefit described above; and
2. the HDV as of the Owner's date of death.
If the Owner dies on or after the Death Benefit Target Date, the Death
Benefit equals the greater of:
1. the basic Death Benefit described above; and
2. the HDV on the Death Benefit Target Date plus the sum of all Purchase
Payments less the sum of all proportional withdrawals since the Death
Benefit Target Date.
The amount determined by this calculation is increased by any Purchase
Payments received after the Owner's date of death and decreased by any
proportional withdrawals since such date.
THE HIGHEST DAILY VALUE DEATH BENEFIT DESCRIBED ABOVE IS CURRENTLY BEING OFFERED
IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL. CERTAIN TERMS
AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. THE HIGHEST DAILY
VALUE DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION,
GUARANTEED RETURN OPTION PLUS, THE "COMBINATION 5% ROLL-UP AND HIGHEST
ANNIVERSARY VALUE" DEATH BENEFIT, OR THE HIGHEST ANNIVERSARY VALUE DEATH
BENEFIT.
KEY TERMS USED WITH THE HIGHEST DAILY VALUE DEATH BENEFIT:
- - The Death Benefit Target Date for the Highest Daily Value Death Benefit is
the later of the Annuity anniversary on or after the 80th birthday of the
current Owner, or the older of either the joint Owner or the Annuitant, if
entity owned, or five years after the Issue Date of the Annuity.
- - The Highest Daily Value equals the highest of all previous "Daily Values"
less proportional withdrawals since such date and plus any Purchase
Payments since such date.
- - The Daily Value is the Account Value as of the end of each Valuation Day.
The Daily Value on the Issue Date is equal to your Purchase Payment.
- - Proportional withdrawals are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
Proportional withdrawals result in a reduction to the Highest Daily Value
by reducing such value in the same proportion as the Account Value was
reduced by the withdrawal as of the date the withdrawal occurred. For
example, if your Highest Daily Value is $125,000 and you subsequently
withdraw $10,000 at a time when your Account Value is equal to $100,000 (a
10% reduction), when calculating the optional Death Benefit we will reduce
your Highest Daily Value ($125,000) by 10% or $12,500.
Please see Appendix B to this prospectus for a hypothetical example of how the
HDV Death Benefit is calculated.
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OPTIMUM ANNUITY PROSPECTUS
Death Benefit continued
ANNUITIES WITH JOINT OWNERS
For Annuities with Joint Owners, the Death Benefits are calculated as shown
above except that the age of the oldest of the Joint Owners is used to determine
the Death Benefit Target Date. NOTE: If you and your spouse own the Annuity
jointly, we will pay the Death Benefit to the Beneficiary. If the sole primary
Beneficiary is the surviving spouse, then the surviving spouse can elect to
assume ownership of the Annuity and continue the Annuity instead of receiving
the Death Benefit.
ANNUITIES OWNED BY ENTITIES
For Annuities owned by an entity, the Death Benefits are calculated as shown
above except that the age of the Annuitant is used to determine the Death
Benefit Target Date. Payment of the Death Benefit is based on the death of the
Annuitant (or Contingent Annuitant, if applicable).
CAN I TERMINATE THE OPTIONAL DEATH BENEFITS? DO THE OPTIONAL DEATH BENEFITS
TERMINATE UNDER OTHER CIRCUMSTANCES?
You can terminate the Enhanced Beneficiary Protection Death Benefit and the
Highest Anniversary Value Death Benefit at any time. The "Combination 5% Roll-up
and HAV Death Benefit" and the HDV Death Benefit may not be terminated once
elected. The optional Death Benefits will terminate automatically on the Annuity
Date. We may also terminate any optional Death Benefit if necessary to comply
with our interpretation of the Code and applicable regulations.
WHAT ARE THE CHARGES FOR THE OPTIONAL DEATH BENEFITS?
We deduct a charge equal to 0.25% per year of the average daily net assets of
the Sub-accounts for each of the Highest Anniversary Value Death Benefit and the
Enhanced Beneficiary Protection Death Benefit and 0.50% per year of the average
daily net assets of the Sub-accounts for the "Combination 5% Roll-up and HAV
Death Benefit" and the HDV Death Benefit. We deduct the charge for each of these
benefits to compensate American Skandia for providing increased insurance
protection under the optional Death Benefits. The additional annual charge is
deducted daily against your Account Value allocated to the Sub-accounts.
Please refer to the section entitled "Tax Considerations" for additional
considerations in relation to the optional Death Benefit.
AMERICAN SKANDIA'S ANNUITY REWARDS
WHAT IS THE ANNUITY REWARDS BENEFIT?
The Annuity Rewards Benefit offers Owners the ability to capture any market
gains since the Issue Date of their Annuity as an enhancement to their current
Death Benefit so their Beneficiaries will not receive less than the Annuity's
value as of the effective date of the benefit. Under the Annuity Rewards
Benefit, American Skandia guarantees that the Death Benefit will not be less
than:
- - your Account Value in the variable investment options plus the Interim
Value in any Fixed Allocations as of the effective date of the benefit
- - MINUS any proportional withdrawals* following the effective date of the
benefit
- - PLUS any additional Purchase Payments applied to the Annuity following the
effective date of the benefit.
The Annuity Rewards Death Benefit enhancement does not affect the
calculation of the basic Death Benefit or any Optional Death Benefits available
under the Annuity to the extent such benefit provides for a change in the method
of calculation based on the age of the decedent as of the date of death. If the
Death Benefit amount payable under your Annuity's basic Death Benefit or any
Optional Death Benefits you purchase is greater than the enhanced Death Benefit
under the Annuity Rewards Benefit on the date the Death Benefit is calculated,
your Beneficiary will receive the higher amount.
WHO IS ELIGIBLE FOR THE ANNUITY REWARDS BENEFIT?
Owners can elect the Annuity Rewards Death Benefit enhancement following the
eighth (8th) anniversary of the Annuity's Issue Date. However, the Account Value
on the date that the Annuity Rewards benefit is effective, must be greater than
the amount that would be payable to the Beneficiary under the Death Benefit
(including any amounts payable under any Optional Death Benefit then in effect).
The effective date must occur before annuity payments begin. There can only be
one effective date for the Annuity Rewards Death Benefit enhancement. There is
no additional charge for electing the Annuity Rewards Death Benefit enhancement.
* "Proportional withdrawals" are determined by calculating the percentage of the
Account Value that each withdrawal represented when withdrawn. For example, a
withdrawal of 50% of your Account Value would be treated as a 50% reduction in
the amount payable under the Death Benefit.
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OPTIMUM ANNUITY PROSPECTUS
PAYMENT OF DEATH BENEFITS
PAYMENT OF DEATH BENEFIT TO BENEFICIARY
Except in the case of a spousal assumption as described below, in the event of
your death, the death benefit must be distributed:
- - as a lump sum amount at any time within five (5) years of the date of
death; or
- - as a series of annuity payments not extending beyond the life expectancy of
the Beneficiary or over the life of the Beneficiary. Payments under this
option must begin within one year of the date of death.
Unless you have made an election prior to death benefit proceeds becoming
due, a Beneficiary can elect to receive the Death Benefit proceeds as a series
of fixed annuity payments (annuity payment options 1-4) or as a series of
variable annuity payments (annuity payment options 1-3 or 5 and 6). See the
section entitled "What Types of Annuity Options are Available."
SPOUSAL BENEFICIARY -- ASSUMPTION OF ANNUITY
You may name your spouse as your Beneficiary. If you and your spouse own the
Annuity jointly, we assume that the sole primary Beneficiary will be the
surviving spouse unless you elect an alternative Beneficiary designation. Unless
you elect an alternative Beneficiary designation, the spouse Beneficiary may
elect to assume ownership of the Annuity instead of taking the Death Benefit
payment. Any Death Benefit (including any optional Death Benefits) that would
have been payable to the Beneficiary will become the new Account Value as of the
date we receive due proof of death and any required proof of a spousal
relationship. As of the date the assumption is effective, the surviving spouse
will have all the rights and benefits that would be available under the Annuity
to a new purchaser of the same attained age. For purposes of determining any
future Death Benefit for the surviving spouse, the new Account Value will be
considered as the initial Purchase Payment. No CDSC will apply to the new
Account Value. However, any additional Purchase Payments applied after the date
the assumption is effective will be subject to all provisions of the Annuity,
including any CDSC that may apply to the additional Purchase Payments.
See the section entitled "Managing Your Annuity -- Spousal Contingent
Annuitant" for a discussion of the treatment of a spousal Contingent Annuitant
in the case of the death of the Annuitant in an entity owned Annuity.
QUALIFIED BENEFICIARY CONTINUATION OPTION
The Code provides for alternative death benefit payment options when an Annuity
is used as an IRA, 403(b) or other "qualified investment" that requires Minimum
Distributions. Upon the Owner's death under an IRA, 403(b) or other "qualified
investment", a Beneficiary may generally elect to continue the Annuity and
receive Minimum Distributions under the Annuity instead of receiving the death
benefit in a single payment. The available payment options will depend on
whether the Owner died on or before the date he or she was required to begin
receiving Minimum Distributions under the Code and whether the Beneficiary is
the surviving spouse.
- - If death occurs BEFORE the date Minimum Distributions must begin under the
Code, the Death Benefit can be paid out in either a lump sum, within five
years from the date of death, or over the life or life expectancy of the
designated Beneficiary (as long as payments begin by December 31st of the
year following the year of death). However, if the spouse is the
Beneficiary, the Death Benefit can be paid out over the life or life
expectancy of the spouse with such payments beginning no earlier than
December 31st of the year following the year of death or December 31st of
the year in which the deceased would have reached age 70 1/2, which ever is
later.
- - If death occurs AFTER the date Minimum Distributions must begin under the
Code, the Death Benefit must be paid out at least as rapidly as under the
method then in effect.
A Beneficiary has the flexibility to take out more each year than required
under the Minimum Distribution rules. Until withdrawn, amounts in an IRA, 403(b)
or other "qualified investment" continue to be tax deferred. Amounts withdrawn
each year, including amounts that are required to be withdrawn under the Minimum
Distribution rules, are subject to tax. You may wish to consult a professional
tax advisor for tax advice as to your particular situation.
Upon election of this Qualified Beneficiary Continuation option:
- - the Annuity contract will be continued in the Owner's name, for the benefit
of the Beneficiary.
- - the Beneficiary will be charged at an amount equal to 1.40% daily against
the average daily assets allocated to the Sub-accounts.
- - the Account Value will be equal to any Death Benefit (including any
optional Death Benefit) that would have been payable to the Beneficiary if
they had taken a lump sum distribution.
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OPTIMUM ANNUITY PROSPECTUS
Death Benefit continued
- - the Beneficiary may request transfers among Sub-accounts, subject to the
same limitations and restrictions that applied to the Owner, except that
the Sub-accounts offered will be those offered under the Qualified
Beneficiary Continuation option at the time the option is elected.
- - the Fixed Allocations will be those offered under the Qualified Beneficiary
Continuation option at the time the option is elected.
- - no additional Purchase Payments can be applied to the Annuity.
- - other optional Benefits will be those offered under the Qualified
Beneficiary Continuation option at the time of election.
- - the basic Death Benefit and any optional Death Benefits elected by the
Owner will no longer apply to the Beneficiary.
- - the Beneficiary can request a withdrawal of all or a portion of the Account
Value at any time without application of a CDSC.
- - upon the death of the Beneficiary, any remaining Account Value will be paid
in a lump sum to the person(s) named by the Beneficiary.
- - all amounts in the Annuity must be paid out to the Beneficiary according to
the Minimum Distribution rules described above.
Your Beneficiary will be provided with a prospectus and settlement option
that will describe this option at the time he or she elects this option. Please
contact American Skandia for additional information on the availability,
restrictions and limitations that will apply to a Beneficiary under the
Qualified Beneficiary Continuation option.
ARE THERE ANY EXCEPTIONS TO THESE RULES FOR PAYING THE DEATH BENEFIT?
Yes, there are exceptions that apply no matter how your Death Benefit is
calculated. There are exceptions to the Death Benefit if the decedent was not
the Owner or Annuitant as of the Issue Date and did not become the Owner or
Annuitant due to the prior Owner's or Annuitant's death. Any Death Benefit
(including any optional Death Benefit) that applies will be suspended for a
two-year period from the date he or she first became Owner or Annuitant. After
the two-year suspension period is completed, the Death Benefit is the same as if
this person had been an Owner or Annuitant on the Issue Date.
WHEN DO YOU DETERMINE THE DEATH BENEFIT?
We determine the amount of the Death Benefit as of the date we receive "due
proof of death", any instructions we require to determine the method of payment
and any other written representations we require to determine the proper payment
of the Death Benefit to all Beneficiaries. "Due proof of death" may include a
certified copy of a death certificate, a certified copy of a decree of a court
of competent jurisdiction as to the finding of death or other satisfactory proof
of death. Upon our receipt of "due proof of death" we automatically transfer the
Death Benefit to the AST Money Market Sub-account until we further determine the
universe of eligible Beneficiaries. Once the universe of eligible Beneficiaries
has been determined each eligible Beneficiary may allocate his or her eligible
share of the Death Benefit to the Sub-accounts according to our rules.
Each Beneficiary must make an election as to the method they wish to
receive their portion of the Death Benefit. Absent an election of a Death
Benefit payment method, no Death Benefit can be paid to the Beneficiary. We may
require written acknowledgment of all named Beneficiaries before we can pay the
Death Benefit. DURING THE PERIOD FROM THE DATE OF DEATH UNTIL WE RECEIVE ALL
REQUIRED PAPER WORK, THE AMOUNT OF THE DEATH BENEFIT MAY BE SUBJECT TO MARKET
FLUCTUATIONS.
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OPTIMUM ANNUITY PROSPECTUS
Valuing Your Investment
HOW IS MY ACCOUNT VALUE DETERMINED?
During the accumulation period, the Annuity has an Account Value. The Account
Value is determined separately for each Sub-account allocation and for each
Fixed Allocation. The Account Value is the sum of the values of each Sub-account
allocation and the value of each Fixed Allocation. The Account Value does not
reflect any CDSC that may apply to a withdrawal or surrender. When determining
the Account Value on a day more than 30 days prior to a Fixed Allocation's
Maturity Date, the Account Value may include any Market Value Adjustment that
would apply to a Fixed Allocation (if withdrawn or transferred) on that day.
WHAT IS THE SURRENDER VALUE OF MY ANNUITY?
The Surrender Value of your Annuity is the value available to you on any day
during the accumulation period. The Surrender Value is defined under "Glossary
of Terms" above.
HOW AND WHEN DO YOU VALUE THE SUB-ACCOUNTS?
When you allocate Account Value to a Sub-account, you are purchasing units of
the Sub-account. Each Sub-account invests exclusively in shares of an underlying
Portfolio. The value of the Units fluctuates with the market fluctuations of the
Portfolios. The value of the Units also reflects the daily accrual for the
Insurance Charge, the Distribution Charge (if applicable), and if you elected
one or more optional benefits whose annual charge is deducted daily, the
additional charge made for such benefits. There may be several different Unit
Prices for each Sub-account to reflect the Insurance Charge, Distribution Charge
and the charges for any optional benefits. The Unit Price for the Units you
purchase will be based on the total charges for the benefits that apply to your
Annuity. See the section entitled "What Happens to My Units When There is a
Change in Daily Asset-Based Charges?" for a detailed discussion of how Units are
purchased and redeemed to reflect changes in the daily charges that apply to
your Annuity.
Each Valuation Day, we determine the price for a Unit of each Sub-account,
called the "Unit Price." The Unit Price is used for determining the value of
transactions involving Units of the Sub-accounts. We determine the number of
Units involved in any transaction by dividing the dollar value of the
transaction by the Unit Price of the Sub-account as of the Valuation Day.
EXAMPLE
Assume you allocate $5,000 to a Sub-account. On the Valuation Day you make the
allocation, the Unit Price is $14.83. Your $5,000 buys 337.154 Units of the
Sub-account. Assume that later, you wish to transfer $3,000 of your Account
Value out of that Sub-account and into another Sub-account. On the Valuation Day
you request the transfer, the Unit Price of the original Sub-account has
increased to $16.79. To transfer $3,000, we sell 178.677 Units at the current
Unit Price, leaving you 158.477 Units. We then buy $3,000 of Units of the new
Sub-account at the Unit Price of $17.83. You would then have 168.255 Units of
the new Sub-account.
HOW DO YOU VALUE FIXED ALLOCATIONS?
During the Guarantee Period, we use the concept of an Interim Value. The Interim
Value can be calculated on any day and is equal to the initial value allocated
to a Fixed Allocation plus all interest credited to a Fixed Allocation as of the
date calculated. The Interim Value does not include the impact of any Market
Value Adjustment. If you made any transfers or withdrawals from a Fixed
Allocation, the Interim Value will reflect the withdrawal of those amounts and
any interest credited to those amounts before they were withdrawn. To determine
the Account Value of a Fixed Allocation on any day more than 30 days prior to
its Maturity Date, we multiply the Account Value of the Fixed Allocation times
the Market Value Adjustment factor.
WHEN DO YOU PROCESS AND VALUE TRANSACTIONS?
American Skandia is generally open to process financial transactions on those
days that the New York Stock Exchange (NYSE) is open for trading. There may be
circumstances where the NYSE does not open on a regularly scheduled date or time
or closes at an earlier time than scheduled (normally 4:00 p.m. EST). Financial
transactions requested before the close of the NYSE which meet our requirements
will be processed according to the value next determined following the close of
business. Financial transactions requested on a non-business day or after the
close of the NYSE will be processed based on the value next computed on the next
Valuation Day. There may be circumstances when the opening or closing time of
the NYSE is different than other major stock exchanges, such as NASDAQ or the
American Stock Exchange. Under such circumstances, the closing time of the NYSE
will be used when valuing and processing transactions.
65
OPTIMUM ANNUITY PROSPECTUS
Valuing Your Investment continued
There may be circumstances where the NYSE is open, however, due to
inclement weather, natural disaster or other circumstances beyond our control,
our offices may be closed or our business processing capabilities may be
restricted. Under those circumstances, your Account Value may fluctuate based on
changes in the Unit Values, but you may not be able to transfer Account Value,
or make a purchase or redemption request.
The NYSE is closed on the following nationally recognized holidays: New
Year's Day, Martin Luther King, Jr. Day, Washington's Birthday, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas. On those
dates, we will not process any financial transactions involving purchase or
redemption orders.
American Skandia will also not process financial transactions involving
purchase or redemption orders or transfers on any day that:
- - trading on the NYSE is restricted;
- - an emergency exists making redemption or valuation of securities held in
the separate account impractical; or
- - the SEC, by order, permits the suspension or postponement for the
protection of security holders.
INITIAL PURCHASE PAYMENTS: We are required to allocate your initial
Purchase Payment to the Sub-accounts within two (2) business days after we
receive all of our requirements at our office to issue the Annuity. If we do not
have all the required information to allow us to issue your Annuity, we may
retain the Purchase Payment while we try to reach you or your representative to
obtain all of our requirements. If we are unable to obtain all of our required
information within five (5) business days, we are required to return the
Purchase Payment to you at that time, unless you specifically consent to our
retaining the Purchase Payment while we gather the required information. Once we
obtain the required information, we will invest the Purchase Payment and issue
the Annuity within two (2) business days. During any period that we are trying
to obtain the required information, your money is not invested.
ADDITIONAL PURCHASE PAYMENTS: We will apply any additional Purchase
Payments on the Valuation Day that we receive the Purchase Payment at our office
with satisfactory allocation instructions. We will allocate any additional
Purchase Payments you make according to your most recent allocation instructions
if none are provided.
SCHEDULED TRANSACTIONS: "Scheduled" transactions include transfers under a
Dollar Cost Averaging, rebalancing, or asset allocation program, Systematic
Withdrawals, Minimum Distributions or annuity payments. Scheduled transactions
are processed and valued as of the date they are scheduled, unless the scheduled
day is not a Valuation Day. In that case, the transaction will be processed and
valued on the next Valuation Day, unless the next Valuation Day falls in the
subsequent calendar year, in which case the transaction will be processed and
valued on the prior Valuation Day.
UNSCHEDULED TRANSACTIONS: "Unscheduled" transactions include any other
non-scheduled transfers and requests for Partial Withdrawals or Free Withdrawals
or Surrenders. Unscheduled transactions are processed and valued as of the
Valuation Day we receive the request at our Office and have all of the required
information.
MEDICALLY-RELATED SURRENDERS & DEATH BENEFITS: Medically-related surrender
requests and Death Benefit claims require our review and evaluation before
processing. We price such transactions as of the date we receive at our Office
all supporting documentation we require for such transactions and that are
satisfactory to us.
WHAT HAPPENS TO MY UNITS WHEN THERE IS A CHANGE IN DAILY ASSET-BASED CHARGES?
DISTRIBUTION CHARGE: The Distribution Charge is deducted under your Annuity
during Annuity Years 1-8. At the end of the 8th Annuity Year, we will no longer
deduct the Distribution Charge. On the date the charge no longer applies, your
Annuity will become subject to a different daily asset-based charge. We will
process a transaction where your Account Value
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OPTIMUM ANNUITY PROSPECTUS
allocated to the Sub-accounts will be used to purchase new Units of the
Sub-accounts that reflect the Insurance Charge (and the charge for any optional
benefits you have elected) but not the Distribution Charge. The number of Units
attributed to your Annuity will be decreased and the Unit Price of each unit of
the Sub-accounts in which you invested will be increased. THE ADJUSTMENT IN THE
NUMBER OF UNITS AND UNIT PRICE WILL NOT AFFECT YOUR ACCOUNT VALUE. Beginning on
that date, your Account Value will be determined based on the change in the
value of Units that reflect the Insurance Charge and any other optional benefits
that you have elected.
TERMINATION OF OPTIONAL BENEFITS: Except for the Guaranteed Minimum Income
Benefit, the Combination 5% Roll-up and Highest Anniversary Value Death Benefit
and the Highest Daily Value Death Benefit, which cannot be terminated by the
owner once elected, if any optional benefit terminates, we will no longer deduct
the charge we apply to purchase the optional benefit. Certain optional benefits
may be added after you have purchased your Annuity. On the date a charge no
longer applies or a charge for an optional benefit begins to be deducted, your
Annuity will become subject to a different daily asset-based charge. This change
may result in the number of Units attributed to your Annuity and the value of
those Units being different than it was before the change, however, the
adjustment in the number of Units and Unit Price will not affect your Account
Value (although the change in charges that are deducted will affect your Account
Value).
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Tax Considerations
The tax considerations associated with the Annuity vary depending on whether the
contract is (i) owned by an individual and not associated with a tax-favored
retirement plan (including contracts held by a non-natural person, such as a
trust acting as an agent for a natural person), or (ii) held under a tax-favored
retirement plan. We discuss the tax considerations for these categories of
contracts below. The discussion is general in nature and describes only federal
income tax law (not state or other tax laws). It is based on current law and
interpretations, which may change. The discussion includes a description of
certain spousal rights under the contract and under tax-qualified plans. Our
administration of such spousal rights and related tax reporting accords with our
understanding of the Defense of Marriage Act (which defines a "marriage" as a
legal union between a man and a woman and a "spouse" as a person of the opposite
sex). The information provided is not intended as tax advice. You should consult
with a qualified tax advisor for complete information and advice. References to
purchase payments below relates to your cost basis in your contract. Generally,
your cost basis in a contract not associated with a tax-favored retirement plan
is the amount you pay into your contract, or into annuities exchanged for your
contract, on an after-tax basis less any withdrawals of such payments.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA or 403(b) account, which can hold other permissible assets other than the
annuity. The terms and administration of the trust or custodial account in
accordance with the laws and regulations for IRAs or 403(b)s, as applicable, are
the responsibility of the applicable trustee or custodian.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
TAXES PAYABLE BY YOU
We believe the contract is an annuity contract for tax purposes. Accordingly, as
a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates) to
you during the same calendar year must be treated as one annuity contract for
purposes of determining the amount subject to tax under the rules described
below.
It is possible that the Internal Revenue Service (IRS) would assert that
some or all of the charges for the optional benefits under the contract should
be treated for federal income tax purposes as a partial withdrawal from the
contract. If this were the case, the charge for this benefit could be deemed a
withdrawal and treated as taxable to the extent there are earnings in the
contract. Additionally, for owners under age 59 1/2, the taxable income
attributable to the charge for the benefit could be subject to a tax penalty.
If the IRS determines that the charges for one or more benefits under the
contract are taxable withdrawals, then the sole or surviving owner will be
provided with a notice from us describing available alternatives regarding these
benefits.
If you choose to defer the Annuity Date beyond the default date for your
Annuity, the IRS may not consider your contract to be an annuity under the tax
law. For more information, see "How and When Do I Choose the Annuity Payment
Option?".
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn. You will
generally be taxed on any withdrawals from the contract while you are alive even
if the withdrawal is paid to someone else.
If you assign or pledge all or part of your contract as collateral for a
loan, the part assigned generally will be treated as a withdrawal.
If you transfer your contract for less than full consideration, such as by
gift, you will trigger tax on any gain in the contract. This rule does not apply
if you transfer the contract to your spouse or under most circumstances if you
transfer the contract incident to divorce.
TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment you receive by a fraction, the
numerator of which is your purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the contract.
After the full amount of your purchase payments have been recovered
tax-free, the full amount of the annuity payments will be taxable. If annuity
payments stop due to the death of the annuitant before the full amount of your
purchase payments have been recovered, a tax deduction may be allowed for the
unrecovered amount.
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TAX PENALTY ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount you receive under your contract may be subject to a 10% tax
penalty. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled;
- - generally the amount paid or received is in the form of substantially equal
payments not less frequently than annually (Please note that substantially
equal payments must continue until the later of reaching age 59 1/2 or 5
years. Modification of payments during that time period will result in
retroactive application of the 10% tax penalty.); or
- - the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
SPECIAL RULES IN RELATION TO TAX-FREE EXCHANGES UNDER SECTION 1035
Section 1035 of the Internal Revenue Code of 1986, as amended (Code) permits
certain tax-free exchanges of a life insurance, annuity or endowment contract
for an annuity. If the annuity is purchased through a tax-free exchange of a
life insurance, annuity or endowment contract that was purchased prior to August
14, 1982, then any purchase payments made to the original contract prior to
August 14, 1982 will be treated as made to the new contract prior to that date.
(See Federal Tax Status section in the Statement of Additional Information.)
Partial surrenders may be treated in the same way as tax-free 1035
exchanges of entire contracts, therefore avoiding current taxation of any gains
in the contract as well as the 10% tax penalty on pre-age 59 1/2 withdrawals.
The IRS has reserved the right to treat transactions it considers abusive as
ineligible for this favorable partial 1035 exchange treatment. We do not know
what transactions may be considered abusive. For example we do not know how the
IRS may view early withdrawals or annuitizations after a partial exchange. In
addition, it is unclear how the IRS will treat a partial exchange from a life
insurance, endowment, or annuity contract into an immediate annuity. As of the
date of this prospectus, we will accept a partial 1035 exchange from a
non-qualified annuity into an immediate annuity as a "tax-free" exchange for
future tax reporting purposes, except to the extent that we, as a reporting and
withholding agent, believe that we would be expected to deem the transaction to
be abusive. However, some insurance companies may not recognize these partial
surrenders as tax-free exchanges and may report them as taxable distributions to
the extent of any gain distributed as well as subjecting the taxable portion of
the distribution to the 10% tax penalty. We strongly urge you to discuss any
transaction of this type with your tax advisor before proceeding with the
transaction.
TAXES PAYABLE BY BENEFICIARIES
The death benefit options are subject to income tax to the extent the
distribution exceeds the cost basis in the contract. The value of the death
benefit, as determined under federal law, is also included in the owner's
estate.
Generally, the same tax rules described above would also apply to amounts
received by your beneficiary. Choosing any option other than a lump sum death
benefit may defer taxes. Certain minimum distribution requirements apply upon
your death, as discussed further below.
Tax consequences to the beneficiary vary among the death benefit payment
options.
- - Choice 1: the beneficiary is taxed on earnings in the contract.
- - Choice 2: the beneficiary is taxed as amounts are withdrawn (in this case
earnings are treated as being distributed first).
- - Choice 3: the beneficiary is taxed on each payment (part will be treated as
earnings and part as return of premiums).
CONSIDERATIONS FOR CONTINGENT ANNUITANTS: There may be adverse tax consequences
if a Contingent Annuitant succeeds an Annuitant when the Annuity is owned by a
trust that is neither tax exempt nor qualifies for preferred treatment under
certain sections of the Code. In general, the Code is designed to prevent
indefinite deferral of tax. Continuing the benefit of tax deferral by naming one
or more Contingent Annuitants when the Annuity is owned by a non-qualified trust
might be deemed an attempt to extend the tax deferral for an indefinite period.
Therefore, adverse tax treatment may depend on the terms of the trust, who is
named as Contingent Annuitant, as well as the particular facts and
circumstances. You should consult your tax advisor before naming a Contingent
Annuitant if you expect to use an Annuity in such a fashion.
REPORTING AND WITHHOLDING ON DISTRIBUTIONS
Taxable amounts distributed from your annuity contracts are subject to federal
and state income tax reporting and withholding. In general, we will withhold
federal income tax from the taxable portion of such distribution based on the
type of distribution. In the case of an annuity or similar periodic payment, we
will withhold as if you are a married individual with 3 exemptions unless you
designate a different withholding status.
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Tax Considerations continued
In the case of all other distributions, we will withhold at a 10% rate. You may
generally elect not to have tax withheld from your payments. An election out of
withholding must be made on forms that we provide.
State income tax withholding rules vary and we will withhold based on the
rules of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident aliens
at a 30% rate. A different withholding rate may be applicable to a nonresident
alien based on the terms of an existing income tax treaty between the United
States and the nonresident alien's country. Please refer to the discussion below
regarding withholding rules for tax favored plans (for example, an IRA).
Regardless of the amount withheld by us, you are liable for payment of
federal and state income tax on the taxable portion of annuity distributions.
You should consult with your tax advisor regarding the payment of the correct
amount of these income taxes and potential liability if you fail to pay such
taxes.
ANNUITY QUALIFICATION
Diversification And Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the assets underlying the
variable investment options of the annuity contract must be diversified,
according to certain rules. We believe these diversification rules will be met.
An additional requirement for qualification for the tax treatment described
above is that we, and not you as the contract owner, must have sufficient
control over the underlying assets to be treated as the owner of the underlying
assets for tax purposes. While we also believe these investor control rules will
be met, 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. It is unclear whether such guidelines, if in fact promulgated,
would have retroactive effect. It is also unclear what effect, if any, such
guidelines may have on transfers between the investment options offered pursuant
to this Prospectus. We will take any action, including modifications to your
Annuity or the investment options, required to comply with such guidelines if
promulgated.
Please refer to the Statement of Additional information for further
information on these Diversification and Investor Control issues.
Required Distributions Upon Your Death. Upon your death, certain
distributions must be made under the contract. The required distributions depend
on whether you die before you start taking annuity payments under the contract
or after you start taking annuity payments under the contract.
If you die on or after the annuity date, the remaining portion of the
interest in the contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract
must be distributed within 5 years after the date of death. However, if a
periodic payment option is selected by your designated beneficiary and if such
payments begin within 1 year of your death, the value of the contract may be
distributed over the beneficiary's life or a period not exceeding the
beneficiary's life expectancy. Your designated beneficiary is the person to whom
benefit rights under the contract pass by reason of death, and must be a natural
person in order to elect a periodic payment option based on life expectancy or a
period exceeding five years.
If the contract is payable to (or for the benefit of) your surviving
spouse, that portion of the contract may be continued with your spouse as the
owner.
Changes In The Contract. We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract owners and you will be
given notice to the extent feasible under the circumstances.
ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
- - The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
- - Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
- - You transfer your contract to, or designate, a beneficiary who is either
37 1/2 years younger than you or a grandchild.
- - You purchased more than one annuity contract from the same insurer within
the same calendar year (other than contracts held by tax favored plans).
CONTRACTS HELD BY TAX-FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
Currently, the contract may be purchased for use in connection with
individual retirement accounts and annuities (IRAs) which are subject to
Sections 408(a), 408(b) and 408A of the Code. In addition, this contract may be
purchased for use in
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OPTIMUM ANNUITY PROSPECTUS
connection with a corporate Pension and Profit-sharing plan (subject to 401(a)
of the Code), H.R. 10 plans (also known as Keogh Plans, subject to 401(a) of the
Code), Tax Sheltered Annuities (subject to 403(b) of the Code, also known as Tax
Deferred Annuities or TDAs), and Section 457 plans (subject to 457 of the Code).
This description assumes that you have satisfied the requirements for
eligibility for these products.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA or 403(b) account, which can hold other permissible assets other than the
annuity. The terms and administration of the trust or custodial account in
accordance with the laws and regulations for IRAs or 403(b)s, as applicable, are
the responsibility of the applicable trustee or custodian.
You should be aware that tax favored plans such as IRAs generally provide
income tax deferral regardless of whether they invest in annuity contracts. This
means that when a tax favored plan invests in an annuity contract, it generally
does not result in any additional tax benefits (such as income tax deferral and
income tax free transfers).
TYPES OF TAX-FAVORED PLANS
IRAs. If you buy a contract for use as an IRA, we will provide you a copy of the
prospectus and contract. The "IRA Disclosure Statement" contains information
about eligibility, contribution limits, tax particulars, and other IRA
information. In addition to this information (some of which is summarized
below), the IRS requires that you have a "free look" after making an initial
contribution to the contract. During this time, you can cancel the contract by
notifying us in writing, and we will refund all of the purchase payments under
the contract (or, if provided by applicable state law, the amount credited under
the contract, if greater), less any applicable federal and state income tax
withholding.
Contributions Limits/Rollovers. Because of the way the contract is
designed, you may purchase a contract for an IRA in connection with a "rollover"
of amounts from a qualified retirement plan, as a transfer from another IRA or
as a current contribution. In 2005 the limit is $4,000; increasing to $5,000 in
2008. After 2008 the contribution amount will be indexed for inflation. The tax
law also provides for a catch-up provision for individuals who are age 50 and
above. These taxpayers will be permitted to contribute an additional $500,
increasing to $1,000 in 2006 and years thereafter.
The "rollover" rules under the Code are fairly technical; however, an
individual (or his or her surviving spouse) may generally "roll over" certain
distributions from tax favored retirement plans (either directly or within 60
days from the date of these distributions) if he or she meets the requirements
for distribution. Once you buy the contract, you can make regular IRA
contributions under the contract (to the extent permitted by law). However, if
you make such regular IRA contributions, you should note that you will not be
able to treat the contract as a "conduit IRA," which means that you will not
retain possible favorable tax treatment if you subsequently "roll over" the
contract funds originally derived from a qualified retirement plan or TDA into
another Section 401(a) plan or TDA.
Required Provisions. Contracts that are IRAs (or endorsements that are part
of the contract) must contain certain provisions:
- - You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree
of divorce);
- - Your rights as owner are non-forfeitable;
- - You cannot sell, assign or pledge the contract;
- - The annual contribution you pay cannot be greater than the maximum amount
allowed by law, including catch-up contributions if applicable (which does
not include any rollover amounts);
- - The date on which annuity payments must begin cannot be later than April
1st of the calendar year after the calendar year you turn age 70 1/2; and
- - Death and annuity payments must meet "minimum distribution requirements"
described below.
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
- - A 10% "early distribution penalty" described below;
- - Liability for "prohibited transactions" if you, for example, borrow against
the value of an IRA; or
- - Failure to take a minimum distribution also described below.
SEPs. SEPs are a variation on a standard IRA, and contracts issued to a
SEP must satisfy the same general requirements described under IRAs (above).
There are, however, some differences:
- - If you participate in a SEP, you generally do not include in income any
employer contributions made to the SEP on your behalf up to the lesser of
(a) $42,000 in 2005 or (b) 25% of the employee's earned income (not
including contri-
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OPTIMUM ANNUITY PROSPECTUS
Tax Considerations continued
bution as "earned income" for these purposes). However, for these purposes,
compensation in excess of certain limits established by the IRS will not be
considered. In 2005, this limit is $210,000;
- - SEPs must satisfy certain participation and nondiscrimination requirements
not generally applicable to IRAs; and
- - SEPs for small employers permit salary deferrals up to $14,000 in 2005 with
the employer making these contributions to the SEP. However, no new "salary
reduction" or "SARSEPs" can be established after 1996. Individuals
participating in a SARSEP who are age 50 or above by the end of the year
will be permitted to contribute an additional $4,000 in 2005, increasing to
$5,000 in 2006. Thereafter, the amount is indexed for inflation.
You will also be provided the same information, and have the same "free
look" period, as you would have if you purchased the contract for a standard
IRA.
ROTH IRAs. Like standard IRAs, income within a Roth IRA accumulates
tax-free, and contributions are subject to specific limits. Roth IRAs have,
however, the following differences:
- - Contributions to a Roth IRA cannot be deducted from your gross income;
- - "Qualified distributions" from a Roth IRA are excludable from gross income.
A "qualified distribution" is a distribution that satisfies two
requirements: (1) the distribution must be made (a) after the owner of the
IRA attains age 59 1/2; (b) after the owner's death; (c) due to the owner's
disability; or (d) for a qualified first time homebuyer distribution within
the meaning of Section 72(t)(2)(F) of the Code; and (2) the distribution
must be made in the year that is at least five tax years after the first
year for which a contribution was made to any Roth IRA established for the
owner or five years after a rollover, transfer, or conversion was made from
a traditional IRA to a Roth IRA. Distributions from a Roth IRA that are not
qualified distributions will be treated as made first from contributions
and then from earnings, and taxed generally in the same manner as
distributions from a traditional IRA.
- - If eligible (including meeting income limitations and earnings
requirements), you may make contributions to a Roth IRA after attaining age
70 1/2, and distributions are not required to begin upon attaining such age
or at any time thereafter.
Because of the way the contract is designed, you may purchase a contract
for a Roth IRA in connection with a "rollover" of amounts of another traditional
IRA, conduit IRA, SEP, SIMPLE-IRA, a Roth IRA or with a current contribution.
The Code permits persons who meet certain income limitations (generally,
adjusted gross income under $100,000), and who receive certain qualifying
distributions from such non-Roth IRAs, to directly rollover or make, within 60
days, a "rollover" of all or any part of the amount of such distribution to a
Roth IRA which they establish. This conversion triggers current taxation (but is
not subject to a 10% early distribution penalty). Once the contract has been
purchased, regular Roth IRA contributions will be accepted to the extent
permitted by law.
TDAs. You may own a TDA generally if you are either an employer or employee
of a tax-exempt organization (as defined under Code Section 501 (c)(3)) or a
public educational organization, and you may make contributions to a TDA so long
as the employee's rights to the annuity are nonforfeitable. Contributions to a
TDA, and any earnings, are not taxable until distribution. You may also make
contributions to a TDA under a salary reduction agreement, generally up to a
maximum of $14,000 in 2005. Individuals participating in a TDA who are age 50 or
above by the end of the year will be permitted to contribute an additional
$4,000 in 2005, increasing to $5,000 in 2006. Thereafter, the amount is indexed
for inflation. Further, you may roll over TDA amounts to another TDA or an IRA.
You may also roll over TDA amounts to a qualified retirement plan, a SEP and a
457 government plan. A contract may only qualify as a TDA if distributions
(other than "grandfathered" amounts held as of December 31, 1988) may be made
only on account of:
- - Your attainment of age 59 1/2;
- - Your severance of employment;
- - Your death;
- - Your total and permanent disability; or
- - Hardship (under limited circumstances, and only related to salary deferrals
and any earnings attributable to these amounts).
In any event, you must begin receiving distributions from your TDA by April
1st of the calendar year after the calendar year you turn age 70 1/2 or retire,
whichever is later.
These distribution limits do not apply either to transfers or exchanges of
investments under the contract, or to any "direct transfer" of your interest in
the contract to another TDA or to a
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OPTIMUM ANNUITY PROSPECTUS
mutual fund "custodial account" described under Code Section 403(b)(7).
Employer contributions to TDAs are subject to the same general
contribution, nondiscrimination, and minimum participation rules applicable to
"qualified" retirement plans.
MINIMUM DISTRIBUTION REQUIREMENTS AND PAYMENT OPTION
If you hold the contract under an IRA (or other tax-favored plan), IRS minimum
distribution requirements must be satisfied. This means that generally payments
must start by April 1 of the year after the year you reach age 70 1/2 and must
be made for each year thereafter. The amount of the payment must at least equal
the minimum required under the IRS rules. Several choices are available for
calculating the minimum amount. More information on the mechanics of this
calculation is available on request. Please contact us at a reasonable time
before the IRS deadline so that a timely distribution is made. Please note that
there is a 50% tax penalty on the amount of any minimum distribution not made in
a timely manner.
Effective in 2006, in accordance with recent changes in laws and
regulations, required minimum distributions will be calculated based on the sum
of the contract value and the actuarial value of any additional death benefits
and benefits from optional riders that you have purchased under the contract. As
a result, the required minimum distributions may be larger than if the
calculation were based on the contract value only, which may in turn result in
an earlier (but not before the required beginning date) distribution under the
Contract and an increased amount of taxable income distributed to the contract
owner, and a reduction of death benefits and the benefits of any optional
riders.
You can use the Minimum Distribution option to satisfy the IRS minimum
distribution requirements for this contract without either beginning annuity
payments or surrendering the contract. We will distribute to you this minimum
distribution amount, less any other partial withdrawals that you made during the
year.
Although the IRS rules determine the required amount to be distributed from
your IRA each year, certain payment alternatives are still available to you. If
you own more than one IRA, you can choose to satisfy your minimum distribution
requirement for each of your IRAs by withdrawing that amount from any of your
IRAs.
PENALTY FOR EARLY WITHDRAWALS
You may owe a 10% tax penalty on the taxable part of distributions received from
an IRA, SEP, Roth IRA, TDA or qualified retirement plan before you attain age
59 1/2. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled; or
- - generally the amount paid or received is in the form of substantially equal
payments not less frequently than annually (Please note that substantially
equal payments must continue until the later of reaching age 59 1/2 or 5
years. Modification of payments during that time period will result in
retroactive application of the 10% tax penalty.).
Other exceptions to this tax may apply. You should consult your tax advisor
for further details.
WITHHOLDING
Unless a distribution is an eligible rollover distribution that is "directly"
rolled over into another qualified plan, IRA (including the IRA variations
described above), SEP, 457 government plan or TDA, we will withhold federal
income tax at the rate of 20%. This 20% withholding does not apply to
distributions from IRAs and Roth IRAs. For all other distributions, unless you
elect otherwise, we will withhold federal income tax from the taxable portion of
such distribution at an appropriate percentage. The rate of withholding on
annuity payments where no mandatory withholding is required is determined on the
basis of the withholding certificate that you file with us. If you do not file a
certificate, we will automatically withhold federal taxes on the following
basis:
- - For any annuity payments not subject to mandatory withholding, you will
have taxes withheld by us as if you are a married individual, with 3
exemptions; and
- - For all other distributions, we will withhold at a 10% rate.
We will provide you with forms and instructions concerning the right to
elect that no amount be withheld from payments in the ordinary course. However,
you should know that, in any event, you are liable for payment of federal income
taxes on the taxable portion of the distributions, and you should consult with
your tax advisor to find out more information on your potential liability if you
fail to pay such taxes. There may be additional state income tax withholding
requirements.
ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevents a fiduciary and other "parties in interest" with respect to a plan
(and, for these purposes, an IRA would also constitute a "plan") from receiving
any benefit
73
OPTIMUM ANNUITY PROSPECTUS
Tax Considerations continued
from any party dealing with the plan, as a result of the sale of the contract.
Administrative exemptions under ERISA generally permit the sale of
insurance/annuity products to plans, provided that certain information is
disclosed to the person purchasing the contract. This information has to do
primarily with the fees, charges, discounts and other costs related to the
contract, as well as any commissions paid to any agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found in the applicable sections of this Prospectus.
Information about sales representatives and commissions may be found in the
sections of this Prospectus addressing distribution of the Annuity.
Please consult your tax advisor if you have any additional questions.
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OPTIMUM ANNUITY PROSPECTUS
General Information
SPOUSAL CONSENT RULES FOR RETIREMENT PLANS -- QUALIFIED CONTRACTS
If you are married at the time your payments commence, you may be required by
federal law to choose an income option that provides survivor annuity income to
your spouse, unless your spouse waives that right. Similarly, if you are married
at the time of your death, federal law may require all or a portion of the death
benefit to be paid to your spouse, even if you designated someone else as your
beneficiary. A brief explanation of the applicable rules follows. For more
information, consult the terms of your retirement arrangement.
Defined Benefit Plans and Money Purchase Pension Plans. If you are married
at the time your payments commence, federal law requires that benefits be paid
to you in the form of a "qualified joint and survivor annuity" (QJSA), unless
you and your spouse waive that right, in writing. Generally, this means that you
will receive a reduced payment during your life and, upon your death, your
spouse will receive at least one-half of what you were receiving for life. You
may elect to receive another income option if your spouse consents to the
election and waives his or her right to receive the QJSA. If your spouse
consents to the alternative form of payment, your spouse may not receive any
benefits from the plan upon your death. Federal law also requires that the plan
pay a death benefit to your spouse if you are married and die before you begin
receiving your benefit. This benefit must be available in the form of an annuity
for your spouse's lifetime and is called a "qualified pre-retirement survivor
annuity" (QPSA). If the plan pays death benefits to other beneficiaries, you may
elect to have a beneficiary other than your spouse receive the death benefit,
but only if your spouse consents to the election and waives his or her right to
receive the QPSA. If your spouse consents to the alternate beneficiary, your
spouse will receive no benefits from the plan upon your death. Any QPSA waiver
prior to your attaining age 35 will become null and void on the first day of the
calendar year in which you attain age 35, if still employed.
Defined Contribution Plans (including 401(k) Plans and ERISA 403(b)
Annuities). Spousal consent to a distribution is generally not required. Upon
your death, your spouse will receive the entire death benefit, even if you
designated someone else as your beneficiary, unless your spouse consents in
writing to waive this right. Also, if you are married and elect an annuity as a
periodic income option, federal law requires that you receive a QJSA (as
described above), unless you and your spouse consent to waive this right.
IRAs, non-ERISA 403(b) Annuities, and 457 Plans. Spousal consent to a
distribution is not required. Upon your death, any death benefit will be paid to
your designated beneficiary.
ADDITIONAL INFORMATION
For additional information about federal tax law requirements applicable to tax
favored plans, see the IRA Disclosure Statement.
HOW WILL I RECEIVE STATEMENTS AND REPORTS?
We send any statements and reports required by applicable law or regulation to
you at your last known address of record. You should therefore give us prompt
notice of any address change. We reserve the right, to the extent permitted by
law and subject to your prior consent, to provide any prospectus, prospectus
supplements, confirmations, statements and reports required by applicable law or
regulation to you through our Internet Website at
http://www.americanskandia.prudential.com or any other electronic means,
including diskettes or CD ROMs. We send a confirmation statement to you each
time a transaction is made affecting Account Value, such as making additional
Purchase Payments, transfers, exchanges or withdrawals. We also send quarterly
statements detailing the activity affecting your Annuity during the calendar
quarter. We may confirm regularly scheduled transactions, such as the Annual
Maintenance Fee, systematic withdrawals (including 72(t) payments and required
minimum distributions), bank drafting, dollar cost averaging, and static
rebalancing, in quarterly statements instead of confirming them immediately. You
should review the information in these statements carefully. You may request
additional reports. We reserve the right to charge up to $50 for each such
additional report. We may also send an annual report and a semi-annual report
containing applicable financial statements for the Separate Account and the
Portfolios, as of December 31 and June 30, respectively, to Owners or, with your
prior consent, make such documents available electronically through our Internet
Website or other electronic means.
WHO IS AMERICAN SKANDIA?
American Skandia Life Assurance Corporation, a Prudential Financial Company,
("American Skandia") is a stock life insurance company domiciled in Connecticut
with licenses in all 50 states, the District of Columbia and Puerto Rico.
American Skandia is a wholly-owned subsidiary of American Skandia, Inc. ("ASI"),
whose ultimate parent is Prudential Financial, Inc. American Skandia markets its
products to broker-dealers and financial planners through an internal field
marketing staff. In
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OPTIMUM ANNUITY PROSPECTUS
General Information continued
addition, American Skandia markets through and in conjunction with financial
institutions such as banks that are permitted directly, or through affiliates,
to sell annuities.
American Skandia is in the business of issuing annuity and life insurance
products. American Skandia currently offers the following products: (a) flexible
premium deferred annuities and single premium fixed deferred annuities that are
registered with the SEC; (b) certain other fixed deferred annuities that are not
registered with the SEC; and (c) both fixed and variable immediate adjustable
annuities.
Effective May 1, 2003, Skandia U.S. Inc., the sole shareholder of ASI,
which is the parent of American Skandia, was purchased by Prudential Financial,
Inc. Prudential Financial, Inc. is a New Jersey insurance holding company whose
subsidiary companies serve individual and institutional customers worldwide and
include The Prudential Insurance Company of America, one of the largest life
insurance companies in the U.S. These companies offer a variety of products and
services, including life insurance, property and casualty insurance, mutual
funds, annuities, pension and retirement related services and administration,
asset management, securities brokerage, banking and trust services, real estate
brokerage franchises, and relocation services.
No company other than American Skandia has any legal responsibility to pay
amounts that it owes under its annuity and variable life insurance contracts.
However, Prudential Financial exercises significant influence over the
operations and capital structure of American Skandia.
WHAT ARE SEPARATE ACCOUNTS?
The separate accounts are where American Skandia sets aside and invests the
assets of some of our annuities. In the accumulation period, assets supporting
Account Values of the Annuities are held in a separate account established under
the laws of the State of Connecticut. We are the legal owner of assets in the
separate accounts. In the payout period, assets supporting fixed annuity
payments and any adjustable annuity payments we make available are held in our
general account. Assets supporting variable annuity payment options may be
invested in our separate accounts. Income, gains and losses from assets
allocated to these separate accounts are credited to or charged against each
such separate account without regard to other income, gains or losses of
American Skandia or of any other of our separate accounts. These assets may only
be charged with liabilities which arise from the Annuities issued by American
Skandia. The amount of our obligation in relation to allocations to the
Sub-accounts is based on the investment performance of such Sub-accounts.
However, the obligations themselves are our general corporate obligations.
SEPARATE ACCOUNT B
During the accumulation period, the assets supporting obligations based on
allocations to the variable investment options are held in Sub-accounts of
American Skandia Life Assurance Corporation Variable Account B, also referred to
as "Separate Account B". Separate Account B was established by us pursuant to
Connecticut law on November 25, 1987. 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.
Separate Account B consists of multiple Sub-accounts. Each Sub-account
invests only in a single mutual fund or mutual fund portfolio. The name of each
Sub-account generally corresponds to the name of the underlying Portfolio. Each
Sub-account in Separate Account B may have several different Unit Prices to
reflect the Insurance Charge, Distribution Charge (when applicable) and the
charges for any optional benefits that are offered under this Annuity and other
annuities issued by us through Separate Account B. Separate Account B is
registered with the SEC under the Investment Company Act of 1940 ("Investment
Company Act") as a unit investment trust, which is a type of investment company.
The SEC does not supervise investment policies, management or practices of
Separate Account B.
Prior to November 18, 2002, Separate Account B was organized as a single
separate account with six different Sub-account classes, each of which was
registered as a distinct unit investment trust under the Investment Company Act.
Effective November 18, 2002, each Sub-account class of Separate Account B was
consolidated into the unit investment trust formerly named American Skandia Life
Assurance Corporation Variable Account B (Class 1 Sub-accounts), which was
subsequently renamed American Skandia Life Assurance Corporation Variable
Account B. Each Sub-account of Separate Account B has multiple Unit Prices to
reflect the daily charge deducted for each combination of the applicable
Insurance Charge, Distribution Charge (when applicable) and the charge for each
optional benefit offered under Annuity contracts funded through Separate Account
B. The consolidation of Separate Account B had no impact on Annuity Owners.
We reserve the right to make changes to the Sub-accounts available under
the Annuity as we determine appropriate. We
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OPTIMUM ANNUITY PROSPECTUS
may offer new Sub-accounts, eliminate Sub-accounts, or combine Sub-accounts at
our sole discretion. We may also close Sub-accounts to additional Purchase
Payments on existing Annuity contracts or close Sub-accounts for Annuities
purchased on or after specified dates. We may also substitute an underlying
mutual fund or portfolio of an underlying mutual fund for another underlying
mutual fund or portfolio of an underlying mutual fund, subject to our receipt of
any exemptive relief that we are required to obtain under the Investment Company
Act. We will notify Owners of changes we make to the Sub-accounts available
under the Annuity.
VALUES AND BENEFITS BASED ON ALLOCATIONS TO THE SUB-ACCOUNTS WILL VARY WITH
THE INVESTMENT PERFORMANCE OF THE UNDERLYING MUTUAL FUNDS OR FUND PORTFOLIOS, AS
APPLICABLE. WE DO NOT GUARANTEE THE INVESTMENT RESULTS OF ANY SUB-ACCOUNT. YOUR
ACCOUNT VALUE ALLOCATED TO THE SUB-ACCOUNTS MAY INCREASE OR DECREASE. YOU BEAR
THE ENTIRE INVESTMENT RISK. THERE IS NO ASSURANCE THAT THE ACCOUNT VALUE OF YOUR
ANNUITY WILL EQUAL OR BE GREATER THAN THE TOTAL OF THE PURCHASE PAYMENTS YOU
MAKE TO US.
SEPARATE ACCOUNT D
During the accumulation period, assets supporting our obligations based on Fixed
Allocations are held in American Skandia Life Assurance Corporation Separate
Account D, also referred to as "Separate Account D". Such obligations are based
on the fixed interest rates we credit to Fixed Allocations and the terms of the
Annuities. These obligations do not depend on the investment performance of the
assets in Separate Account D. Separate Account D was established by us pursuant
to Connecticut law.
There are no units in Separate Account D. The Fixed Allocations are
guaranteed by our general account. An Annuity Owner who allocates a portion of
their Account Value to Separate Account D does not participate in the investment
gain or loss on assets maintained in Separate Account D. Such gain or loss
accrues solely to us. We retain the risk that the value of the assets in
Separate Account D may drop below the reserves and other liabilities we must
maintain. Should the value of the assets in Separate Account D drop below the
reserve and other liabilities we must maintain in relation to the annuities
supported by such assets, we will transfer assets from our general account to
Separate Account D to make up the difference. We have the right to transfer to
our general account any assets of Separate Account D in excess of such reserves
and other liabilities. We maintain assets in Separate Account D supporting a
number of annuities we offer.
We currently employ investment managers to manage the assets maintained in
Separate Account D. Each manager we employ is responsible for investment
management of a different portion of Separate Account D. From time to time
additional investment managers may be employed or investment managers may cease
being employed. We are under no obligation to employ or continue to employ any
investment manager(s) and have sole discretion over the investment managers we
retain.
We are not obligated to invest according to specific guidelines or
strategies except as may be required by Connecticut and other state insurance
laws.
WHAT IS THE LEGAL STRUCTURE OF THE UNDERLYING FUNDS?
Each underlying mutual fund is registered as an open-end management investment
company under the Investment Company Act. Shares of the underlying mutual fund
portfolios are sold to separate accounts of life insurance companies offering
variable annuity and variable life insurance products. The shares may also be
sold directly to qualified pension and retirement plans.
VOTING RIGHTS
We are the legal owner of the shares of the underlying mutual funds in which the
Sub-accounts invest. However, under SEC rules, you have voting rights in
relation to Account Value maintained in the Sub-accounts. If an underlying
mutual fund portfolio requests a vote of shareholders, we will vote our shares
based on instructions received from Owners with Account Value allocated to that
Sub-account. Owners have the right to vote an amount equal to the number of
shares attributable to their contracts. If we do not receive voting instructions
in relation to certain shares, we will vote those shares in the same manner and
proportion as the shares for which we have received instructions. We will
furnish those Owners who have Account Value allocated to a Sub-account whose
underlying mutual fund portfolio has requested a "proxy" vote with proxy
materials and the necessary forms to provide us with their voting instructions.
Generally, you will be asked to provide instructions for us to vote on matters
such as changes in a fundamental investment strategy, adoption of a new
investment
77
OPTIMUM ANNUITY PROSPECTUS
General Information continued
advisory agreement, or matters relating to the structure of the underlying
mutual fund that require a vote of shareholders.
American Skandia Trust (the "Trust") has obtained an exemption from the
Securities and Exchange Commission that permits its co-investment advisers,
American Skandia Investment Services, Incorporated ("ASISI") and Prudential
Investments LLC, subject to approval by the Board of Trustees of the Trust, to
change sub-advisors for a Portfolio and to enter into new sub-advisory
agreements, without obtaining shareholder approval of the changes. This
exemption (which is similar to exemptions granted to other investment companies
that are organized in a similar manner as the Trust) is intended to facilitate
the efficient supervision and management of the sub-advisors by ASISI,
Prudential Investments LLC and the Trustees. The Trust is required, under the
terms of the exemption, to provide certain information to shareholders following
these types of changes. We may add new Sub-accounts that invest in a series of
underlying funds other than the Trust that is managed by an affiliate. Such
series of funds may have a similar order from the SEC. You also should review
the prospectuses for the other underlying funds in which various Sub-accounts
invest as to whether they have obtained similar orders from the SEC.
MATERIAL CONFLICTS
It is possible that differences may occur between companies that offer shares of
an underlying mutual fund portfolio to their respective separate accounts
issuing variable annuities and/or variable life insurance products. Differences
may also occur surrounding the offering of an underlying mutual fund portfolio
to variable life insurance policies and variable annuity contracts that we
offer. Under certain circumstances, these differences could be considered
"material conflicts," in which case we would take necessary action to protect
persons with voting rights under our variable annuity contracts and variable
life insurance policies against persons with voting rights under other insurance
companies' variable insurance products. If a "material conflict" were to arise
between owners of variable annuity contracts and variable life insurance
policies issued by us we would take necessary action to treat such persons
equitably in resolving the conflict. "Material conflicts" could arise due to
differences in voting instructions between owners of variable life insurance and
variable annuity contracts of the same or different companies. We monitor any
potential conflicts that may exist.
SERVICE FEES PAYABLE TO AMERICAN SKANDIA
American Skandia or our affiliates have entered into agreements with the
investment adviser or distributor of the underlying Portfolios. Under the terms
of these agreements, American Skandia may provide administrative and support
services to the Portfolios for which it receives a fee of up to 0.75%
(currently) of the average assets allocated to the Portfolios under the Annuity
from the investment adviser, distributor and/or the fund. These agreements may
be different for each underlying mutual fund whose portfolios are offered as
Sub-accounts.
In addition, the investment adviser, sub-advisor or distributor of the
underlying Portfolios may also compensate us by providing reimbursement or
paying directly for, among other things, marketing and/or administrative
services and/or other services they provide in connection with the Annuity.
These services may include, but are not limited to: co-sponsoring various
meetings and seminars attended by broker-dealer firms' registered
representatives and creating marketing material discussing the Annuity and the
available options.
WHO DISTRIBUTES ANNUITIES OFFERED BY AMERICAN SKANDIA?
American Skandia Marketing, Incorporated ("ASM"), a wholly-owned subsidiary of
American Skandia, Inc., is the distributor and principal underwriter of the
securities offered through this prospectus. ASM acts as the distributor of a
number of annuity and life insurance products we offer and co-distributor of
American Skandia Trust and American Skandia Advisor Funds, Inc., a family of
retail mutual funds. ASM also acts as an introducing broker-dealer through which
it receives a portion of brokerage commissions in connection with purchases and
sales of securities held by portfolios of American Skandia Trust which are
offered as underlying investment options under the Annuity.
ASM's principal business address is One Corporate Drive, Shelton,
Connecticut 06484. ASM is registered as broker-dealer under the Securities
Exchange Act of 1934 ("Exchange Act") and is a member of the National
Association of Securities Dealers, Inc. ("NASD").
The Annuity is offered on a continuous basis. ASM enters into distribution
agreements with broker-dealers who are registered under the Exchange Act and
with entities that may offer the Annuity but are exempt from registration
("firms"). Applications for the Annuity are solicited by registered
representatives of those firms. Such representatives will also be our appointed
insurance agents under state insurance law. In addition, ASM may offer the
Annuity directly to potential purchasers.
Commissions are paid to firms on sales of the Annuity according to one or
more schedules. The individual representative will receive a portion of the
compensation, depending on the practice of his or her firm. Commissions are
generally based on a percentage of Purchase Payments made, up to a maximum of
7.0%. Alternative compensation schedules are available that provide a lower
initial commission plus ongoing annual compensation based on all or a portion of
Account
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OPTIMUM ANNUITY PROSPECTUS
Value. We may also provide compensation to the distributing firm for providing
ongoing service to you in relation to the Annuity. Commissions and other
compensation paid in relation to the Annuity do not result in any additional
charge to you or to the Separate Account.
In addition, in an effort to promote the sale of our products (which may
include the placement of ASLAC and/or the Annuity on a preferred or recommended
company or product list and/or access to the firm's registered representatives),
we or ASM may enter into compensation arrangements with certain broker-dealer
firms (including Linsco/Private Ledger, Corp.) with respect to certain or all
registered representatives of such firms under which such firms may receive
separate compensation or reimbursement for, among other things, training of
sales personnel and/or marketing and/or administrative services and/or other
services they provide . These services may include, but are not limited to:
educating customers of the firm on the Annuity's features; conducting due
diligence, analysis and providing office access, operations and systems support;
holding seminars intended to educate the firm's registered representatives and
make them more knowledgeable about the Annuity; providing a dedicated marketing
coordinator; providing priority sales desk support; and providing expedited
marketing compliance approval. To the extent permitted by NASD rules and other
applicable laws and regulations, ASM may pay or allow other promotional
incentives or payments in the form of cash or non-cash compensation. These
arrangements may not be offered to all firms and the terms of such arrangements
may differ between firms. A list of the firms to whom American Skandia pays an
amount of greater than $10,000 for these arrangements is provided in the
Statement of Additional Information, which is available upon request. You should
note that firms and individual registered representatives and branch managers
within some firms participating in one of these compensation arrangements might
receive greater compensation for selling the Annuity than for selling a
different annuity that is not eligible for these compensation arrangements.
While compensation is generally taken into account as an expense in considering
the charges applicable to an annuity product, any such compensation will be paid
by us or ASM and will not result in any additional charge to you. Overall
compensation paid to the distributing firm does not exceed, based on actuarial
assumptions, 8.5% of the total Purchase Payments made. Your registered
representative can provide you with more information about the compensation
arrangements that apply upon the sale of the Annuity.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
American Skandia publishes annual and quarterly reports that are filed with the
SEC. These reports contain financial information about American Skandia that is
annually audited by an independent registered public accounting firm. American
Skandia's annual report for the year ended December 31, 2004, together with
subsequent periodic reports that American Skandia files with the SEC, are
incorporated by reference into this prospectus. You can obtain copies, at no
cost, of any and all of this information, including the American Skandia annual
report that is not ordinarily mailed to contract owners, the more current
reports and any subsequently filed documents at no cost by contacting us at
American Skandia -- Variable Annuities; P.O. Box 7960, Philadelphia, PA 19176
(Telephone: 203-926-1888). The SEC file number for American Skandia is 33-44202.
You may read and copy any filings made by American Skandia with the SEC at the
SEC's Public Reference Room at 450 Fifth Street, Washington, D.C. 20549-0102.
You can obtain information on the operation of the Public Reference Room by
calling (202) 942-8090. The SEC maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC at http://www.sec.gov.
FINANCIAL STATEMENTS
The financial statements of the separate account and American Skandia Life
Assurance Corporation are included in the Statement of Additional Information.
HOW TO CONTACT US
You can contact us by:
- - calling our Customer Service Team at 1-800-752-6342 during our normal
business hours, 8:30 a.m. EST to 8:00 p.m. EST, Monday through Friday, or
Skandia's telephone automated response system at 1-800-766-4530.
- - writing to us via regular mail at American Skandia -- Variable Annuities,
P.O. Box 7960, Philadelphia, PA 19176 OR for express mail American Skandia
-- Variable Annuities, 2101 Welsh Road, Dresher, PA 19025. NOTE: Failure to
send mail to the proper address may result in a delay in our receiving and
processing your request.
- - sending an email to service@prudential.com or visiting our Internet Website
at www.americanskandia.prudential.com.
- - accessing information about your Annuity through our Internet Website at
www.americanskandia.prudential.com.
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OPTIMUM ANNUITY PROSPECTUS
General Information continued
You can obtain account information by calling our automated response system
and at www.americanskandia.prudential.com, our Internet Website. Our Customer
Service representatives are also available during business hours to provide you
with information about your account. You can request certain transactions
through our telephone voice response system, our Internet Website or through a
customer service representative. You can provide authorization for a third
party, including your attorney-in-fact acting pursuant to a power of attorney,
to access your account information and perform certain transactions on your
account. You will need to complete a form provided by us which identifies those
transactions that you wish to authorize via telephonic and electronic means and
whether you wish to authorize a third party to perform any such transactions.
Please note that unless you tell us otherwise, we deem that all transactions
that are directed by your investment professional with respect to your Annuity
have been authorized by you. We require that you or your representative provide
proper identification before performing transactions over the telephone or
through our Internet Website. This may include a Personal Identification Number
(PIN) that will be provided to you upon issue of your Annuity or you may
establish or change your PIN by calling our automated response system and at
www.americanskandia.prudential.com, our Internet Website. Any third party that
you authorize to perform financial transactions on your account will be assigned
a PIN for your account.
Transactions requested via telephone are recorded. To the extent permitted
by law, we will not be responsible for any claims, loss, liability or expense in
connection with a transaction requested by telephone or other electronic means
if we acted on such transaction instructions after following reasonable
procedures to identify those persons authorized to perform transactions on your
Annuity using verification methods which may include a request for your Social
Security number, PIN or other form of electronic identification. We may be
liable for losses due to unauthorized or fraudulent instructions if we did not
follow such procedures.
American Skandia does not guarantee access to telephonic, facsimile,
Internet or any other electronic information or that we will be able to accept
transaction instructions via such means at all times. Regular and/or express
mail will be the only means by which we will accept transaction instructions
when telephonic, facsimile, Internet or any other electronic means are
unavailable or delayed. American Skandia reserves the right to limit, restrict
or terminate telephonic, facsimile, Internet or any other electronic transaction
privileges at any time.
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Securities Act") may be permitted to directors, officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
LEGAL PROCEEDINGS
As of the date of this Prospectus, American Skandia and its affiliates are not
involved in any legal proceedings outside of the ordinary course of business.
American Skandia and its affiliates are involved in pending and threatened legal
proceedings in the normal course of its business, however, we do not anticipate
that the outcome of any such legal proceedings will have a material adverse
affect on the Separate Account, or American Skandia's ability to meet its
obligations under the Annuity, or on the distribution of the Annuity.
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The following are the contents of the Statement of Additional Information:
GENERAL INFORMATION ABOUT AMERICAN SKANDIA
- - American Skandia Life Assurance Corporation
- - American Skandia Life Assurance Corporation Variable Account B
- - American Skandia Life Assurance Corporation Separate Account D
Principal Underwriter/Distributor -- American Skandia Marketing, Incorporated
Payments Made to Promote Sale of our Products
How the Unit Price is Determined
Additional Information on Fixed Allocations
- - How We Calculate the Market Value Adjustment
General Information
- - Voting Rights
- - Modification
- - Deferral of Transactions
- - Misstatement of Age or Sex
- - Ending the Offer
Annuitization
Experts
Legal Experts
Financial Statements
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APPENDIX A
OPTIMUM ANNUITY PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B
Separate Account B consists of multiple Sub-accounts. Each Sub-account invests
only in a single mutual fund or mutual fund portfolio. All or some of these
Sub-accounts are available as investment options for other variable annuities we
offer pursuant to different prospectuses.
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 Sub-accounts of Separate Account
B that are being offered pursuant to this Prospectus; and (b) the number of
Units outstanding for each such Sub-account as of the dates shown. Since
November 18, 2002, we have been determining, on a daily basis, multiple Unit
Prices for each Sub-account of Separate Account B. We compute multiple Unit
Prices because several of our variable annuities invest in the same
Sub-accounts, and these annuities deduct varying charges that correspond to each
combination of the applicable Insurance Charge, Distribution Charge (when
applicable) and the charges for each optional benefit. Where an asset-based
charge corresponding to a particular Sub-account within a new annuity product is
identical to that in the same Sub-account within an existing annuity, the Unit
Price for the new annuity will be identical to that of the existing annuity. In
such cases, we will for reference purposes depict, in the condensed financial
information for the new annuity, Unit Prices of the existing annuity. The year
in which operations commenced in each such Sub-account is noted in parentheses.
To the extent a Sub-account commenced operations during a particular calendar
year, the Unit Price as of the end of the period reflects only the partial year
results from the commencement of operations until December 31st of the
applicable year. When a Unit Price was first calculated for a particular
Sub-account, we set the price of that Unit at $10.00 per Unit. Thereafter, Unit
Prices vary based on market performance. Unit Prices and Units are provided for
Sub-accounts that commenced operations prior to January 1, 2005.
A-1
APPENDIX A
OPTIMUM ANNUITY PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
---- ---- ---- ---- ----
AST WILLIAM BLAIR INTERNATIONAL GROWTH (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 16.42 $ 14.32 10.35 14.10 18.68
Number of Units 1,953,908 1,166,396 7,064 5,277 6,782
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.35 $ 13.41 9.72 -- --
Number of Units 1,986,105 470,320 19,565 -- --
With GMWB
Unit Value $ 12.07 $ 10.56 -- -- --
Number of Units 216,886 18,507 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.26 $ 13.38 9.72 -- --
Number of Units 291,719 54,833 16,068 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.03 $ 10.56 -- -- --
Number of Units 38,033 6,110 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.18 $ 13.34 -- -- --
Number of Units 1,821,923 103,740 -- -- --
With HAV, EBP and GMWB
Unit Value $ 12.00 -- -- -- --
Number of Units 19,719 -- -- -- --
AST LSV INTERNATIONAL VALUE (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.01 $ 5.86 4.43 5.41 8.08
Number of Units 233,045 91,736 32,967 29,954 20,311
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.40 $ 12.92 9.80 -- --
Number of Units 76,147 20,245 4,776 -- --
With GMWB
Unit Value $ 12.85 -- -- -- --
Number of Units 5,183 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.32 $ 12.88 9.79 -- --
Number of Units 6,471 632 279 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.81 -- -- -- --
Number of Units 6,010 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.24 $ 12.85 -- -- --
Number of Units 69,494 5,504 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-2
APPENDIX A
OPTIMUM ANNUITY PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
---- ---- ---- ---- ----
AST STATE STREET RESEARCH SMALL-CAP GROWTH (1)
WITH NO OPTIONAL BENEFITS
Unit Price $ 15.97 $ 17.38 12.12 18.70 20.25
Number of Units 107,136 145,364 6,331 2,439 978
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.43 $ 13.56 9.48 -- --
Number of Units 82,128 52,103 6,251 -- --
With GMWB
Unit Value $ 9.43 $ 10.30 -- -- --
Number of Units 8,600 3,356 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.37 $ 13.53 -- -- --
Number of Units 40,854 8,575 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 9.40 -- -- -- --
Number of Units 3,927 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.30 $ 13.49 -- -- --
Number of Units 113,913 9,676 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AST DEAM SMALL-CAP GROWTH (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.41 $ 6.86 4.71 6.48 9.17
Number of Units 293,384 258,089 44,611 41,602 35,743
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.23 $ 14.13 9.72 -- --
Number of Units 78,039 27,101 2,506 -- --
With GMWB
Unit Value $ 11.15 $ 10.36 -- -- --
Number of Units 15,137 1,850 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.15 $ 14.09 9.72 -- --
Number of Units 35,100 7,018 277 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.12 $ 10.35 -- -- --
Number of Units 3,898 1,939 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.07 $ 14.05 -- -- --
Number of Units 56,414 1,850 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-3
APPENDIX A
OPTIMUM ANNUITY PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
---- ---- ---- ---- ----
AST FEDERATED AGGRESSIVE GROWTH (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.12 $ 8.33 4.98 7.12 9.08
Number of Units 1,169,995 859,909 25,040 10,912 243
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.97 $ 16.47 9.87 -- --
Number of Units 633,435 164,946 14,007 -- --
With GMWB
Unit Value $ 12.78 $ 10.55 -- -- --
Number of Units 70,619 8,491 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 19.86 $ 16.42 9.86 -- --
Number of Units 77,506 18,658 5,370 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.74 $ 10.55 -- -- --
Number of Units 12,031 1,546 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 19.75 $ 16.38 -- -- --
Number of Units 562,771 37,078 -- -- --
With HAV, EBP and GMWB
Unit Value $ 12.70 -- -- -- --
Number of Units 6,328 -- -- -- --
AST SMALL-CAP VALUE (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 16.64 $ 14.47 10.79 12.06 11.41
Number of Units 1,293,786 962,965 66,744 33,608 15,339
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.47 $ 13.49 10.09 -- --
Number of Units 1,067,140 344,340 32,914 -- --
With GMWB
Unit Value $ 12.24 $ 10.69 -- -- --
Number of Units 120,010 14,484 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 15.39 $ 13.45 10.08 -- --
Number of Units 141,679 37,207 6,048 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.21 $ 10.68 -- -- --
Number of Units 16,803 2,140 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.31 $ 13.41 -- -- --
Number of Units 1,007,926 100,155 -- -- --
With HAV, EBP and GMWB
Unit Value $ 12.17 -- -- -- --
Number of Units 7,974 -- -- -- --
A-4
APPENDIX A
OPTIMUM ANNUITY PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
---- ---- ---- ---- ----
AST GOLDMAN SACHS MID-CAP GROWTH (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 4.44 $ 3.87 2.98 4.15 7.03
Number of Units 2,232,502 1,535,565 28,812 17,882 2,473
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.68 $ 12.81 9.88 -- --
Number of Units 633,571 170,457 11,936 -- --
With GMWB
Unit Value $ 12.05 $ 10.52 -- -- --
Number of Units 55,808 4,600 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.60 $ 12.77 9.88 -- --
Number of Units 102,613 20,463 5,904 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 12.01 $ 10.51 -- -- --
Number of Units 10,211 2,424 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.52 $ 12.73 -- -- --
Number of Units 516,261 37,400 -- -- --
With HAV, EBP and GMWB
Unit Value $ 11.97 -- -- -- --
Number of Units 5,270 -- -- -- --
AST NEUBERGER BERMAN MID-CAP VALUE (1993)
WITH NO OPTIONAL BENEFITS
Unit Price $ 16.76 $ 13.82 10.26 11.62 12.13
Number of Units 1,116,503 781,348 69,657 56,219 16,574
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.22 $ 13.40 9.98 -- --
Number of Units 989,311 268,150 16,671 -- --
With GMWB
Unit Value $ 13.12 $ 10.86 -- -- --
Number of Units 108,730 7,071 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 16.13 $ 13.37 9.98 -- --
Number of Units 173,241 40,022 5,947 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 13.08 $ 10.85 -- -- --
Number of Units 22,361 4,186 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 16.04 $ 13.33 -- -- --
Number of Units 937,314 87,253 -- -- --
With HAV, EBP and GMWB
Unit Value $ 13.04 -- -- -- --
Number of Units 6,141 -- -- -- --
A-5
APPENDIX A
OPTIMUM ANNUITY PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
---- ---- ---- ---- ----
AST MFS GROWTH (1999)
WITH NO OPTIONAL BENEFITS
Unit Price $ 7.04 $ 6.44 5.31 7.48 9.68
Number of Units 791,823 893,170 112,701 47,656 3,089
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.50 $ 11.47 9.47 -- --
Number of Units 305,582 188,109 18,241 -- --
With GMWB
Unit Value $ 11.13 $ 10.22 -- -- --
Number of Units 21,410 7,308 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.43 $ 11.43 -- -- --
Number of Units 26,773 6,479 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.09 $ 10.21 -- -- --
Number of Units 4,350 1,319 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.37 $ 11.40 -- -- --
Number of Units 304,760 18,900 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
AST MARSICO CAPITAL GROWTH (1997)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.67 $ 8.46 6.50 7.80 10.09
Number of Units 5,717,404 4,075,719 228,033 182,904 114,992
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.07 $ 12.35 9.52 -- --
Number of Units 3,543,456 1,021,520 78,038 -- --
With GMWB
Unit Value $ 11.74 $ 10.31 -- -- --
Number of Units 386,737 35,775 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.00 $ 12.32 9.52 -- --
Number of Units 479,057 126,883 26,662 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.70 $ 10.31 -- -- --
Number of Units 73,444 10,353 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.92 $ 12.28 -- -- --
Number of Units 3,136,818 215,988 -- -- --
With HAV, EBP and GMWB
Unit Value $ 11.66 -- -- -- --
Number of Units 32,384 -- -- -- --
A-6
APPENDIX A
OPTIMUM ANNUITY PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
---- ---- ---- ---- ----
AST SANFORD BERNSTEIN CORE VALUE (2) (2001)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.28 $ 10.91 8.61 10.05 --
Number of Units 603,508 453,569 82,054 18,453 --
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.30 $ 12.75 10.09 -- --
Number of Units 243,464 91,128 65,721 -- --
With GMWB
Unit Value $ 12.00 $ 10.70 -- -- --
Number of Units 45,483 4,032 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.23 $ 12.71 10.08 -- --
Number of Units 51,451 16,568 25,273 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.96 $ 10.70 -- -- --
Number of Units 7,978 1,276 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.15 $ 12.67 -- -- --
Number of Units 220,419 11,518 -- -- --
With HAV, EBP and GMWB
Unit Value $ 11.92 -- -- -- --
Number of Units 1,051 -- -- -- --
AST HOTCHKIS & WILEY LARGE-CAP VALUE
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.25 $ 8.99 7.59 9.31 10.32
Number of Units 417,314 204,589 44,419 44,212 8,596
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.30 $ 11.70 9.90 -- --
Number of Units 126,725 38,215 5,087 -- --
With GMWB
Unit Value $ 11.88 -- -- -- --
Number of Units 27,234 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.23 $ 11.67 9.90 -- --
Number of Units 49,033 11,538 200 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.84 $ 10.45 -- -- --
Number of Units 9,024 1,288 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.16 $ 11.63 -- -- --
Number of Units 173,888 21,961 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
A-7
APPENDIX A
OPTIMUM ANNUITY PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
---- ---- ---- ---- ----
AST LORD ABBETT BOND-DEBENTURE (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.71 $ 11.98 10.22 10.30 10.13
Number of Units 1,012,739 814,135 43,077 16,628 425
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.67 $ 11.97 10.24 -- --
Number of Units 733,436 309,328 27,024 -- --
With GMWB
Unit Value $ 11.00 $ 10.41 -- -- --
Number of Units 92,187 12,397 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.60 $ 11.94 10.23 -- --
Number of Units 108,071 20,920 274 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 10.97 $ 10.41 -- -- --
Number of Units 14,516 1,266 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.53 $ 11.90 -- -- --
Number of Units 904,128 42,593 -- -- --
With HAV, EBP and GMWB
Unit Value $ 10.94 -- -- -- --
Number of Units 4,145 -- -- -- --
AST PIMCO TOTAL RETURN BOND (1994)
WITH NO OPTIONAL BENEFITS
Unit Price $ 13.72 $ 13.23 12.72 11.80 10.97
Number of Units 3,074,732 2,301,863 362,294 275,317 37,918
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.91 $ 10.55 10.17 -- --
Number of Units 3,124,509 1,067,126 87,940 -- --
With GMWB
Unit Value $ 10.43 $ 10.10 -- -- --
Number of Units 329,463 37,841 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 10.85 $ 10.52 10.17 -- --
Number of Units 356,784 93,573 11,308 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 10.40 $ 10.09 -- -- --
Number of Units 35,761 3,287 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.79 $ 10.49 -- -- --
Number of Units 3,495,678 378,676 -- -- --
With HAV, EBP and GMWB
Unit Value $ 10.37 -- -- -- --
Number of Units 19,700 -- -- -- --
A-8
APPENDIX A
OPTIMUM ANNUITY PROSPECTUS
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
---- ---- ---- ---- ----
AST PIMCO LIMITED MATURITY BOND (1995)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.18 $ 12.08 10.09 11.29 10.59
Number of Units 2,189,975 956,856 38,260 112,948 1,940
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.32 $ 10.26 10.09 -- --
Number of Units 1,926,546 238,601 3,018 -- --
With GMWB
Unit Value $ 10.07 $ 10.03 -- -- --
Number of Units 264,755 23,203 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 10.26 $ 10.23 -- -- --
Number of Units 295,271 30,532 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 10.04 $ 10.02 -- -- --
Number of Units 23,826 1,299 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.21 $ 10.21 -- -- --
Number of Units 2,764,809 36,640 -- -- --
With HAV, EBP and GMWB
Unit Value $ 10.01 -- -- -- --
Number of Units 11,324 -- -- -- --
AST MONEY MARKET (1992)
WITH NO OPTIONAL BENEFITS
Unit Price $ 10.46 $ 10.51 10.57 10.57 10.32
Number of Units 1,663,940 1,245,396 403,604 179,509 29,567
With any one of GRO Plus, EBP or HAV
Unit Price $ 9.84 $ 9.91 9.99 -- --
Number of Units 860,728 432,412 69,199 -- --
With GMWB
Unit Value $ 9.90 $ 9.98 -- -- --
Number of Units 167,246 5,609 -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 9.79 $ 9.88 9.99 -- --
Number of Units 118,431 40,239 11,113 -- --
With any one of EBP or HAV and GMWB
Unit Price $ 9.87 -- -- -- --
Number of Units 6,752 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 9.73 $ 9.85 -- -- --
Number of Units 1,312,018 81,304 -- -- --
With HAV, EBP and GMWB
Unit Value $ 9.84 -- -- -- --
Number of Units 521 -- -- -- --
A-9
APPENDIX A
OPTIMUM ANNUITY PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
SUB-ACCOUNT 2004 2003 2002 2001 2000
---- ---- ---- ---- ----
EVERGREEN VA -- INTERNATIONAL EQUITY (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 12.31 $ 10.46 -- -- --
Number of Units 62,400 24,847 -- -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.27 $ 10.45 -- -- --
Number of Units 24,314 5,552 -- -- --
With GMWB
Unit Value $ 12.26 -- -- -- --
Number of Units 14,337 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 12.24 $ 10.45 -- -- --
Number of Units 7,296 1,075 -- -- --
With any one of EBP or HAV and GMWB
Unit Price -- $ 10.45 -- -- --
Number of Units -- 970 -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.21 $ 10.45 -- -- --
Number of Units 32,858 827 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
EVERGREEN VA -- OMEGA (2000)
WITH NO OPTIONAL BENEFITS
Unit Price $ 9.75 $ 9.21 -- 9.04 --
Number of Units 26,849 15,743 -- -0- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.01 $ 13.27 -- -- --
Number of Units 22,947 3,320 -- -- --
With GMWB
Unit Value $ 11.04 -- -- -- --
Number of Units 1,787 -- -- -- --
With any two of GRO Plus, EBP or HAV
Unit Value $ 13.93 $ 13.23 -- -- --
Number of Units 263 27 -- -- --
With any one of EBP or HAV and GMWB
Unit Price $ 11.00 -- -- -- --
Number of Units 3,387 -- -- -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.86 $ 13.19 -- -- --
Number of Units 31,153 283 -- -- --
With HAV, EBP and GMWB
Unit Value -- -- -- -- --
Number of Units -- -- -- -- --
1: Effective May 2, 2005 the name of the AST State Street Research Small-Cap
Growth Portfolio has changed to AST Small-Cap Growth Portfolio.
2: Effective May 2, 2005 the name of the AST Sanford Bernstein Core Value
Portfolio has changed to AST AllianceBernstein Core Value Portfolio.
A-10
APPENDIX B
OPTIMUM ANNUITY PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits
EXAMPLES OF ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT CALCULATION
The following are examples of how the Enhanced Beneficiary Protection Optional
Death Benefit is calculated. Each example assumes that a $50,000 initial
Purchase Payment is made. Each example assumes that there is one Owner who is
age 50 on the Issue Date and that all Account Value is maintained in the
variable investment options. The formula for determining the Enhanced
Beneficiary Protection Optional Death Benefit is as follows:
Account Value of variable
Growth = investment options plus Interim minus Purchase Payments -
Value of Fixed Allocations proportional withdrawals
(no MVA applies)
Example with market increase
Assume that the Owner has made no withdrawals and that the Account Value has
been increasing due to positive market performance. On the date we receive due
proof of death, the Account Value is $75,000. The basic Death Benefit is
calculated as Purchase Payments minus proportional withdrawals, or Account
Value, which ever is greater. Therefore, the basic Death Benefit is equal to
$75,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to
the amount payable under the basic Death Benefit ($75,000) PLUS 40% of the
"Growth" under the Annuity.
Growth = $75,000 - [$50,000 - $0]
= $25,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit =
40% of Growth
= $25,000 x 0.40
= $10,000
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $85,000
Examples with market decline
Assume that the Owner has made no withdrawals and that the Account Value has
been decreasing due to declines in market performance. On the date we receive
due proof of death, the Account Value is $45,000. The basic Death Benefit is
calculated as Purchase Payments minus proportional withdrawals, or Account
Value, which ever is greater. Therefore, the basic Death Benefit is equal to
$50,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to
the amount payable under the basic Death Benefit ($50,000) PLUS the "Growth"
under the Annuity.
Growth = $45,000 - [$50,000 - $0]
= $-5,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit =
40% of Growth
NO BENEFIT IS PAYABLE
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $50,000
B-1
APPENDIX B
OPTIMUM ANNUITY PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits continued
IN THIS EXAMPLE YOU WOULD RECEIVE NO ADDITIONAL BENEFIT FROM PURCHASING THE
ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT.
Example with market increase and withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 5 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $90,000. The basic Death Benefit is calculated as Purchase
Payments minus proportional withdrawals, or Account Value, which ever is
greater. Therefore, the basic Death Benefit is equal to $90,000. The Enhanced
Beneficiary Protection Optional Death Benefit is equal to the amount payable
under the basic Death Benefit ($90,000) PLUS 40% of the "Growth" under the
Annuity.
Growth = $90,000 - [$50,000 - ($50,000 x $15,000/$75,000)]
= $90,000 - [$50,000 - $10,000]
= $90,000 - $40,000
= $50,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death Benefit =
40% of Growth
= $50,000 x 0.40
= $20,000
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary Protection
Optional Death Benefit
= $110,000
EXAMPLES OF HIGHEST ANNIVERSARY VALUE DEATH BENEFIT CALCULATION
The following are examples of how the Highest Anniversary Value Death Benefit is
calculated. Each example assumes an initial Purchase Payment of $50,000. Each
example assumes that there is one Owner who is age 70 on the Issue Date and that
all Account Value is maintained in the variable investment options.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the date
we receive due proof of death, the Account Value is $75,000; however, the
Anniversary Value on the 5th anniversary of the Issue Date was $90,000. Assume
as well that the Owner has died before the Death Benefit Target Date. The Death
Benefit is equal to the greater of the Highest Anniversary Value or the basic
Death Benefit. The Death Benefit would be the Highest Anniversary Value
($90,000) because it is greater than the amount that would have been payable
under the basic Death Benefit ($75,000).
Example with withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $80,000; however, the Anniversary Value on the 5th anniversary
of the Issue Date was $90,000. Assume as well that the Owner has died before the
Death Benefit Target Date. The Death Benefit is equal to the greater of the
Highest Anniversary Value or the basic Death Benefit.
Highest Anniversary Value = $90,000 - [$90,000 x $15,000/$75,000]
= $90,000 - $18,000
= $72,000
Basic Death Benefit = max [$80,000, $50,000 - ($50,000 x $15,000/$75,000)]
= max [$80,000, $40,000]
= $80,000
The Death Benefit therefore is $80,000.
B-2
APPENDIX B
OPTIMUM ANNUITY PROSPECTUS
Example with death after Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals had been made prior to the
Death Benefit Target Date. Further assume that the Owner dies after the Death
Benefit Target Date, when the Account Value is $75,000. The Highest Anniversary
Value on the Death Benefit Target Date was $80,000; however, following the Death
Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had
taken a withdrawal of $5,000 when the Account Value was $70,000. The Death
Benefit is equal to the greater of the Highest Anniversary Value plus Purchase
Payments minus proportional withdrawals after the Death Benefit Target Date or
the basic Death Benefit.
Highest Anniversary Value = $80,000 + $15,000 - [($80,000 + $15,000)
x $5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $88,214
Basic Death Benefit = max [$75,000, ($50,000 + $15,000) - {($50,000
+ $15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $75,000
The Death Benefit therefore is $88,214.
EXAMPLES OF COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
CALCULATION
The following are examples of how the Combination 5% Roll-Up and Highest
Anniversary Value Death Benefit are calculated. Each example assumes an initial
Purchase Payment of $50,000. Each example assumes that there is one Owner who is
age 70 on the Issue Date and that all Account Value is maintained in the
variable investment options.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the 7th
anniversary of the Issue Date we receive due proof of death, at which time the
Account Value is $75,000; however, the Anniversary Value on the 5th anniversary
of the Issue Date was $90,000. Assume as well that the Owner has died before the
Death Benefit Target Date. The Roll-Up Value is equal to initial Purchase
Payment accumulated at 5% for 6 years, or $67,005. The Death Benefit is equal to
the greatest of the Roll-Up Value, Highest Anniversary Value or the basic Death
Benefit. The Death Benefit would be the Highest Anniversary Value ($90,000)
because it is greater than both the Roll-Up Value ($67,005) and the amount that
would have been payable under the basic Death Benefit ($75,000).
Example with withdrawals
Assume that the Owner made a withdrawal of $5,000 on the 6th anniversary of the
Issue Date when the Account Value was $45,000. The Roll-Up Value on the 6th
anniversary of the Issue Date is equal to initial Purchase Payment accumulated
at 5% for 6 years, or $67,005. The 5% Dollar-for-Dollar Withdrawal Limit for the
7th annuity year is equal to 5% of the Roll-Up Value as of the 6th anniversary
of the Issue Date, or $3,350. Therefore, the remaining $1,650 of the withdrawal
results in a proportional reduction to the Roll-Up Value. On the 7th anniversary
of the Issue Date we receive due proof of death, at which time the Account Value
is $43,000; however, the Anniversary Value on the 2nd anniversary of the Issue
Date was $70,000. Assume as well that the Owner has died before the Death
Benefit Target Date. The Death Benefit is equal to the greatest of the Roll-Up
Value, Highest Anniversary Value or the basic Death Benefit.
B-3
APPENDIX B
OPTIMUM ANNUITY PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits continued
Roll-Up Value = {(67,005 - $3,350) - [($67,005 - $3,350)
x $1,650/($45,000 -$3,350)]} x 1.05
= ($63,655 - $2,522) x 1.05
= $64,190
Highest Anniversary Value = $70,000 - [$70,000 x $5,000 / $45,000]
= $70,000 - $7,778
= $62,222
Basic Death Benefit = max [$43,000, $50,000 - ($50,000 x $5,000/$45,000)]
= max [$43,000, $44,444]
= $44,444
The Death Benefit therefore is $64,190.
Example with death after Death Benefit Target Date
Assume that the Owner has not made any withdrawals prior to the Death Benefit
Target Date. Further assume that the Owner dies after the Death Benefit Target
Date, when the Account Value is $75,000. The Roll-Up Value on the Death Benefit
Target Date (the contract anniversary on or following the Owner's 80th birthday)
is equal to initial Purchase Payment accumulated at 5% for 10 years, or $81,445.
The Highest Anniversary Value on the Death Benefit Target Date was $85,000;
however, following the Death Benefit Target Date, the Owner made a Purchase
Payment of $15,000 and later had taken a withdrawal of $5,000 when the Account
Value was $70,000. The Death Benefit is equal to the greatest of the Roll-Up
Value, Highest Anniversary Value or the basic Death Benefit as of the Death
Benefit Target Date; each increased by subsequent purchase payments and reduced
proportionally for subsequent withdrawals.
Roll-Up Value = $81,445 + $15,000 - [($81,445 + 15,000)
x $5,000/$70,000]
= $81,445 + $15,000 - $6,889
= $89,556
Highest Anniversary Value = $85,000 + $15,000 - [($85,000 + 15,000)
x $5,000/$70,000]
= $85,000 + $15,000 - $7,143
= $92,857
Basic Death Benefit = max [$75,000, $50,000 + $15,000
- {(50,000 + $15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $75,000
The Death Benefit therefore is $92,857.
EXAMPLES OF HIGHEST DAILY VALUE DEATH BENEFIT CALCULATION
The following are examples of how the HDV Death Benefit is calculated. Each
example assumes an initial Purchase Payment of $50,000. Each example assumes
that there is one Owner who is age 70 on the Issue Date.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the date
we receive due proof of death, the Account Value is $75,000; however, the
Highest Daily Value was $90,000. Assume as well that the Owner has died before
the Death Benefit Target Date. The Death Benefit is equal to the greater of the
Highest Daily Value or the basic Death Benefit. The Death Benefit would be the
HDV ($90,000) because it is greater than the amount that would have been payable
under the basic Death Benefit ($75,000).
B-4
APPENDIX B
OPTIMUM ANNUITY PROSPECTUS
Example with withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $80,000; however, the Highest Daily Value ($90,000) was
attained during the fifth Annuity Year. Assume as well that the Owner has died
before the Death Benefit Target Date. The Death Benefit is equal to the greater
of the Highest Daily Value (proportionally reduced by the subsequent withdrawal)
or the basic Death Benefit.
Highest Daily Value = $90,000 - [$90,000 x $15,000/$75,000]
= $90,000 - $18,000
= $72,000
Basic Death Benefit = max [$80,000, $50,000 - ($50,000 x $15,000/$75,000)]
= max [$80,000, $40,000]
= $80,000
The Death Benefit therefore is $80,000.
Example with death after Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals had been made prior to the
Death Benefit Target Date. Further assume that the Owner dies after the Death
Benefit Target Date, when the Account Value is $75,000. The Highest Daily Value
on the Death Benefit Target Date was $80,000; however, following the Death
Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had
taken a withdrawal of $5,000 when the Account Value was $70,000. The Death
Benefit is equal to the greater of the Highest Daily Value on the Death Benefit
Target Date plus Purchase Payments minus proportional withdrawals after the
Death Benefit Target Date or the basic Death Benefit.
Highest Daily Value = $80,000 + $15,000 - [($80,000 + $15,000) x $5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $88,214
Basic Death Benefit = max [$75,000, ($50,000 + $15,000) - {($50,000 + $15,000)
x $5,000/$70,000}]
= max [$75,000, $60,357]
= $75,000
The Death Benefit therefore is $88,214.
B-5
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APPENDIX C
OPTIMUM ANNUITY PROSPECTUS
Appendix C -- Additional Information on Asset Allocation Programs
PROGRAM RULES
- - You can elect an asset allocator program where the Sub-accounts for each
asset class in each model portfolio are designated based on an evaluation
of available Sub-accounts. If you elect the Lifetime Five Benefit ("LT5")
or the Highest Daily Value Death Benefit ("HDV"), you must enroll in one of
the eligible model portfolios. Asset allocation is a sophisticated method
of diversification that allocates assets among asset classes in order to
manage investment risk and potentially enhance returns over the long term.
However, asset allocation does not guarantee a profit or protect against a
loss.
HOW THE ASSET ALLOCATION PROGRAM WORKS
- - Amounts will automatically be allocated in accordance with the percentages
and to Sub-accounts indicated for the model portfolio that you choose. If
you allocate your Account Value or transfer your Account Value among any
Sub-accounts that are outside of your model portfolio, we will allocate
these amounts according to the allocation percentages of the applicable
model portfolio upon the next rebalancing. You may only choose one model
portfolio at a time. When you enroll in the asset allocation program and
upon each rebalance thereafter, 100% of your Account Value allocated to the
variable Sub-accounts will be allocated to the asset allocation program.
Any Account Value not invested in the Sub-accounts will not be part of the
program.
- - ADDITIONAL PURCHASE PAYMENTS: Unless otherwise requested, any additional
Purchase Payments applied to the variable Sub-accounts in the Annuity will
be allocated to the Sub-accounts according to the allocation percentages
for the model portfolio you choose. Allocation of additional Purchase
Payments outside of your model portfolio but into a Sub-account, will be
reallocated according to the allocation percentages of the applicable model
portfolio upon the next rebalancing.
- - REBALANCING YOUR MODEL PORTFOLIO: Changes in the value of the Sub-account
will cause your Account Value allocated to the Sub-accounts to vary from
the percentage allocations of the model portfolio you select. By selecting
the asset allocation program, you have directed us to periodically (e.g.,
quarterly) rebalance your Account Value allocated to the Sub-accounts in
accordance with the percentage allocations assigned to each Sub-account
within your model portfolio at the time you elected the program or as later
modified with your consent. Some asset allocation programs will only
require that a rebalancing occur when the percent of your Account Value
allocated to the Sub-accounts are outside of the acceptable range permitted
under such asset allocation program. Note -- Any Account Value not invested
in the Sub-accounts will not be affected by any rebalance.
- - SUB-ACCOUNT CHANGES WITHIN THE MODEL PORTFOLIOS: From time to time you may
be notified of a suggested change in a Sub-account or percentage allocated
to a Sub-account within your model portfolio. If you consent (in the manner
that is then permitted or required) to the suggested change, then it will
be implemented upon the next rebalance. If you do not consent then
rebalancing will continue in accordance with your unchanged model
portfolio, unless the Sub-account is no longer available under your
Annuity, in which case your lack of consent will be deemed a request to
terminate the asset allocation program and the provisions under
"Termination or Modification of the Asset Allocation Program" will apply.
- - OWNER CHANGES IN CHOICE OF MODEL PORTFOLIO: You may change from the model
portfolio that you have elected to any other currently available model
portfolio at any time. The change will be implemented on the date we
receive all required information in the manner that is then permitted or
required.
TERMINATION OR MODIFICATION OF THE ASSET ALLOCATION PROGRAM:
- - You may request to terminate your asset allocation program at any time. Any
termination will be effective on the date that American Skandia receives
your termination request in good order. If you are enrolled in HDV or LT5,
termination of your asset allocation program must coincide with enrollment
in a then currently available and approved asset allocation program or
other approved option. However, if you are enrolled in LT5 you may
terminate the LT5 benefit in order to then terminate your asset allocation
program. American Skandia reserves the right to terminate or modify the
asset allocation program at any time with respect to any programs.
RESTRICTIONS ON ELECTING THE ASSET ALLOCATION:
- - You cannot participate in auto-rebalancing or a DCA program while enrolled
in an asset allocation program. Upon election of an asset allocation
program, American Skandia will automatically terminate your enrollment in
any auto-rebalancing or DCA program. Finally, Systematic Withdrawals can
only be made as flat dollar amounts.
C-1
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PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS FURTHER
DETAILS ABOUT THE AMERICAN SKANDIA ANNUITY DESCRIBED IN PROSPECTUS ASAPIII-PROS
(05/2005).
_______________________________
(print your name)
_______________________________
(address)
_______________________________
(city/state/zip code)
OPTIMUM ANNUITY PROSPECTUS
Variable Annuity Issued by: Variable Annuity Distributed by:
AMERICAN SKANDIA LIFE AMERICAN SKANDIA
ASSURANCE CORPORATION MARKETING, INCORPORATED
A Prudential Financial Company A Prudential Financial Company
One Corporate Drive One Corporate Drive
Shelton, Connecticut 06484 Shelton, Connecticut 06484
Telephone: 1-800-752-6342 Telephone: 203-926-1888
http://www.americanskandia.prudential.com http://www.americanskandia.prudential.com
MAILING ADDRESSES:
AMERICAN SKANDIA -- VARIABLE ANNUITIES
P.O. Box 7960
Philadelphia, PA 19176
EXPRESS MAIL:
AMERICAN SKANDIA -- VARIABLE ANNUITIES
2101 Welsh Road
Dresher, PA 19025
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
A Prudential Financial Company
One Corporate Drive, Shelton, Connecticut 06484
AMERICAN SKANDIA LIFEVEST(R) II
Flexible Premium Deferred Annuity
PROSPECTUS: MAY 2, 2005
This Prospectus describes American Skandia LifeVest(R) II, a flexible premium
deferred annuity (the "Annuity") offered by American Skandia Life Assurance
Corporation ("American Skandia", "we", "our" or "us"). The Annuity may be
offered as an individual annuity contract or as an interest in a group annuity.
This Prospectus describes the important features of the Annuity and what you
should consider before purchasing the Annuity. THE ANNUITY OR CERTAIN OF ITS
INVESTMENT OPTIONS AND/OR FEATURES MAY NOT BE AVAILABLE IN ALL STATES. VARIOUS
RIGHTS AND BENEFITS MAY DIFFER BETWEEN STATES TO MEET APPLICABLE LAWS AND/OR
REGULATIONS. For more information about variations applicable to your state,
please refer to your Annuity contract or consult your Investment Professional.
Certain terms are capitalized in this Prospectus. Those terms are either defined
in the Glossary of Terms or in the context of the particular section.
American Skandia offers several different annuities which your investment
professional may be authorized to offer to you. Each annuity has different
features and benefits that may be appropriate for you based on your financial
situation, your age and how you intend to use the annuity. The different
features and benefits include variations in death benefit protection and the
ability to access your annuity's account value. The fees and charges you pay and
compensation paid to your investment professional may also be different between
each annuity.
The Variable Investment Option
The variable investment options, each a Sub-account of American Skandia Life
Assurance Corporation Variable Account B, invest in an underlying mutual fund
portfolio. Currently, portfolios of the following underlying mutual funds are
being offered: American Skandia Trust, Gartmore Variable Investment Trust, Wells
Fargo Variable Trust, A I M Advisors, Inc., Evergreen Variable Annuity Trust,
ProFunds VP, First Defined Portfolio Fund LLC and The Prudential Series Fund,
Inc.
Please Read This Prospectus
PLEASE READ THIS PROSPECTUS AND THE CURRENT PROSPECTUS FOR THE UNDERLYING MUTUAL
FUNDS. KEEP THEM FOR FUTURE REFERENCE. If you are purchasing the Annuity as a
replacement for existing variable annuity or variable life coverage, you should
consider any surrender or penalty charges you may incur when replacing your
existing coverage.
Available Information
We have also filed a Statement of Additional Information that is available from
us, without charge, upon your request. The contents of the Statement of
Additional Information are described on page 90. This Prospectus is part of the
registration statement we filed with the SEC regarding this offering. Additional
information on us and this offering is available in the registration statement
and the exhibits thereto. You may review and 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. These documents, as well as documents
incorporated by reference, may also be obtained through the SEC's Internet
Website (http://www.sec.gov) for this registration statement as well as for
other registrants that file electronically with the SEC.
For Further Information call:
====> 1-800-752-6342
THESE ANNUITIES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ISSUED, GUARANTEED OR
ENDORSED BY, ANY BANK, ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC), THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY. AN INVESTMENT IN THIS ANNUITY INVOLVES INVESTMENT RISKS, INCLUDING
POSSIBLE LOSS OF VALUE, EVEN WITH RESPECT TO AMOUNTS ALLOCATED TO THE AST MONEY
MARKET SUB-ACCOUNT. 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.
AMERICAN SKANDIA LIFEVEST(R) II IS A REGISTERED TRADEMARK OF THE PRUDENTIAL
INSURANCE COMPANY OF AMERICA.
Prospectus Dated: May 2, 2005 Statement of Additional Information Dated: May 2, 2005
ASL2PROS505 ASLPROS
PLEASE SEE OUR PRIVACY POLICY AND IRA DISCLOSURE STATEMENT ATTACHED TO THE BACK
COVER OF THIS PROSPECTUS.
Contents
Introduction ............................................................................. 1
Why Would I Choose to Purchase This Annuity? ........................................... 1
What Are Some of the Key Features of This Annuity ...................................... 1
How Do I Purchase This Annuity? ........................................................ 1
Glossary of Terms ........................................................................ 2
Summary of Contract Fees and Charges ..................................................... 3
Expense Examples ......................................................................... 11
Investment Options ....................................................................... 12
What Are the Investment Objectives and Policies of the Portfolios? ..................... 12
What Are the Fixed Allocations? ........................................................ 26
Fees and Charges ......................................................................... 27
What Are the Contract Fees and Charges? ................................................ 27
What Charges Apply Solely to the Variable Investment Options? .......................... 28
What Fees and Expenses Are Incurred by the Portfolios? ................................. 28
What Charges Apply to the Fixed Allocations? ........................................... 28
What Charges Apply if I Choose an Annuity Payment Option? .............................. 28
Exceptions/Reductions to Fees and Charges .............................................. 28
Purchasing Your Annuity .................................................................. 30
What Are Our Requirements for Purchasing the Annuity? .................................. 30
Managing Your Annuity .................................................................... 31
May I Change the Owner, Annuitant and Beneficiary Designations? ........................ 31
May I Return the Annuity if I Change my Mind? .......................................... 31
May I Make Additional Purchase Payments? ............................................... 31
May I Make Scheduled Payments Directly from my Bank Account? ........................... 32
May I Make Purchase Payments Through a Salary Reduction Program? ....................... 32
Managing Your Account Value .............................................................. 33
How and When Are Purchase Payments Invested? ........................................... 33
Are There Restrictions or Charges on Transfers Between Investment Options? ............. 33
Do You Offer Dollar Cost Averaging? .................................................... 35
Do You Offer any Automatic Rebalancing Programs? ....................................... 35
Are any Asset Allocation Programs Available? ........................................... 35
Do You Offer Programs Designed to Guarantee a "Return of Premium" at a Future Date? .... 36
May I Give My Investment Professional Permission to Manage my Account Value? ........... 37
May I Authorize my Third Party Investment Advisor to Manage my Account? ................ 37
How Do the Fixed Allocations Work? ..................................................... 38
How Do You Determine Rates for Fixed Allocations? ...................................... 39
How Does the Market Value Adjustment Work? ............................................. 39
What Happens When my Guarantee Period Matures? ......................................... 40
Access To Account Value .................................................................. 41
What Types of Distributions Are Available to Me? ....................................... 41
Are There Tax Implications for Distributions? .......................................... 41
Can I Withdraw a Portion of my Annuity? ................................................ 41
Can I Make Periodic Withdrawals from the Annuity During the Accumulation Period? ....... 41
Do You Offer a Program for Withdrawals Under Section 72(t) of the Internal Revenue 41
Code?
What Are Minimum Distributions and When Would I Need to Make Them? ..................... 42
Can I Surrender My Annuity for its Value? .............................................. 42
What Types of Annuity Options Are Available? ........................................... 42
How and When Do I Choose the Annuity Payment Option? ................................... 43
How Are Annuity Payments Calculated? ................................................... 44
(i)
Contents
Living Benefit Programs ............................................................. 46
Do You Offer Programs Designed to Provide Investment Protection for Owners
While They Are Alive? ........................................................... 46
Guaranteed Return Option Plus(SM) (GRO PlusSM) .................................... 47
Guaranteed Minimum Withdrawal Benefit (GMWB) ...................................... 55
Guaranteed Minimum Income Benefit (GMIB) .......................................... 59
Lifetime Five Income Benefit (Lifetime Five) ...................................... 63
Death Benefit ....................................................................... 69
What Triggers the Payment of a Death Benefit? ..................................... 69
Basic Death Benefit ............................................................... 69
Optional Death Benefits ........................................................... 69
Valuing Your Investment ............................................................. 76
How Is my Account Value Determined? ............................................... 76
What Is the Surrender Value of my Annuity? ........................................ 76
How and When Do You Value the Sub-Accounts? ....................................... 76
How Do You Value Fixed Allocations? ............................................... 76
When Do You Process and Value Transactions? ....................................... 76
What Happens to my Units When There is a Change in Daily Asset-Based Charges? ..... 77
Tax Considerations .................................................................. 78
General Information ................................................................. 85
How Will I Receive Statements and Reports? ........................................ 85
Who Is American Skandia? .......................................................... 85
What Are Separate Accounts? ....................................................... 85
What Is the Legal Structure of the Underlying Funds? .............................. 87
Who Distributes Annuities Offered by American Skandia? ............................ 88
Incorporation of Certain Documents by Reference ................................... 88
Financial Statements .............................................................. 89
How to Contact Us ................................................................. 89
Indemnification ................................................................... 89
Legal Proceedings ................................................................. 90
Contents of the Statement of Additional Information ............................... 90
Appendix A -- Condensed Financial Information About Separate Account B .............. A-1
Appendix B -- Calculation of Optional Death Benefits ................................ B-1
Appendix C -- Plus40(TM) Optional Life Insurance Rider .............................. C-1
Appendix D -- Description and Calculation of Previously Offered Optional
Death Benefits .................................................................... D-1
Appendix E -- Additional Information on Asset Allocation Programs ................... E-1
(ii)
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Introduction
Why Would I Choose to Purchase This Annuity?
This Annuity is frequently used for retirement planning because it allows you to
accumulate retirement savings and also offers annuity payment options when you
are ready to begin receiving income. The Annuity also offers a choice of
different optional benefits, for an additional charge, that can provide
principal protection or guaranteed minimum income protection for Owners while
they are alive and one or more death benefits that can protect your retirement
savings if you die during a period of declining markets. It may be used as an
investment vehicle for "qualified" investments, including an IRA, SEP-IRA, Roth
IRA, Section 401(a) plans (defined benefit plans and defined contribution plans
such as 401(k), profit sharing and money purchase plans) or Tax Sheltered
Annuity (or 403(b)). It may also be used as an investment vehicle for
"non-qualified" investments. The Annuity allows you to invest your money in a
number of variable investment options as well as in one or more fixed
allocations.
When an Annuity is purchased as a "NON-QUALIFIED" investment, you generally are
not taxed on any investment gains the Annuity earns until you make a withdrawal
or begin to receive annuity payments. This feature, referred to as
"tax-deferral", can be beneficial to the growth of your Account Value because
money that would otherwise be needed to pay taxes on investment gains each year
remains invested and can earn additional money. However, because the Annuity is
designed for long-term retirement savings, a 10% penalty tax may be applied on
withdrawals you make before you reach age 59 1/2. Annuities purchased as a
non-qualified investment are not subject to the maximum contribution limits that
may apply to a qualified investment, and are not subject to required minimum
distributions after age 701/2.
When an Annuity is purchased as a "QUALIFIED" investment, you should consider
that the Annuity does not provide any tax advantages in addition to the
preferential treatment already available through your retirement plan under the
Internal Revenue Code. An Annuity may offer features and benefits in addition to
providing tax deferral that other investment vehicles may not offer, including
death benefit protection for your beneficiaries, lifetime income options, and
the ability to make transfers between numerous variable investment options
offered under the Annuity. You should consult with your investment professional
as to whether the overall benefits and costs of the Annuity are appropriate
considering your overall financial plan.
What Are Some of the Key Features of This Annuity
- - This Annuity is a "flexible premium deferred annuity." It is called
"flexible premium" because you have considerable flexibility in the timing
and amount of premium payments. Generally, investors "defer" receiving
annuity payments until after an accumulation period.
- - This Annuity offers both variable investment options and Fixed Allocations.
If you allocate your Account Value to variable investment options, the value
of your Annuity will vary daily to reflect the investment performance of the
underlying investment options. Fixed Allocations of different durations are
offered that are guaranteed by us, but may have a Market Value Adjustment if
you withdraw or transfer your Account Value before the Maturity Date.
- - The Annuity features two distinct phases -- the accumulation period and the
payout period. During the accumulation period your Account Value is
allocated to one or more investment options.
- - During the payout period, commonly called "annuitization," you can elect to
receive annuity payments (1) for life; (2) for life with a guaranteed
minimum number of payments; (3) based on joint lives; or (4) for a
guaranteed number of payments. We currently make annuity payments available
on a fixed or variable basis.
- - This Annuity offers optional benefits, for an additional charge, that can
provide principal protection or guaranteed minimum income protection for
Owners while they are alive.
- - This Annuity offers a basic Death Benefit. It also offers optional Death
Benefits that provide an enhanced level of protection for your
beneficiary(ies) for an additional charge.
- - There is no Contingent Deferred Sales Charge on surrenders or withdrawals.
You can withdraw Account Value from your Annuity free of any charges,
although the value of any optional guaranteed benefit you elect may be
reduced.
- - Transfers between investment options are tax-free. Currently, you may make
twenty transfers each year free of charge. We also offer several programs
that enable you to manage your Account Value as your financial needs and
investment performance change.
How Do I Purchase This Annuity?
We sell the Annuity through licensed, registered investment professionals. You
must complete an application and submit a minimum initial purchase payment of
$15,000. We may allow you to make a lower initial purchase payment provided you
establish a bank drafting program under which purchase payments received in the
first Annuity Year total at least $15,000. There is no age restriction to
purchase the Annuity. However, the basic Death Benefit provides greater
protection for Owners under age 85, as of the Issue Date of the Annuity. The
availability and level of protection of certain optional benefits may vary based
on the age of the Owner on the Issue Date of the Annuity or the date of the
Owner's death.
1
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Glossary of Terms
Many terms used within this Prospectus are described within the text where they
appear. The description of those terms are not repeated in this Glossary of
Terms.
ACCOUNT VALUE
The value of each allocation to a Sub-account (also referred to as "variable
investment option") or a Fixed Allocation prior to the Annuity Date, plus any
earnings, and/or less any losses, distributions and charges. Other than on a
contract anniversary, the Account Value is calculated before we assess any fee
that is deducted from the contract annually in arrears. The Account Value is
determined separately for each Sub-account and for each Fixed Allocation, and
then totaled to determine the Account Value for your entire Annuity. The Account
Value of each Fixed Allocation on other than its Maturity Date may be calculated
using a market value adjustment.
ANNUITIZATION
The application of Account Value (or Protected Income Value for the Guaranteed
Minimum Income Benefit, if applicable) to one of the available annuity options
for the Annuitant to begin receiving periodic payments for life, for a
guaranteed minimum number of payments or for life with a guaranteed minimum
number of payments.
ANNUITY DATE
The date you choose for annuity payments to commence. A maximum Annuity Date may
apply.
ANNUITY YEAR
A 12-month period commencing on the Issue Date of the Annuity and each
successive 12-month period thereafter.
CODE
The Internal Revenue Code of 1986, as amended from time to time.
FIXED ALLOCATION
An allocation of Account Value that is to be credited a fixed rate of interest
for a specified Guarantee Period during the accumulation period.
GUARANTEE PERIOD
A period of time during the accumulation period where we credit a fixed rate of
interest on a Fixed Allocation.
INTERIM VALUE
The value of a Fixed Allocation on any date other than the Maturity Date. The
Interim Value is equal to the initial value allocated to the Fixed Allocation
plus all interest credited to the Fixed Allocation as of the date calculated,
less any transfers or withdrawals from the Fixed Allocation.
ISSUE DATE
The effective date of your Annuity.
MVA
A market value adjustment used in the determination of Account Value of each
Fixed Allocation on any day more than 30 days prior to the Maturity Date of such
Fixed Allocation.
OWNER
With an Annuity issued as an individual annuity contract, the Owner is either an
eligible entity or person named as having ownership rights in relation to the
Annuity. With an Annuity issued as a certificate under a group annuity contract,
the "Owner" refers to the person or entity who has the rights and benefits
designated as to the "Participant" in the certificate.
SURRENDER VALUE
The value of your Annuity available upon surrender prior to the Annuity Date. It
equals the Account Value as of the date we price the surrender minus the Annual
Maintenance Fee, Tax Charge, the charge for any optional benefits and any
additional amounts we applied to your Purchase Payments that we may be entitled
to recover under certain circumstances. There is no Contingent Deferred Sales
Charge upon surrender or partial withdrawal. The surrender value may be
calculated using a Market Value Adjustment with respect to amounts in any Fixed
Allocation.
UNIT
A measure used to calculate your Account Value in a Sub-account during the
accumulation period.
VALUATION DAY
Every day the New York Stock Exchange is open for trading or any other day the
Securities and Exchange Commission requires mutual funds or unit investment
trusts to be valued.
2
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Summary of Contract Fees and Charges
Below is a summary of the fees and charges for the Annuity. Some fees and
charges are assessed against your Annuity while others are assessed against
assets allocated to the variable investment options. The fees and charges that
are assessed against the Annuity include the Transfer Fee, Tax Charge and Annual
Maintenance Fee. The charges that are assessed against the variable investment
options are the mortality and expense risk charge, the charge for administration
of the Annuity, and the charge for certain optional benefits other than the
Guaranteed Minimum Income Benefit, which is assessed against the Protected
Income Value. Each underlying mutual fund portfolio assesses a charge for
investment management, other expenses and with some mutual funds, a 12b-1
charge. The prospectus for each underlying mutual fund provides more detailed
information about the expenses for the underlying mutual funds.
The following table provides a summary of the fees and charges you will pay if
you surrender the Annuity or transfer Account Value among investment options.
These fees and charges are described in more detail within this Prospectus.
YOUR TRANSACTION FEES AND CHARGES
(ASSESSED AGAINST THE ANNUITY)
FEE/CHARGE AMOUNT DEDUCTED
- ----------------------------------------------------------------------------------------------------------
There is no Contingent Deferred Sales Charge deducted upon
Contingent Deferred Sales Charge surrender or partial withdrawal.
$10 (currently, $15 maximum)
(Currently, we deduct the fee after the 20th
transfer each Annuity Year. We guarantee
that the number of charge free transfers
Transfer Fee will never be less than 8.)
Up to 3.5% of the value that is annuitized, depending on the
requirements of the applicable jurisdiction. This charge is deducted
Tax Charge generally at the time you annuitize your contract.
3
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Summary of Contract Fees and Charges continued
The following table provides a summary of the periodic fees and charges you will
pay while you own the Annuity, excluding the underlying mutual fund Portfolio
annual expenses. These fees and charges are described in more detail within this
Prospectus.
YOUR PERIODIC FEES AND CHARGES
ANNUAL FEES/CHARGES ASSESSED AGAINST THE ANNUITY
FEE/CHARGE AMOUNT DEDUCTED
- ------------------------------------------------------------------------------------------------------------------
Annual Maintenance Fee Smaller of $35 or 2% of Account Value
(Only applicable if Account Value is less than $100,000)
(Assessed annually on the Annuity's anniversary date
or upon surrender)
ANNUAL FEES/CHARGES OF THE SUB-ACCOUNTS(1)
(AS A PERCENTAGE OF THE AVERAGE DAILY NET ASSETS OF THE SUB-ACCOUNTS)
FEE/CHARGE AMOUNT DEDUCTED
- -------------------------------------------------------------------------------------------------------------------------
Mortality & Expense Risk Charge(2) 1.50%
Administration Charge(2) 0.15%
Settlement Service Charge(3) 1.40% per year of the value of each Sub-account if your beneficiary
elects the Qualified Beneficiary Continuation
Option(4) ("Qualified BCO")
1.65% per year of the value of each Sub-account
Total Annual Charges of the Sub-accounts(2) (1.40% per year if you are a beneficiary electing the Qualified BCO)
1: These charges are deducted daily and apply to Variable Investment Options
only.
2: The combination of the Mortality and Expense Risk Charge and Administration
Charge is referred to as the "Insurance Charge" elsewhere in this Prospectus.
3: The Mortality & Expense Risk Charge and the Administration do not apply if
you are a beneficiary under the Qualified Beneficiary Continuation Option. The
Settlement Service Charge applies only if your beneficiary elects the Qualified
Beneficiary Continuation Option.
4: When an Annuity is used as an IRA, 403(b) or other "qualified investment",
upon the Owner's death a beneficiary may generally elect to continue the Annuity
and receive Minimum Distributions under the Annuity instead of receiving the
death benefit in a single payment. If a beneficiary elects this option, the
beneficiary will incur the Settlement Service Charge. Please refer to the
section of this Prospectus that describes the Qualified Beneficiary Continuation
Option for more detailed information about this option, including certain
restrictions and limitations that may apply.
4
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
The following table provides a summary of the fees and charges you will pay if
you elect any of the following optional benefits. Not all optional benefits may
be purchased in combination with one another. You may only elect one optional
living benefit. The optional living benefits are the Guaranteed Return Option
Plus program (and where not available, Guaranteed Return Option), the Guaranteed
Minimum Withdrawal Benefit, the Guaranteed Minimum Income Benefit and the
Lifetime Five(SM) Income Benefit. For the optional death benefits, you may elect
the Highest Anniversary Value Death Benefit or the Highest Daily Value Death
Benefit together with the Enhanced Beneficiary Protection Death Benefit or any
of these three benefits individually, but the Combination 5% Roll-up and HAV
Death Benefit may only be purchased individually. The fees and charges of each
of the optional benefits are described in more detail within this Prospectus.
YOUR OPTIONAL BENEFIT FEES AND CHARGES
OPTIONAL
BENEFIT FEE/ TOTAL ANNUAL
OPTIONAL BENEFIT CHARGE CHARGE*
- -----------------------------------------------------------------------------------------------------------------------------
GUARANTEED RETURN OPTION PLUS(SM) (GRO PLUS(SM))/GUARANTEED RETURN OPTION
We offer a program that guarantees a "return of premium" at a future 0.25% of average daily 1.90%;
date, while allowing you to allocate all or a portion of your Account net assets of the 1.65% for Qualified BCO
Value to certain Sub-accounts. Sub-accounts
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
We offer a program that guarantees your ability to withdraw amounts 0.35% of average 2.00%;
over time equal to an initial principal value, regardless of the daily net assets of 1.75% for Qualified BCO
impact of market performance on your Account Value. the Sub-accounts
GUARANTEED MINIMUM INCOME BENEFIT (GMIB) **
We offer a program that, after a seven-year waiting period, guarantees 0.50% per year of 1.65%
your ability to begin receiving income from your Annuity in the form the average Protected PLUS
of annuity payments based on your total Purchase Payments and an Income Value during 0.50% per year of average
annual increase of 5% on such Purchase Payments adjusted for each year; deducted Protected Income Value
withdrawals (called the "Protected Income Value"), regardless of the annually in arrears each
impact of market performance on your Account Value. Annuity Year
LIFETIME FIVE INCOME BENEFIT**
We offer a program that guarantees your ability to withdraw amounts 0.60% of average 2.25%
equal to a percentage of an initial principal value, regardless of the daily net assets of
impact of market performance on your Account Value, subject to our the Sub-accounts
program rules regarding the timing and amount of withdrawals.
ENHANCED BENEFICIARY PROTECTION DEATH BENEFIT **
We offer an Optional Death Benefit that provides an enhanced level of 0.25% of average 1.90%
protection for your beneficiary(ies) by providing amounts in addition daily net assets of
to the basic Death Benefit that can be used to offset federal and the Sub-accounts
state taxes payable on any taxable gains in your Annuity at the time
of your death.
5
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Summary of Contract Fees and Charges continued
OPTIONAL
BENEFIT FEE/ TOTAL ANNUAL
OPTIONAL BENEFIT CHARGE CHARGE*
- -------------------------------------------------------------------------------------------------------------------------
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT ("HAV") **
We offer an Optional Death Benefit that provides an enhanced level of 0.25% of average 1.90%
protection for your beneficiary(ies) by providing a death benefit daily net assets of
equal to the greater of the basic Death Benefit and the Highest the Sub-accounts
Anniversary Value, less proportional withdrawals.
COMBINATION 5% ROLL-UP AND HAV DEATH BENEFIT **
We offer an Optional Death Benefit that provides an enhanced level of 0.50% of average 2.15%
protection for your beneficiary(ies) by providing the greater of the daily net assets of
Highest Anniversary Value Death Benefit and a 5% annual increase on the Sub-accounts
Purchase Payments adjusted for withdrawals.
HIGHEST DAILY VALUE DEATH BENEFIT ("HDV")**
We offer an Optional Death Benefit that provides an enhanced level of 0.50% of average 1.75% in Annuity Years
protection for your beneficiary(ies) by providing a death benefit daily net assets of 1-8; 1.15% in Annuity
equal to the greater of the basic Death Benefit and the Highest Daily the Sub-accounts Years 9 and later
Value, less proportional withdrawals.
PLEASE REFER TO THE SECTION OF THIS PROSPECTUS THAT DESCRIBES EACH OPTIONAL
BENEFIT FOR A COMPLETE DESCRIPTION OF THE BENEFIT, INCLUDING ANY RESTRICTIONS OR
LIMITATIONS THAT MAY APPLY.
* The Total Annual Charge includes the Insurance Charge assessed against the
average daily net assets allocated to the sub-accounts. If you elect more than
one optional benefit, the Total Annual Charge would be increased to include the
charge for each optional benefit.
** These optional benefits are not available under the Qualified BCO.
The following table provides the range (minimum and maximum) of the total annual
expenses for the underlying mutual funds ("Portfolios") as of December 31, 2004.
Each figure is stated as a percentage of the underlying Portfolio's average
daily net assets.
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES
MINIMUM MAXIMUM
- --------------------------------- ------- --------
TOTAL PORTFOLIO OPERATING EXPENSE 0.63% 3.06%
The following are the investment management fees, other expenses, 12b-1 fees (if
applicable), and the total annual expenses for each underlying mutual fund
("Portfolio") as of December 31, 2004, except as noted. Each figure is stated as
a percentage of the underlying Portfolio's average daily net assets. For certain
of the underlying Portfolios, a portion of the management fee has been waived
and/or other expenses have been partially reimbursed. Any such fee waivers
and/or reimbursements have been reflected in the footnotes. The "Total Annual
Portfolio Operating Expenses" reflect the combination of the underlying
Portfolio's investment management fee, other expenses and any 12b-1 fees. The
following expenses are deducted by the underlying Portfolio before it provides
American Skandia with the daily net asset value. Any footnotes about expenses
appear after the list of all the Portfolios. The underlying Portfolio
information was provided by the underlying mutual funds and has not been
independently verified by us. See the prospectuses or statements of additional
information of the underlying Portfolios for further details. The current
prospectus and statement of additional information for the underlying Portfolios
can be obtained by calling 1-800-752-6342.
6
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES
(AS A PERCENTAGE OF THE AVERAGE NET ASSETS OF THE UNDERLYING PORTFOLIOS)
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
- --------------------------------------------------------------------------------------------------
AMERICAN SKANDIA TRUST:(2, 3)
AST JPMorgan International Equity 1.00% 0.13% None 1.13%
AST William Blair International Growth 1.00% 0.22% None 1.22%
AST LSV International Value(4) 1.00% 0.37% None 1.37%
AST MFS Global Equity 1.00% 0.35% None 1.35%
AST Small-Cap Growth(5) 0.90% 0.24% None 1.14%
AST DeAM Small-Cap Growth 0.95% 0.22% None 1.17%
AST Federated Aggressive Growth 0.95% 0.24% None 1.19%
AST Goldman Sachs Small-Cap Value 0.95% 0.24% None 1.19%
AST Small-Cap Value(6) 0.90% 0.18% None 1.08%
AST DeAM Small-Cap Value 0.95% 0.33% None 1.28%
AST Goldman Sachs Mid-Cap Growth 1.00% 0.25% None 1.25%
AST Neuberger Berman Mid-Cap Growth 0.90% 0.22% None 1.12%
AST Neuberger Berman Mid-Cap Value 0.90% 0.15% None 1.05%
AST Alger All-Cap Growth 0.95% 0.22% None 1.17%
AST Gabelli All-Cap Value 0.95% 0.26% None 1.21%
AST T. Rowe Price Natural Resources 0.90% 0.26% None 1.16%
AST AllianceBernstein Large-Cap Growth(7) 0.90% 0.23% None 1.13%
AST MFS Growth 0.90% 0.20% None 1.10%
AST Marsico Capital Growth 0.90% 0.14% None 1.04%
AST Goldman Sachs Concentrated Growth 0.90% 0.17% None 1.07%
AST DeAM Large-Cap Value 0.85% 0.26% None 1.11%
AST AllianceBernstein Growth + Value 0.90% 0.32% None 1.22%
AST AllianceBernstein Core Value(8) 0.75% 0.24% None 0.99%
AST Cohen & Steers Realty 1.00% 0.22% None 1.22%
AST AllianceBernstein Managed Index 500(9) 0.60% 0.17% None 0.77%
AST American Century Income & Growth 0.75% 0.24% None 0.99%
AST AllianceBernstein Growth & Income(10) 0.75% 0.15% None 0.90%
AST Hotchkis & Wiley Large-Cap Value 0.75% 0.19% None 0.94%
AST Global Allocation(11) 0.89% 0.26% None 1.15%
AST American Century Strategic Balanced 0.85% 0.27% None 1.12%
AST T. Rowe Price Asset Allocation 0.85% 0.27% None 1.12%
AST T. Rowe Price Global Bond 0.80% 0.27% None 1.07%
AST Goldman Sachs High Yield 0.75% 0.18% None 0.93%
AST Lord Abbett Bond-Debenture 0.80% 0.22% None 1.02%
AST PIMCO Total Return Bond 0.65% 0.16% None 0.81%
AST PIMCO Limited Maturity Bond 0.65% 0.17% None 0.82%
AST Money Market 0.50% 0.13% None 0.63%
GARTMORE VARIABLE INVESTMENT TRUST:
GVIT Developing Markets 1.15% 0.38% 0.25% 1.78%
WELLS FARGO VARIABLE TRUST ADVANTAGE:(12)
Advantage Equity Income 0.55% 0.23% 0.25% 1.03%
7
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Summary of Contract Fees and Charges continued
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
- ---------------------------------------------------------------------------------------------------------------
AIM VARIABLE INSURANCE FUNDS:(13)
AIM V.I. Dynamics Fund -- Series I shares 0.75% 0.39% None 1.14%
AIM V.I. Technology Fund -- Series I shares 0.75% 0.40% None 1.15%
AIM V.I. Health Sciences Fund -- Series I shares(14) 0.75% 0.36% None 1.11%
AIM V.I. Financial Services Fund -- Series I shares 0.75% 0.37% None 1.12%
EVERGREEN VARIABLE ANNUITY TRUST:
International Equity 0.42% 0.30% None 0.72%
Growth 0.70% 0.26% None 0.96%
Omega 0.52% 0.16% None 0.68%
PROFUND VP:(15)
Access High Yield 0.75% 1.02% 0.25% 1.98%
Bull 0.75% 0.78% 0.25% 1.78%
OTC 0.75% 0.87% 0.25% 1.87%
Large-Cap Value 0.75% 1.04% 0.25% 2.04%
Large-Cap Growth 0.75% 2.06% 0.25% 3.06%
Mid-Cap Value 0.75% 0.92% 0.25% 1.92%
Mid-Cap Growth 0.75% 0.94% 0.25% 1.94%
Small-Cap Value 0.75% 0.95% 0.25% 1.95%
Small-Cap Growth 0.75% 0.90% 0.25% 1.90%
Asia 30 0.75% 0.86% 0.25% 1.86%
Europe 30 0.75% 0.78% 0.25% 1.78%
Japan 0.75% 0.85% 0.25% 1.85%
UltraBull 0.75% 0.89% 0.25% 1.89%
UltraMid-Cap 0.75% 0.94% 0.25% 1.94%
UltraSmall-Cap 0.75% 0.94% 0.25% 1.94%
UltraOTC 0.75% 0.88% 0.25% 1.88%
Bear 0.75% 0.90% 0.25% 1.90%
Short Mid-Cap 0.75% 0.90% 0.25% 1.90%
Short Small-Cap 0.75% 1.28% 0.25% 2.28%
Short OTC 0.75% 0.86% 0.25% 1.86%
Banks 0.75% 0.98% 0.25% 1.98%
Basic Materials 0.75% 0.96% 0.25% 1.96%
Biotechnology 0.75% 0.98% 0.25% 1.98%
Consumer Goods 0.75% 0.99% 0.25% 1.99%
Consumer Services 0.75% 1.20% 0.25% 2.20%
Financials 0.75% 0.92% 0.25% 1.92%
Health Care 0.75% 0.91% 0.25% 1.91%
Industrials 0.75% 0.99% 0.25% 1.99%
Internet 0.75% 0.94% 0.25% 1.94%
Oil & Gas 0.75% 0.92% 0.25% 1.92%
Pharmaceuticals 0.75% 0.97% 0.25% 1.97%
Precious Metals 0.75% 0.87% 0.25% 1.87%
Real Estate 0.75% 0.93% 0.25% 1.93%
8
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
TOTAL
ANNUAL
PORTFOLIO
MANAGEMENT OTHER 12b-1 OPERATING
UNDERLYING PORTFOLIO FEES EXPENSES(1) FEES EXPENSES
PROFUND VP:(15) CONTINUED
Semiconductor 0.75% 0.99% 0.25% 1.99%
Technology 0.75% 0.87% 0.25% 1.87%
Telecommunications 0.75% 0.95% 0.25% 1.95%
Utilities 0.75% 0.95% 0.25% 1.95%
U.S. Government Plus 0.50% 0.86% 0.25% 1.61%
Rising Rates Opportunity 0.75% 0.75% 0.25% 1.75%
FIRST DEFINED PORTFOLIO FUND, LLC:(16, 17)
First Trust(R) 10 Uncommon Values 0.60% 0.76% 0.25% 1.61%
Target Managed VIP 0.60% 1.25% 0.25% 2.10%
The Dow(SM) DART 10 0.60% 1.53% 0.25% 2.38%
Global Dividend Target 15 0.60% 1.85% 0.25% 2.70%
S&P(R) Target 24 0.60% 1.58% 0.25% 2.43%
NASDAQ(R) Target 15 0.60% 1.75% 0.25% 2.60%
Value Line(R) Target 25 0.60% 1.48% 0.25% 2.33%
The Dow Target Dividend(18) 0.60% 0.62% 0.25% 1.47%
THE PRUDENTIAL SERIES FUND, INC.:
SP William Blair International Growth 0.85% 0.45% 0.25% 1.55%
1: As noted above, shares of the Portfolios generally are purchased through
variable insurance products. Many of the Portfolios and/or their investment
advisers and/or distributors have entered into arrangements with us as the
issuer of the Annuity under which they compensate us for providing ongoing
services in lieu of the Trust providing such services. Amounts paid by a
Portfolio under those arrangements are included under "Other Expenses." For more
information see the prospectus for each underlying portfolio and, "Service Fees
payable to American Skandia," later in this prospectus.
2: The Portfolios' total actual annual operating expenses for the year ended
December 31, 2004 were less than the amount shown in the table due to fee
waivers, reimbursement of expenses and expense offset arrangements. These
waivers, reimbursements, and offset arrangements are voluntary and may be
terminated by American Skandia Investment Services, Inc. and Prudential
Investments LLC at any time. After accounting for the waivers, reimbursements
and offset arrangements, the Portfolios' actual annual operating expenses were:
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
AST William Blair International Growth 1.11%
AST LSV International Value 1.22%
AST DeAM Small-Cap Growth 1.02%
AST DeAM Small-Cap Value 1.13%
AST Goldman Sachs Mid-Cap Growth 1.13%
AST Neuberger Berman Mid-Cap Growth 1.11%
AST Neuberger Berman Mid-Cap Value 1.04%
AST AllianceBernstein Large-Cap Growth 1.10%
AST MFS Growth 1.07%
AST Marsico Capital Growth 1.02%
AST Goldman Sachs Concentrated Growth 1.00%
AST DeAM Large-Cap Value 0.99%
AST Cohen & Steers Realty 1.11%
AST AllianceBernstein Growth & Income 0.87%
AST Hotchkis & Wiley Large-Cap Value 0.90%
AST American Century Strategic Balanced 1.09%
AST T. Rowe Price Asset Allocation 1.07%
AST Lord Abbett Bond-Debenture Portfolio 0.97%
AST PIMCO Total Return Bond 0.78%
AST PIMCO Limited Maturity Bond 0.79%
AST Money Market 0.58%
9
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Summary of Contract Fees and Charges continued
3: Until November 18, 2004, the Trust had a Distribution Plan under Rule 12b-1
to permit an affiliate of the Trust's Investment Managers to receive brokerage
commissions in connection with purchases and sales of securities held by the
Portfolios, and to use these commissions to promote the sale of shares of the
Portfolio. The Distribution Plan was terminated effective November 18, 2004. The
total annual portfolio operating expenses do not reflect any brokerage
commissions paid pursuant to the Distribution Plan prior to the Plan's
termination.
4: Effective November 18, 2004, LSV Asset Management became the Sub-advisor of
the Portfolio. Prior to November 18, 2004, Deutsche Asset Management, Inc.
served as Sub-advisor of the Portfolio, then named "AST DeAM International
Equity Portfolio."
5: Effective May 1, 2005, Eagle Asset Management and Neuberger Berman
Management, Inc. became Co-Sub-advisors of the Portfolio. Prior to May 1, 2005,
State Street Research and Management Company served as Sub-advisor of the
Portfolio, then named "AST State Street Research Small-Cap Growth Portfolio."
6: Effective November 18, 2004, Integrity Asset Management, Lee Munder Capital
Group, J.P. Morgan Fleming Asset Management became Co-Sub-advisors of the
Portfolio. Prior to November 18, 2004, GAMCO Advisors Inc. served as Sub-advisor
of the Portfolio, then named "AST Gabelli Small-Cap Value Portfolio."
7: Effective May 1, 2005, the name of the Portfolio was changed from "AST
Alliance Growth Portfolio" to "AST AllianceBernstein Large-Cap Growth
Portfolio."
8: Effective May 1, 2005, the name of the Portfolio was changed from "AST
Sanford Bernstein Core Value Portfolio" to "AST AllianceBernstein Core Value
Portfolio."
9: Effective May 1, 2005, the name of the Portfolio was changed from "AST
Sanford Bernstein Managed Index 500 Portfolio" to "AST AllianceBernstein
Managed Index 500 Portfolio."
10: Effective May 1, 2005, the name of the Portfolio was changed from "AST
Alliance Growth and Income Portfolio" to "AST AllianceBernstein Growth & Income
Portfolio."
11: The Global Asset Allocation Portfolio invests primarily in shares of other
AST Portfolios (the "Underlying Portfolios").
a: The only management fee directly paid by the Portfolio is a 0.10% fee
paid to American Skandia Investment Services, Inc. and Prudential
Investments LLC. The management fee shown in the chart for the Portfolio is
(i) that 0.10% management fee paid by the Portfolio plus (ii) an estimate
of the management fees paid by the Underlying Portfolios, which are borne
indirectly by investors in the Portfolio. The estimate was calculated based
on the percentage of the Portfolio invested in each Underlying Portfolio as
of December 31, 2004 using the management fee rates shown in the chart
above.
b: The expense information shown in the chart for the Portfolio reflects
(i) the expenses of the Portfolio itself plus (ii) an estimate of the
expenses paid by the Underlying Portfolios, which are borne indirectly by
investors in the Portfolio. The estimate was calculated based on the
percentage of the Portfolio invested in each Underlying Portfolio as of
December 31, 2004 using the expense rates for the Underlying Portfolios
shown in the above chart.
c: Effective May 1, 2005, Prudential Investment LLC provides day-to-day
management of the Portfolio. Prior to May 1, 2005, Deutsche Asset
Management, Inc. served as Sub-advisor of the Portfolio, then named "AST
DeAM Global Allocation Portfolio."
12: a: The Adviser of Wells Fargo Variable Trust has committed through April
30, 2006 to waive fees and/or reimburse expenses to the extent necessary to
maintain the Fund's net operating expenses as shown.
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
Advantage Equity Income 1.00%
b: In addition, the following name changes were made effective May 1, 2005:
OLD PORTFOLIO NAME NEW PORTFOLIO NAME
Equity Income Advantage Equity Income
13: The Fund's adviser is entitled to receive reimbursement from the Fund for
fees and expenses paid for by the Fund's adviser pursuant to expense limitation
commitments between the Fund's adviser and the Fund if such reimbursement does
not cause the Fund to exceed its then-current expense limitations and the
reimbursement is made within three years after the Fund's adviser incurred the
expense.
14: Effective July 1, 2005, the "AIM V.I. Health Sciences Fund" will be renamed
"AIM V.I. Global Health Care Fund."
15: ProFund Advisors LLC has contractually agreed to waive Investment Advisory
and Management Services Fees and to reimburse other expenses to the extent Total
Annual Portfolio Operating Expenses, as a percentage of average daily net
assets, exceed 1.98% (1.73% for ProFund VP U.S. Government Plus and 1.78% for
ProFund VP Rising Rates Opportunity) through December 31, 2005. After such date,
any of the expense limitations may be terminated or revised. Amounts waived or
reimbursed in a particular fiscal year may be repaid to ProFund Advisors LLC
within three years of the waiver or reimbursement to the extent that recoupment
will not cause the Portfolio's expenses to exceed any expense limitation in
place at that time. A waiver or reimbursement lowers the expense ratio and
increases overall returns to investors.
16: The Funds' Board of Trustees reserve the right to suspend payments under the
12b-1 Plan at any time. On May 1, 2003, 12b-1 payments were suspended for all
Funds except the First Trust 10 Uncommon Values Portfolio. Payments under the
12b-1 Plan resumed effective May 1, 2004 for the Target Managed VIP Portfolio,
the Dow Dart 10 Portfolio, the Global Dividend Target 15 Portfolio, the S&P
Target 24 Portfolio, the Nasdaq Target 15 Portfolio and the Value Line Target 25
Portfolio.
17: For the period September 30, 2004 through December 31, 2007, First Trust has
contractually agreed to waive fees and reimburse expenses of the Portfolios to
limit the total annual fund operating expenses (excluding brokerage expense and
extraordinary expense) to 1.37% for the First Trust 10 Uncommon Values Portfolio
and 1.47% for each of the other Portfolios' average daily net assets. First
Trust has entered into an agreement with First Defined Portfolio Fund, LLC that
will allow First Trust to recover from the Portfolios any fees waived or
reimbursed during the three year period of January 1, 2005 through December 31,
2007. However, First Trust's ability to recover such amounts is limited to the
extent that it would not exceed the amount reimbursed or waived during such
period.
TOTAL ACTUAL ANNUAL
PORTFOLIO OPERATING EXPENSES
PORTFOLIO NAME AFTER EXPENSE REIMBURSEMENT
First Trust(R) 10 Uncommon Values 1.37%
Target Managed VIP 1.47%
S&P Target 24 1.47%
The Dow(SM) DART 10 1.47%
Value Line(R) Target 25 1.47%
Global Dividend Target 15 1.47%
Nasdaq Target 15 1.47%
Dow Target Dividend 1.47%
18: The Dow(SM) Target Dividend Portfolio is newly organized. Accordingly, Other
Expenses and Total Annual Portfolio Operating Expenses are based on estimated
expenses for the current fiscal year.
10
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Expense Examples
These examples are designed to assist you in understanding the various expenses
you may incur with the Annuity over certain periods of time based on specific
assumptions. The examples reflect the Annual Maintenance Fee, Insurance Charge,
and the highest total annual portfolio operating expenses for any underlying
Portfolio offered under the product, as well as the maximum charges for the
optional benefits that are offered under the Annuity that can be elected in
combination with one another.
Below are examples showing what you would pay in expenses at the end of the
stated time periods had you invested $10,000 in the Annuity and received a 5%
annual return on assets, and elected all optional benefits available.
The examples shown assume that: (a) you only allocate Account Value to the
Sub-account with the maximum total annual portfolio operating expenses for the
underlying Portfolio (shown above), not to a Fixed Allocation; (b) the Insurance
Charge is assessed as 1.65% per year; (c) the Annual Maintenance Fee is
reflected as an asset-based charge based on an assumed average contract size;
(d) you make no withdrawals of Account Value during the period shown; (e) you
make no transfers, or other transactions for which we charge a fee during the
period shown; (f) no tax charge applies; (g) the highest total annual portfolio
operating expenses for any underlying Portfolio offered under the product
applies; and (h) the charge for each optional benefit is reflected as an
additional charge equal to 0.60% per year of the average daily net assets of the
Sub-accounts for the Lifetime Five Income Benefit, 0.50% per year of the average
daily net assets of the Sub-accounts for the Highest Daily Value Death Benefit
and 0.25% of the average daily net assets of the Sub-accounts for the Enhanced
Beneficiary Protection Death Benefit. Amounts shown in the examples are rounded
to the nearest dollar.
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 WILL BE LESS THAN THOSE SHOWN IF YOU DO NOT
ELECT ALL OF THE OPTIONAL BENEFITS AVAILABLE OR IF YOU ALLOCATE ACCOUNT VALUE TO
ANY OTHER AVAILABLE SUB-ACCOUNTS.
Expense Examples are provided as follows: 1.) whether or not you surrender the
Annuity at the end of the stated time period; and 2.) if you annuitize at the
end of the stated time period. A table of accumulation values appears in
Appendix A to this Prospectus.
WHETHER OR NOT YOU SURRENDER YOUR CONTRACT IF YOU ANNUITIZE AT THE END OF THE
AT THE END OF THE APPLICABLE TIME PERIOD: APPLICABLE TIME PERIOD:
- ---------------------------------------------------------------------------------------------------------
1 YR 3 YRS 5 YRS 10 YRS 1 YR 3 YRS 5 YRS 10 YRS
$768 $2,241 $3,632 $6,785 $768 $2,241 $3,632 $6,785
11
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Investment Options
WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE PORTFOLIOS?
Each variable investment option is a Sub-account of American Skandia Life
Assurance Corporation Variable Account B (see "What are Separate Accounts" for
more detailed information). Each Sub-account invests exclusively in one
Portfolio. You should carefully read the prospectus for any Portfolio in which
you are interested. The following chart classifies each of the Portfolios based
on our assessment of their investment style (as of the date of this Prospectus).
The chart also provides a description of each Portfolio's investment objective
(in italics) and a short, summary description of their key policies to assist
you in determining which Portfolios may be of interest to you. There is no
guarantee that any underlying Portfolio will meet its investment objective.
The name of the advisor/sub-advisor for each Portfolio appears next to the
description. Those Portfolios whose name includes the prefix "AST" are
Portfolios of American Skandia Trust. The investment managers for AST are
American Skandia Investment Services, Incorporated, a Prudential Financial
Company and Prudential Investments LLC, affiliated companies of American
Skandia. However, a sub-advisor, as noted below, is engaged to conduct
day-to-day investment decisions.
The Portfolios are not publicly traded mutual funds. They are only
available as investment options in variable annuity contracts and variable life
insurance policies issued by insurance companies, or in some cases, to
participants in certain qualified retirement plans. However, some of the
Portfolios available as Sub-accounts under the Annuity are managed by the same
portfolio advisor or sub-advisor as a retail mutual fund of the same or similar
name that the Portfolio may have been modeled after at its inception. Certain
retail mutual funds may also have been modeled after a Portfolio. While the
investment objective and policies of the retail mutual funds and the Portfolios
may be substantially similar, the actual investments will differ to varying
degrees. Differences in the performance of the funds can be expected, and in
some cases could be substantial. You should not compare the performance of a
publicly traded mutual fund with the performance of any similarly named
Portfolio offered as a Sub-account. Details about the investment objectives,
policies, risks, costs and management of the Portfolios are found in the
prospectuses for the underlying mutual funds. The current prospectus and
statement of additional information for the underlying Portfolios can be
obtained by calling 1-800-752-6342.
Effective as of the close of business JUNE 28, 2002, the AST GOLDMAN SACHS
SMALL-CAP VALUE PORTFOLIO is no longer offered as a Sub-account under the
Annuity, except as follows: if at any time on or prior to June 28, 2002 you had
any portion of your Account Value allocated to the AST Goldman Sachs Small-Cap
Value Sub-account, you may continue to allocate Account Value and make transfers
into and/or out of the AST Goldman Sachs Small-Cap Value Sub-account, including
any bank drafting, dollar cost averaging, asset allocation and rebalancing
programs. If you never had a portion of your Account Value allocated to the AST
Goldman Sachs Small-Cap Value Sub-account on or prior to June 28, 2002 or if you
purchase your Annuity after June 28, 2002, you cannot allocate Account Value to
the AST Goldman Sachs Small-Cap Value Sub-Account.
Effective MAY 1, 2004, the SP WILLIAM BLAIR INTERNATIONAL GROWTH PORTFOLIO
(FORMERLY THE SP JENNISON INTERNATIONAL GROWTH PORTFOLIO) is no longer offered
as a Sub-account under the Annuity, except as follows: if at any time prior to
May 1, 2004 you had any portion of your Account Value allocated to the SP
William Blair International Growth Sub-account, you may continue to allocate
Account Value and make transfers into and/or out of the SP William Blair
International Growth Sub-account, including any bank drafting, dollar cost
averaging, asset allocation and rebalancing programs. If you never had a portion
of your Account Value allocated to the SP William Blair International Growth
Sub-account prior to May 1, 2004 or if you purchase your Annuity on or after May
1, 2004, you cannot allocate Account Value to the SP William Blair International
Growth Sub-account.
Either of the above Sub-accounts may be offered to new Owners at some
future date; however, at the present time, there is no intention to do so. We
also reserve the right to offer or close each of the above Sub-accounts to all
Owners that owned the Annuity prior to the respective close dates.
12
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- -------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL AST JPMORGAN INTERNATIONAL EQUITY: seeks long-term capital growth by J.P. Morgan
EQUITY investing in a diversified portfolio of international equity securities. The Fleming Asset
Portfolio seeks to meet its objective by investing, under Management
normal market conditions, at least 80% of its
assets in a diversified portfolio of equity securities of
companies located or operating in developed non-U.S.
countries and emerging markets of the world.
INTERNATIONAL AST WILLIAM BLAIR INTERNATIONAL GROWTH: Seeks long-term capital William Blair &
EQUITY appreciation. The Portfolio invests primarily in stocks of large and Company, L.L.C.
medium-sized companies located in countries included in the Morgan
Stanley Capital International All Country World Ex-U.S. Index.
INTERNATIONAL AST LSV INTERNATIONAL VALUE (formerly AST DeAM International Equity): Deutsche Asset
EQUITY seeks capital growth. The Portfolio pursues its objective by primarily Management, Inc.
investing at least 80% of the value of its assets in the equity securities of
companies in developed non-U.S. countries that are represented in the
MSCI EAFE Index.
INTERNATIONAL AST MFS GLOBAL EQUITY: seeks capital growth. Under normal Massachusetts
EQUITY circumstances the Portfolio invests at least 80% of its assets in equity Financial Services
securities of U.S. and foreign issuers (including issuers in developing Company
countries). The Portfolio generally seeks to purchase securities of
companies with relatively large market capitalizations relative to the
market in which they are traded.
SMALL CAP AST SMALL-CAP GROWTH (formerly AST State Street Research Small-Cap Eagle Asset
GROWTH Growth): seeks long-term capital growth. The Portfolio pursues its Management,
objective by primarily investing in the common stocks of small- Neuberger Berman
capitalization companies. Management, Inc.
SMALL CAP AST DEAM SMALL-CAP GROWTH: seeks maximum growth of investors' Deutsche Asset
GROWTH capital from a portfolio of growth stocks of smaller companies. The Management, Inc.
Portfolio pursues its objective, under normal circumstances,
by primarily investing at least 80% of its total assets in
the equity securities of small-sized companies included in
the Russell 2000 Growth(R) Index.
SMALL CAP AST FEDERATED AGGRESSIVE GROWTH: seeks capital growth. The Portfolio Federated Equity
GROWTH pursues its investment objective by investing primarily in the stocks of Management
small companies that are traded on national security exchanges, the Company of
NASDAQ stock exchange and the over-the-counter market. Pennsylvania/
Federated Global
Investment
Management Corp.
SMALL CAP AST GOLDMAN SACHS SMALL-CAP VALUE: seeks long-term capital appreciation. Goldman Sachs
VALUE The Portfolio will seek its objective through investments primarily in equity Asset Management,
securities that are believed to be undervalued in the marketplace. The Portfolio L.P.
primarily seeks companies that are small-sized, based on the value of their
outstanding stock.
13
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------
SMALL CAP AST SMALL-CAP VALUE (formerly AST Gabelli Small-Cap Value): seeks to Integrity Asset
VALUE provide long-term capital growth by investing primarily in small- Management, Lee
capitalization stocks that appear to be undervalued. The Portfolio will Munder Capital
have a non-fundamental policy to invest, under normal circumstances, at Group, J.P. Morgan
least 80% of the value of its assets in small capitalization companies. Fleming Asset
Management
SMALL CAP AST DEAM SMALL-CAP VALUE: seeks maximum growth of investors' capital. Deutsche Asset
VALUE The Portfolio pursues its objective under normal market conditions, by Management, Inc.
primarily investing at least 80% of its total assets in the
equity securities of small-sized companies included in the
Russell 2000(R) Value Index.
MID CAP AST GOLDMAN SACHS MID-CAP GROWTH: seeks long-term capital growth. The Goldman Sachs
GROWTH Portfolio pursues its investment objective by investing primarily in equity Asset Management,
securities selected for their growth potential, and normally invests at least L.P.
80% of the value of its assets in medium capitalization companies.
MID CAP AST NEUBERGER BERMAN MID-CAP GROWTH: seeks capital growth. Under Neuberger Berman
GROWTH normal market conditions, the Portfolio primarily invests at least 80% of Management Inc.
its net assets in the common stocks of mid-cap companies. The
Sub-advisor looks for fast-growing companies that are in new
or rapidly evolving industries.
MID CAP VALUE AST NEUBERGER BERMAN MID-CAP VALUE: seeks capital growth. Under normal Neuberger Berman
market conditions, the Portfolio primarily invests at least 80% of its net Management Inc.
assets in the common stocks of mid-cap companies. Under the Portfolio's
value-oriented investment approach, the Sub-advisor looks for well-managed
companies whose stock prices are undervalued and that may rise before other
investors realize their worth.
SPECIALTY AST ALGER ALL-CAP GROWTH: seeks long-term capital growth. The Portfolio Fred Alger
invests primarily in equity securities, such as common or preferred stocks Management, Inc.
that are listed on U.S. exchanges or in the over-the-counter market. The
Portfolio may invest in the equity securities of companies of all sizes, and
may emphasize either larger or smaller companies at a given time based on
the Sub-advisor's assessment of particular companies and market conditions.
SPECIALTY AST GABELLI ALL-CAP VALUE: seeks capital growth. The Portfolio pursues its GAMCO Investors,
objective by investing primarily in readily marketable equity securities Inc.
including common stocks, preferred stocks and securities that may be
converted at a later time into common stock. The Portfolio may invest in the
securities of companies of all sizes, and may emphasize either larger or
smaller companies at a given time based on the Sub-advisor's assessment of
particular companies and market conditions.
SPECIALTY AST T. ROWE PRICE NATURAL RESOURCES: seeks long-term capital growth T. Rowe Price
primarily through the common stocks of companies that own or develop Associates, Inc.
natural resources (such as energy products, precious metals and forest
products) and other basic commodities. The Portfolio normally invests
primarily (at least 80% of its total assets) in the common stocks of natural
resource companies whose earnings and tangible assets could benefit
from accelerating inflation.
14
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- -----------------------------------------------------------------------------------------------------------------
LARGE CAP AST ALLIANCEBERNSTEIN LARGE-CAP GROWTH (formerly AST Alliance Growth): Alliance Capital
GROWTH seeks long-term capital growth. The Portfolio invests at least 80% of its Management, L.P.
total assets in the equity securities of a limited number of large, carefully
selected, high-quality U.S. companies that are judged likely to achieve
superior earnings growth.
LARGE CAP AST MFS GROWTH: seeks long-term capital growth and future income. Massachusetts
GROWTH Under normal market conditions, the Portfolio invests at least 80% of its Financial Services
total assets in common stocks and related securities, such as Company
preferred stocks, convertible securities and depositary
receipts, of companies that the Sub-advisor believes offer better
than average prospects for long-term growth.
LARGE CAP AST MARSICO CAPITAL GROWTH: seeks capital growth. Income realization is Marsico Capital
GROWTH not an investment objective and any income realized on the Portfolio's Management, LLC
investments, therefore, will be incidental to the Portfolio's
objective. The Portfolio will pursue its objective by investing
primarily in common stocks of larger, more established companies.
LARGE CAP AST GOLDMAN SACHS CONCENTRATED GROWTH: seeks growth of capital in a Goldman Sachs
GROWTH manner consistent with the preservation of capital. Realization of income Asset Management,
is not a significant investment consideration and any income L.P.
realized on the Portfolio's investments, therefore, will be
incidental to the Portfolio's objective. The Portfolio will
pursue its objective by investing primarily in equity securities
of companies that the Sub-advisor believes have potential to
achieve capital appreciation over the long-term.
LARGE CAP AST DEAM LARGE-CAP VALUE: seeks maximum growth of capital by Deutsche Asset
VALUE investing primarily in the value stocks of larger companies. The Portfolio Management, Inc.
pursues its objective, under normal market conditions, by
primarily investing at least 80% of the value of its assets in
the equity securities of large-sized companies included in the
Russell 1000(R) Value Index.
LARGE CAP AST ALLIANCEBERNSTEIN GROWTH + VALUE: seeks capital growth by investing Alliance Capital
BLEND approximately 50% of its assets in growth stocks of large companies and Management, L.P.
approximately 50% of its assets in value stocks of large companies. The
Portfolio will invest primarily in common stocks of large U.S. companies
included in the Russell 1000(R) Index.
LARGE CAP AST ALLIANCEBERNSTEIN CORE VALUE (formerly AST Sanford Bernstein Core Alliance Capital
VALUE Value): seeks long-term capital growth by investing primarily in common Management, L.P.
stocks. The Sub-advisor expects that the majority of the
Portfolio's assets will be invested in the common stocks of large
companies that appear to be undervalued.
SPECIALTY AST COHEN & STEERS REALTY: seeks to maximize total return through Cohen & Steers
investment in real estate securities. The Portfolio pursues its investment Capital
objective by investing, under normal circumstances, at least 80% of its Management, Inc.
net assets in securities of real estate issuers.
15
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- --------------------------------------------------------------------------------------------------------------------
LARGE CAP AST ALLIANCEBERNSTEIN MANAGED INDEX 500 (formerly AST Sanford Alliance Capital
BLEND Bernstein Managed Index 500): seeks to outperform the S&P 500 through Management, L.P.
stock selection resulting in different weightings of common
stocks relative to the index. The Portfolio will invest, under
normal circumstances, at least 80% of its net assets in
securities included in the Standard & Poor's 500 Composite
Stock Price Index.
LARGE CAP AST AMERICAN CENTURY INCOME & GROWTH: seeks capital growth with American Century
VALUE current income as a secondary objective. The Portfolio invests primarily Investment
in common stocks that offer potential for capital growth, and may, Management, Inc.
consistent with its investment objective, invest in stocks that offer
potential for current income.
LARGE CAP AST ALLIANCEBERNSTEIN GROWTH & INCOME: seeks long-term growth of Alliance Capital
VALUE capital and income while attempting to avoid excessive fluctuations in Management, L.P.
market value. The Portfolio normally will invest in common
stocks (and securities convertible into common stocks).
LARGE CAP AST HOTCHKIS & WILEY LARGE-CAP VALUE: seeks current income and long- Hotchkis and Wiley
VALUE term growth of income, as well as capital appreciation. The Portfolio invests, Capital
under normal circumstances, at least 80% of its net assets Management, LLC
plus borrowings for investment purposes in
common stocks of large cap U.S. companies that have a high
cash dividend or payout yield relative to the market.
ASSET AST GLOBAL ALLOCATION (formerly AST DeAM Global Allocation): seeks to Prudential
ALLOCATION/ obtain the highest potential total return consistent with a specified level Investments LLC
BALANCED of risk tolerance. The Portfolio seeks to achieve its investment objective
by investing in several other AST Portfolios ("Underlying
Portfolios"). The Portfolio intends its strategy of investing
in combinations of Underlying Portfolios to result in
investment diversification that an investor could otherwise
achieve only by holding numerous investments.
ASSET AST AMERICAN CENTURY STRATEGIC BALANCED: seeks capital growth and American Century
ALLOCATION/ current income. The Sub-advisor intends to maintain approximately 60% Investment
BALANCED of the Portfolio's assets in equity securities and the remainder in bonds Management, Inc.
and other fixed income securities.
ASSET AST T. ROWE PRICE ASSET ALLOCATION: seeks a high level of total return by T. Rowe Price
ALLOCATION/ investing primarily in a diversified portfolio of fixed income and equity Associates, Inc.
BALANCED securities. The Portfolio normally invests approximately 60% of its total
assets in equity securities and 40% in fixed income securities. This mix
may vary depending on the Sub-advisor's outlook for the markets.
FIXED INCOME AST T. ROWE PRICE GLOBAL BOND: seeks to provide high current income T. Rowe Price
and capital growth by investing in high quality foreign and U.S. dollar- International, Inc.
denominated bonds. The Portfolio will invest at least 80% of its total
assets in fixed income securities, including high quality bonds issued or
guaranteed by U.S. or foreign governments or their agencies and by
foreign authorities, provinces and municipalities as well as investment
grade corporate bonds and mortgage and asset-backed securities of U.S.
and foreign issuers.
16
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ------------------------------------------------------------------------------------------------------------------------
FIXED INCOME AST GOLDMAN SACHS HIGH YIELD: seeks a high level of current income Goldman Sachs
and may also consider the potential for capital appreciation. The Asset Management,
Portfolio invests, under normal circumstances, at least 80% of its L.P.
net assets plus any borrowings for investment purposes (measured at
time of purchase) ("Net Assets") in high-yield, fixed-income
securities that, at the time of purchase, are non-investment grade
securities.
FIXED INCOME AST LORD ABBETT BOND-DEBENTURE: seeks high current income and the Lord, Abbett & Co.
opportunity for capital appreciation to produce a high total LLC
return. To pursue its objective, the Portfolio will invest, under
normal circumstances, at least 80% of the value of its assets in
fixed income securities and normally invests primarily in high
yield and investment grade debt securities, securities convertible
into common stock and preferred stocks.
FIXED INCOME AST PIMCO TOTAL RETURN BOND: seeks to maximize total return Pacific Investment
consistent with preservation of capital and prudent investment Management
management. The Portfolio will invest in a diversified portfolio of Company LLC
fixed-income securities of varying maturities. The average (PIMCO)
portfolio duration of the Portfolio generally will vary within a
three- to six-year time frame based on the Sub-advisor's forecast
for interest rates.
FIXED INCOME AST PIMCO LIMITED MATURITY BOND: seeks to maximize total return Pacific Investment
consistent with preservation of capital and prudent investment Management
management. The Portfolio will invest in a diversified portfolio of fixed- Company LLC
income securities of varying maturities. The average portfolio duration of (PIMCO)
the Portfolio generally will vary within a one- to three-year time frame
based on the Sub-advisor's forecast for interest rates.
FIXED INCOME AST MONEY MARKET: seeks high current income while maintaining high Wells Capital
levels of liquidity. The Portfolio attempts to accomplish its objective Management, Inc.
by maintaining a dollar-weighted average maturity of not more than 90
days and by investing in securities which have effective maturities of
not more than 397 days.
INTERNATIONAL GVIT DEVELOPING MARKETS: seeks long-term capital appreciation, under Gartmore Global
EQUITY normal conditions by investing at least 80% of its total assets in stocks of Asset Management
companies of any size based in the world's developing Trust/Gartmore
economies. Under normal market conditions, Global Partners
investments are maintained in at least six countries
at all times and no more than 35% of total assets in
any single one of them.
LARGE CAP ADVANTAGE EQUITY INCOME FUND (formerly Equity Income): Seeks long-term Wells Fargo Funds
VALUE capital appreciation and above-average dividend income. The Portfolio Management, LLC
invests in the common stocks of large U.S. companies with
strong return potential and above-average dividend income.
The Portfolio invests principally in securities of companies
with market capitalizations of $3 billion or more.
MID CAP AIM VARIABLE INSURANCE FUNDS -- AIM V.I. DYNAMICS FUND -- SERIES I A I M Advisors,
GROWTH SHARES (formerly an INVESCO fund): seeks long-term capital growth. The Inc.
Portfolio pursues its objective by normally investing at
least 65% of its assets in common stocks of mid-sized
companies that are included in the Russell Midcap
Growth(R) Index at the time of purchase.
17
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- --------------------------------------------------------------------------------------------------------------------
SPECIALTY AIM VARIABLE INSURANCE FUNDS -- AIM V.I. TECHNOLOGY FUND -- SERIES I A I M Advisors,
SHARES (formerly an INVESCO fund): seeks capital growth. The Portfolio Inc.
normally invests at least 80% of its net assets in the equity securities and
equity-related instruments of companies engaged in technology-related
industries. These include, but are not limited to, various applied
technologies, hardware, software, semiconductors, telecommunications
equipment and services and service-related companies in information
technology.
SPECIALTY AIM VARIABLE INSURANCE FUNDS -- AIM V.I. HEALTH SCIENCES FUND -- A I M Advisors,
SERIES I SHARES (formerly an INVESCO fund) (Effective July 1, 2005, AIM Inc.
V.I. Health Sciences Fund will be renamed AIM V.I. Global Health Care
Fund): seeks capital growth. The Portfolio normally invests at least 80% of
its net assets in the equity securities and equity-related instruments of
companies related to health care.
SPECIALTY AIM VARIABLE INSURANCE FUNDS -- AIM V.I. FINANCIAL SERVICES FUND -- A I M Advisors,
SERIES I SHARES (formerly an INVESCO fund): seeks capital growth. The Inc.
Portfolio normally invests at least 80% of its net assets in the equity
securities and equity-related instruments of companies involved in the
financial services sector. These companies include, but are not limited to,
banks, insurance companies, investment and miscellaneous industries,
and suppliers to financial services companies.
INTERNATIONAL EVERGREEN VA INTERNATIONAL EQUITY (formerly Evergreen VA International Evergreen
EQUITY Growth): seeks long-term capital growth and secondarily, modest income. Investment
The Portfolio normally invests 80% of its assets in equity Management
securities issued by established, quality, Company, LLC
non-U.S. companies located in countries with
developed markets and may purchase across all market
capitalizations. The Portfolio normally invests at least 65%
of its assets in securities of companies in at least three
different countries (other than the U.S.).
SMALL CAP EVERGREEN VA GROWTH (formerly Evergreen VA Special Equity): seeks Evergreen
GROWTH long-term capital growth. The Portfolio invests at least 75% of its assets Investment
in common stocks of small- and medium-sized companies (i.e., companies Management
whose market capitalizations fall within the range of the Russell 2000(R) Company, LLC
Growth Index, at the time of purchase).
SPECIALTY EVERGREEN VA OMEGA: seeks long-term capital growth. The Portfolio Evergreen
invests primarily, and under normal conditions, substantially all of its Investment
assets in common stocks and securities convertible into common stocks Management
of U.S. companies across all market capitalizations. Company, LLC
INTERNATIONAL PROFUND VP EUROPE 30: seeks daily investment results, before fees and ProFund Advisors
EQUITY expenses, that correspond to the daily performance of the ProFunds LLC
Europe 30 Index. The ProFunds Europe 30 Index, created by
ProFund Advisors, is composed of 30 companies whose principal
offices are located in Europe and whose securities are traded
on U.S. exchanges or on the NASDAQ as depositary receipts or
ordinary shares.
18
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP ASIA 30: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the LLC
ProFunds Asia 30 Index. The ProFunds Asia 30 Index, created
by ProFund Advisors, is composed of 30 companies whose principal
offices are located in the Asia/Pacific region, excluding Japan,
and whose securities are traded on U.S. exchanges or on the
NASDAQ as depository receipts or ordinary shares.
SPECIALTY PROFUND VP JAPAN: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Nikkei 225 LLC
Stock Average. Since the Japanese markets are not open when ProFund VP
Japan values its shares, ProFund VP Japan determines its success in
meeting this investment objective by comparing its daily return on a
given day with the daily performance of related futures contracts
traded in the United States related to the Nikkei 225 Stock Average.
SPECIALTY PROFUND VP BANKS: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones LLC
U.S. Banks Index. The Dow Jones U.S. Banks Index measures the
performance of the banking industry portion of the U.S. equity market.
SPECIALTY PROFUND VP BASIC MATERIALS: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the Dow LLC
Jones U.S. Basic Materials Sector Index. The Dow Jones U.S. Basic
Materials Sector Index measures the performance of the basic materials
economic sector of the U.S. equity market.
SPECIALTY PROFUND VP BIOTECHNOLOGY: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the Dow LLC
Jones U.S. Biotechnology Index. The Dow Jones U.S. Biotechnology
Index measures the performance of the biotechnology industry portion of
the U.S. equity market.
SPECIALTY PROFUND VP CONSUMER SERVICES (formerly ProFund VP Consumer Cyclical): ProFund Advisors
seeks daily investment results, before fees and expenses, that correspond to LLC
the daily performance of the Dow Jones U.S. Consumer Services Index. The
Dow Jones U.S. Consumer Services Index measures the performance of
consumer spending in the services industry of the U.S. equity market.
SPECIALTY PROFUND VP CONSUMER GOODS (formerly ProFund VP Consumer Non-Cyclical): ProFund Advisors
seeks daily investment results, before fees and expenses, that correspond to LLC
the daily performance of the Dow Jones U.S. Consumer Goods Index. The
Dow Jones U.S. Consumer Goods Index measures the performance of
consumer spending in the goods industry of the U.S. equity market.
SPECIALTY PROFUND VP OIL & Gas (formerly ProFund VP Energy): seeks daily ProFund Advisors
investment results, before fees and expenses, that correspond to the LLC
daily performance of the Dow Jones U.S. Oil & Gas Index. The Dow
Jones U.S. Oil & Gas Sector Index measures the performance of the
energy sector of the U.S. equity market.
19
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP FINANCIALS (formerly ProFund VP Financial): seeks daily ProFund Advisors
investment results, before fees and expenses, that correspond to the LLC
daily performance of the Dow Jones U.S. Financials Sector Index. The
Dow Jones U.S. Financials Sector Index measures the performance of
the financial services economic sector of the U.S. equity market.
SPECIALTY PROFUND VP HEALTH CARE (formerly ProFund VP Healthcare): seeks daily ProFund Advisors
investment results, before fees and expenses, that correspond to the LLC
daily performance of the Dow Jones U.S. Health Care Index. The Dow
Jones U.S. Health Care Index measures the performance of the
healthcare economic sector of the U.S. equity market.
SPECIALTY PROFUND VP INDUSTRIALS (formerly ProFund VP Industrial): seeks daily ProFund Advisors
investment results, before fees and expenses, that correspond to the LLC
daily performance of the Dow Jones U.S. Industrials Index. The Dow
Jones U.S. Industrials Index measures the performance of the industrial
economic sector of the U.S. equity market.
SPECIALTY PROFUND VP INTERNET: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones LLC
Composite Internet Index. The Dow Jones Composite Internet Index
measures the performance of stocks in the U.S. equity markets that
generate the majority of their revenues from the Internet.
SPECIALTY PROFUND VP PHARMACEUTICALS: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the Dow LLC
Jones U.S. Pharmaceuticals Index. The Dow Jones U.S. Pharmaceuticals
Index measures the performance of the pharmaceuticals industry portion
of the U.S. equity market.
SPECIALTY PROFUND VP PRECIOUS METALS: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the Dow Jones LLC
Precious Metals Index. The Dow Jones Precious Metals Index measures the
performance of the precious metals mining industry.
SPECIALTY PROFUND VP REAL ESTATE: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones U.S. LLC
Real Estate Index. The Dow Jones U.S. Real Estate Index measures the
performance of the real estate industry portion of the U.S. equity market.
SPECIALTY PROFUND VP SEMICONDUCTOR: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the daily performance of the Dow LLC
Jones U.S. Semiconductor Index. The Dow Jones U.S. Semiconductor
Index measures the performance of the semiconductor industry portion of
the U.S. equity market.
SPECIALTY PROFUND VP TECHNOLOGY: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones LLC
U.S. Technology Sector Index. The Dow Jones U.S. Technology Sector
Index measures the performance of the technology sector of the U.S.
equity market.
20
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- -------------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP TELECOMMUNICATIONS: seeks daily investment results, before ProFund Advisors
fees and expenses, that correspond to the daily performance of the Dow LLC
Jones U.S. Telecommunications Sector Index. The Dow Jones U.S.
Telecommunications Sector Index measures the performance of the
telecommunications economic sector of the U.S. equity market.
SPECIALTY PROFUND VP UTILITIES: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the Dow Jones U.S. LLC
Utilities Sector Index. The Dow Jones U.S. Utilities Sector Index measures
the performance of the utilities economic sector of the U.S. equity market.
SPECIALTY PROFUND VP BULL: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the S&P 500(R) Index. LLC
SPECIALTY PROFUND VP BEAR: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the inverse (opposite) of the daily LLC
performance of the S&P 500(R) Index. If ProFund VP Bear is successful in
meeting its objective, its net asset value should gain approximately the
same, on a percentage basis, as any decrease in the S&P 500(R) Index
when the Index declines on a given day. Conversely, its net asset value
should lose approximately the same, on a percentage basis, as any
increase in the Index when the Index rises on a given day.
SPECIALTY PROFUND VP ULTRABULL: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to twice (200%) the daily performance of the S&P LLC
500(R) Index. Prior to May 1, 2003, ProFund VP UltraBull was named "ProFund
VP Bull Plus" and sought daily investment results that corresponded to one
and one-half times (150%) the daily performance of the S&P 500(R) Index. If
ProFund VP UltraBull is successful in meeting its objective, its net asset
value should gain approximately twice as much, on a percentage basis, as
the S&P 500(R) Index when the Index rises on a given day. Conversely, its net
asset value should lose approximately twice as much, on a percentage
basis, as the Index when the Index declines on a given day.
SPECIALTY PROFUND VP OTC: seeks daily investment results, before fees and expenses, ProFund Advisors
that correspond to the daily performance of the NASDAQ-100 Index(R). LLC
"OTC" in the name of ProFund VP OTC refers to securities that do not trade
on a U.S. securities exchange registered under the Securities Exchange Act
of 1934.
SPECIALTY PROFUND VP SHORT OTC: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the inverse (opposite) of the daily LLC
performance of the NASDAQ-100 Index(R). If ProFund VP Short OTC is
successful in meeting its objective, its net asset value should gain
approximately the same, on a percentage basis, as any decrease in the
NASDAQ-100 Index(R) when the Index declines on a given day. Conversely,
its net asset value should lose approximately the same, on a percentage
basis, as any increase in the Index when the Index rises on a given day.
"OTC" in the name of ProFund VP Short OTC refers to securities that do
not trade on a U.S. securities exchange registered under the Securities
Exchange Act of 1934.
21
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP ULTRAOTC: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to twice (200%) the daily performance of the LLC
NASDAQ-100 Index(R). If ProFund VP UltraOTC is successful in meeting its
objective, its net asset value should gain approximately twice as much,
on a percentage basis, as the NASDAQ-100 Index(R) when the Index rises
on a given day. Conversely, its net asset value should lose approximately
twice as much, on a percentage basis, as the Index when the Index
declines on a given day. "OTC" in the name of ProFund VP UltraOTC
refers to securities that do not trade on a U.S. securities exchange
registered under the Securities Exchange Act of 1934.
MID CAP VALUE PROFUND VP MID-CAP VALUE: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to the daily performance of the S&P MidCap LLC
400/Barra Value Index(R). The S&P MidCap400/Barra Value Index(R) is
a float adjusted market capitalization weighted index comprised of the
stocks in the S&P MidCap 400 Index that have comparatively low price-
to-book ratios as determined before each semiannual rebalance date.
MID CAP PROFUND VP MID-CAP GROWTH: seeks daily investment results, before fees and ProFund Advisors
GROWTH expenses, that correspond to the daily performance of the S&P MidCap LLC
400/Barra Growth Index(R). The S&P MidCap 400/Barra Growth Index(R)
is a float adjusted market capitalization weighted index comprised of the
stocks in the S&P MidCap 400 Index(R) that have comparatively high
price-to-book ratios as determined before each semiannual rebalance date.
SPECIALTY PROFUND VP ULTRAMID-CAP: seeks daily investment results, before fees and ProFund Advisors
expenses, that correspond to twice (200%) the daily performance of the LLC
S&P MidCap 400 Index(R). If ProFund VP UltraMid-Cap is successful in
meeting its objective, its net asset value should gain approximately twice
as much, on a percentage basis, as the S&P MidCap 400 Index(R) when
the Index rises on a given day. Conversely, its net asset value should lose
approximately twice as much, on a percentage basis, as the Index when
the Index declines on a given day.
SMALL CAP PROFUND VP SMALL-CAP VALUE: seeks daily investment results, before fees and ProFund Advisors
VALUE expenses, that correspond to the daily performance of the S&P SmallCap LLC
600/Barra Value Index(R). The S&P SmallCap 600/Barra Value Index(R)
is a float adjusted market capitalization weighted index comprised of the
stocks in the S&P SmallCap 600/Barra Value Index(R) that have
comparatively low price-to-book ratios as determined before each semiannual
rebalance date.
SMALL CAP PROFUND VP SMALL-CAP GROWTH: seeks daily investment results, before ProFund Advisors
GROWTH fees and expenses, that correspond to the daily performance of the S&P LLC
SmallCap 600/Barra Growth Index(R). The S&P SmallCap
600/Barra Growth Index(R) is a float adjusted market
capitalization weighted index comprised of the stocks in the
S&P SmallCap 600/Barra Growth Index(R) that have
comparatively high price-to-book ratios as determined before
each semiannual rebalance date.
22
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- --------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP ULTRASMALL-CAP: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to twice (200%) the daily LLC
performance of the Russell 2000(R) Index. If ProFund VP
UltraSmall-Cap is successful in meeting its objective, its net
asset value should gain approximately twice as much, on a
percentage basis, as the Russell 2000 Index(R) when the Index
rises on a given day. Conversely, its net asset value should lose
approximately twice as much, on a percentage basis, as the Index
when the Index declines on a given day.
SPECIALTY PROFUND VP U.S. GOVERNMENT PLUS: seeks daily investment results, before ProFund Advisors
fees and expenses, that correspond to one and one-quarter times (125%) LLC
the daily price movement of the most recently issued 30-year U.S.
Treasury bond ("Long Bond"). In accordance with its stated objective, the
net asset value of ProFund VP U.S. Government Plus generally should
decrease as interest rates rise. If ProFund VP U.S. Government Plus is
successful in meeting its objective, its net asset value should gain
approximately one and one-quarter times (125%) as much, on a
percentage basis, as any daily increase in the price of the Long Bond on
a given day. Conversely, its net asset value should lose approximately
one and one-quarter as much, on a percentage basis, as any daily
decrease in the price of the Long Bond on a given day.
SPECIALTY PROFUND VP RISING RATES OPPORTUNITY: seeks daily investment results, ProFund Advisors
before fees and expenses, that correspond to one and one-quarter times LLC
(125%) the inverse (opposite) of the daily price movement of the most
recently issued 30-year U.S. Treasury bond ("Long Bond"). In accordance
with its stated objective, the net asset value of ProFund VP Rising Rates
Opportunity generally should decrease as interest rates fall. If ProFund
VP Rising Rates Opportunity is successful in meeting its objective, its net
asset value should gain approximately one and one-quarter times as
much, on a percentage basis, as any daily decrease in the Long Bond on
a given day. Conversely, its net asset value should lose approximately
one and one-quarter times as much, on a percentage basis, as any daily
increase in the Long Bond on a given day.
LARGE CAP PROFUND VP LARGE-CAP GROWTH: seeks daily investment results, before fees ProFund Advisors
GROWTH and expenses, that correspond to the daily performance of the S&P LLC
500/Barra Growth Index(R). The S&P 500/Barra Growth Index is a float
adjusted market capitalization weighted index comprised of the stocks in
the S&P 500 Index that have comparatively high price-to-book ratios as
determined before each semiannual rebalance date.
LARGE CAP PROFUND VP LARGE-CAP VALUE: seeks daily investment results, before fees ProFund Advisors
VALUE and expenses, that correspond to the daily performance of the S&P LLC
500/Barra Value Index(R). The S&P 500/Barra Value Index is a
float adjusted market capitalization weighted index comprised of
the stocks in the S&P 500 Index that have comparatively low
price-to-book ratios as determined before each semiannual
rebalance date.
23
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ----------------------------------------------------------------------------------------------------------------
SPECIALTY PROFUND VP SHORT SMALL-CAP: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the inverse (opposite) of the daily LLC
performance of the Russell 2000(R) Index. If ProFund VP Short Small-Cap is
successful in meeting its objective, its net asset value should gain
approximately the same amount, on a percentage basis, as any decrease
in the Russell 2000 Index when the Index declines on a given day.
Conversely, its net asset value should lose approximately the same
amount, on a percentage basis, as any increase in the Index when the
Index rises on a given day.
SPECIALTY PROFUND VP SHORT MID-CAP: seeks daily investment results, before fees ProFund Advisors
and expenses, that correspond to the inverse (opposite) of the daily LLC
performance of the S&P MidCap 400 Index(R). If ProFund VP Short Mid-Cap
is successful in meeting its objective, its net asset value should gain
approximately the same amount, on a percentage basis, as any decrease
in the S&P MidCap 400 Index when the Index declines on a given day.
Conversely, its net asset value should lose approximately the same
amount, on a percentage basis, as any increase in the Index when the
Index rises on a given day.
SPECIALTY ACCESS VP HIGH YIELD: seeks to provide investment results that ProFund Advisors
correspond generally to the total return of the high yield market LLC
consistent with maintaining reasonable liquidity. The Access VP High
Yield, created by ProFund Advisors, will achieve its high yield exposure
primarily through CDSs but may invest in high yield debt instruments
("junk bonds"), Interest rate swap agreements and futures contracts, and
other debt and money market instruments without limitation, consistent
with applicable regulations. Under normal market conditions, the fund will
invest at least 80% of its net assets in credit default swaps and other
financial instruments that in combination have economic characteristics
similar to the high yield debt market and/or in high yield debt securities.
The fund seeks to maintain exposure to the high yield bond markets
regardless of market conditions and without taking defensive positions.
SPECIALTY FIRST TRUST(R) 10 UNCOMMON VALUES: seeks to provide above-average capital First Trust Advisors
appreciation. The Portfolio seeks to achieve its objective by investing L.P.
primarily in the ten common stocks selected by the Investment Policy
Committee of Lehman Brothers Inc. ("Lehman Brothers") with the
assistance of the Research Department of Lehman Brothers which, in
their opinion have the greatest potential for capital appreciation during
the next year. The stocks included in the Portfolio are adjusted annually
on or about July 1st in accordance with the selections of Lehman
Brothers.
SPECIALTY TARGET MANAGED VIP: seeks to provide above-average total return. The First Trust Advisors
Portfolio seeks to achieve its objective by investing in common stocks of L.P.
the most attractive companies that are identified by a model based on six
uniquely specialized strategies -- The Dow(SM) DART 5, the European Target
20, the Nasdaq(R) Target 15, the S&P Target 24, the Target Small Cap and the
Value Line(R) Target 25.
24
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- --------------------------------------------------------------------------------------------------------------------
SPECIALTY THE DOW(SM) DART 10: seeks to provide above-average total return. The First Trust Advisors
Portfolio seeks to achieve its objective by investing in common L.P.
stocks issued by companies that are expected to provide
income and to have the potential for capital appreciation. The
Portfolio invests primarily in the common stocks of the ten
companies in the DJIA that have the highest combined dividend
yields and buyback ratios on or about the applicable stock
selection date.
SPECIALTY GLOBAL DIVIDEND TARGET 15 (formerly Global Target 15): seeks to provide First Trust Advisors
above-average total return. The Portfolio seeks to achieve its objective by L.P.
investing in common stocks issued by companies that are expected to
provide income and to have the potential for capital appreciation. The
Portfolio invests primarily in the common stocks of the companies which are
components of the DJIA, the Financial Times Industrial Ordinary Share Index
("FT Index") and the Hang Seng Index. The Portfolio primarily consists of
common stocks of the five companies with the lowest per share stock prices
of the ten companies in each of the DJIA, FT Index and Hang Seng Index,
respectively, that have the highest dividend yield in the respective index on
or about the applicable stock selection date.
SPECIALTY S&P(R) TARGET 24: seeks to provide above-average total return. The First Trust Advisors
Portfolio seeks to achieve its objective by investing in common stocks L.P.
issued by companies that have the potential for capital appreciation. The
Portfolio invests primarily in the common stocks of twenty-four companies
selected from a subset of the stocks included in the Standard & Poor's
500 Composite Stock Price Index(R). The subset of stocks will be taken
from each of the eight largest economic sectors of the S&P 500 Index(R)
based on the sector's market capitalization.
SPECIALTY THE DOW(SM) TARGET DIVIDEND seeks to provide above-average total return. First Trust Advisors
The Portfolio seeks to achieve its objective by investing in common L.P.
stocks issued by companies that are expected to provide income and to
have the potential for capital appreciation. The Portfolio invests primarily
in the 20 common stocks from the Dow Jones Select Dividend Index(SM)
with the best overall ranking on both the change in return on assets over
the last 12 months and price-to-book ratio as of the close of business on
or about the applicable stock selection date.
SPECIALTY VALUE LINE(R) TARGET 25: seeks to provide above-average capital First Trust Advisors
appreciation. The Portfolio seeks to achieve its objective by investing in L.P.
25 of the 100 common stocks that Value Line(R) gives a #1 ranking for
Timeliness(TM) which have recently exhibited certain positive financial
attributes as of the close of business on the applicable stock selection
date through a multi-step process.
25
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Investment Options continued
PORTFOLIO
STYLE/ ADVISOR/
TYPE INVESTMENT OBJECTIVES/POLICIES SUB-ADVISOR
- ---------------------------------------------------------------------------------------------------------------------
SPECIALTY NASDAQ(R) TARGET 15: seeks to provide above-average total return. The First Trust Advisors
Portfolio seeks to achieve its objective by investing in L.P.
common stocks issued by companies that are expected to
have the potential for capital appreciation. The Portfolio
invests primarily in the common stocks of fifteen companies
selected from a pre-screened subset of the stocks included in
the Nasdaq-100 Index(R) on or about the applicable stock
selection date through a multi-step process.
INTERNATIONAL THE PRUDENTIAL SERIES FUND, INC. -- SP WILLIAM BLAIR INTERNATIONAL Prudential
EQUITY Growth: Seeks long-term capital appreciation. The Portfolio invests Investments LLC/
primarily in stocks of large and medium-sized companies William Blair &
located in countries included in the Morgan Company, L.L.C.
Stanley Capital International All Country World
Ex-U.S. Index. Under normal market conditions, the portfolio
invests at least 80% of its net assets in equity securities.
The Portfolio's assets normally will be allocated among not
fewer than six different countries and will not concentrate
investments in any particular industry.
"Standard & Poor's(R), "S&P(R)," "S&P 500(R)," "Standard & Poor's 500," and
"500" are trademarks of the McGraw-Hill Companies, Inc. and have been licensed
for use by American Skandia Investment Services, Incorporated. The Portfolio is
not sponsored, endorsed, sold or promoted by Standard & Poor's and Standard &
Poor's makes no representation regarding the advisability of investing in the
Portfolio.
"Dow Jones Industrial Average(SM)", "DJIA(SM)", "Dow Industrials(SM)", "Dow
Jones Select Dividend Index(SM)", and "The Dow 10(SM)", are service marks of Dow
Jones & Company, Inc. ("Dow Jones") and have been licensed for use for certain
purposes by First Trust Advisors L.P. ("First Trust"). The portfolios,
including, and in particular the Target Managed VIP portfolio The Dow(SM) DART
10 portfolio, and The Dow(SM) Target Dividend Portfolio are not endorsed, sold
or promoted by Dow Jones, and Dow Jones makes no representation regarding the
advisability of investing in such products.
"Standard & Poor's," "S&P," "S&P 500," "Standard & Poor's 500," and "500" are
trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by
First Trust on behalf of the S&P Target 24 Portfolio and the Target Managed VIP
Portfolio. The Portfolios are not sponsored, endorsed, managed, sold or promoted
by Standard & Poor's and Standard & Poor's makes no representation regarding the
advisability of investing in the Portfolio.
"The Nasdaq 100(R)", "Nasdaq-100 Index(R)", "Nasdaq Stock Market(R)", and
"Nasdaq(R)" are trade or service marks of The Nasdaq Stock Market, Inc. (which
with its affiliates are the "Corporations") and have been licensed for use by
First Trust. The Nasdaq Target 15 Portfolio and Target Managed VIP Portfolio
have not been passed on by the Corporations as to its legality or suitability.
The Nasdaq Target 15 Portfolio and Target Managed VIP Portfolio are not issued,
endorsed, sponsored, managed, sold or promoted by the Corporations. THE
CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE NASDAQ
TARGET 15 PORTFOLIO OR THE TARGET MANAGED VIP PORTFOLIO.
"Value Line(R)," "The Value Line Investment Survey," and "Value Line
Timeliness(TM) Ranking System" are registered trademarks of Value Line
Securities, Inc. or Value Line Publishing, Inc. The Target Managed VIP(R)
Portfolio is not sponsored, recommended, sold or promoted by Value Line
Publishing, Inc., Value Line, Inc. or Value Line Securities, Inc. ("Value
Line"). Value Line makes no representation regarding the advisability of
investing in the Portfolio.
The First Trust(R) 10 Uncommon Values portfolio is not sponsored or created by
Lehman Brothers, Inc. ("Lehman Brothers"). Lehman Brothers' only relationship to
First Trust is the licensing of certain trademarks and trade names of Lehman
Brothers and of the "10 Uncommon Values" which is determined, composed and
calculated by Lehman Brothers without regard to First Trust or the First
Trust(R) 10 Uncommon Values portfolio.
Dow Jones has no relationship to the ProFunds VP, other than the licensing of
the Dow Jones sector indices and its service marks for use in connection with
the ProFunds VP. The ProFunds VP are not sponsored, endorsed, sold, or promoted
by Standard & Poor's or NASDAQ, and neither Standard & Poor's nor NASDAQ makes
any representations regarding the advisability of investing in the ProFunds VP.
WHAT ARE THE FIXED ALLOCATIONS?
We offer Fixed Allocations of different durations during the accumulation
period. These "Fixed Allocations" earn a guaranteed fixed rate of interest for a
specified period of time, called the "Guarantee Period." In most states, we
offer Fixed Allocations with Guarantee Periods from 1 to 10 years. We may also
offer special purpose Fixed Allocations for use with certain optional investment
programs. We guarantee the fixed rate for the entire Guarantee Period. However,
if you withdraw or transfer Account Value before the end of the Guarantee
Period, we will adjust the value of your withdrawal or transfer based on a
formula, called a "Market Value Adjustment." The Market Value Adjustment can
either be positive or negative, depending on the movement of applicable interest
rates payable on Strips of the appropriate duration. Please refer to the section
entitled "How does the Market Value Adjustment Work?" for a description of the
formula along with examples of how it is calculated. You may allocate Account
Value to more than one Fixed Allocation at a time.
Fixed Allocations may not be available in all states. Availability of Fixed
Allocations is subject to change and may differ by state and by the annuity
product you purchase. Please call American Skandia at 1-800-752-6342 to
determine availability of Fixed Allocations in your state and for your annuity
product.
26
AMERICAN SCANDIA LIFEVEST(R) II PROSPECTUS
Fees and Charges
The charges under the contracts are designed to cover, in the aggregate, our
direct and indirect costs of selling, administering and providing benefits under
the contracts. They are also designed, in the aggregate, to compensate us for
the risks of loss we assume pursuant to the contracts. If, as we expect, the
charges that we collect from the contracts exceed our total costs in connection
with the contracts, we will earn a profit. Otherwise we will incur a loss. For
example, American Skandia may make a profit on the Insurance Charge if, over
time, the actual costs of providing the guaranteed insurance obligations under
the Annuity are less than the amount we deduct for the Insurance Charge. To the
extent we make a profit on the Insurance Charge, such profit may be used for any
other corporate purpose, including payment of other expenses that American
Skandia incurs in promoting, distributing, issuing and administering the
Annuity.
The rates of certain of our charges have been set with reference to
estimates of the amount of specific types of expenses or risks that we will
incur. In most cases, this prospectus identifies such expenses or risks in the
name of the charge; however, the fact that any charge bears the name of, or is
designed primarily to defray a particular expense or risk does not mean that the
amount we collect from that charge will never be more than the amount of such
expense or risk, nor does it mean that we may not also be compensated for such
expense or risk out of any other charges we are permitted to deduct by the terms
of the contract. A portion of the proceeds that American Skandia receives from
charges that apply solely to the variable investment options may include amounts
based on market appreciation of the variable investment option values.
WHAT ARE THE CONTRACT FEES AND CHARGES?
THERE IS NO CONTINGENT DEFERRED SALES CHARGE APPLIED IF YOU SURRENDER YOUR
ANNUITY OR MAKE A PARTIAL WITHDRAWAL.
TRANSFER FEE: Currently, you may make twenty (20) free transfers between
investment options each Annuity Year. We will charge $10.00 for each transfer
after the twentieth in each Annuity Year. We do not consider transfers made as
part of a dollar cost averaging, automatic rebalancing or asset allocation
program when we count the twenty free transfers. All transfers made on the same
day will be treated as one (1) transfer. Renewals or transfers of Account Value
from a Fixed Allocation at the end of its Guarantee Period are not subject to
the Transfer Fee and are not counted toward the twenty free transfers. We may
reduce the number of free transfers allowable each Annuity Year (subject to a
minimum of eight) without charging a Transfer Fee unless you make use of
electronic means to transmit your transfer requests. We may eliminate the
Transfer Fee for transfer requests transmitted electronically or through other
means that reduce our processing costs. If enrolled in any program that does not
permit transfer requests to be transmitted electronically, the Transfer Fee will
not be waived.
ANNUAL MAINTENANCE FEE: During the accumulation period we deduct an Annual
Maintenance Fee. The Annual Maintenance Fee is $35.00 or 2% of your Account
Value invested in the variable investment options, whichever is less. This fee
will be deducted annually on the anniversary of the Issue Date of your Annuity
or, if you surrender your Annuity during the Annuity Year, the fee is deducted
at the time of surrender. Currently, the Annual Maintenance Fee is only deducted
if your Account Value is less than $100,000 on the anniversary of the Issue Date
or at the time of surrender. We may increase the Annual Maintenance Fee.
However, any increase will only apply to Annuities issued after the date of the
increase.
TAX CHARGE: Several states and some municipalities charge premium taxes or
similar taxes on annuities that we are required to pay. The amount of tax will
vary from jurisdiction to jurisdiction and is subject to change. The tax charge
currently ranges up to 3 1/2% of your premium and is designed to approximate the
taxes that we are required to pay. We generally will deduct the charge at the
time the tax is imposed, but may also decide to deduct charge from each Purchase
Payment at the time of a withdrawal or surrender of your Annuity or at the time
you elect to begin receiving annuity payments. We may assess a charge against
the Sub-accounts and the Fixed Allocations equal to any taxes which may be
imposed upon the separate accounts.
We will pay company income taxes on the taxable corporate earnings created
by this separate account product. While we may consider company income taxes
when pricing our products, we do not currently include such income taxes in the
tax charges you pay under the contract. We will periodically review the issue of
charging for these taxes and may impose a charge in the future.
In calculating our corporate income tax liability, we derive certain
corporate income tax benefits associated with the investment of company assets,
including separate account assets, which are treated as company assets under
applicable income tax law. These benefits reduce our overall corporate income
tax liability. Under current law, such benefits may
27
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Fees and Charges continued
include foreign tax credits and corporate dividends received deductions. We do
not pass these tax benefits through to holders of the separate account annuity
contracts because (i) the contract owners are not the owners of the assets
generating these benefits under applicable income tax law and (ii) we do not
currently include company income taxes in the tax charges you pay under the
contract.
WHAT CHARGES APPLY SOLELY TO THE VARIABLE INVESTMENT OPTIONS?
INSURANCE CHARGE: We deduct an Insurance Charge daily. The charge is assessed
against the average daily assets allocated to the Sub-accounts and is equal to
1.65% on an annual basis. The Insurance Charge is a combination of the Mortality
& Expense Risk Charge (1.50%) and the Administration Charge (0.15%). The
Insurance Charge is intended to compensate American Skandia for providing the
insurance benefits under the Annuity, including the Annuity's basic death
benefit that provides guaranteed benefits to your beneficiaries even if the
market declines and the risk that persons we guarantee annuity payments to will
live longer than our assumptions. The charge also covers administrative costs
associated with providing the Annuity benefits, including preparation of the
contract, confirmation statements, annual account statements and annual reports,
legal and accounting fees as well as various related expenses. Finally, the
charge covers the risk that our assumptions about the mortality risks and
expenses under this Annuity are incorrect and that we have agreed not to
increase these charges over time despite our actual costs. We may increase the
portion of the total Insurance Charge that is deducted for administrative costs;
however, any increase will only apply to Annuities issued after the date of the
increase.
The Insurance Charge is not deducted against assets allocated to a Fixed
Allocation. However, the amount we credit to Fixed Allocations may also reflect
similar assumptions about the insurance guarantees provided under the Annuity.
OPTIONAL BENEFITS FOR WHICH WE ASSESS A CHARGE SOLELY AGAINST THE VARIABLE
INVESTMENT OPTIONS: If you elect to purchase certain optional benefits, we will
deduct an additional charge on a daily basis solely from your Account Value
allocated to the Sub-accounts The additional charge is included in the daily
calculation of the Unit Price for each Sub-account. We may assess charges for
other optional benefits on a different basis as described elsewhere in the
prospectus. Please refer to the sections entitled "Living Benefit Programs" and
"Death Benefit" for a description of the charge for each Optional Benefit.
WHAT FEES AND EXPENSES ARE INCURRED BY THE PORTFOLIOS?
Each Portfolio incurs total annual operating expenses comprised of an investment
management fee, other expenses and any distribution and service (12b-1) fees
that may apply. These fees and expenses are reflected daily by each Portfolio
before it provides American Skandia with the net asset value as of the close of
business each day. More detailed information about fees and expenses can be
found in the prospectuses for the Portfolios.
WHAT CHARGES APPLY TO THE FIXED ALLOCATIONS?
No specific fee or expenses are deducted when determining the rate we credit to
a Fixed Allocation. However, for some of the same reasons that we deduct the
Insurance Charge against Account Value allocated to the Sub-accounts, we also
take into consideration mortality, expense, administration, profit and other
factors in determining the interest rates we credit to Fixed Allocations. Any
Tax Charge applies to amounts that are taken from the variable investment
options or the Fixed Allocations. A Market Value Adjustment may also apply to
transfers, certain withdrawals, surrender or annuitization from a Fixed
Allocation.
WHAT CHARGES APPLY IF I CHOOSE AN ANNUITY PAYMENT OPTION?
If you select a fixed payment option, the amount of each fixed payment will
depend on the Account Value of your Annuity when you elected to annuitize. There
is no specific charge deducted from these payments; however, the amount of each
annuity payment reflects assumptions about our insurance expenses. If you select
a variable payment option that we may offer, then the amount of your benefits
will reflect changes in the value of your Annuity and will be subject to charges
that apply under the variable annuity. Also, a tax charge may apply (see "Tax
Charge" above).
EXCEPTIONS/REDUCTIONS TO FEES AND CHARGES
We may reduce or eliminate certain fees and charges or alter the manner in which
the particular fee or charge is deducted. For example, we may reduce or
eliminate the amount of the Annual Maintenance Fee or reduce the portion of the
total Insurance Charge that is deducted as an Administration Charge.
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Generally, these types of changes will be based on a reduction to our sales,
maintenance or administrative expenses due to the nature of the individual or
group purchasing the Annuity. Some of the factors we might consider in making
such a decision are: (a) the size and type of group; (b) the number of Annuities
purchased by an Owner; (c) the amount of Purchase Payments or likelihood of
additional Purchase Payments; and/or (d) other transactions where sales,
maintenance or administrative expenses are likely to be reduced. We will not
discriminate unfairly between Annuity purchasers if and when we reduce any fees
and charges.
29
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Purchasing Your Annuity
WHAT ARE OUR REQUIREMENTS FOR PURCHASING THE ANNUITY?
INITIAL PURCHASE PAYMENT: You must make a minimum initial Purchase Payment of
$15,000. However, if you decide to make payments under a systematic investment
or "bank drafting" program, we will accept a lower initial Purchase Payment
provided that, within the first Annuity Year, you make at least $15,000 in total
Purchase Payments.
Where allowed by law, we must approve any initial and additional Purchase
Payments of $1,000,000 or more. We may apply certain limitations and/or
restrictions on the Annuity as a condition of our acceptance, including limiting
the liquidity features or the Death Benefit protection provided under the
Annuity, limiting the right to make additional Purchase Payments, changing the
number of transfers allowable under the Annuity or restricting the Sub-accounts
or Fixed Allocations that are available. Other limitations and/or restrictions
may apply.
Except as noted below, Purchase Payments must be submitted by check drawn
on a U.S. bank, in U.S. dollars, and made payable to American Skandia. Purchase
Payments may also be submitted via 1035 exchange or direct transfer of funds.
Under certain circumstances, Purchase Payments may be transmitted to American
Skandia via wiring funds through your investment professional's broker-dealer
firm. Additional Purchase Payments may also be applied to your Annuity under an
arrangement called "bank drafting" where you authorize us to deduct money
directly from your bank account. We may reject any payment if it is received in
an unacceptable form. Our acceptance of a check is subject to our ability to
collect funds.
AGE RESTRICTIONS: There is no age restriction to purchase the Annuity.
However, the basic Death Benefit provides greater protection for persons under
age 85. There is no Contingent Deferred Sales Charge deducted upon surrender or
partial withdrawal. However, if you take a distribution prior to age 59 1/2, you
may be subject to a 10% penalty in addition to ordinary income taxes on any
gain. The availability and level of protection of certain optional benefits may
vary based on the age of the Owner as of the Issue Date of the Annuity or the
date of the Owner's death.
OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS:
We will ask you to name the Owner(s), Annuitant and one or more Beneficiaries
for your Annuity.
- - Owner: The Owner(s) holds all rights under the Annuity. You may name up to
two Owners in which case all ownership rights are held jointly. Generally,
joint owners are required to act jointly; however, if each owner provides
us with an instruction that we find acceptable, we will permit each owner
to act separately. All information and documents that we are required to
send you will be sent to the first named owner. This Annuity does not
provide a right of survivorship. Refer to the Glossary of Terms for a
complete description of the term "Owner."
- - Annuitant: The Annuitant is the person we agree to make annuity payments to
and upon whose life we continue to make such payments. You must name an
Annuitant who is a natural person. We do not accept a designation of joint
Annuitants during the accumulation period. Where allowed by law, you may
name one or more Contingent Annuitants. A Contingent Annuitant will become
the Annuitant if the Annuitant dies before the Annuity Date. Please refer
to the discussion of "Considerations for Contingent Annuitants" in the Tax
Considerations section of the Prospectus.
- - Beneficiary: The Beneficiary is the person(s) or entity you name to receive
the death benefit. Your beneficiary designation must be the exact name of
your beneficiary, not only a reference to the beneficiary's relationship to
you. For example, a designation of "surviving spouse" would not be
acceptable. If no beneficiary is named the death benefit will be paid to
you or your estate.
Your right to make certain designations may be limited if your Annuity is
to be used as an IRA or other "qualified" investment that is given beneficial
tax treatment under the Code. You should seek competent tax advice on the
income, estate and gift tax implications of your designations.
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Managing Your Annuity
MAY I CHANGE THE OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS?
You may change the Owner, Annuitant and Beneficiary designations by sending us a
request in writing. Upon an ownership change, any automated investment or
withdrawal programs will be canceled. The new owner must submit the applicable
program enrollment if they wish to participate in such a program. Where allowed
by law, such changes will be subject to our acceptance. Some of the changes we
will not accept include, but are not limited to:
- - a new Owner subsequent to the death of the Owner or the first of any joint
Owners to die, except where a spouse-Beneficiary has become the Owner as a
result of an Owner's death;
- - a new Annuitant subsequent to the Annuity Date;
- - for "non-qualified" investments, a new Annuitant prior to the Annuity Date
if the Annuity is owned by an entity; and
- - a change in Beneficiary if the Owner had previously made the designation
irrevocable.
SPOUSAL OWNERS/SPOUSAL BENEFICIARIES
If an Annuity is co-owned by spouses, we will assume that the sole primary
Beneficiary is the surviving spouse that was named as the co-owner unless you
elect an alternative Beneficiary designation. Unless you elect an alternative
Beneficiary designation, upon the death of either spousal Owner, the surviving
spouse may elect to assume ownership of the Annuity instead of taking the Death
Benefit payment. The Death Benefit that would have been payable will be the new
Account Value of the Annuity as of the date of due proof of death and any
required proof of a spousal relationship. As of the date the assumption is
effective, the surviving spouse will have all the rights and benefits that would
be available under the Annuity to a new purchaser of the same attained age. For
purposes of determining any future Death Benefit for the beneficiary of the
surviving spouse, the new Account Value will be considered as the initial
Purchase Payment. However, any additional Purchase Payments applied after the
date the assumption is effective will be subject to all provisions of the
Annuity.
SPOUSAL CONTINGENT ANNUITANT
If the Annuity is owned by an entity and the surviving spouse is named as a
Contingent Annuitant, upon the death of the Annuitant, the surviving spouse that
was named as the Contingent Annuitant will become the Annuitant. NO DEATH
BENEFIT IS PAYABLE UPON THE DEATH OF THE ANNUITANT. However, the Account Value
of the Annuity as of the date of due proof of death of the Annuitant (and any
required proof of the spousal relationship) will reflect the amount that would
have been payable had a Death Benefit been paid.
MAY I RETURN THE ANNUITY IF I CHANGE MY MIND?
If after purchasing your Annuity you change your mind and decide that you do not
want it, you may return it to us within a certain period of time known as a
right to cancel period. This is often referred to as a "free-look." Depending on
the state in which you purchased your Annuity, and, in some states, if you
purchased the Annuity as a replacement for a prior contract, the right to cancel
period may be ten (10) days, twenty-one (21) days or longer, measured from the
time that you received your Annuity. If you return your Annuity, during the
applicable period, we will refund your current Account Value plus any tax charge
deducted, and depending on your state's requirements, any applicable insurance
charges deducted. The amount returned to you may be higher or lower than the
Purchase Payment(s) applied during the right to cancel period. Where required by
law, we will return your Purchase Payments(s), or the greater of your current
Account Value and the amount of your Purchase Payment(s) applied during the
right to cancel period.
MAY I MAKE ADDITIONAL PURCHASE PAYMENTS?
The minimum amount that we accept as an additional Purchase Payment is $100
unless you participate in American Skandia's Systematic Investment Plan or a
periodic purchase payment program. Unless you participate in an asset allocation
program, or unless you have provided us with other specific allocation
instructions for one, more than one, or all subsequent purchase payments, we
will allocate any additional Purchase Payments you make according to your
initial purchase payment allocation instructions. If you so instruct us, we will
allocate subsequent purchase payments according to any new allocation
instructions. Purchase payments made while you participate in an asset
allocation program will be allocated in accordance with such program. Additional
Purchase Payments may be paid at any time before the Annuity Date.
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Managing Your Annuity continued
MAY I MAKE SCHEDULED PAYMENTS DIRECTLY FROM MY BANK ACCOUNT?
You can make additional Purchase Payments to your Annuity by authorizing us to
deduct money directly from your bank account and applying it to your Annuity.
This type of program is often called "bank drafting". We call our bank drafting
program "American Skandia's Systematic Investment Plan." Purchase Payments made
through bank drafting may only be allocated to the variable investment options
when applied. Bank drafting allows you to invest in your Annuity with a lower
initial Purchase Payment, as long as you authorize payments that will equal at
least $15,000 during the first 12 months of your Annuity. We may suspend or
cancel bank drafting privileges if sufficient funds are not available from the
applicable financial institution on any date that a transaction is scheduled to
occur.
MAY I MAKE PURCHASE PAYMENTS THROUGH A SALARY REDUCTION PROGRAM?
These types of programs are only available with certain types of qualified
investments. If your employer sponsors such a program, we may agree to accept
periodic Purchase Payments through a salary reduction program as long as the
allocations are made only to variable investment options and the periodic
Purchase Payments received in the first year total at least $15,000.
32
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Managing Your Account Value
HOW AND WHEN ARE PURCHASE PAYMENTS INVESTED?
(See "Valuing Your Investment" for a description of our procedure for pricing
initial and subsequent Purchase Payments.)
INITIAL PURCHASE PAYMENT: Once we accept your application, we invest your
net Purchase Payment in the Annuity. The net Purchase Payment is your initial
Purchase Payment minus any tax charges that may apply. On your application we
ask you to provide us with instructions for allocating your Account Value. You
can allocate Account Value to one or more variable investment options or Fixed
Allocations.
SUBSEQUENT PURCHASE PAYMENTS: Unless you participate in an asset allocation
program, or unless you have provided us with other specific allocation
instructions for one, more than one, or all subsequent Purchase Payments, we
will allocate any additional Purchase Payments you make according to your
initial Purchase Payment allocation instructions. If you so instruct us, we will
allocate subsequent Purchase Payments according to any new allocation
instructions. Purchase Payments made while you participate in an asset
allocation program will be allocated in accordance with such program.
ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?
During the accumulation period you may transfer Account Value between investment
options. Transfers are not subject to taxation on any gain. We may require a
minimum of $500 in each Sub-account you allocate Account Value to at the time of
any allocation or transfer. If you request a transfer and, as a result of the
transfer, there would be less than $500 in the Sub-account, we may transfer the
remaining Account Value in the Sub-account pro-rata to the other investment
options to which you transferred.
We may impose specific restrictions on financial transactions (including
transfer requests) for certain Portfolios based on the Portfolio's investment
and/or transfer restrictions. We may do so to conform to any present or future
restriction that is imposed by any portfolio available under this Annuity.
Currently, any purchase, redemption or transfer involving the ProFunds VP
Sub-accounts must be received by us no later than one hour prior to any
announced closing of the applicable securities exchange (generally, 3:00 p.m.
Eastern time) to be processed on the current Valuation Day. The "cut-off" time
for such financial transactions involving a ProFunds VP Sub-account will be
extended to 1/2 hour prior to any announced closing (generally, 3:30 p.m.
Eastern time) for transactions submitted electronically through American
Skandia's Internet website (www.americanskandia.prudential.com).
Currently, we charge $10.00 for each transfer after the twentieth (20th) in
each Annuity Year. Transfers made as part of a dollar cost averaging, automatic
rebalancing or asset allocation program do not count toward the twenty free
transfer limit. Renewals or transfers of Account Value from a Fixed Allocation
at the end of its Guarantee Period are not subject to the transfer charge. We
may reduce the number of free transfers allowable each Annuity Year (subject to
a minimum of eight) without charging a Transfer Fee unless you make use of
electronic means to transmit your transfer requests. We may also increase the
Transfer Fee that we charge to $15.00 for each transfer after the number of free
transfers has been used up. We may eliminate the Transfer Fee for transfer
requests transmitted electronically or through other means that reduce our
processing costs. If enrolled in any program that does not permit transfer
requests to be transmitted electronically, the Transfer Fee will not be waived.
Once you have made 20 transfers among the Sub-accounts during an Annuity
Year, we will accept any additional transfer request during that year only if
the request is submitted to us in writing with an original signature and
otherwise is in good order. For purposes of this 20 transfer limit, we (i) do
not view a facsimile transmission as a "writing", (ii) will treat multiple
transfer requests submitted on the same business day as a single transfer, and
(iii) do not count any transfer that solely involves Sub-accounts corresponding
to any ProFund Portfolio and/or the AST Money Market Portfolio, or any transfer
that involves one of our systematic programs, such as asset allocation and
automated withdrawals.
Frequent transfers among Sub-accounts in response to short-term
fluctuations in markets, sometimes called "market timing," can make it very
difficult for a Portfolio manager to manage a Portfolio's investments. Frequent
transfers may cause the Portfolio to hold more cash than otherwise necessary,
disrupt management strategies, increase transaction costs, or affect
performance. The Annuity offers Sub-accounts designed for Owners who wish to
engage in frequent transfers (i.e., one or more of the Sub-accounts
corresponding to the ProFund Portfolios and the AST Money Market Portfolio), and
we encourage Owners seeking frequent transfers to utilize those Sub-accounts.
33
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Managing Your Account Value continued
In light of the risks posed to Owners and other investors by frequent
transfers, we reserve the right to limit the number of transfers in any Annuity
Year for all existing or new Owners and to take the other actions discussed
below. We also reserve the right to limit the number of transfers in any Annuity
Year or to refuse any transfer request for an Owner or certain Owners if: (a) we
believe that excessive transfer activity (as we define it) or a specific
transfer request or group of transfer requests may have a detrimental effect on
Unit Values or the share prices of the Portfolios; or (b) we are informed by a
Portfolio (e.g., by the Portfolio's portfolio manager) that the purchase or
redemption of shares in the Portfolio must be restricted because the Portfolio
believes the transfer activity to which such purchase and redemption relates
would have a detrimental effect on the share prices of the affected Portfolio.
Without limiting the above, the most likely scenario where either of the above
could occur would be if the aggregate amount of a trade or trades represented a
relatively large proportion of the total assets of a particular Portfolio. In
furtherance of our general authority to restrict transfers as described above,
and without limiting other actions we may take in the future, we have adopted
the following specific restrictions:
- - With respect to each Sub-account (other than the AST Money Market
Sub-account, or a Sub-account corresponding to a ProFund Portfolio), we
track amounts exceeding a certain dollar threshold that were transferred
into the Sub-account. If you transfer such amount into a particular
Sub-account, and within 30 calendar days thereafter transfer (the "Transfer
Out") all or a portion of that amount into another Sub-account, then upon
the Transfer Out, the former Sub-account becomes restricted (the
"Restricted Sub-account"). Specifically, we will not permit subsequent
transfers into the Restricted Sub-account for 90 calendar days after the
Transfer Out if the Restricted Sub-account invests in a non-international
Portfolio, or 180 calendar days after the Transfer Out if the Restricted
Sub-account invests in an international Portfolio. For purposes of this
rule, we (i) do not count transfers made in connection with one of our
systematic programs, such as asset allocation and automated withdrawals;
(ii) do not count any transfer that solely involves Sub-accounts
corresponding to any ProFund Portfolio and/or the AST Money Market
Portfolio and (iii) do not categorize as a transfer the first transfer that
you make after the Issue Date, if you make that transfer within 30 calendar
days after the Issue Date. Even if an amount becomes restricted under the
foregoing rules, you are still free to redeem the amount from your Annuity
at any time.
- - We reserve the right to effect exchanges on a delayed basis for all
contracts. That is, we may price an exchange involving the Sub-accounts on
the Valuation Day subsequent to the Valuation Day on which the exchange
request was received. Before implementing such a practice, we would issue a
separate written notice to Owners that explains the practice in detail.
- - If we deny one or more transfer requests under the foregoing rules, we will
inform you or your investment professional promptly of the circumstances
concerning the denial.
- - Contract Owners in New York who purchased their contracts prior to March
15, 2004 are not subject to the specific restrictions outlined in bulleted
paragraphs immediately above. In addition, there are contract owners of
different variable annuity contracts that are funded through the same
Separate Account that are not subject to the above-referenced transfer
restrictions and, therefore, might make more numerous and frequent
transfers then contract owners who are subject to such limitations.
Finally, there are contract owners of other variable annuity contracts or
variable life contracts that are issued by American Skandia as well as
other insurance companies that have the same underlying mutual fund
portfolios available to them. Since some contract owners are not subject to
the same transfer restrictions, unfavorable consequences associated with
such frequent trading within the underlying mutual fund (e.g., greater
portfolio turnover, higher transaction costs, or performance or tax issues)
may affect all contract owners. Similarly, while contracts managed by an
investment professional or third party investment advisor are subject to
the restrictions on transfers between investment options that are discussed
above, if the advisor manages a number of contracts in the same fashion
unfavorable consequences may be associated with management activity since
it may involve the movement of a substantial portion of an underlying
mutual fund's assets which may affect all contract owners invested in the
affected options. Apart from jurisdiction-specific and contract differences
in transfer restrictions, we will apply these rules uniformly (including
contracts managed by an investment professional or third party investment
advisor), and will not waive a transfer restriction for any contract
owners.
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
ALTHOUGH OUR TRANSFER RESTRICTIONS ARE DESIGNED TO PREVENT EXCESSIVE
TRANSFERS, THEY ARE NOT CAPABLE OF PREVENTING EVERY POTENTIAL OCCURRENCE OF
EXCESSIVE TRANSFER ACTIVITY.
DO YOU OFFER DOLLAR COST AVERAGING?
Yes. We offer Dollar Cost Averaging during the accumulation period. Dollar Cost
Averaging allows you to systematically transfer an amount periodically from one
investment option to one or more other investment options. You can choose to
transfer earnings only, principal plus earnings or a flat dollar amount. You may
elect a Dollar Cost Averaging program that transfers amounts monthly, quarterly,
semi-annually, or annually from variable investment options, or a program that
transfers amounts monthly from Fixed Allocations. By investing amounts on a
regular basis instead of investing the total amount at one time, Dollar Cost
Averaging may decrease the effect of market fluctuation on the investment of
your purchase payment. This may result in a lower average cost of units over
time. However, there is no guarantee that Dollar Cost Averaging will result in a
profit or protect against a loss in a declining market. There is no minimum
Account Value required to enroll in a Dollar Cost Averaging program and we do
not deduct a charge for participating in a Dollar Cost Averaging program.
You can Dollar Cost Average from variable investment options or Fixed
Allocations. Dollar Cost Averaging from Fixed Allocations is subject to a number
of rules that include, but are not limited to the following:
- - You may only use Fixed Allocations with Guarantee Periods of 1, 2 or 3
years.
- - You may only Dollar Cost Average earnings or principal plus earnings. If
transferring principal plus earnings, the program must be designed to last
the entire Guarantee Period for the Fixed Allocation.
- - Dollar Cost Averaging transfers from Fixed Allocations are not subject to a
Market Value Adjustment.
NOTE: When a Dollar Cost Averaging program is established from a Fixed
Allocation, the fixed rate of interest we credit to your Account Value is
applied to a declining balance due to the transfers of Account Value to the
Sub-accounts during the Guarantee Period. This will reduce the effective rate of
return on the Fixed Allocation over the Guarantee Period.
The Dollar Cost Averaging program is not available if you elect the
Guaranteed Return Option Plus(SM), the Guaranteed Return Option or the automatic
rebalancing programs when it involves transfers out of Fixed Allocations and is
also not available when you have elected an asset allocation program.
DO YOU OFFER ANY AUTOMATIC REBALANCING PROGRAMS?
Yes. During the accumulation period, we offer automatic rebalancing among the
variable investment options you choose. You can choose to have your Account
Value rebalanced monthly, quarterly, semi-annually, or annually. On the
appropriate date, the variable investment options you chose are rebalanced to
the allocation percentages you requested. With automatic rebalancing, we
transfer the appropriate amount from the "overweighted" Sub-accounts to the
"underweighted" Sub-accounts to return your allocations to the percentages you
request. For example, over time the performance of the variable investment
options will differ, causing your percentage allocations to shift. Any transfer
to or from any variable investment option that is not part of your automatic
rebalancing program, will be made, however that variable investment option will
not become part of your rebalancing program unless we receive instructions from
you indicating that you would like such option to become part of the program.
There is no minimum Account Value required to enroll in automatic
rebalancing. All rebalancing transfers as part of an automatic rebalancing
program are not included when counting the number of transfers each year toward
the maximum number of free transfers. We do not deduct a charge for
participating in an automatic rebalancing program. Participation in the
Automatic Rebalancing program may be restricted if you are enrolled in certain
other optional programs.
ARE ANY ASSET ALLOCATION PROGRAMS AVAILABLE?
Yes. Certain "static asset allocation programs" are available for use with the
Annuity. These programs are considered static because once you have selected a
model portfolio, the Sub-accounts and the percentage of contract value allocated
to each Sub-account cannot be changed without your consent. The programs are
available at no additional charge. Under these programs, the Sub-account for
each asset class in each model portfolio is designated for you. Under the
programs, the values in the Sub-accounts will be rebalanced periodically back to
the indicated percentages for the applicable asset class within the model
portfolio that you have selected. For more information on the asset allocation
programs, see the Appendix entitled "Additional Information on the Asset
Allocation Programs."
Asset allocation is a sophisticated method of diversification, which
allocates assets among asset classes in order to manage investment risk and
enhance returns over the long
35
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Managing Your Account Value continued
term. However, asset allocation does not guarantee a profit or protect against a
loss. No personalized investment advice is provided in connection with the asset
allocation programs and you should not rely on these programs as providing
individualized investment recommendations to you. The asset allocation programs
do not guarantee better investment results. We reserve the right to terminate or
change the asset allocation programs at any time. You should consult with your
Investment Professional before electing any asset allocation program.
DO YOU OFFER PROGRAMS DESIGNED TO GUARANTEE A "RETURN OF PREMIUM" AT A FUTURE
DATE?
Yes. We offer two different programs for investors who wish to invest in the
variable investment options but also wish to protect their principal, as of a
specific date in the future. They are the Balanced Investment Program and the
Guaranteed Return Option Plus(SM). (The Guaranteed Return Option Plus (GRO
Plus(SM)) is not available in all states. In some states where GRO Plus is not
available we offer the Guaranteed Return Option (GRO)). Both the Balanced
Investment Program and GRO Plus allow you to allocate a portion of your Account
Value to the available variable investment options while ensuring that your
Account Value will at least equal your contributions adjusted for withdrawals
and transfers on a specified date. Under GRO Plus, Account Value is allocated to
and maintained in Fixed Allocations to the extent we, in our sole discretion,
deem it is necessary to support our guarantee under the program. This differs
from the Balanced Investment Program where a set amount is allocated to a Fixed
Allocation regardless of the performance of the underlying Sub-accounts or the
interest rate environment after the amount is allocated to a Fixed Allocation.
Generally, more of your Account Value will be allocated to the variable
investment options under the GRO Plus program than under the Balanced Investment
Program (although in periods of poor market performance, low interest rates
and/or as the option progresses to its maturity date, this may not be the case).
You may not want to use either of these programs if you expect to begin taking
annuity payments before the program would be completed. In addition, as with
most return of premium programs, amounts that are available to allocate to the
variable investment options may be substantially less than they would be if you
did not elect a return of premium program. This means that, if investment
experience in the variable investment options were positive, your Account Value
would grow at a slower rate than if you did not elect a return of premium
program and allocated all of your Account Value to the variable investment
options.
BALANCED INVESTMENT PROGRAM
We offer a balanced investment program where a portion of your Account Value is
allocated to a Fixed Allocation and the remaining Account Value is allocated to
the variable investment options that you select. When you enroll in the Balanced
Investment Program, you choose the duration that you wish the program to last.
This determines the duration of the Guarantee Period for the Fixed Allocation.
Based on the fixed rate for the Guarantee Period chosen, we calculate the
portion of your Account Value that must be allocated to the Fixed Allocation to
grow to a specific "principal amount" (such as your initial Purchase Payment).
We determine the amount based on the rates then in effect for the Guarantee
Period you choose. If you continue the program until the end of the Guarantee
Period and make no withdrawals or transfers, at the end of the Guarantee Period,
the Fixed Allocation will have grown to equal the "principal amount".
Withdrawals or transfers from the Fixed Allocation before the end of the
Guarantee Period will terminate the program and may be subject to a Market Value
Adjustment. You can transfer the Account Value that is not allocated to the
Fixed Allocation between any of the Sub-accounts available under the Annuity.
Account Value you allocate to the variable investment options is subject to
market fluctuations and may increase or decrease in value. We do not deduct a
charge for participating in the Balanced Investment Program.
EXAMPLE
Assume you invest $100,000. You choose a 10-year program and allocate a
portion of your Account Value to a Fixed Allocation with a 10-year
Guarantee Period. The rate for the 10-year Guarantee Period is 2.50%*.
Based on the fixed interest rate for the Guarantee Period chosen, the
factor is 0.781198 for determining how much of your Account Value will be
allocated to the Fixed Allocation. That means that $78,120 will be
allocated to the Fixed Allocation and the remaining Account Value ($21,880)
will be allocated to the variable investment options. Assuming that you do
not make any withdrawals or transfers from the Fixed Allocation, it will
grow to $100,000 at the end of the Guarantee Period. Of course we cannot
predict the value of the remaining Account Value that was allocated to the
variable investment options.
* The rate in this example is hypothetical and may not reflect the current rate
for Guarantee Periods of this duration.
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
The GUARANTEED RETURN OPTION PLUS (GRO PLUS) guarantees that, after a
seven-year period following commencement of the program ("maturity date") and on
each anniversary of the maturity date thereafter, your Account Value will not be
less than the Account Value on the effective date of the program. The program
also offers you the option to elect a second, enhanced guarantee amount at a
higher Account Value subject to a separate maturity period (and its
anniversaries). The GRO Plus program may be appropriate if you wish to protect a
principal amount (called the "Protected Principal Value") against market
downturns as of a specific date in the future, but also wish to exercise control
of your available Account Value among the variable investment options to
participate in market experience. Under the GRO Plus program, you give us the
right to allocate amounts to Fixed Allocations as needed to support the
guarantees provided. The available Account Value is the amount not allocated to
the Fixed Allocations to support the guarantees provided. There is a fee
associated with this program. See "Living Benefit Programs," later in this
Prospectus, for more information about this program.
MAY I GIVE MY INVESTMENT PROFESSIONAL PERMISSION TO MANAGE MY ACCOUNT VALUE?
Yes. Your Investment Professional may direct the allocation of your Account
Value and request financial transactions between investment options while you
are living, subject to our rules and unless you tell us otherwise. IF YOUR
INVESTMENT PROFESSIONAL HAS THIS AUTHORITY, AND UNLESS YOU TELL US OTHERWISE WE
DEEM THAT ALL TRANSACTIONS THAT ARE DIRECTED BY YOUR INVESTMENT PROFESSIONAL
WITH RESPECT TO YOUR ANNUITY HAVE BEEN AUTHORIZED BY YOU. You must contact us
immediately if and when you revoke such authority. We will not be responsible
for acting on instructions from your Investment Professional until we receive
notification of the revocation of such person's authority. We may also suspend,
cancel or limit these privileges at any time. We will notify you if we do.
MAY I AUTHORIZE MY THIRD PARTY INVESTMENT ADVISOR TO MANAGE MY ACCOUNT?
Yes. You may engage your own investment advisor to manage your account. These
investment advisors may be firms or persons who also are appointed by us, or
whose affiliated broker-dealers are appointed by us, as authorized sellers of
the Annuity. EVEN IF THIS IS THE CASE, HOWEVER, PLEASE NOTE THAT THE INVESTMENT
ADVISOR YOU ENGAGE TO PROVIDE ADVICE AND/OR MAKE TRANSFERS FOR YOU, IS NOT
ACTING ON OUR BEHALF, BUT RATHER IS ACTING ON YOUR BEHALF. We do not offer
advice about how to allocate your Account Value under any circumstance. As such,
we are not responsible for any recommendations such investment advisors make,
any investment models or asset allocation programs they choose to follow or any
specific transfers they make on your behalf.
Any fee that is charged by your investment advisor is in addition to the
fees and expenses that apply under your Annuity. If you authorize your
investment advisor to withdraw amounts from your Annuity (to the extent
permitted) to pay for the investment advisor's fee, as with any other withdrawal
from your Annuity, you may incur adverse tax consequences, and/or a Market Value
Adjustment. Withdrawals to pay your investment advisor generally will also
reduce the level of various living and death benefit guarantees provided (e.g.
the withdrawals will reduce proportionately the Annuity's guaranteed minimum
death benefit. WE ARE NOT A PARTY TO THE AGREEMENT YOU HAVE WITH YOUR INVESTMENT
ADVISOR AND DO NOT VERIFY THAT AMOUNTS WITHDRAWN FROM YOUR ANNUITY, INCLUDING
AMOUNTS WITHDRAWN TO PAY FOR THE INVESTMENT ADVISOR'S FEE, ARE WITHIN THE TERMS
OF YOUR AGREEMENT WITH YOUR INVESTMENT ADVISOR. You will, however, receive
confirmations of transactions that affect your Annuity. If your investment
advisor has also acted as your Investment Professional with respect to the sale
of your Annuity, he or she may be receiving compensation for services provided
both as an Investment Professional and investment advisor. Alternatively, the
investment advisor may compensate the Investment Professional from whom you
purchased your Annuity for the referral that led you to enter into your
investment advisory relationship with the investment advisor. If you are
interested in the details about the compensation that your investment advisor
and/or your Investment Professional receive in connection with your Annuity, you
should ask them for more details.
We or an affiliate of ours may provide administrative support to licensed,
registered investment professionals or investment advisors who you authorize to
make financial transactions on your behalf. We may require Investment
Professionals or investment advisors, who are authorized by multiple contract
owners to make financial transactions, to enter into an administrative agreement
with American Skandia as a condition of our accepting transactions on your
behalf. The administrative agreement may impose limitations on the Investment
Professional's or investment advisor's ability to request financial transactions
on your behalf. These limitations are intended to minimize the detrimental
impact of an Investment Professional who is in a position to transfer large
amounts of money for
37
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Managing Your Account Value continued
multiple clients in a particular Portfolio or type of portfolio or to comply
with specific restrictions or limitations imposed by a Portfolio(s) on American
Skandia. Contracts managed by your investment professional also are subject to
the restrictions on transfer between investment options that are discussed in
the section entitled "ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN
INVESTMENT OPTIONS?." Since transfer activity under contracts managed by an
investment professional or third party investment adviser may result in
unfavorable consequences to all contract owners invested in the affected options
we reserves the right to limit the investment options available to a particular
Owner whose contract is managed by the advisor or impose other transfer
restrictions we deem necessary. The administrative agreement may limit the
available investment options, require advance notice of large transactions, or
impose other trading limitations on your investment professional. Your
investment professional will be informed of all such restrictions on an ongoing
basis. We may also require that your investment professional transmit all
financial transactions using the electronic trading functionality available
through our Internet website (www.americanskandia.prudential.com). LIMITATIONS
THAT WE MAY IMPOSE ON YOUR INVESTMENT PROFESSIONAL OR INVESTMENT ADVISOR UNDER
THE TERMS OF THE ADMINISTRATIVE AGREEMENT DO NOT APPLY TO FINANCIAL TRANSACTIONS
REQUESTED BY AN OWNER ON THEIR OWN BEHALF, EXCEPT AS OTHERWISE DESCRIBED IN THIS
PROSPECTUS.
HOW DO THE FIXED ALLOCATIONS WORK?
We credit the fixed interest rate to the Fixed Allocation throughout a set
period of time called a "Guarantee Period". Fixed Allocations currently are
offered with Guarantee Periods from 1 to 10 years. We may make Fixed Allocations
of different durations available in the future, including Fixed Allocations
offered exclusively for use with certain optional investment programs. Fixed
Allocations may not be available in all states and may not always be available
for all Guarantee Periods depending on market factors and other considerations.
The interest rate credited to a Fixed Allocation is the rate in effect when
the Guarantee Period begins and does not change during the Guarantee Period. The
rates are an effective annual rate of interest. We determine the interest rates
for the various Guarantee Periods. At the time that we confirm your Fixed
Allocation, we will advise you of the interest rate in effect and the date your
Fixed Allocation matures. We may change the rates we credit new Fixed
Allocations at any time. Any change in interest rate does not affect Fixed
Allocations that were in effect before the date of the change. To inquire as to
the current rates for Fixed Allocations, please call 1-800-752-6342.
A Guarantee Period for a Fixed Allocation begins:
- - when all or part of a net Purchase Payment is allocated to that particular
Guarantee Period;
- - upon transfer of any of your Account Value to a Fixed Allocation for that
particular Guarantee Period; or
- - when you "renew" a Fixed Allocation by electing a new Guarantee Period.
To the extent permitted by law, we may establish different interest rates
for Fixed Allocations offered to a class of Owners who choose to participate in
various optional investment programs we make available. This may include, but is
not limited to, Owners who elect to use Fixed Allocations under a dollar cost
averaging program (see "Do You Offer Dollar Cost Averaging?") or a balanced
investment program (see "Do you offer programs designed to guarantee a "Return
of Premium" at a future date?"). The interest rate credited to Fixed Allocations
offered to this class of purchasers may be different than those offered to other
purchasers who choose the same Guarantee Period but who do not participate in an
optional investment program. Any such program is at our sole discretion.
AMERICAN SKANDIA MAY OFFER FIXED ALLOCATIONS WITH GUARANTEE PERIODS OF 3 MONTHS
OR 6 MONTHS EXCLUSIVELY FOR USE AS A SHORT-TERM FIXED ALLOCATION ("SHORT-TERM
FIXED ALLOCATIONS"). SHORT-TERM FIXED ALLOCATIONS MAY ONLY BE ESTABLISHED WITH
YOUR INITIAL PURCHASE PAYMENT OR ADDITIONAL PURCHASE PAYMENTS. YOU MAY NOT
TRANSFER EXISTING ACCOUNT VALUE TO A SHORT-TERM FIXED ALLOCATION. WE RESERVE THE
RIGHT TO TERMINATE OFFERING THESE SPECIAL PURPOSE FIXED ALLOCATIONS AT ANY TIME.
On the Maturity Date of the Short-term Fixed Allocation, the Account Value
will be transferred to the Sub-account(s) you choose at the inception of the
program. If no instructions are provided, such Account Value will be transferred
to the AST Money Market Sub-account. Short-term Fixed Allocations may not be
renewed on the Maturity Date. If you surrender the
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Annuity or transfer any Account Value from the Short-term Fixed Allocation to
any other investment option before the end of the Guarantee Period, a Market
Value Adjustment will apply.
HOW DO YOU DETERMINE RATES FOR FIXED ALLOCATIONS?
We do not have a specific formula for determining the fixed interest rates for
Fixed Allocations. Generally the interest rates we offer for Fixed Allocations
will reflect the investment returns available on the types of investments we
make to support our fixed rate guarantees. These investment types may include
cash, debt securities guaranteed by the United States government and its
agencies and instrumentalities, money market instruments, corporate debt
obligations of different durations, private placements, asset-backed obligations
and municipal bonds. In determining rates we also consider factors such as the
length of the Guarantee Period for the Fixed Allocation, regulatory and tax
requirements, liquidity of the markets for the type of investments we make,
commissions, administrative and investment expenses, our insurance risks in
relation to the Fixed Allocations, general economic trends and competition. Some
of these considerations are similar to those we consider in determining the
Insurance Charge that we deduct from Account Value allocated to the
Sub-accounts.
We will credit interest on a new Fixed Allocation in an existing Annuity at
a rate not less than the rate we are then crediting to Fixed Allocations for the
same Guarantee Period selected by new Annuity purchasers in the same class.
The interest rate we credit for a Fixed Allocation is subject to a minimum.
Please refer to the Statement of Additional Information. In certain states the
interest rate may be subject to a minimum under state law or regulation.
HOW DOES THE MARKET VALUE ADJUSTMENT WORK?
If you transfer or withdraw Account Value from a Fixed Allocation more than 30
days before the end of its Guarantee Period, we will adjust the value of your
investment based on a formula, called a "Market Value Adjustment" or "MVA". The
amount of any Market Value Adjustment can be either positive or negative,
depending on the movement of a combination of Strip Yields on Strips and an
Option-adjusted Spread (each as defined below) between the time that you
purchase the Fixed Allocation and the time you make a transfer or withdrawal.
The Market Value Adjustment formula compares the combination of Strip Yields for
Strips and the Option-adjusted Spreads as of the date the Guarantee Period began
with the combination of Strip Yields for Strips and the Option-adjusted Spreads
as of the date the MVA is being calculated. In certain states the amount of any
Market Value Adjustment may be limited under state law or regulation. If your
Annuity is governed by the laws of that state, any Market Value Adjustment that
applies will be subject to our rules for complying with such law or regulation.
- - "Strips" are a form of security where ownership of the interest portion of
United States Treasury securities are separated from ownership of the
underlying principal amount or corpus.
- - "Strip Yields" are the yields payable on coupon Strips of United States
Treasury securities.
- - "Option-adjusted Spread" is the difference between the yields on corporate
debt securities (adjusted to disregard options on such securities) and
government debt securities of comparable duration. We currently use the
Merrill Lynch 1 to 10 year Investment Grade Corporate Bond Index of
Option-adjusted Spreads.
39
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Managing Your Account Value continued
MVA FORMULA
The MVA formula is applied separately to each Fixed Allocation to determine the
Account Value of the Fixed Allocation on a particular date. The formula is as
follows:
[(1+I) / (1+J+0.0010)](N/365)
where:
I is the Strip Yield as of the start date of the Guarantee Period for
coupon Strips maturing at the end of the applicable Guarantee Period plus
the Option-adjusted Spread. If there are no Strips maturing at that time,
we will 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 being applied for
coupon Strips maturing at the end of the applicable Guarantee Period plus
the Option-adjusted Spread. If there are no Strips maturing at that time,
we will 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 the original Guarantee Period.
If you surrender your Annuity under the right to cancel provision, the MVA
formula is
[(1 + I)/(1 + J)](N/365).
MVA EXAMPLES
The following hypothetical examples show the effect of the MVA in determining
Account Value. Assume the following:
- - You allocate $50,000 into a Fixed Allocation (we refer to this as the
"Allocation Date" in these examples) with a Guarantee Period of 5 years (we
refer to this as the Maturity Date in these examples).
- - The Strip Yields for coupon Strips beginning on the Allocation Date and
maturing on the Maturity Date plus the Option-adjusted Spread is 5.50% (I =
5.50%).
- - You make no withdrawals or transfers until you decide to withdraw the
entire Fixed Allocation after exactly three (3) years, at which point 730
days remain before the Maturity Date (N = 730).
EXAMPLE OF POSITIVE MVA
Assume that at the time you request the withdrawal, the Strip Yields for Strips
maturing on the Maturity Date plus the Option-adjusted Spread is 4.00% (J =
4.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0010)](N/365) =
[1.055/1.041](2) = 1.027078
Interim Value = $57,881.25
Account Value after MVA = Interim Value X MVA
Factor = $59,448.56
EXAMPLE OF NEGATIVE MVA
Assume that at the time you request the withdrawal, the Strip Yields for Strips
maturing on the Maturity Date plus the Option-adjusted Spread is 7.00% (J =
7.00%). Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0010)](N/365) =
[1.055/1.071)](2) = 0.970345
Interim Value = $57,881.25
Account Value after MVA = Interim Value X MVA
Factor = $56,164.78.
WHAT HAPPENS WHEN MY GUARANTEE PERIOD MATURES?
The "Maturity Date" for a Fixed Allocation is the last day of the Guarantee
Period. Before the Maturity Date, you may choose to renew the Fixed Allocation
for a new Guarantee Period of the same or different length or you may transfer
all or part of that Fixed Allocation's Account Value to another Fixed Allocation
or to one or more Sub-accounts. We will not charge a MVA if you choose to renew
a Fixed Allocation on its Maturity Date or transfer the Account Value to one or
more variable investment options. We will notify you before the end of the
Guarantee Period about the fixed interest rates that we are currently crediting
to all Fixed Allocations that are being offered. The rates being credited to
Fixed Allocations may change before the Maturity Date.
IF YOU DO NOT SPECIFY HOW YOU WANT A FIXED ALLOCATION TO BE ALLOCATED ON
ITS MATURITY DATE, WE WILL THEN TRANSFER THE ACCOUNT VALUE OF THE FIXED
ALLOCATION TO THE AST MONEY MARKET SUB-ACCOUNT. You can then elect to allocate
the Account Value to any of the Sub-accounts or to a new Fixed Allocation.
40
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
ACCESS TO ACCOUNT VALUE
WHAT TYPES OF DISTRIBUTIONS ARE AVAILABLE TO ME?
During the accumulation period you can access your Account Value through partial
withdrawals, Systematic Withdrawals, and where required for tax purposes,
Minimum Distributions. You can also surrender your Annuity at any time. There is
no Contingent Deferred Sales Charge applied upon surrender or partial
withdrawal. However, if you surrender your Annuity, we may deduct the Annual
Maintenance Fee, any Tax Charge that applies and the charge for any optional
benefits. We may also apply a Market Value Adjustment to any Fixed Allocations
being withdrawn or surrendered. Unless you notify us differently, withdrawals
are taken pro-rata based on the Account Value in the investment options at the
time we receive your withdrawal request. Each of these types of distributions is
described more fully below.
ARE THERE TAX IMPLICATIONS FOR DISTRIBUTIONS?
(For more information, see "Tax Considerations".)
DURING THE ACCUMULATION PERIOD
A distribution during the accumulation period is deemed to come first from any
"gain" in your Annuity and second as a return of your "tax basis", if any.
Distributions from your Annuity are generally subject to ordinary income
taxation on the amount of any investment gain unless the distribution qualifies
as a non-taxable exchange or transfer. If you take a distribution prior to the
taxpayer's age 59 1/2, you may be subject to a 10% penalty in addition to
ordinary income taxes on any gain. You may wish to consult a professional tax
advisor for advice before requesting a distribution.
DURING THE ANNUITIZATION PERIOD
During the annuitization period, a portion of each annuity payment is taxed as
ordinary income at the tax rate you are subject to at the time of the payment.
The Code and regulations have "exclusionary rules" that we use to determine what
portion of each annuity payment should be treated as a return of any tax basis
you have in the Annuity. Once the tax basis in the Annuity has been distributed,
the remaining annuity payments are taxable as ordinary income. The tax basis in
the Annuity may be based on the tax-basis from a prior contract in the case of a
1035 exchange or other qualifying transfer.
CAN I WITHDRAW A PORTION OF MY ANNUITY?
Yes, you can make a withdrawal during the accumulation period. We call this a
"partial withdrawal." The maximum that you may withdraw will equal your
Surrender Value as of the date we process the withdrawal request. After any
partial withdrawal, your Annuity must have a Surrender Value of at least $1,000,
or we may treat the partial withdrawal request as a request to fully surrender
your Annuity. The minimum partial withdrawal you may request is $100. We may
apply a Market Value Adjustment to any Fixed Allocations.
Partial withdrawals may also be available following annuitization but only
if you choose certain annuity payment options.
To request the forms necessary to make a withdrawal from your Annuity, call
1-800-752-6342 or visit our Internet Website at
www.americanskandia.prudential.com.
CAN I MAKE PERIODIC WITHDRAWALS FROM THE ANNUITY DURING THE ACCUMULATION PERIOD?
Yes. We call these "Systematic Withdrawals." You can receive Systematic
Withdrawals of earnings only, principal plus earnings or a flat dollar amount.
Systematic Withdrawals can be made from Account Value allocated to the
variable investment options or Fixed Allocations. Systematic Withdrawals are
available on a monthly, quarterly, semi-annual or annual basis. The Account
Value of your Annuity must be at least $20,000 before we will allow you to begin
a program of Systematic Withdrawals.
The minimum amount for each Systematic Withdrawal is $100. If any scheduled
Systematic Withdrawal is for less than $100 (which may occur under a program
that provides payment of an amount equal to the earnings in the annuity for the
period requested), we may postpone the withdrawal and add the expected amount to
the amount that is to be withdrawn on the next scheduled Systematic Withdrawal.
DO YOU OFFER A PROGRAM FOR WITHDRAWALS UNDER SECTION 72(t) OF THE INTERNAL
REVENUE CODE?
Yes. If your Annuity is used as a funding vehicle for certain retirement plans
that receive special tax treatment under Sections 401, 403(b) or 408 of the
Code, Section 72(t) of the Code may provide an exception to the 10% penalty tax
on distributions made prior to age 591/2 if you elect to receive distributions
as a series of "substantially equal periodic payments". We may apply a Market
Value Adjustment to any Fixed Allocations. To request a program that complies
with Section 72(t), you must provide us with certain
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Access To Account Value continued
required information in writing on a form acceptable to us. We may require
advance notice to allow us to calculate the amount of 72(t) withdrawals. The
Surrender Value of your Annuity must be at least $20,000 before we will allow
you to begin a program for withdrawals under Section 72(t). The minimum amount
for any such withdrawal is $100.
You may also annuitize your contract and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments before age 59 1/2 that are not subject to the 10% penalty.
WHAT ARE MINIMUM DISTRIBUTIONS AND WHEN WOULD I NEED TO MAKE THEM?
(See "Tax Considerations" for a further discussion of Minimum Distributions.)
Minimum Distributions are a type of Systematic Withdrawal we allow to meet
distribution requirements under Sections 401, 403(b) or 408 of the Code. Under
the Code, you may be required to begin receiving periodic amounts from your
Annuity. In such case, we will allow you to make Systematic Withdrawals in
amounts that satisfy the minimum distribution rules under the Code.
The amount of the required Minimum Distribution for your particular
situation may depend on other annuities, savings or investments. We will only
calculate the amount of your required Minimum Distribution based on the value of
your Annuity. We require three (3) days advance written notice to calculate and
process the amount of your payments. You may elect to have Minimum Distributions
paid out monthly, quarterly, semi-annually or annually. The $100 minimum amount
that applies to Systematic Withdrawals applies to monthly minimum distributions
but does not apply to minimum distributions taken out on a quarterly,
semi-annual or annual basis.
You may also annuitize your contract and begin receiving payments for the
remainder of your life (or life expectancy) as a means of receiving income
payments and satisfying the Minimum Distribution requirements under the Code.
CAN I SURRENDER MY ANNUITY FOR ITS VALUE?
Yes. During the accumulation period you can surrender your Annuity at any time.
Upon surrender, you will receive the Surrender Value. Upon surrender of your
Annuity, you will no longer have any rights under the Annuity. We may apply a
Market Value Adjustment to any Fixed Allocations.
Under certain annuity payment options, you may be allowed to surrender your
Annuity for its then current value.
To request the forms necessary to surrender your Annuity, call
1-800-752-6342 or visit our Internet Website at
www.americanskandia.prudential.com.
WHAT TYPES OF ANNUITY OPTIONS ARE AVAILABLE?
We currently make annuity options available that provide fixed annuity payments,
variable payments or adjustable payments. Fixed options provide the same amount
with each payment. Variable options generally provide a payment which may
increase or decrease depending on the investment performance of the
Sub-accounts. However, currently, we also make a variable payment option that
has a guarantee feature. Adjustable options provide a fixed payment that is
periodically adjusted based on current interest rates. WE DO NOT GUARANTEE TO
MAKE ANY ANNUITY PAYMENT OPTIONS AVAILABLE IN THE FUTURE OTHER THAN THOSE FIXED
ANNUITIZATION OPTIONS GUARANTEED IN YOUR ANNUITY. Please refer to the
"Guaranteed Minimum Income Benefit" and the "Lifetime Five Income Benefit(2)"
under "Living Benefits" below for a description of annuity options that are
available when you elect these benefits. For additional information on annuity
payment options you may request a Statement of Additional Information.
When you purchase an Annuity, or at a later date, you may choose an Annuity
Date, an annuity option and the frequency of annuity payments. You may change
your choices before the Annuity Date under the terms of your contract. A maximum
Annuity Date may be required by law. The Annuity Date may depend on the annuity
option you choose. Certain annuity options may not be available depending on the
age of the Annuitant.
Certain of these annuity options may be available to Beneficiaries who
choose to receive the Death Benefit proceeds as a series of payments instead of
a lump sum payment.
OPTION 1
PAYMENTS FOR LIFE: Under this option, income is payable periodically until the
death of the "key life". The "key life" (as used in this section) is the person
or persons upon whose life annuity payments are based. No additional annuity
payments are made after the death of the key life. Since no minimum number of
payments is guaranteed, this option offers the largest amount of periodic
payments of the life contingent annuity options. It is possible that only one
payment will be payable if the death of the key life occurs before the date the
second payment was due, and no other payments nor death benefits
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
would be payable. THIS OPTION IS CURRENTLY AVAILABLE ON A FIXED OR VARIABLE
BASIS. Under this option, you cannot make a partial or full surrender of the
annuity.
OPTION 2
PAYMENTS BASED ON JOINT LIVES: Under this option, income is payable periodically
during the joint lifetime of two key lives, and thereafter during the remaining
lifetime of the survivor, ceasing with the last payment prior to the survivor's
death. No minimum number of payments is guaranteed under this option.
It is possible that only one payment will be payable if the death of all the key
lives occurs before the date the second payment was due, and no other payments
or death benefits would be payable. THIS OPTION IS CURRENTLY AVAILABLE ON A
FIXED OR VARIABLE BASIS. Under this option, you cannot make a partial or full
surrender of the annuity.
OPTION 3
PAYMENTS FOR LIFE WITH A CERTAIN PERIOD: Under this option, income is payable
until the death of the key life. However, if the key life dies before the end of
the period selected (5, 10 or 15 years), the remaining payments are paid to the
Beneficiary until the end of such period. THIS OPTION IS CURRENTLY AVAILABLE ON
A FIXED OR VARIABLE BASIS. If you elect to receive payments on a variable basis
under this option, you can request partial or full surrender of the annuity and
receive its then current cash value (if any) subject to our rules.
OPTION 4
FIXED PAYMENTS FOR A CERTAIN PERIOD: Under this option, income is payable
periodically for a specified number of years. If the payee dies before the end
of the specified number of years, the remaining payments are paid to the
Beneficiary until the end of such period. Note that under this option, payments
are not based on any assumptions of life expectancy. Therefore, that portion of
the Insurance Charge assessed to cover the risk that key lives outlive our
expectations provides no benefit to an Owner selecting this option. Under this
option, you cannot make a partial or full surrender of the annuity.
OPTION 5
VARIABLE PAYMENTS FOR LIFE WITH A CASH VALUE: Under this option, benefits are
payable periodically until the death of the key life. Benefits may increase or
decrease depending on the investment performance of the Sub-accounts. This
option has a cash value that also varies with the investment performance of the
Sub-account. The cash value provides a "cushion" from volatile investment
performance so that negative investment performance does not automatically
result in a decrease in the annuity payment each month, and positive investment
performance does not automatically result in an increase in the annuity payment
each month. The cushion generally "stabilizes" monthly annuity payments. Any
cash value remaining on the death of the key life is paid to the Beneficiary in
a lump sum or as periodic payments. Under this option, you can request partial
or full surrender of the annuity and receive its then current cash value (if
any) subject to our rules.
OPTION 6
VARIABLE PAYMENTS FOR LIFE WITH A CASH VALUE AND GUARANTEE: Under this option,
benefits are payable as described in Option 5; except that, while the key life
is alive, the annuity payment will not be less than a guaranteed amount, which
generally is equal to the first annuity payment. WE CHARGE AN ADDITIONAL AMOUNT
FOR THIS GUARANTEE. Under this option, any cash value remaining on the death of
the key life is paid to the Beneficiary in a lump sum or as periodic payments.
Under this option, you can request partial or full surrender of the annuity and
receive its then current cash value (if any) subject to our rules.
We may make additional annuity payment options available in the future.
HOW AND WHEN DO I CHOOSE THE ANNUITY PAYMENT OPTION?
You have a right to choose your annuity start date. If you have not provided us
with your Annuity Date or annuity payment option in writing then:
- - A DEFAULT DATE for the Annuity Date will be the first day of the calendar
month following the later of the Annuitant's 85th birthday or the fifth
anniversary of our receipt of your request to purchase an annuity; and
- - The annuity payments, where allowed by law, will be calculated on a fixed
basis under Option 3, Payments for Life with 10 years certain.
If you choose to defer the Annuity Date beyond the default date, the IRS may not
consider your contract to be an annuity under the tax law. If that should occur,
all gain in your contract at that time will become immediately taxable to you.
Further, each subsequent year's increase in Account Value would be taxable in
that year. By choosing to continue to defer after the default date, you will
assume the risk that your Annuity will not be considered an annuity for federal
income tax purposes.
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Access To Account Value continued
HOW ARE ANNUITY PAYMENTS CALCULATED?
FIXED ANNUITY PAYMENTS (OPTIONS 1-4)
If you choose to receive fixed annuity payments, you will receive equal
fixed-dollar payments throughout the period you select. The amount of the fixed
payment will vary depending on the annuity payment option and payment frequency
you select. Generally, the first annuity payment is determined by multiplying
the Account Value, minus any state premium taxes that may apply, by the factor
determined from our table of annuity rates. The table of annuity rates differs
based on the type of annuity chosen and the frequency of payment selected. Our
rates will not be less than our guaranteed minimum rates. These guaranteed
minimum rates are derived from the a2000 Individual Annuity Mortality Table
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.
VARIABLE ANNUITY PAYMENTS
Generally, we offer three different types of variable annuity payment options.
The first annuity payment will be calculated based upon the assumed investment
return ("AIR"). You select the AIR before we start to make annuity payments.
You will not receive annuity payments until you choose an AIR. The remaining
annuity payments will fluctuate based on the performance of the Sub-accounts
relative to the AIR, as well as, other factors described below. The greater the
AIR, the greater the first annuity payment. A higher AIR may result in smaller
potential growth in the annuity payments. A lower AIR results in a lower
initial annuity payment. Within payment options 1-3, if the Sub-accounts you
choose perform exactly the same as the AIR, then subsequent annuity payments
will be the same as the first annuity payment. If the Sub-accounts you choose
perform better than the AIR, then subsequent annuity payments will be higher
than the first annuity payment. If the Sub-accounts you choose perform worse
than the AIR, then subsequent annuity payments will be lower than the first.
Within payment options 5 and 6, the cash value for the Annuitant (while alive)
and a variable period of time during which annuity payments will be made
whether or not the Annuitant is still alive are adjusted based on the
performance of the Sub-accounts relative to the AIR; however, subsequent
annuity payments do not always increase or decrease based on the performance of
the Sub-accounts relative to the AIR.
- - VARIABLE PAYMENTS (OPTIONS 1-3)
We calculate each annuity payment amount by multiplying the number of units
scheduled to be redeemed under a schedule of units for each Sub-account by
the Unit Value of each Sub-account on the annuity payment date. We
determine the schedule of units based on your Account Value (minus any
premium tax that applies) at the time you elect to begin receiving annuity
payments. The schedule of units will vary based on the annuity payment
option selected, the length of any certain period (if applicable), the
Annuitant's age and gender (if annuity payments are due for the life of the
Annuitant) and the Unit Value of the Sub-accounts you initially selected on
the Issue Date. The calculation is performed for each Sub-account, and the
sum of the Sub-account calculations equals the amount of your annuity
payment. Other than to fund annuity payments, the number of units allocated
to each Sub-account will not change unless you transfer among the
Sub-accounts or make a withdrawal (if allowed). You can select one of three
AIRs for these options: 3%, 5% or 7%.
- - STABILIZED VARIABLE PAYMENTS (OPTION 5)
This option provides guaranteed payments for life, a cash value for the
Annuitant (while alive) and a variable period of time during which annuity
payments will be made whether or not the Annuitant is still alive. We
calculate the initial annuity payment amount by multiplying the number of
units scheduled to be redeemed under a schedule of units by the Unit Values
determined on the annuitization date. The schedule of units is established
for each Sub-account you choose on the annuitization date based on the
applicable benchmark rate, meaning the AIR, and the annuity factors. The
annuity factors reflect our assumptions regarding the costs we expect to
bear in guaranteeing payments for the lives of the Annuitant and will
depend on the benchmark rate, the annuitant's attained age and gender
(where permitted). Unlike variable payments (described above) where each
payment can vary based on Sub-account performance, this payment option
cushions the immediate impact of Sub-account performance by adjusting the
length of the time during which annuity payments will be made whether or
not
44
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
the Annuitant is alive while generally maintaining a level annuity payment
amount. Sub-account performance that exceeds a benchmark rate will
generally extend this time period, while Sub-account performance that is
less than a benchmark rate will generally shorten the period. If the period
reaches zero and the Annuitant is still alive, Annuity Payments continue,
however, the annuity payment amount will vary depending on Sub-account
performance, similar to conventional variable payments. The AIR for this
option is 4%.
- - STABILIZED VARIABLE PAYMENTS WITH A GUARANTEED MINIMUM (OPTION 6)
This option provides guaranteed payments for life in the same manner as
Stabilized Variable Payments (described above). In addition to the
stabilization feature, this option also guarantees that variable annuity
payments will not be less than the initial annuity payment amount
regardless of Sub-account performance. The AIR for this option is 3%.
The variable annuity payment options are described in greater detail in a
separate prospectus which will be provided to you at the time you elect one of
the variable annuity payment options.
ADJUSTABLE ANNUITY PAYMENTS
We may make an adjustable annuity payment option available. Adjustable annuity
payments are calculated similarly to fixed annuity payments except that on
every fifth (5th) anniversary of receiving annuity payments, the annuity
payment amount is adjusted upward or downward depending on the rate we are
currently crediting to annuity payments. The adjustment in the annuity payment
amount does not affect the duration of remaining annuity payments, only the
amount of each payment.
45
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Living Benefit Programs
DO YOU OFFER PROGRAMS DESIGNED TO PROVIDE INVESTMENT PROTECTION FOR OWNERS WHILE
THEY ARE ALIVE?
American Skandia offers different optional benefits, for an additional charge,
that can provide investment protection for Owners while they are alive.
Notwithstanding the additional protection provided under the optional Living
Benefit Programs, the additional cost has the impact of reducing net
performance of the investment options. Each optional benefit offers a distinct
type of guarantee, regardless of the performance of variable investment
options, that may be appropriate for you depending on the manner in which you
intend to make use of your annuity while you are alive. Depending on which
optional benefit you choose, you can have substantial flexibility to invest in
variable investment options while:
- - protecting a principal amount from decreases in value as of specified
future dates due to investment performance;
- - taking withdrawals with a guarantee that you will be able to withdraw not
less than a principal amount over time; or
- - guaranteeing a minimum amount of growth will be applied to your principal,
if it is to be used as the basis for lifetime income payments beginning
after a waiting period.
Below is a brief summary of the "living benefits" that American Skandia
offers. Please refer to the benefit description for a complete description of
the terms, conditions and limitations of each optional benefit. You should
consult with your investment professional to determine if any of these optional
benefits may be appropriate for you based on your financial needs. There are
many factors to consider, but we note that among them you may want to evaluate
the tax implications of these different approaches to meeting your needs, both
between these benefits and in comparison to other potential solutions to your
needs (e.g. comparing the tax implications of the withdrawal benefit and annuity
payments).
I. The GUARANTEED RETURN OPTION PLUS(SM) (GRO Plus(SM)) guarantees that,
after a seven-year period following commencement of the program ("maturity
date") and on each anniversary of the maturity date thereafter, your
Account Value will not be less than the Account Value on the effective
date of the program. The program also offers you the option to elect a
second, enhanced guarantee amount at a higher Account Value subject to a
separate maturity period (and its anniversaries). The GRO PlusSM program
may be appropriate if you wish to protect a principal amount (called the
"Protected Principal Value") against market downturns as of a specific
date in the future, but also wish to exercise control of your available
Account Value among the variable investment options to participate in
market experience. Under the GRO PlusSM program, you give us the right to
allocate amounts to Fixed Allocations as needed to support the guarantees
provided. The available Account Value that may be allocated among your
variable investment options are those amounts not allocated to the Fixed
Allocations to support the guarantees provided.
II. The GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) guarantees your ability
to make cumulative withdrawals over time equal to an initial principal
value (called the "Protected Value"), regardless of decreases in your
Account Value due to market losses. The GMWB program may be appropriate if
you intend to make periodic withdrawals from your Annuity and wish to
ensure that market performance will not affect your ability to receive
guaranteed minimum withdrawals. Taking income as withdrawals, rather than
annuity payments, may be less tax efficient for non-qualified uses of the
Annuity, but provides greater control over the timing and amount of
withdrawals during the accumulation period, as well as continuing the
Annuity's other benefits, such as the death benefit.
III. The GUARANTEED MINIMUM INCOME BENEFIT (GMIB) guarantees your ability,
after a minimum seven-year waiting period, to begin receiving income from
the Annuity in the form of annuity payments based on your total purchase
payments under the contract and an annual increase of 5% on such Purchase
Payments, adjusted for withdrawals, regardless of the impact of market
performance on your Account Value. The GMIB program may be appropriate if
you anticipate using your Annuity as a future source of periodic fixed
income payments for the remainder of your life and wish to ensure that the
basis upon which your income payments will be calculated will achieve at
least a minimum amount despite fluctuations in market performance.
IV. The LIFETIME FIVE INCOME BENEFIT guarantees your ability to withdraw
amounts equal to a percentage of a "Protected Withdrawal Value" regardless
of decreases in your Account Value due to market losses. The Lifetime Five
Benefit may be appropriate if you intend to make periodic withdrawals from
your Annuity and wish to ensure that market performance will not affect
your ability to receive guaranteed
46
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
minimum withdrawals. Taking income as withdrawals, rather than annuity
payments, may be less tax efficient for non-qualified uses of the Annuity,
but provides greater control over the timing and amount of withdrawals
during the accumulation period, as well as continuing the Annuity's other
benefits, such as the death benefit.
GUARANTEED RETURN OPTION PLUS(SM) (GRO PLUS(SM))
THE GUARANTEED RETURN OPTION PLUS DESCRIBED BELOW IS ONLY BEING OFFERED IN THOSE
JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL, AND WILL BE OFFERED
SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY APPROVAL IN THOSE
JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS
ONCE APPROVED. THE PROGRAM CAN BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF
THEIR ANNUITY, AND CAN BE ELECTED BY EXISTING ANNUITY OWNERS ON EITHER THE
ANNIVERSARY OF THE ISSUE DATE OF THEIR ANNUITY OR ON A DATE OTHER THAN THAT
ANNIVERSARY, AS DESCRIBED BELOW UNDER "ELECTION OF THE PROGRAM". THE GUARANTEED
RETURN OPTION PLUS IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION
PROGRAM (AND IT IS CURRENTLY ACTIVE), THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT
RIDER, THE GUARANTEED MINIMUM INCOME BENEFIT RIDER, THE LIFETIME FIVE INCOME
BENEFIT RIDER, THE HIGHEST DAILY VALUE DEATH BENEFIT, OR THE DOLLAR COST
AVERAGING PROGRAM IF IT INVOLVES TRANSFERS OUT OF THE FIXED ALLOCATIONS.
We offer a program that, after a seven-year period following commencement
of the program (we refer to the end of that period and any applicable subsequent
period as the "maturity date") and on each anniversary of the maturity date
thereafter while the program remains in effect, guarantees your Account Value
will not be less than your Account Value on the effective date of your program
(called the "Protected Principal Value"). The program also offers you the
opportunity to elect a second, enhanced guaranteed amount at a later date if
your Account Value has increased, while preserving the guaranteed amount
established on the effective date of your program. The enhanced guaranteed
amount (called the "Enhanced Protected Principal Value") guarantees that, after
a separate period following election of the enhanced guarantee and on each
anniversary thereafter while this enhanced guarantee amount remains in effect,
your Account Value will not be less than your Account Value on the effective
date of your election of the enhanced guarantee.
The program monitors your Account Value daily and, if necessary,
systematically transfers amounts between variable investment options you choose
and Fixed Allocations used to support the Protected Principal Value(s). The
program may be appropriate if you wish to protect a principal amount against
market downturns as of a specific date in the future, but also wish to invest in
the variable investment options to participate in market performance. There is
an additional charge if you elect the Guaranteed Return Option Plus program.
The guarantees provided by the program exist only on the applicable
maturity date(s) and on each anniversary of the maturity date(s) thereafter.
However, due to the ongoing monitoring of your Account Value and the transfer of
Account Value between the variable investment options and the Fixed Allocations
to support our future guarantees, the program may provide some protection from
significant market losses if you choose to surrender the Annuity or begin
receiving annuity payments prior to a maturity date. For this same reason, the
program may limit your ability to benefit from market increases while it is in
effect.
KEY FEATURE -- PROTECTED PRINCIPAL VALUE/ ENHANCED PROTECTED PRINCIPAL VALUE
The Guaranteed Return Option Plus offers a base guarantee as well as the option
of electing an enhanced guarantee at a later date.
- - BASE GUARANTEE: Under the base guarantee, American Skandia guarantees that
on the maturity date and on each anniversary of the maturity date
thereafter that the program remains in effect, your Account Value will be
no less than the Protected Principal Value. On the maturity date and on
each anniversary after the maturity date that the program remains in
effect, if your Account Value is below the Protected Principal Value,
American Skandia will apply additional amounts to your Annuity from its
general account to increase your Account Value to be equal to the Protected
Principal Value.
- - ENHANCED GUARANTEE: On any anniversary following commencement of the
program, you can establish an enhanced guaranteed amount based on your
current Account Value. Under the enhanced guarantee, American Skandia
guarantees that at the end of a specified period following the election of
47
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Living Benefit Programs continued
the enhanced guarantee (also referred to as its "maturity date"), and on
each anniversary of the maturity date thereafter that the enhanced
guaranteed amount remains in effect, your Account Value will be no less
than the Enhanced Protected Principal Value. YOU CAN ELECT AN ENHANCED
GUARANTEE MORE THAN ONCE; HOWEVER, A SUBSEQUENT ELECTION SUPERSEDES THE
PRIOR ELECTION OF AN ENHANCED GUARANTEE. ELECTION OF AN ENHANCED GUARANTEE
DOES NOT IMPACT THE BASE GUARANTEE. IN ADDITION, YOU MAY ELECT AN "AUTO
STEP-UP" FEATURE THAT WILL AUTOMATICALLY CREATE AN ENHANCED GUARANTEE (OR
INCREASE YOUR ENHANCED GUARANTEE, IF PREVIOUSLY ELECTED) ON EACH
ANNIVERSARY OF THE PROGRAM (AND CREATE A NEW MATURITY PERIOD FOR THE NEW
ENHANCED GUARANTEE) IF THE ACCOUNT VALUE AS OF THAT ANNIVERSARY EXCEEDS THE
PROTECTED PRINCIPAL VALUE OR ENHANCED PROTECTED PRINCIPAL VALUE BY 7% OR
MORE. YOU MAY ALSO ELECT TO TERMINATE AN ENHANCED GUARANTEE. IF YOU ELECT
TO TERMINATE THE ENHANCED GUARANTEE, THE BASE GUARANTEE WILL REMAIN IN
EFFECT. If you have elected the enhanced guarantee, on the guarantee's
maturity date and on each anniversary of the maturity date thereafter that
the enhanced guarantee amount remains in effect, if your Account Value is
below the Enhanced Protected Principal Value, American Skandia will apply
additional amounts to your Annuity from its general account to increase
your Account Value to be equal to the Enhanced Protected Principal Value.
Any amounts added to your Annuity to support our guarantees under the
program will be applied to any Fixed Allocations first and then to the
sub-accounts pro rata, based on your most recent allocation instructions in
accordance with the allocation mechanism we use under the program. We will
notify you of any amounts added to your Annuity under the program. If our
assumptions are correct and the operations relating to the administration of the
program work properly, we do not expect that we will need to add additional
amounts to the Annuity. The Protected Principal Value is referred to as the
"Base Guarantee" and the Enhanced Protected Principal Value is referred to as
the "Step-up Guarantee" in the rider we issue for this benefit.
WITHDRAWALS UNDER YOUR ANNUITY
Withdrawals from your Annuity, while the program is in effect, will reduce the
base guarantee under the program as well as any enhanced guarantee. Cumulative
annual withdrawals up to 5% of the Protected Principal Value as of the
effective date of the program (adjusted for any subsequent Purchase Payments)
will reduce the applicable guaranteed amount by the actual amount of the
withdrawal (referred to as the "dollar-for-dollar limit"). If the amount
withdrawn is greater than the dollar-for-dollar limit, the portion of the
withdrawal equal to the dollar-for-dollar limit will be treated as described
above, and the portion of the withdrawal in excess of the dollar-for-dollar
limit will reduce the base guarantee and the enhanced guarantee proportionally,
according to the formula as described in the rider for this benefit (see the
examples of this calculation below). Withdrawals other than Systematic
Withdrawals will be taken pro-rata from the variable investment options and any
Fixed Allocations. Systematic Withdrawals will be taken pro-rata from the
variable investment options and any Fixed Allocations up to growth attributable
to the Fixed Allocations and thereafter pro-rata solely from the variable
investment options. Withdrawals will be subject to all other provisions of the
Annuity, including any Market Value Adjustment that would apply.
Charges for other optional benefits under the Annuity that are deducted as
an annual charge in arrears will not reduce the applicable guaranteed amount
under the Guaranteed Return Option Plus program, however, any partial
withdrawals in payment of charges for the Plus40(TM) Optional Life Insurance
Rider (not currently offered for sale) and any third party investment advisory
service will be treated as withdrawals and will reduce the applicable guaranteed
amount.
The following examples of dollar-for-dollar and proportional reductions
assume that: 1.) the Issue Date and the effective date of the GRO Plus(SM)
program are October 13, 2004; 2.) an initial Purchase Payment of $250,000; 3.) a
base guarantee amount of $250,000; and 4.) a dollar-for-dollar limit of $12,500
(5% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 29, 2004 (in the first Annuity Year).
No prior withdrawals have been taken. As the amount withdrawn is less than the
Dollar-for-dollar Limit:
- - The base guarantee amount is reduced by the amount withdrawn (i.e., by
$10,000, from $250,000 to $240,000).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance
of the first Annuity Year is also reduced by the amount withdrawn (from
$12,500 to $2,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on December 18, 2004 (still within the
first Annuity Year). The Account Value immediately before the withdrawal is
$180,000. As the amount withdrawn exceeds the Remaining Limit of $2,500 from
Example 1:
48
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- - the base guarantee amount is first reduced by the Remaining Limit (from
$240,000 to $237,500);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the Remaining Limit ($10,000 - $2,500,
or $7,500).
- B is the Account Value less the Remaining Limit ($180,000 - $2,500, or
$177,500).
The resulting base guarantee amount is: $237,500 x (1 - $7,500 / $177,500),
or $227,464.79.
- - The Remaining Limit is set to zero (0) for the balance of the first Annuity
Year.
EXAMPLE 3. RESET OF THE DOLLAR-FOR-DOLLAR LIMIT
A $10,000 withdrawal is made on December 19, 2005 (second Annuity Year). The
Remaining Limit has been reset to the dollar-for-dollar limit of $12,500. As
the amount withdrawn is less than the dollar-for-dollar limit:
- - The base guarantee amount is reduced by the amount withdrawn (i.e., reduced
by $10,000, from $227,464.79 to $217,464.79).
- - The Remaining Limit for the balance of the second Annuity Year is also
reduced by the amount withdrawn (from $12,500 to $2,500).
KEY FEATURE -- ALLOCATION OF ACCOUNT VALUE
Account Value is transferred to and maintained in Fixed Allocations to the
extent we, in our sole discretion, deem it is necessary to support our
guarantee(s) under the program. We monitor fluctuations in your Account Value
each Valuation Day, as well as the prevailing interest rates on Fixed
Allocations, the remaining duration(s) until the applicable maturity date(s)
and the amount of Account Value allocated to Fixed Allocation(s) relative to a
"reallocation trigger", which determines whether Account Value must be
transferred to or from Fixed Allocation(s). While you are not notified when
your Account Value reaches a reallocation trigger, you will receive a
confirmation statement indicating the transfer of a portion of your Account
Value either to or from Fixed Allocation(s).
- - IF YOUR ACCOUNT VALUE IS GREATER THAN OR EQUAL TO THE REALLOCATION TRIGGER,
your Account Value in the variable investment options will remain allocated
according to your most recent instructions. If a portion of Account Value
was previously allocated to a Fixed Allocation to support the applicable
guaranteed amount, all or a portion of those amounts may be transferred
from the Fixed Allocation and re-allocated to the variable investment
options pro-rata according to your most recent allocation instructions
(including the model allocations under any asset allocation program you may
have elected). A Market Value Adjustment will apply when we reallocate
Account Value from a Fixed Allocation to the variable investment options,
which may result in a decrease or increase in your Account Value.
- - IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER, a portion of
your Account Value in the variable investment options will be transferred
from your variable investment options pro rata according to your
allocations to a new Fixed Allocation(s) to support the applicable
guaranteed amount. The new Fixed Allocation(s) will have a Guarantee Period
equal to the time remaining until the applicable maturity date(s). The
Account Value allocated to the new Fixed Allocation(s) will be credited
with the fixed interest rate(s) then being credited to a new Fixed
Allocation(s) maturing on the applicable maturity date(s) (rounded to the
next highest yearly duration). The Account Value will remain invested in
each applicable Fixed Allocation until the applicable maturity date unless,
at an earlier date, your Account Value is greater than or equal to the
reallocation trigger and, therefore, amounts can be transferred to the
variable investment options while maintaining the guaranteed protection
under the program (as described above).
49
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Living Benefit Programs continued
IF A SIGNIFICANT AMOUNT OF YOUR ACCOUNT VALUE IS SYSTEMATICALLY TRANSFERRED TO
FIXED ALLOCATIONS TO SUPPORT THE PROTECTED PRINCIPAL VALUE AND/OR THE ENHANCED
PROTECTED PRINCIPAL VALUE DURING PERIODS OF MARKET DECLINES, LOW INTEREST RATES,
AND/OR AS THE PROGRAM NEARS ITS MATURITY DATE, LESS OF YOUR ACCOUNT VALUE MAY BE
AVAILABLE TO PARTICIPATE IN THE INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT
OPTIONS IF THERE IS A SUBSEQUENT MARKET RECOVERY. DURING PERIODS CLOSER TO THE
MATURITY DATE OF THE BASE GUARANTEE OR ANY ENHANCED GUARANTEE, OR ANY
ANNIVERSARY OF SUCH MATURITY DATE(S), A SIGNIFICANT PORTION OF YOUR ACCOUNT
VALUE MAY BE ALLOCATED TO FIXED ALLOCATIONS TO SUPPORT ANY APPLICABLE GUARANTEED
AMOUNT(S). IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER AND NEW
FIXED ALLOCATIONS MUST BE ESTABLISHED DURING PERIODS WHERE THE INTEREST RATE(S)
BEING CREDITED TO SUCH FIXED ALLOCATIONS IS LOW, A LARGER PORTION OF YOUR
ACCOUNT VALUE MAY NEED TO BE TRANSFERRED TO FIXED ALLOCATIONS TO SUPPORT THE
APPLICABLE GUARANTEED AMOUNT(S), CAUSING LESS OF YOUR ACCOUNT VALUE TO BE
AVAILABLE TO PARTICIPATE IN THE INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT
OPTIONS.
Separate Fixed Allocations may be established in support of the Protected
Principal Value and the Enhanced Protected Principal Value (if elected). There
may also be circumstances when a Fixed Allocation will be established only in
support of the Protected Principal Value or the Enhanced Protected Principal
Value. If you elect an enhanced guarantee, it is more likely that a portion of
your Account Value may be allocated to Fixed Allocations and will remain
allocated for a longer period of time to support the Enhanced Protected
Principal Value, even during a period of positive market performance and/or
under circumstances where Fixed Allocations would not be necessary to support
the Protected Principal Value. Further, there may be circumstances where Fixed
Allocations in support of the Protected Principal Value or Enhanced Protected
Principal Value are transferred to the variable investment options differently
than each other because of the different guarantees they support.
American Skandia uses an allocation mechanism based on assumptions of
expected and maximum market volatility, interest rates and time left to the
maturity of the program to determine the reallocation trigger. The allocation
mechanism is used to determine the allocation of Account Value between Fixed
Allocations and the Sub-accounts you choose. American Skandia reserves the right
to change the allocation mechanism and the reallocation trigger at its
discretion, subject to regulatory approval where required. Changes to the
allocation mechanism and/or the reallocation trigger may be applied to existing
programs where allowed by law.
ELECTION OF THE PROGRAM
The Guaranteed Return Option Plus program can be elected at the time that you
purchase your Annuity, or on any Valuation Day thereafter (prior to
annuitization). If you elect the program after the Issue Date of your Annuity,
the program will be effective as of the Valuation Day that we receive the
required documentation in good order at our home office, and the guaranteed
amount will be based on your Account Value as of that date. If you previously
elected the Guaranteed Return Option program and wish to elect the Guaranteed
Return Option Plus program, your prior Guaranteed Return Option program will be
terminated. Termination of the Guaranteed Return Option for the purpose of
electing the Guaranteed Return Option Plus, will be treated as any other
termination of the Guarantee Return Option (see below), including the
termination of any guaranteed amount, and application of any applicable market
value adjustment when amounts are transferred to the variable investment
options as a result of the termination. The Guaranteed Return Option Plus
program will then be added to your Annuity based on the current Account Value.
TERMINATION OF THE PROGRAM
You can elect to terminate the enhanced guarantee but maintain the protection
provided by the base guarantee. You also can terminate the Guaranteed Return
Option Plus program entirely. If you terminate the program entirely, you can
subsequently elect to participate in the program again (based on the Account
Value on that date) by furnishing the documentation we require. In a rising
market, you could, for example, terminate the program on a given Valuation Day
and two weeks later reinstate the program with a higher base guarantee (and a
new maturity date). However, your ability to reinstate the program is limited
by the following: (A) in any Annuity Year, we do not permit more than two
program elections (including any election made effective on the Annuity issue
date and any spousal election made by a surviving spouse) and (B) a program
reinstatement cannot be effected on the same Valuation Day on which a program
termination was effected. Upon termination, any Account Value in the Fixed
Allocations will be
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
transferred to the variable investment options pro-rata based on the Account
Values in such variable investment options, or in accordance with any effective
asset allocation program. A Market Value Adjustment will apply.
The program will terminate automatically upon: (a) the death of the Owner
or the Annuitant (in an entity owned contract); (b) as of the date Account Value
is applied to begin annuity payments; or (c) upon full surrender of the Annuity.
If you elect to terminate the program, the Guaranteed Return Option Plus will no
longer provide any guarantees. The surviving spouse may elect the benefit at any
time, subject to the limitations described above, after the death of the Annuity
Owner. The surviving spouse's election will be effective on the Valuation day
that we receive the required documentation in good order at our home office, and
the Account Value on that Valuation Day will be the Protected Principal Value.
The charge for the Guaranteed Return Option Plus program will no longer be
deducted from your Account Value upon termination of the program.
Special Considerations under the Guaranteed Return Option Plus
This program is subject to certain rules and restrictions, including, but not
limited to the following:
- - Upon inception of the program, 100% of your Account Value must be allocated
to the variable investment options. No Fixed Allocations may be in effect
as of the date that you elect to participate in the program. However, the
reallocation trigger may transfer Account Value to Fixed Allocations as of
the effective date of the program under some circumstances.
- - You cannot allocate any portion of Purchase Payments or transfer Account
Value to or from a Fixed Allocation while participating in the program;
however, all or a portion of any Purchase Payments may be allocated by us
to Fixed Allocations to support the amount guaranteed. You cannot
participate in any dollar cost averaging program that transfers Account
Value from a Fixed Allocation to a variable investment option.
- - Transfers from Fixed Allocations made as a result of the allocation
mechanism under the program will be subject to the Market Value Adjustment
formula under the Annuity; however, the 0.10% liquidity factor in the
formula will not apply. A Market Value Adjustment may be either positive or
negative. Transfer amounts will be taken from the most recently established
Fixed Allocation.
- - Transfers from the Sub-accounts to Fixed Allocations or from Fixed
Allocations to the Sub-accounts under the program will not count toward the
maximum number of free transfers allowable under the Annuity.
- - Any amounts applied to your Account Value by American Skandia on the
maturity date or any anniversary of the maturity date will not be treated
as "investment in the contract" for income tax purposes.
- - Low interest rates may require allocation to Fixed Allocations even when
the current Account Value exceeds the guarantee.
- - As the time remaining until the applicable maturity date gradually
decreases the program will become increasingly sensitive to moves to Fixed
Allocations.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to an
eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible investment
options will not be counted in determining the number of free transfers
during an Annuity Year. We may also require that you allocate your Account
Value according to an asset allocation model.
CHARGES UNDER THE PROGRAM
We deduct a charge equal to 0.25% of the average daily net assets of the
sub-accounts for participation in the Guaranteed Return Option Plus program.
The annual charge is deducted daily. Account Value allocated to Fixed
Allocations under the program is not subject to the charge. The charge is
deducted to compensate American Skandia for: (a) the risk that your Account
Value on the maturity date is less than the amount guaranteed; and (b)
administration of the program.
51
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Living Benefit Programs continued
GUARANTEED RETURN OPTION (GRO)
THE GUARANTEED RETURN OPTION DESCRIBED BELOW IS OFFERED ONLY IN THOSE
JURISDICTIONS WHERE WE HAVE NOT YET RECEIVED REGULATORY APPROVAL FOR THE
GUARANTEED RETURN OPTION PLUS AS OF THE DATE THE ELECTION OF THE OPTION IS MADE.
CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS. THE PROGRAM CAN
BE ELECTED BY NEW PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY, AND CAN BE
ELECTED BY EXISTING ANNUITY OWNERS ON EITHER THE ANNIVERSARY OF THE ISSUE DATE
OF THEIR ANNUITY OR ON A DATE OTHER THAN THAT ANNIVERSARY, AS DESCRIBED BELOW
UNDER "ELECTION OF THE PROGRAM". THE GUARANTEED RETURN OPTION IS NOT AVAILABLE
IF YOU ELECT THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT RIDER, THE GUARANTEED
MINIMUM INCOME BENEFIT RIDER, THE LIFETIME FIVE INCOME BENEFIT RIDER, THE
HIGHEST DAILY VALUE DEATH BENEFIT, OR THE DOLLAR COST AVERAGING PROGRAM IF IT
INVOLVES TRANSFERS OUT OF THE FIXED ALLOCATIONS.
We offer a program that, after a seven-year period following commencement
of the program (we refer to the end of that period as the "maturity date")
guarantees your Account Value will not be less than your Account Value on the
effective date of your program (called the "Protected Principal Value").
The program monitors your Account Value daily and, if necessary,
systematically transfers amounts between variable investment options you choose
and the Fixed Allocation used to support the Protected Principal Value. The
program may be appropriate if you wish to protect a principal amount against
market downturns as of a specific date in the future, but also wish to invest in
the variable investment options to participate in market performance. There is
an additional charge if you elect the Guaranteed Return Option program.
The guarantee provided by the program exists only on the applicable
maturity date. However, due to the ongoing monitoring of your Account Value and
the transfer of Account Value between the variable investment options and the
Fixed Allocation to support our future guarantee, the program may provide some
protection from significant market losses if you choose to surrender the Annuity
or begin receiving annuity payments prior to a maturity date. For this same
reason, the program may limit your ability to benefit from market increases
while it is in effect.
KEY FEATURE -- PROTECTED PRINCIPAL VALUE
- - Under the GRO option, American Skandia guarantees that on the maturity
date, your Account Value will be no less than the Protected Principal
Value. On the maturity date if your Account Value is below the Protected
Principal Value, American Skandia will apply additional amounts to your
Annuity from its general account to increase your Account Value to be equal
to the Protected Principal Value.
Any amounts added to your Annuity to support our guarantee under the
program will be applied to the Fixed Allocation first and then to the
Sub-accounts pro-rata, based on your most recent allocation instructions in
accordance with the allocation mechanism we use under the program. We will
notify you of any amounts added to your Annuity under the program. If our
assumptions are correct and the operations relating to the administration of the
program work properly, we do not expect that we will need to add additional
amounts to the Annuity. The Protected Principal Value is generally referred to
as the "Guaranteed Amount" in the rider we issue for this benefit.
KEY FEATURE -- ALLOCATION OF ACCOUNT VALUE
Account Value is transferred to and maintained in a Fixed Allocation to the
extent we, in our sole discretion, deem it is necessary to support our
guarantee under the program. We monitor fluctuations in your Account Value each
Valuation Day, as well as the prevailing interest rate on the Fixed Allocation,
the remaining duration until the applicable maturity date and the amount of
Account Value allocated to the Fixed Allocation relative to a "reallocation
trigger", which determines whether Account Value must be transferred to or from
the Fixed Allocation. While you are not notified when your Account Value
reaches a reallocation trigger, you will receive a confirmation statement
indicating the transfer of a portion of your Account Value either to or from
the Fixed Allocation.
- - IF YOUR ACCOUNT VALUE IS GREATER THAN OR EQUAL TO THE REALLOCATION TRIGGER,
your Account Value in the variable investment options will remain allocated
according to your most recent instructions. If a portion of Account Value
was previously allocated to the Fixed Allocation to support the guaranteed
amount, all or a portion of those amounts may be transferred from the Fixed
Allocation and re-allocated to the variable investment options pro-rata
according to your most recent allocation instructions (including the model
allocations under any asset allocation program you may have elected). A
Market Value Adjustment will apply when we reallocate Account Value from
the Fixed Allocation to
52
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
the variable investment options, which may result in a decrease or increase
in your Account Value.
- - IF YOUR ACCOUNT VALUE IS LESS THAN THE REALLOCATION TRIGGER, a portion of
your Account Value in the variable investment options will be transferred
from your variable investment options pro rata according to your
allocations to a new Fixed Allocation to support the guaranteed amount. The
new Fixed Allocation will have a Guarantee Period equal to the time
remaining until the applicable maturity date. The Account Value allocated
to the new Fixed Allocation will be credited with the fixed interest rate
then being credited to a new Fixed Allocation maturing on the applicable
maturity date (rounded to the next highest yearly duration). The Account
Value will remain invested in the Fixed Allocation until the maturity date
unless, at an earlier date, your Account Value is greater than or equal to
the reallocation trigger and, therefore, amounts can be transferred to the
variable investment options while maintaining the guaranteed protection
under the program (as described above).
IF A SIGNIFICANT AMOUNT OF YOUR ACCOUNT VALUE IS SYSTEMATICALLY TRANSFERRED TO
THE FIXED ALLOCATION TO SUPPORT THE PROTECTED PRINCIPAL VALUE DURING PERIODS OF
MARKET DECLINES, LOW INTEREST RATES, AND/OR AS THE PROGRAM NEARS ITS MATURITY
DATE, LESS OF YOUR ACCOUNT VALUE MAY BE AVAILABLE TO PARTICIPATE IN THE
INVESTMENT EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS IF THERE IS A
SUBSEQUENT MARKET RECOVERY. DURING PERIODS CLOSER TO THE MATURITY DATE OF THE
GUARANTEE A SIGNIFICANT PORTION OF YOUR ACCOUNT VALUE MAY BE ALLOCATED TO THE
FIXED ALLOCATION TO SUPPORT ANY APPLICABLE GUARANTEED AMOUNT. IF YOUR ACCOUNT
VALUE IS LESS THAN THE REALLOCATION TRIGGER AND A NEW FIXED ALLOCATION MUST BE
ESTABLISHED DURING PERIODS WHERE THE INTEREST RATE BEING CREDITED TO SUCH FIXED
ALLOCATION IS LOW, A LARGER PORTION OF YOUR ACCOUNT VALUE MAY NEED TO BE
TRANSFERRED TO THE FIXED ALLOCATION TO SUPPORT THE GUARANTEED AMOUNT, CAUSING
LESS OF YOUR ACCOUNT VALUE TO BE AVAILABLE TO PARTICIPATE IN THE INVESTMENT
EXPERIENCE OF THE VARIABLE INVESTMENT OPTIONS.
American Skandia uses an allocation mechanism based on assumptions of
expected and maximum market volatility, interest rates and time left to the
maturity of the program to determine the reallocation trigger. The allocation
mechanism is used to determine the allocation of Account Value between the
Fixed Allocation and the Sub-accounts you choose. American Skandia reserves the
right to change the allocation mechanism and the reallocation trigger at its
discretion, subject to regulatory approval where required. Changes to the
allocation mechanism and/or the reallocation trigger may be applied to existing
programs where allowed by law.
ELECTION OF THE PROGRAM
The Guaranteed Return Option can be elected at the time that you purchase your
Annuity, or on any Valuation Day thereafter (prior to annuitization). If you
elect the program after the Issue Date of your Annuity, the program will be
effective as of the Valuation Day that we receive the required documentation in
good order at our home office, and the guaranteed amount will be based on your
Account Value as of that date.
TERMINATION OF THE PROGRAM
The Annuity Owner also can terminate the Guaranteed Return Option program. Upon
termination, any Account Value in the Fixed Allocation will be transferred to
the variable investment options pro rata based on the Account Values in such
variable investment options, or in accordance with any effective asset
allocation program. A Market Value Adjustment will apply.
The program will terminate automatically upon: (a) the death of the Owner
or the Annuitant (in an entity owned contract); (b) as of the date Account
Value is applied to begin annuity payments; or (c) upon full surrender of the
Annuity. If you elect to terminate the program, the Guaranteed Return Option
will no longer provide any guarantees. If the surviving spouse assumes the
Annuity, he/she may re-elect the benefit on any anniversary of the Issue Date
of the Annuity or, if the deceased Owner had not previously elected the
benefit, may elect the benefit at any time. The surviving spouse's election
will be effective on the Valuation Day that we receive the required
documentation in good order at our home office, and the Account Value on that
Valuation Day will be the Protected Principal Value.
The charge for the Guaranteed Return Option program will no longer be
deducted from your Account Value upon termination of the program.
53
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Living Benefit Programs continued
SPECIAL CONSIDERATIONS UNDER THE GUARANTEED RETURN OPTION
This program is subject to certain rules and restrictions, including, but not
limited to the following:
- - Upon inception of the program, 100% of your Account Value must be allocated
to the variable investment options. The Fixed Allocation may not be in
effect as of the date that you elect to participate in the program.
However, the reallocation trigger may transfer Account Value to the Fixed
Allocation as of the effective date of the program under some
circumstances.
- - Annuity Owners cannot allocate any portion of Purchase Payments or transfer
Account Value to or from the Fixed Allocation while participating in the
program; however, all or a portion of any Purchase Payments may be
allocated by us to the Fixed Allocation to support the amount guaranteed.
You cannot participate in any dollar cost averaging program that transfers
Account Value from the Fixed Allocation to the variable investment options.
- - Transfers from the Fixed Allocation made as a result of the allocation
mechanism under the program will be subject to the Market Value Adjustment
formula under the Annuity; however, the 0.10% liquidity factor in the
formula will not apply. A Market Value Adjustment may be either positive or
negative. Transfer amounts will be taken from the most recently established
Fixed Allocation.
- - Transfers from the Sub-accounts to the Fixed Allocation or from the Fixed
Allocation to the Sub-accounts under the program will not count toward the
maximum number of free transfers allowable under the Annuity.
- - Any amounts applied to your Account Value by American Skandia on the
maturity date or any anniversary of the maturity date will not be treated
as "investment in the contract" for income tax purposes.
- - Low interest rates may require allocation to the Fixed Allocation even when
the current Account Value exceeds the guarantee.
- - As the time remaining until the applicable maturity date gradually
decreases the program will become increasingly sensitive to moves to the
Fixed Allocation.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to an
eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible investment
options will not be counted in determining the number of free transfers
during an Annuity Year. We may also require that you allocate your Account
Value according to an asset allocation model.
CHARGES UNDER THE PROGRAM
We deduct a charge equal to 0.25% of your Account Value allocated to the
Sub-accounts for participation in the Guaranteed Return Option program. The
annual charge is deducted daily. Account Value allocated to the Fixed
Allocation under the program is not subject to the charge. The charge is
deducted to compensate American Skandia for: (a) the risk that your Account
Value on the maturity date is less than the amount guaranteed; and (b)
administration of the program.
Owners who purchased the Annuity between February 4, 2002 and August 2, 2002
(the "Promotional Period") will not be charged the 0.25% annual fee for the
Guaranteed Return Option program if elected at any time while their Annuity is
in effect.
- - American Skandia will not charge the 0.25% annual fee for the entire period
that the program remains in effect, including any extension of the
program's maturity date resulting from the Owner's election to restart the
7-year program duration, regardless of when the Owner elects to participate
in the Guaranteed Return Option program.
- - Owners who complete the initial 7-year program duration OR terminate the
program before the program's maturity date, will not be charged the 0.25%
annual fee for participating in the program if they re-elect the Guaranteed
Return Option program at a later date.
- - To qualify for the waiver of the 0.25% annual fee, American Skandia must
receive an application for the Annuity during the Promotional Period, which
meets all of our requirements.
- - All other terms and conditions of the Annuity and the Guaranteed Return
Option program apply to Owners who qualify for the waiver of the 0.25%
annual fee.
- - Owners who purchase the Annuity after the completion of the Promotional
Period will not qualify for the 0.25% annual fee waiver.
54
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Effective November 18, 2002, American Skandia changed the manner in which the
annual charge for the Guaranteed Return Option is deducted to the method
described above. The annual charge for the Guaranteed Return Option for Owners
who elected the benefit between January 23, 2002 and November 15, 2002 and
subsequent to November 19, 2002 in those states where the daily deduction of the
charge has not been approved, is deducted annually, in arrears, according to the
prospectus in effect as of the date the program was elected. Owners who
terminate and then re-elect the Guaranteed Return Option or elect to restart the
Guaranteed Return Option at any time after November 18, 2002 will be subject to
the charge method described above.
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL AND
WILL BE OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY
APPROVAL IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. CURRENTLY, THE PROGRAM CAN ONLY BE ELECTED BY NEW
PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY. WE MAY OFFER THE PROGRAM TO
EXISTING ANNUITY OWNERS IN THE FUTURE, SUBJECT TO OUR ELIGIBILITY RULES AND
RESTRICTIONS. THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT PROGRAM IS NOT AVAILABLE
IF YOU ELECT THE GUARANTEED RETURN OPTION, GUARANTEED RETURN OPTION PLUS, THE
GUARANTEED MINIMUM INCOME BENEFIT RIDER OR THE LIFETIME FIVE INCOME BENEFIT
RIDER.
We offer a program that guarantees your ability to withdraw amounts equal to an
initial principal value (called the "Protected Value"), regardless of the
impact of market performance on your Account Value, subject to our program
rules regarding the timing and amount of withdrawals. The program may be
appropriate if you intend to make periodic withdrawals from your Annuity and
wish to ensure that market performance will not affect your ability to protect
your principal. You are not required to make withdrawals as part of the program
- -- the guarantee is not lost if you withdraw less than the maximum allowable
amount of principal each year under the rules of the program. There is an
additional charge if you elect the GMWB program; however, the charge may be
waived under certain circumstances described below.
KEY FEATURE -- PROTECTED VALUE
The Protected Value is the total amount that we guarantee will be available to
you through withdrawals from your Annuity and/or benefit payments, regardless
of the impact of market performance on your Account Value. The Protected Value
is reduced with each withdrawal you make until the Protected Value is reduced
to zero. When the Protected Value is reduced to zero due to your withdrawals,
the GMWB program terminates. Additionally, the Protected Value is used to
determine the maximum annual amount that you can withdraw from your Annuity,
called the Protected Annual Withdrawal Amount, without triggering an adjustment
in the Protected Value on a proportional basis. The Protected Value is referred
to as the "Benefit Base" in the rider we issue for this benefit.
The Protected Value is determined as of the date you make your first
withdrawal under the Annuity following your election of the GMWB program. The
initial Protected Value is equal to the greater of (A) the Account Value on the
date you elect the GMWB program, plus any additional Purchase Payments before
the date of your first withdrawal; or (B) the Account Value as of the date of
the first withdrawal from your Annuity. The Protected Value may be enhanced by
increases in your Account Value due to market performance during the period
between your election of the GMWB program and the date of your first
withdrawal.
- - If you elect the GMWB program at the time you purchase your Annuity, the
Account Value will be your initial Purchase Payment plus any Credit applied
to such Purchase Payment.
- - IF WE OFFER THE GMWB PROGRAM TO EXISTING ANNUITY OWNERS, the Account Value
on the anniversary of the Issue Date of your Annuity following your
election of the GMWB program will be used to determine the initial
Protected Value.
- - If you make additional Purchase Payments after your first withdrawal, the
Protected Value will be increased by the amount of the additional Purchase
Payment that we apply to the Purchase Payment.
You may elect to step-up your Protected Value if, due to positive market
performance, your Account Value is greater than the Protected Value. You are
eligible to step-up the Protected Value on or after the 5th annuity anniversary
following the first withdrawal under the GMWB program. The Protected
55
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Living Benefit Programs continued
Value can be stepped up again on or after the 5th annuity anniversary
following the preceding step-up. If you elect to step-up the Protected Value,
you must do so during the 30-day period prior to your eligibility date. If you
elect to step-up the Protected Value under the program, and on the date you
elect to step-up, the charges under the GMWB program have changed for new
purchasers, your program may be subject to the new charge going forward.
Upon election of the step-up, we reset the Protected Value to be equal to
the then current Account Value. For example, assume your initial Protected
Value was $100,000 and you have made cumulative withdrawals of $40,000,
reducing the Protected Value to $60,000. On the date you are eligible to
step-up the Protected Value, your Account Value is equal to $75,000. You could
elect to step-up the Protected Value to $75,000 on the date you are eligible.
Upon election of the step-up, we also reset the Protected Annual Withdrawal
Amount (discussed immediately below) to be equal to the greater of (A) the
Protected Annual Withdrawal Amount immediately prior to the reset; and (B) 7%
of the Protected Value immediately after the reset.
KEY FEATURE -- PROTECTED ANNUAL WITHDRAWAL AMOUNT
The initial Protected Annual Withdrawal Amount is equal to 7% of the Protected
Value. Under the GMWB program, if your cumulative withdrawals each Annuity Year
are less than or equal to the Protected Annual Withdrawal Amount, your
Protected Value will be reduced on a "dollar-for-dollar" basis (the Protected
Value is reduced by the actual amount of the withdrawal, including any MVA that
may apply). Cumulative withdrawals in any Annuity Year that exceed the
Protected Annual Withdrawal Amount trigger a proportional adjustment to both
the Protected Value and the Protected Annual Withdrawal Amount, as described in
the rider for this benefit (see the examples of this calculation below). The
Protected Annual Withdrawal Amount is referred to as the "Maximum Annual
Benefit" in the rider we issue for this benefit.
THE GMWB PROGRAM DOES NOT AFFECT YOUR ABILITY TO MAKE WITHDRAWALS UNDER
YOUR ANNUITY OR LIMIT YOUR ABILITY TO REQUEST WITHDRAWALS THAT EXCEED THE
PROTECTED ANNUAL WITHDRAWAL AMOUNT. You are not required to withdraw all or any
portion of the Protected Annual Withdrawal Amount each Annuity Year.
- - If, cumulatively, you withdraw an amount less than the Protected Annual
Withdrawal Amount in any Annuity Year, you cannot carry-over the unused
portion of the Protected Annual Withdrawal Amount to subsequent Annuity
Years. However, because the Protected Value is only reduced by the actual
amount of withdrawals you make under these circumstances, any unused
Protected Annual Withdrawal Amount may extend the period of time until the
remaining Protected Value is reduced to zero.
- - Additional Purchase Payments will increase the Protected Annual Withdrawal
Amount by 7% of the applicable Purchase Payment.
- - If the Protected Annual Withdrawal Amount after an adjustment exceeds the
Protected Value, the Protected Annual Withdrawal Amount will be set equal
to the Protected Value.
The following examples of dollar-for dollar and proportional reductions
and the reset of the Maximum Annual Benefit assume that: 1.) the Issue Date and
the effective date of the GMWB program are October 13, 2004; 2.) an initial
Purchase Payment of $250,000; 3.) a Protected Value of $250,000; and 4.) a
Protected Annual Withdrawal Amount of $17,500 (7% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 13, 2004 (in the first Annuity Year).
No prior withdrawals have been taken. As the amount withdrawn is less than the
Protected Annual Withdrawal Amount:
- - The Protected Value is reduced by the amount withdrawn (i.e., by $10,000,
from $250,000 to $240,000).
- - The remaining Protected Annual Withdrawal Amount for the balance of the
first Annuity Year is also reduced by the amount withdrawn (from $17,500 to
$7,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on December 13, 2004 (still within the
first Annuity Year). The Account Value immediately before the withdrawal is
$220,000. As the amount withdrawn exceeds the remaining Protected Annual
Withdrawal Amount of $7,500 from Example 1:
- - the Protected Value is first reduced by the remaining Protected Annual
Withdrawal Amount (from $240,000 to $232,500);
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the remaining Protected Annual
Withdrawal Amount ($10,000 - $7,500, or $2,500).
56
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- B is the Account Value less the remaining Protected Annual Withdrawal
Amount ($220,000 - $7,500, or $212,500).
The resulting Protected Value is: $232,500 x (1 - $2,500 / $212,500), or
$229,764.71.
- the Protected Annual Withdrawal Amount is also reduced by the ratio of
A to B: The resulting Protected Annual Withdrawal Amount is: $17,500 x
(1 - $2,500 / $212,500), or $17,294.12.
- - The remaining Protected Annual Withdrawal Amount is set to zero (0) for the
balance of the first Annuity Year.
EXAMPLE 3. RESET OF THE MAXIMUM ANNUAL BENEFIT
A $10,000 withdrawal is made on October 13, 2005 (second Annuity Year). The
remaining Protected Annual Withdrawal Amount has been reset to the Protected
Annual Withdrawal Amount of $17,294.12 from Example 2. As the amount withdrawn
is less than the remaining Protected Annual Withdrawal Amount:
- - the Protected Value is reduced by the amount withdrawn (i.e., reduced by
$10,000, from $229,764.71 to $219,764.71).
- - The remaining Protected Annual Withdrawal Amount for the balance of the
second Annuity Year is also reduced by the amount withdrawn (from
$17,294.12 to $7,294.12).
BENEFITS UNDER THE GMWB PROGRAM
- - In addition to any withdrawals you make under the GMWB program, market
performance may reduce your Account Value. If your Account Value is equal
to zero, and you have not received all of your Protected Value in the form
of withdrawals from your Annuity, we will continue to make payments equal
to the remaining Protected Value in the form of fixed, periodic payments
until the remainder of the Protected Value is paid, at which time the rider
terminates. The fixed, periodic payments will each be equal to the
Protected Annual Withdrawal Amount, except for the last payment which may
be equal to the remaining Protected Value. We will determine the duration
for which periodic payments will continue by dividing the Protected Value
by the Protected Annual Withdrawal Amount. You will not have the right to
make additional Purchase Payments or receive the remaining Protected Value
in a lump sum. You can elect the frequency of payments, subject to our
rules then in effect.
- - If the death benefit under the Annuity becomes payable before you have
received all of your Protected Value in the form of withdrawals from your
Annuity, your Beneficiary has the option to elect to receive the remaining
Protected Value as an alternate death benefit payout in lieu of the amount
payable under any other death benefit provided under the Annuity. The
remaining Protected Value will be payable in the form of fixed, periodic
payments. Your beneficiary can elect the frequency of payments, subject to
our rules then in effect. We will determine the duration for which periodic
payments will continue by dividing the Protected Value by the Protected
Annual Withdrawal Amount. THE PROTECTED VALUE IS NOT EQUAL TO THE ACCOUNT
VALUE FOR PURPOSES OF THE ANNUITY'S OTHER DEATH BENEFIT OPTIONS. THE GMWB
PROGRAM DOES NOT INCREASE OR DECREASE THE AMOUNT OTHERWISE PAYABLE UNDER
THE ANNUITY'S OTHER DEATH BENEFIT OPTIONS. GENERALLY, THE GMWB PROGRAM
WOULD BE OF VALUE TO YOUR BENEFICIARY ONLY WHEN THE PROTECTED VALUE AT
DEATH EXCEEDS ANY OTHER AMOUNT AVAILABLE AS A DEATH BENEFIT.
- - If you elect to begin receiving annuity payments before you have received
all of your Protected Value in the form of withdrawals from your Annuity,
an additional annuity payment option will be available that makes fixed
annuity payments for a certain period, determined by dividing the Protected
Value by the Protected Annual Withdrawal Amount. If you elect to receive
annuity payments calculated in this manner, the assumed interest rate used
to calculate such payments will be 0%, which is less than the assumed
interest rate on other annuity payment options we offer. This 0% assumed
interest rate results in lower annuity payments than what would have been
paid if the assumed interest rate was higher than 0%. YOU CAN ALSO ELECT TO
TERMINATE THE GMWB PROGRAM AND BEGIN RECEIVING ANNUITY PAYMENTS BASED ON
YOUR THEN CURRENT ACCOUNT VALUE (NOT THE REMAINING PROTECTED VALUE) UNDER
ANY OF THE AVAILABLE ANNUITY PAYMENT OPTIONS.
57
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Living Benefit Programs continued
OTHER IMPORTANT CONSIDERATIONS
- - Withdrawals under the GMWB program are subject to all of the terms and
conditions of the Annuity, including any MVA that may apply.
- - Withdrawals made while the GMWB program is in effect will be treated, for
tax purposes, in the same way as any other withdrawals under the Annuity.
- - The GMWB program does not directly affect the Annuity's Account Value or
Surrender Value, but any withdrawal will decrease the Account Value by the
amount of the withdrawal. If you surrender your Annuity, you will receive
the current Surrender Value, not the Protected Value.
- - You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the GMWB program. The GMWB program
provides a guarantee that if your Account Value declines due to market
performance, you will be able to receive your Protected Value in the form
of periodic benefit payments.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to an
eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible investment
options will not be counted in determining the number of free transfers
during an Annuity Year. We may also require that you allocate your Account
Value according to an asset allocation model.
ELECTION OF THE PROGRAM
Currently, the GMWB program can only be elected at the time that you purchase
your Annuity. In the future, we may offer existing Annuity Owners the option to
elect the GMWB program after the Issue Date of their Annuity, subject to our
eligibility rules and restrictions. If you elect the GMWB program after the
Issue Date of your Annuity, the program will be effective as of the next
anniversary date. Your Account Value as of such anniversary date will be used
to calculate the initial Protected Value and the initial Protected Annual
Withdrawal Amount.
We reserve the right to restrict the maximum amount of Protected Value
that may be covered under the GMWB program under this Annuity or any other
annuities that you own that are issued by American Skandia or its affiliated
companies.
TERMINATION OF THE PROGRAM
The program terminates automatically when your Protected Value reaches zero
based on your withdrawals. You may terminate the program at any time by
notifying us. If you terminate the program, any guarantee provided by the
benefit will terminate as of the date the termination is effective. The program
terminates upon your surrender of the Annuity, upon due proof of death (unless
your surviving spouse elects to continue the Annuity and the GMWB program or
your Beneficiary elects to receive the amounts payable under the GMWB program
in lieu of the death benefit) or upon your election to begin receiving annuity
payments.
The charge for the GMWB program will no longer be deducted from your
Account Value upon termination of the program.
CHARGES UNDER THE PROGRAM
Currently, we deduct a charge equal to 0.35% of the average daily net assets of
the Sub-accounts per year to purchase the GMWB program. The annual charge is
deducted daily. Account Value allocated to Fixed Allocations under the program
is not subject to the charge.
- - If, during the seven years following the effective date of the program, you
do not make any withdrawals, and do not make any additional Purchase
Payments after a five-year period following the effective date of the
program, the program will remain in effect; however, we will waive the
annual charge going forward. If you make an additional Purchase Payment
following the waiver of the annual charge, we will begin charging for the
program. After year seven (7) following the effective date of the program,
withdrawals will not cause a charge to be re-imposed.
- - If you elect to step-up the Protected Value under the program, and on the
date you elect to step-up, the charges under the program have changed for
new purchasers, your program may be subject to the new charge level for the
benefit.
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS
If you purchase an Annuity as an investment vehicle for "qualified"
investments, including an IRA, SEP-IRA, Roth IRA or Tax Sheltered Annuity (or
403(b)), the minimum distribution rules under the Code require that you begin
receiving periodic amounts from your Annuity beginning after age 70 1/2. The
amount required under the Code may exceed the Protected Annual Withdrawal
Amount, which will cause us to recalculate the Protected Value and the
Protected Annual Withdrawal Amount, resulting in a lower amount payable
58
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
in future Annuity Years. In addition, the amount and duration of payments under
the annuity payment and death benefit provisions may be adjusted so that the
payments do not trigger any penalty or excise taxes due to tax considerations
such as minimum distribution requirements.
GUARANTEED MINIMUM INCOME BENEFIT (GMIB)
THE GUARANTEED MINIMUM INCOME BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL, AND
WILL BE OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY
APPROVAL IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. CURRENTLY, THE PROGRAM CAN ONLY BE ELECTED BY NEW
PURCHASERS ON THE ISSUE DATE OF THEIR ANNUITY. WE MAY OFFER THE PROGRAM TO
EXISTING ANNUITY OWNERS IN THE FUTURE, SUBJECT TO OUR ELIGIBILITY RULES AND
RESTRICTIONS. THE GUARANTEED MINIMUM INCOME BENEFIT PROGRAM IS NOT AVAILABLE IF
YOU ELECT THE GUARANTEED RETURN OPTION PROGRAM, GUARANTEED RETURN OPTION PLUS
PROGRAM, THE GUARANTEED MINIMUM WITHDRAWAL BENEFIT RIDER OR THE LIFETIME FIVE
INCOME BENEFIT RIDER.
We offer a program that, after a seven-year waiting period, guarantees
your ability to begin receiving income from your Annuity in the form of annuity
payments based on a guaranteed minimum value (called the "Protected Income
Value") that increases after the waiting period begins, regardless of the
impact of market performance on your Account Value. The program may be
appropriate for you if you anticipate using your Annuity as a future source of
periodic fixed income payments for the remainder of your life and wish to
ensure that the basis upon which your income payments will be calculated will
achieve at least a minimum amount despite fluctuations in market performance.
There is an additional charge if you elect the GMIB program.
KEY FEATURE -- PROTECTED INCOME VALUE
The Protected Income Value is the minimum amount that we guarantee will be
available (net of any applicable tax charge), after a waiting period of at
least seven years, as a basis to begin receiving fixed annuity payments. The
Protected Income Value is initially established on the effective date of the
GMIB program and is equal to your Account Value on such date. Currently, since
the GMIB program may only be elected at issue, the effective date is the Issue
Date of the Annuity. The Protected Income Value is increased daily based on an
annual growth rate of 5%, subject to the limitations described below. The
Protected Income Value is referred to as the "Protected Value" in the rider we
issue for this benefit. The 5% annual growth rate is referred to as the
"Roll-Up Percentage" in the rider we issue for this benefit.
The Protected Income Value is subject to a limit of 200% (2X) of the sum
of the Protected Income Value established on the effective date of the GMIB
program, or the effective date of any step-up value, plus any additional
Purchase Payments made after the waiting period begins ("Maximum Protected
Income Value"), minus the sum of any reductions in the Protected Income Value
due to withdrawals you make from the Annuity after the waiting period begins.
- - Subject to the maximum age/durational limits described immediately below,
we will no longer increase the Protected Income Value by the 5% annual
growth rate once you reach the Maximum Protected Income Value. However, we
will increase the Protected Income Value by the amount of any additional
Purchase Payments after you reach the Maximum Protected Income Value.
Further, if you make withdrawals after you reach the Maximum Protected
Income Value, we will reduce the Protected Income Value and the Maximum
Protected Income Value by the proportional impact of the withdrawal on your
Account Value.
- - Subject to the Maximum Protected Income Value, we will no longer increase
the Protected Income Value by the 5% annual growth rate after the later of
the anniversary date on or immediately following the Annuitant's 80th
birthday or the 7th anniversary of the later of the effective date of the
GMIB program or the effective date of the most recent step-up. However, we
will increase the Protected Income Value by the amount of any additional
Purchase Payments. Further, if you make withdrawals after the Annuitant
reaches the maximum age/duration limits, we will reduce the Protected
Income Value and the Maximum Protected Income Value by the proportional
impact of the withdrawal on your Account Value.
- - Subject to the Maximum Protected Income Value, if you make an additional
Purchase Payment, we will increase the Protected Income Value by the amount
of the Purchase Payment
59
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Living Benefit Programs continued
and will apply the 5% annual growth rate on the new amount from the date
the Purchase Payment is applied.
- - As described below, after the waiting period begins, cumulative withdrawals
each Annuity Year that are up to 5% of the Protected Income Value on the
prior anniversary of the Annuity will reduce the Protected Income Value by
the amount of the withdrawal. Cumulative withdrawals each Annuity Year in
excess of 5% of the Protected Income Value on the prior anniversary of the
Annuity, will reduce the Protected Income Value proportionately. All
withdrawals after the Maximum Protected Income Value is reached will reduce
the Protected Income Value proportionately. The 5% annual growth rate will
be applied to the reduced Protected Income Value from the date of the
withdrawal.
Stepping-Up the Protected Income Value -- You may elect to "step-up" or
"reset" your Protected Income Value if your Account Value is greater than the
current Protected Income Value. Upon exercise of the step-up provision, your
initial Protected Income Value will be reset equal to your current Account
Value. From the date that you elect to step-up the Protected Income Value, we
will apply the 5% annual growth rate to the stepped-up Protected Income Value,
as described above. You can exercise the step-up provision twice while the GMIB
program is in effect, and only while the Annuitant is less than age 76.
- - A new seven-year waiting period will be established upon the effective date
of your election to step-up the Protected Income Value. You cannot exercise
your right to begin receiving annuity payments under the GMIB program until
the end of the new waiting period.
- - The Maximum Protected Income Value will be reset as of the effective date
of any step-up. The new Maximum Protected Income Value will be equal to
200% of the sum of the Protected Income Value as of the effective date of
the step-up plus any subsequent Purchase Payments, minus the impact of any
withdrawals after the date of the step-up.
- - When determining the guaranteed annuity purchase rates for annuity payments
under the GMIB program, we will apply such rates based on the number of
years since the most recent step-up.
- - If you elect to step-up the Protected Income Value under the program, and
on the date you elect to step-up, the charges under the GMIB program have
changed for new purchasers, your program may be subject to the new charge
going forward.
- - A step-up will increase the dollar for dollar limit on the anniversary of
the Issue Date of the Annuity following such step-up.
Impact of Withdrawals on the Protected Income Value -- Cumulative
withdrawals each Annuity Year up to 5% of the Protected Income Value will
reduce the Protected Income Value on a "dollar-for-dollar" basis (the Protected
Income Value is reduced by the actual amount of the withdrawal). Cumulative
withdrawals in any Annuity Year in excess of 5% of the Protected Income Value
will reduce the Protected Income Value proportionately (see the examples of
this calculation below). The 5% annual withdrawal amount is determined on each
anniversary of the Issue Date (or on the Issue Date for the first Annuity Year)
and applies to any withdrawals during the Annuity Year. This means that the
amount available for withdrawals each Annuity Year on a "dollar-for-dollar"
basis is adjusted on each annuity anniversary to reflect changes in the
Protected Income Value during the prior Annuity Year.
The following examples of dollar-for-dollar and proportional reductions
assume that: 1.) the Issue Date and the effective date of the GMIB program are
October 13, 2005; 2.) an initial Purchase Payment of $250,000; 3.) an initial
Protected Income Value of $250,000; and 4.) a dollar-for-dollar limit of
$12,500 (5% of $250,000):
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
A $10,000 withdrawal is taken on November 13, 2005 (in the first Annuity Year).
No prior withdrawals have been taken. Immediately prior to the withdrawal, the
Protected Income Value is $251,038.10 (the initial value accumulated for 31
days at an annual effective rate of 5%). As the amount withdrawn is less than
the dollar-for-dollar limit:
- - the Protected Income Value is reduced by the amount withdrawn (i.e., by
$10,000, from $251,038.10 to $241,038.10).
- - The remaining dollar-for-dollar limit ("Remaining Limit") for the balance
of the first Annuity Year is also reduced by the amount withdrawn (from
$12,500 to $2,500).
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
A second $10,000 withdrawal is taken on December 13, 2005 (still within the
first Annuity Year). Immediately before the withdrawal, the Account Value is
$220,000 and the Protected Income Value is $242,006.64. As the amount withdrawn
exceeds the Remaining Limit of $2,500 from Example 1:
- - the Protected Income Value is first reduced by the Remaining Limit (from
$242,006.64 to $239,506.64);
60
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- - The result is then further reduced by the ratio of A to B, where:
- A is the amount withdrawn less the Remaining Limit ($10,000 - $2,500,
or $7,500).
- B is the Account Value less the Remaining Limit ($220,000 - $2,500, or
$217,500).
The resulting Protected Income Value is: $239,506.64 x (1 - $7,500 /
$217,500), or $231,247.79.
- - The Remaining Limit is set to zero (0) for the balance of the first Annuity
Year.
EXAMPLE 3. RESET OF THE DOLLAR-FOR-DOLLAR LIMIT
A $10,000 withdrawal is made on the first anniversary of the Issue Date,
October 13, 2006 (second Annuity Year). Prior to the withdrawal, the Protected
Income Value is $240,838.37. The Remaining Limit is reset to 5% of this amount,
or $12,041.92. As the amount withdrawn is less than the dollar-for-dollar
limit:
- - the Protected Income Value is reduced by the amount withdrawn (i.e.,
reduced by $10,000, from $240,838.37 to $230,870.56).
- - The Remaining Limit for the balance of the second Annuity Year is also
reduced by the amount withdrawn (from $12,041.92 to $2,041.92).
KEY FEATURE -- GMIB ANNUITY PAYMENTS
You can elect to apply the Protected Income Value to one of the available GMIB
Annuity Payment Options on any anniversary date following the initial waiting
period, or any subsequent waiting period established upon your election to
step-up the Protected Income Value. Once you have completed the waiting period,
you will have a 30-day period each year, prior to the annuity anniversary,
during which you may elect to begin receiving annuity payments under one of the
available GMIB Annuity Payment Options. You must elect one of the GMIB Annuity
Payment Options by the anniversary of the Annuity's Issue Date on or
immediately following the Annuitant's 95th birthday, except for Annuities used
as a funding vehicle for an IRA, SEP IRA or 403(b), in which case you must
elect one of the GMIB Annuity Payment Options by the anniversary of the
Annuity's Issue Date on or immediately following the Annuitant's 92nd birthday.
The amount of each GMIB Annuity Payment will be determined based on the
age and, where permitted by law, sex of the Annuitant by applying the Protected
Income Value (net of any applicable tax charge that may be due) to the GMIB
Annuity Payment Option you choose. We use special annuity purchase rates to
calculate the amount of each payment due under the GMIB Annuity Payment
Options. These special rates for the GMIB Annuity Payment Options are
calculated using an assumed interest rate factor that provides for lower growth
in the value applied to produce annuity payments than if you elected an annuity
payment option that is not part of the GMIB program. These special rates also
are calculated using other factors such as "age setbacks" (use of an age lower
than the Annuitant's actual age) that result in lower payments than would
result if you elected an annuity payment option that is not part of the GMIB
program. Use of an age setback entails a longer assumed life for the Annuitant
which in turn results in lower annuity payments.
ON THE DATE THAT YOU ELECT TO BEGIN RECEIVING GMIB ANNUITY PAYMENTS, WE
GUARANTEE THAT YOUR PAYMENTS WILL BE CALCULATED BASED ON YOUR ACCOUNT VALUE AND
OUR THEN CURRENT ANNUITY PURCHASE RATES IF THE PAYMENT AMOUNT CALCULATED ON
THIS BASIS WOULD BE HIGHER THAN IT WOULD BE BASED ON THE PROTECTED INCOME VALUE
AND THE SPECIAL GMIB ANNUITY PURCHASE RATES.
GMIB ANNUITY PAYMENT OPTION 1 -- PAYMENTS FOR LIFE WITH A CERTAIN PERIOD
Under this option, monthly annuity payments will be made until the death of the
Annuitant. If the Annuitant dies before having received 120 monthly annuity
payments, the remainder of the 120 monthly annuity payments will be made to the
Beneficiary.
GMIB ANNUITY PAYMENT OPTION 2 -- PAYMENTS FOR JOINT LIVES WITH A CERTAIN PERIOD
Under this option, monthly annuity payments will be made until the death of
both the Annuitant and the Joint Annuitant. If the Annuitant and the Joint
Annuitant die before having received 120 monthly annuity payments, the
remainder of the 120 monthly annuity payments will be made to the Beneficiary.
- - If the Annuitant dies first, we will continue to make payments until the
later of the death of the Joint Annuitant and the end of the period
certain. However, if the Joint Annuitant is still receiving annuity
payments following the end of the certain period, we will reduce the amount
of each subsequent payment to 50% of the original payment amount.
- - If the Joint Annuitant dies first, we will continue to make payments until
the later of the death of the Annuitant and the end of the period certain.
You cannot withdraw your Account Value or the Protected Income Value under
either GMIB Annuity Payment Option once
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Living Benefit Programs continued
annuity payments have begun. We may make other payout frequencies available,
such as quarterly, semi-annually or annually.
OTHER IMPORTANT CONSIDERATIONS
- - YOU SHOULD NOTE THAT GMIB IS DESIGNED TO PROVIDE A TYPE OF INSURANCE THAT
SERVES AS A SAFETY NET ONLY IN THE EVENT YOUR ACCOUNT VALUE DECLINES
SIGNIFICANTLY DUE TO NEGATIVE INVESTMENT PERFORMANCE. IF YOUR CONTRACT
VALUE IS NOT SIGNIFICANTLY AFFECTED BY NEGATIVE INVESTMENT PERFORMANCE, IT
IS UNLIKELY THAT THE PURCHASE OF THE GMIB WILL RESULT IN YOUR RECEIVING
LARGER ANNUITY PAYMENTS THAN IF YOU HAD NOT PURCHASED GMIB. This is because
the assumptions that we use in computing the GMIB, such as the annuity
purchase rates, (which include assumptions as to age-setbacks and assumed
interest rates), are more conservative than the assumptions that we use in
computing annuity payout options outside of GMIB. Therefore, you may
generate higher income payments if you were to annuitize a lower Account
Value at the current annuity purchase rates, than if you were to annuitize
under the GMIB with a higher Protected Value than your Account Value but,
at the annuity purchase rates guaranteed under the GMIB. The GMIB program
does not directly affect the Annuity's Account Value, Surrender Value or
the amount payable under either the basic death benefit provision of the
Annuity or any optional death benefit provision. If you surrender your
Annuity, you will receive the current Surrender Value, not the Protected
Income Value. The Protected Income Value is only applicable if you elect to
begin receiving annuity payments under one of the GMIB annuity options
after the waiting period.
- - The Annuity offers other annuity payment options that you can elect which
do not impose an additional charge, but which do not offer to guarantee a
minimum value on which to make annuity payments.
- - Where allowed by law, we reserve the right to limit subsequent purchase
payments if we determine, at our sole discretion, that based on the timing
of your Purchase Payments and withdrawals, your Protected Income Value is
increasing in ways we did not intend. In determining whether to limit
Purchase Payments, we will look at Purchase Payments which are
disproportionately larger than your initial Purchase Payment and other
actions that may artificially increase the Protected Income Value.
- - We currently limit the variable investment options in which you may
allocate Account Value if you participate in this program. We reserve the
right to transfer any Account Value in a prohibited investment option to an
eligible investment option. Should we prohibit access to any investment
option, any transfers required to move Account Value to eligible investment
options will not be counted in determining the number of free transfers
during an Annuity Year. We may also require that you allocate your Account
Value according to an asset allocation model.
- - If you change the Annuitant after the effective date of the GMIB program,
the period of time during which we will apply the 5% annual growth rate may
be changed based on the age of the new Annuitant. If the new Annuitant
would not be eligible to elect the GMIB program based on his or her age at
the time of the change, then the GMIB program will terminate.
- - Annuity payments made under the GMIB program are subject to the same tax
treatment as any other annuity payment.
- - At the time you elect to begin receiving annuity payments under the GMIB
program or under any other annuity payment option we make available, the
protection provided by the Annuity's basic death benefit or any optional
death benefit provision you elected will no longer apply.
ELECTION OF THE PROGRAM
Currently, the GMIB program can only be elected at the time that you purchase
your Annuity. The Annuitant must be age 75 or less as of the effective date of
the GMIB program. In the future, we may offer existing Annuity Owners the
option to elect the GMIB program after the Issue Date of their Annuity, subject
to our eligibility rules and restrictions. If you elect the GMIB program after
the Issue Date of your Annuity, the program will be effective as of the date of
election. Your Account Value as of the that date will be used to calculate the
Protected Income Value as of the effective date of the program.
TERMINATION OF THE PROGRAM
The GMIB program cannot be terminated by the Owner once elected. The GMIB
program automatically terminates as of the date the Annuity is fully
surrendered, on the date the death benefit is payable to your Beneficiary
(unless your surviving spouse elects to continue the Annuity), or on the date
that your Account Value is transferred to begin making annuity payments. The
GMIB program may also be terminated if you designate a
62
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
new Annuitant who would not be eligible to elect the GMIB program based on his
or her age at the time of the change.
Upon termination of the GMIB program we will deduct the charge from your
Account Value for the portion of the Annuity Year since the prior anniversary
of the Annuity's Issue Date (or the Issue Date if in the first Annuity Year).
CHARGES UNDER THE PROGRAM
Currently, we deduct a charge equal to 0.50% per year of the average Protected
Income Value for the period the charge applies. Because the charge is
calculated based on the average Protected Income Value, it does not increase or
decrease based on changes to the Annuity's Account Value due to market
performance. The dollar amount you pay each year will increase in any year the
Protected Income Value increases, and it will decrease in any year the
Protected Income Value decreases due to withdrawal, irrespective of whether
your Account Value increases or decreases.
The charge is deducted annually in arrears each Annuity Year on the
anniversary of the Issue Date of the Annuity. We deduct the amount of the
charge pro-rata from the Account Value allocated to the variable investment
options and the Fixed Allocations. No MVA will apply to Account Value deducted
from a Fixed Allocation. If you surrender your Annuity, begin receiving annuity
payments under the GMIB program or any other annuity payment option we make
available during an Annuity Year, or the GMIB program terminates, we will
deduct the charge for the portion of the Annuity Year since the prior
anniversary of the Annuity's Issue Date (or the Issue Date if in the first
Annuity Year).
No charge applies after the Annuity Date.
LIFETIME FIVE INCOME BENEFIT (LIFETIME FIVE)
THE LIFETIME FIVE INCOME BENEFIT PROGRAM DESCRIBED BELOW IS ONLY BEING OFFERED
IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL AND WILL BE
OFFERED SUBSEQUENTLY IN OTHER JURISDICTIONS WHEN WE RECEIVE REGULATORY APPROVAL
IN THOSE JURISDICTIONS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. CURRENTLY, LIFETIME FIVE CAN BE ELECTED ONLY ONCE
EACH ANNUITY YEAR, AND ONLY WHERE THE ANNUITANT AND THE OWNER ARE THE SAME
PERSON OR, IF THE ANNUITY OWNER IS AN ENTITY, WHERE THERE IS ONLY ONE ANNUITANT.
WE RESERVE THE RIGHT TO LIMIT THE ELECTION FREQUENCY IN THE FUTURE. BEFORE
MAKING ANY SUCH CHANGE TO THE ELECTION FREQUENCY, WE WILL PROVIDE PRIOR NOTICE
TO OWNERS WHO HAVE AN EFFECTIVE LIFETIME FIVE INCOME BENEFIT. THE ANNUITANT MUST
BE AT LEAST 45 YEARS OLD WHEN THE PROGRAM IS ELECTED. THE LIFETIME FIVE INCOME
BENEFIT PROGRAM IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION,
GUARANTEED RETURN OPTION PLUS, GUARANTEED MINIMUM WITHDRAWAL BENEFIT OR THE
GUARANTEED MINIMUM INCOME BENEFIT RIDER. AS LONG AS YOUR LIFETIME FIVE INCOME
BENEFIT IS IN EFFECT, YOU MUST ALLOCATE YOUR ACCOUNT VALUE IN ACCORDANCE WITH AN
ELIGIBLE MODEL UNDER OUR ASSET ALLOCATION PROGRAMS, WHICH ARE GENERALLY
DESCRIBED IN THE "ARE ANY ASSET ALLOCATION PROGRAMS AVAILABLE?" SECTION ABOVE.
FOR FURTHER INFORMATION ON ASSET ALLOCATION PROGRAMS, PLEASE CONSULT WITH YOUR
INVESTMENT PROFESSIONAL OR CALL 1-800-752-6342.
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Living Benefit Programs continued
We offer a program that guarantees your ability to withdraw amounts equal
to a percentage of an initial principal value (called the "Protected Withdrawal
Value"), regardless of the impact of market performance on your Account Value,
subject to our program rules regarding the timing and amount of withdrawals.
There are two options -- one is designed to provide an annual withdrawal amount
for life (the "Life Income Benefit") and the other is designed to provide a
greater annual withdrawal amount as long as there is Protected Withdrawal Value
(adjusted as described below) (the "Withdrawal Benefit"). If there is no
Protected Withdrawal Value, the withdrawal benefit will be zero. You do not
choose between these two options; each option will continue to be available as
long as the Annuity has an Account Value and the Lifetime Five is in effect.
Certain benefits under Lifetime Five may remain in effect even if the Account
Value of the Annuity is zero. The program may be appropriate if you intend to
make periodic withdrawals from your Annuity and wish to ensure that market
performance will not affect your ability to receive annual payments. You are not
required to make withdrawals as part of the program -- the guarantees are not
lost if you withdraw less than the maximum allowable amount each year under the
rules of the program.
KEY FEATURE -- PROTECTED WITHDRAWAL VALUE
The Protected Withdrawal Value is initially used to determine the amount of
each initial annual payment under the Life Income Benefit and the Withdrawal
Benefit. The initial Protected Withdrawal Value is determined as of the date
you make your first withdrawal under the Annuity following your election of
Lifetime Five. The initial Protected Withdrawal Value is equal to the greater
of (A) the Account Value on the date you elect Lifetime Five, plus any
additional Purchase Payments each growing at 5% per year from the date of your
election of the program, or application of the Purchase Payment to your
Annuity, as applicable, until the date of your first withdrawal or the 10th
anniversary of the benefit effective date, if earlier (B) the Account Value as
of the date of the first withdrawal from your Annuity, prior to the withdrawal,
and (C) the highest Account Value on each Annuity anniversary prior to the
first withdrawal or on the first 10 Annuity anniversaries if earlier than the
date of your first withdrawal after the benefit effective date. Each value is
increased by the amount of any subsequent Purchase Payments.
- - If you elect the Lifetime Five program at the time you purchase your
Annuity, the Account Value will be your initial Purchase Payment.
- - For existing Owners who are electing the Lifetime Five benefit, the Account
Value on the date of your election of the Lifetime Five program will be
used to determine the initial Protected Withdrawal Value.
- - If you make additional Purchase Payments after your first withdrawal, the
Protected Withdrawal Value will be increased by the amount of each
additional Purchase Payment.
You may elect to step-up your Protected Withdrawal Value if, due to
positive market performance, your Account Value is greater than the Protected
Withdrawal Value. You are eligible to step-up the Protected Withdrawal Value on
or after the 5th anniversary of the first withdrawal under the Lifetime Five
program. The Protected Withdrawal Value can be stepped up again on or after the
5th anniversary following the preceding step-up. If you elect to step-up the
Protected Withdrawal Value under the program, and on the date you elect to
step-up, the charges under the Lifetime Five program have changed for new
purchasers, your program may be subject to the new charge going forward.
Upon election of the step-up, we increase the Protected Withdrawal Value
to be equal to the then current Account Value. For example, assume your initial
Protected Withdrawal Value was $100,000 and you have made cumulative
withdrawals of $40,000, reducing the Protected Withdrawal Value to $60,000. On
the date you are eligible to step-up the Protected Withdrawal Value, your
Account Value is equal to $75,000. You could elect to step-up the Protected
Withdrawal Value to $75,000 on the date you are eligible. If your current
Annual Income Amount and Annual Withdrawal Amount are less than they would be
if we did not reflect the step-up in Protected Withdrawal Value, then we will
increase these amounts to reflect the step-up as described below.
The Protected Withdrawal Value is reduced each time a withdrawal is made
on a dollar-for-dollar basis up to 7% per Annuity Year of the Protected
Withdrawal Value and on the greater of a dollar-for-dollar basis or a pro rata
basis for withdrawals in an Annuity Year in excess of that amount until the
Protected Withdrawal Value is reduced to zero. At that point the Annual
Withdrawal Amount will be zero until such time (if
64
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
any) as the Annuity reflects a Protected Withdrawal Value (for example, due to a
step-up or additional Purchase Payments being made into the Annuity).
KEY FEATURE -- ANNUAL INCOME AMOUNT UNDER THE LIFE INCOME BENEFIT
The initial Annual Income Amount is equal to 5% of the initial Protected
Withdrawal Value. Under the Lifetime Five program, if your cumulative
withdrawals in an Annuity Year are less than or equal to the Annual Income
Amount, they will not reduce your Annual Income Amount in subsequent Annuity
Years. If your cumulative withdrawals are in excess of the Annual Income Amount
("Excess Income"), your Annual Income Amount in subsequent years will be
reduced (except with regard to required minimum distributions) by the result of
the ratio of the Excess Income to the Account Value immediately prior to such
withdrawal (see examples of this calculation below). Reductions include the
actual amount of the withdrawal. A withdrawal can be considered Excess Income
under the Life Income Benefit even though it does not exceed the Annual
Withdrawal Amount under the Withdrawal Benefit. When you elect a step-up, your
Annual Income Amount increases to equal 5% of your Account Value after the
step-up if such amount is greater than your Annual Income Amount. Your Annual
Income Amount also increases if you make additional Purchase Payments. The
amount of the increase is equal to 5% of any additional Purchase Payments. Any
increase will be added to your Annual Income Amount beginning on the day that
the step-up is effective or the Purchase Payment is made. A determination of
whether you have exceeded your Annual Income Amount is made at the time of each
withdrawal; therefore a subsequent increase in the Annual Income Amount will
not offset the effect of a withdrawal that exceeded the Annual Income Amount at
the time the withdrawal was made.
KEY FEATURE -- ANNUAL WITHDRAWAL AMOUNT UNDER THE WITHDRAWAL BENEFIT
The initial Annual Withdrawal Amount is equal to 7% of the initial Protected
Withdrawal Value. Under the Lifetime Five program, if your cumulative
withdrawals each Annuity Year are less than or equal to the Annual Withdrawal
Amount, your Protected Withdrawal Value will be reduced on a dollar-for-dollar
basis. If your cumulative withdrawals are in excess of the Annual Withdrawal
Amount ("Excess Withdrawal"), your Annual Withdrawal Amount will be reduced
(except with regard to required minimum distributions) by the result of the
ratio of the Excess Withdrawal to the Account Value immediately prior to such
withdrawal (see the examples of this calculation below). Reductions include the
actual amount of the withdrawal. When you elect a step-up, your Annual
Withdrawal Amount increases to equal 7% of your Account Value after the step-up
if such amount is greater than your Annual Withdrawal Amount. Your Annual
Withdrawal Amount also increases if you make additional Purchase Payments. The
amount of the increase is equal to 7% of any additional Purchase Payments. A
determination of whether you have exceeded your Annual Withdrawal Amount is
made at the time of each withdrawal; therefore, a subsequent increase in the
Annual Withdrawal Amount will not offset the effect of a withdrawal that
exceeded the Annual Withdrawal Amount at the time the withdrawal was made.
The Lifetime Five program does not affect your ability to make withdrawals
under your Annuity or limit your ability to request withdrawals that exceed the
Annual Income Amount and the Annual Withdrawal Amount. You are not required to
withdraw all or any portion of the Annual Withdrawal Amount or Annual Income
Amount in each Annuity Year.
- - If, cumulatively, you withdraw an amount less than the Annual Withdrawal
Amount under the Withdrawal Benefit in any Annuity Year, you cannot
carry-over the unused portion of the Annual Withdrawal Amount to subsequent
Annuity Years. However, because the Protected Withdrawal Value is only
reduced by the actual amount of withdrawals you make under these
circumstances, any unused Annual Withdrawal Amount may extend the period of
time until the remaining Protected Withdrawal Value is reduced to zero.
- - If, cumulatively, you withdraw an amount less than the Annual Income Amount
under the Life Income Benefit in any Annuity Year, you cannot carry-over
the unused portion of the Annual Income Amount to subsequent Annuity Years.
However, because the Protected Withdrawal Value is only reduced by the
actual amount of withdrawals you make under these circumstances, any unused
Annual Income Amount may extend the period of time until the remaining
Protected Withdrawal Value is reduced to zero.
The following examples of dollar-for-dollar and proportional reductions
and the step-up of the Protected Withdrawal Value, Annual Withdrawal Amount and
Annual Income Amount assume: 1.) the Issue Date and the Effective Date of the
Lifetime Five program are February 1, 2005; 2.) an initial Purchase
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Living Benefit Programs continued
Payment of $250,000; 3.) the Account Value on February 1, 2006 is equal to
$265,000; 4.) the first withdrawal occurs on March 1, 2006 when the Account
Value is equal to $263,000; and 5.) the Account Value on March 1, 2011 is equal
to $240,000.
The initial Protected Withdrawal Value is calculated as the greatest of
(a), (b) and (c):
(a) Purchase payment accumulated at 5% per year from February 1, 2005
until March 1, 2006 (393 days) = $250,000 x 1.05(393/365) =
$263,484.33
(b) Account Value on March 1, 2006 (the date of the first withdrawal) =
$263,000
(c) Account Value on February 1, 2006 (the first Annuity Anniversary) =
$265,000
Therefore, the initial Protected Withdrawal Value is equal to $265,000.
The Annual Withdrawal Amount is equal to $18,550 under the Withdrawal Benefit
(7% of $265,000). The Annual Income Amount is equal to $13,250 under the Life
Income Benefit (5% of $265,000).
EXAMPLE 1. DOLLAR-FOR-DOLLAR REDUCTION
If $10,000 was withdrawn (less than both the Annual Income Amount and the
Annual Withdrawal Amount) on March 1, 2006, then the following values would
result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 -
$10,000 = $8,550
Annual Withdrawal Amount for future Annuity Years remains at $18,550
- - Remaining Annual Income Amount for current Annuity Year = $13,250 - $10,000
= $3,250
Annual Income Amount for future Annuity Years remains at $13,250
- - Protected Withdrawal Value is reduced by $10,000 from $265,000 to $255,000
EXAMPLE 2. DOLLAR-FOR-DOLLAR AND PROPORTIONAL REDUCTIONS
(a) If $15,000 was withdrawn (more than the Annual Income Amount but less
than the Annual Withdrawal Amount) on March 1, 2006, then the
following values would result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $18,550 -
$15,000 = $3,550
Annual Withdrawal Amount for future Annuity Years remains at $18,550
- - Remaining Annual Income Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Income Amount ($15,000 - $13,250 =
$1,750) reduces Annual Income Amount for future Annuity Years.
- - Reduction to Annual Income Amount = Excess Income/ Account Value before
Excess Income x Annual Income Amount = $1,750 / ($263,000 - $13,250) x
$13,250 = $93 Annual Income Amount for future Annuity Years = $13,250 - $93
= $13,157
- - Protected Withdrawal Value is reduced by $15,000 from $265,000 to $250,000
(b) If $25,000 was withdrawn (more than both the Annual Income Amount and
the Annual Withdrawal Amount) on March 1, 2006, then the following
values would result:
- - Remaining Annual Withdrawal Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Withdrawal Amount ($25,000 - $18,550 =
$6,450) reduces Annual Withdrawal Amount for future Annuity Years.
- - Reduction to Annual Withdrawal Amount = Excess Withdrawal/Account Value
before Excess Withdrawal x Annual Withdrawal Amount = $6,450 / ($263,000 -
$18,550) x $18,550 = $489 Annual Withdrawal Amount for future Annuity Years
= $18,550 - $489 = $18,061
- - Remaining Annual Income Amount for current Annuity Year = $0
Excess of withdrawal over the Annual Income Amount ($25,000 - $13,250 =
$11,750) reduces Annual Income Amount for future Annuity Years.
- - Reduction to Annual Income Amount = Excess Income/ Account Value before
Excess Income x Annual Income Amount = $11,750 / ($263,000 - $13,250) x
$13,250 = $623 Annual Income Amount for future Annuity Years = $13,250 -
$623 = $12,627
- - Protected Withdrawal Value is first reduced by the Annual Withdrawal Amount
($18,550) from $265,000 to $246,450. It is further reduced by the greater
of a dollar-for-dollar reduction or a proportional reduction.
Dollar-for-dollar reduction = $25,000 - $18,550 = $6,450
- - Proportional reduction = Excess Withdrawal / Account Value before Excess
Withdrawal x Protected Withdrawal Value = $6,450 / ($263,000 - $18,550) x
$246,450 = $6,503
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Protected Withdrawal Value = $246,450 - max {$6,403} = $239,947
EXAMPLE 3. STEP-UP OF THE PROTECTED WITHDRAWAL VALUE
If the Annual Income Amount ($13,250) is withdrawn each year starting on March
1, 2006 for a period of 5 years, the Protected Withdrawal Value on March 1,
2011 would be reduced to $198,750 {$265,000 - ($13,250 - 5)}. If a step-up is
elected on March 1, 2011, then the following values would result:
- - Protected Withdrawal Value = Account Value on March 1, 2011 = $240,000
- - Annual Income Amount is equal to the greater of the current Annual Income
Amount or 5% of the stepped up Protected Withdrawal Value. Current Annual
Income Amount is $13,250. 5% of the stepped-up Protected Withdrawal Value
is 5% of $240,000, which is $12,000. Therefore, the Annual Income Amount
remains $13,250.
- - Annual Withdrawal Amount is equal to the greater of the current Annual
Withdrawal Amount or 7% of the stepped up Protected Withdrawal Value.
Current Annual Withdrawal Amount is $18,550. 7% of the stepped-up Protected
Withdrawal Value is 7% of $240,000, which is $16,800. Therefore the Annual
Withdrawal Amount remains $18,550.
BENEFITS UNDER THE LIFETIME FIVE PROGRAM
- - If your Account Value is equal to zero, and the cumulative withdrawals in
the current Annuity Year are greater than the Annual Withdrawal Amount, the
Lifetime Five program will terminate. To the extent that your Account Value
was reduced to zero as a result of cumulative withdrawals that are equal to
or less than the Annual Income Amount and amounts are still payable under
both the Life Income Benefit and the Withdrawal Benefit, you will be given
the choice of receiving the payments under the Life Income Benefit or under
the Withdrawal Benefit. Once you make this election we will make an
additional payment for that Annuity Year equal to either the remaining
Annual Income Amount or Annual Withdrawal Amount for the Annuity Year, if
any, depending on the option you choose. In subsequent Annuity Years we
make payments that equal either the Annual Income Amount or the Annual
Withdrawal Amount as described in this Prospectus. You will not be able to
change the option after your election and no further Purchase Payments will
be accepted under your Annuity. If you do not make an election, we will pay
you annually under the Life Income Benefit. To the extent that cumulative
withdrawals in the current Annuity Year that reduced your Account Value to
zero are more than the Annual Income Amount but less than or equal to the
Annual Withdrawal Amount and amounts are still payable under the Withdrawal
Benefit, you will receive the payments under the Withdrawal Benefit. In the
year of a withdrawal that reduced your Account Value to zero, we will make
an additional payment to equal any remaining Annual Withdrawal Amount and
make payments equal to the Annual Withdrawal Amount in each subsequent year
(until the Protected Withdrawal Value is depleted). Once your Account Value
equals zero no further Purchase Payments will be accepted under your
Annuity.
- - If annuity payments are to begin under the terms of your Annuity or if you
decide to begin receiving annuity payments and there is any Annual Income
Amount due in subsequent Annuity Years or any remaining Protected
Withdrawal Value, you can elect one of the following three options:
(1) apply your Account Value to any annuity option available; or
(2) request that, as of the date annuity payments are to begin, we make
annuity payments each year equal to the Annual Income Amount. We make
such annuity payments until the Annuitant's death; or
(3) request that, as of the date annuity payments are to begin, we pay
out any remaining Protected Withdrawal Value as annuity payments.
Each year such annuity payments will equal the Annual Withdrawal
Amount or the remaining Protected Withdrawal Value if less. We make
such annuity payments until the earlier of the Annuitant's death or
the date the Protected Withdrawal Value is depleted.
We must receive your request in a form acceptable to us at our office.
- - In the absence of an election when mandatory annuity payments are to begin,
we will make annual annuity payments as a single life fixed annuity with
five payments certain using the greater of the annuity rates then currently
available or the annuity rates guaranteed in your Annuity. The amount that
will be applied to provide such annuity payments will be the greater of:
(1) the present value of future Annual Income Amount payments. Such
present value will be calculated using the greater of the single life
fixed annuity rates then currently available or the single life fixed
annuity rates guaranteed in your Annuity; and
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Living Benefit Programs continued
(2) the Account Value.
- - If no withdrawal was ever taken, we will determine a Protected Withdrawal
Value and calculate an Annual Income Amount and an Annual Withdrawal Amount
as if you made your first withdrawal on the date the annuity payments are
to begin.
OTHER IMPORTANT CONSIDERATIONS
- - Withdrawals under the Lifetime Five program are subject to all of the terms
and conditions of the Annuity.
- - Withdrawals made while the Lifetime Five program is in effect will be
treated, for tax purposes, in the same way as any other withdrawals under
the Annuity. The Lifetime Five program does not directly affect the
Annuity's Account Value or Surrender Value, but any withdrawal will
decrease the Account Value by the amount of the withdrawal. If you
surrender your Annuity, you will receive the current Surrender Value, not
the Protected Withdrawal Value.
- - You can make withdrawals from your Annuity while your Account Value is
greater than zero without purchasing the Lifetime Five program. The
Lifetime Five program provides a guarantee that if your Account Value
declines due to market performance, you will be able to receive your
Protected Withdrawal Value or Annual Income Amount in the form of periodic
benefit payments.
- - You must allocate your Account Value in accordance with an eligible model
under an available asset allocation program or in accordance with other
options that we may permit in order to elect and maintain the Lifetime Five
program. Asset allocation programs are described generally in the "Are Any
Asset Allocation Programs Available?" section above. For further
information on asset allocation programs, please consult with your
Investment Professional or call 1-800-752-6342.
ELECTION OF THE PROGRAM
The Lifetime Five program can be elected at the time that you purchase your
Annuity. We also offer existing Owners the option to elect the Lifetime Five
program after the Issue Date of their Annuity, subject to our eligibility rules
and restrictions. Your Account Value as the date of election will be used as a
basis to calculate the initial Protected Withdrawal Value, the initial
Protected Annual Withdrawal Amount, and the Annual Income Amount.
TERMINATION OF THE PROGRAM
The program terminates automatically when your Protected Withdrawal Value and
Annual Income Amount equals zero. You may terminate the program at any time by
notifying us. If you terminate the program, any guarantee provided by the
benefit will terminate as of the date the termination is effective. The program
terminates upon your surrender of the Annuity, upon the death of the Annuitant
(but your surviving spouse may elect a new Lifetime Five if your spouse elects
the spousal continuance option and your spouse would then be eligible to elect
the benefit if he or she was a new purchaser), upon a change in ownership of
the Annuity that changes the tax identification number of the Owner, upon
change in the Annuitant or upon your election to begin receiving annuity
payments.
The charge for the Lifetime Five program will no longer be deducted from
your Account Value upon termination of the program.
ADDITIONAL TAX CONSIDERATIONS FOR QUALIFIED CONTRACTS
If you purchase an Annuity as an investment vehicle for "qualified"
investments, including an IRA, SEP-IRA, or Tax Sheltered Annuity (or 403(b)),
the minimum distribution rules under the Code require that you begin receiving
periodic amounts from your Annuity beginning after age 70 1/2. The amount
required under the Code may exceed the Annual Withdrawal Amount and the Annual
Income Amount, which will cause us to increase the Annual Income Amount and the
Annual Withdrawal Amount in any Annuity Year that required minimum
distributions due from your Annuity are greater than such amounts. Any such
payments will reduce your Protected Withdrawal Value. In addition, the amount
and duration of payments under the annuity payment and death benefit provisions
may be adjusted so that the payments do not trigger any penalty or excise taxes
due to tax considerations such as minimum distribution requirements.
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Death Benefit
WHAT TRIGGERS THE PAYMENT OF A DEATH BENEFIT?
The Annuity provides a Death Benefit during its accumulation period. If the
Annuity is owned by one or more natural persons, the Death Benefit is payable
upon the first death of an Owner. IF THE ANNUITY IS OWNED BY AN ENTITY, THE
DEATH BENEFIT IS PAYABLE UPON THE ANNUITANT'S DEATH, IF THERE IS NO CONTINGENT
ANNUITANT. If a Contingent Annuitant was designated before the Annuitant's
death and the Annuitant dies, then the Contingent Annuitant becomes the
Annuitant and a Death Benefit will not be paid at that time. The person upon
whose death the Death Benefit is paid is referred to below as the "decedent."
BASIC DEATH BENEFIT
The Annuity provides a basic Death Benefit at no additional charge. The
Insurance Charge we deduct daily from your Account Value allocated to the
Sub-accounts is used, in part, to pay us for the risk we assume in providing
the basic Death Benefit guarantee under the Annuity. The Annuity also offers
three different optional Death Benefits that can be purchased for an additional
charge. The additional charge is deducted to compensate American Skandia for
providing increased insurance protection under the optional Death Benefits.
NOTWITHSTANDING THE ADDITIONAL PROTECTION PROVIDED UNDER THE OPTIONAL DEATH
BENEFITS, THE ADDITIONAL COST HAS THE IMPACT OF REDUCING THE NET PERFORMANCE OF
THE INVESTMENT OPTIONS.
The BASIC DEATH BENEFIT depends on the decedent's age on the date of
death:
If death occurs prior to the decedent's age 85: The Death Benefit is the
greater of:
- - The sum of all Purchase Payments less the sum of all proportional
withdrawals; and
- - The sum of your Account Value in the variable investment options and your
Interim Value in the Fixed Allocations.
If death occurs after the decedent's age 85 or older: The Death Benefit is
your Account Value in the variable investment options and your Interim Value in
the Fixed Allocations.
"PROPORTIONAL WITHDRAWALS" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn. For
example, a withdrawal of 50% of Account Value would be considered as a 50%
reduction in Purchase Payments for purposes of calculating the basic Death
Benefit.
OPTIONAL DEATH BENEFITS
Three optional Death Benefits are offered for purchase with your Annuity to
provide an enhanced level of protection for your beneficiaries.
CURRENTLY, THESE BENEFITS ARE ONLY OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE
RECEIVED REGULATORY APPROVAL AND MUST BE ELECTED AT THE TIME THAT YOU PURCHASE
YOUR ANNUITY. WE MAY, AT A LATER DATE, ALLOW EXISTING ANNUITY OWNERS TO PURCHASE
AN OPTIONAL DEATH BENEFIT SUBJECT TO OUR RULES AND ANY CHANGES OR RESTRICTIONS
IN THE BENEFITS. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS
ONCE APPROVED AND IF YOU PURCHASE YOUR ANNUITY AS PART OF AN EXCHANGE,
REPLACEMENT OR TRANSFER, IN WHOLE OR IN PART, FROM ANY OTHER ANNUITY WE ISSUE.
THE "COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT" MAY
ONLY BE ELECTED INDIVIDUALLY, AND CANNOT BE ELECTED WITH ANY OTHER OPTIONAL
DEATH BENEFIT.
ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT
The Enhanced Beneficiary Protection Optional Death Benefit can provide
additional amounts to your Beneficiary that may be used to offset federal and
state taxes payable on any taxable gains in your Annuity at the time of your
death. Whether this benefit is appropriate for you may depend on your
particular circumstances, including other financial resources that may be
available to your Beneficiary to pay taxes on your Annuity should you die
during the accumulation period. No benefit is payable if death occurs on or
after the Annuity Date.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT PROVIDES A
BENEFIT THAT IS PAYABLE IN ADDITION TO THE BASIC DEATH BENEFIT. If the Annuity
has one Owner, the Owner must be age 75 or less at the time the benefit is
purchased. If the Annuity has joint Owners, the oldest Owner must be age 75 or
less. If the Annuity is owned by an entity, the Annuitant must be age 75 or
less.
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Death Benefit continued
CALCULATION OF ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT
If you purchase the Enhanced Beneficiary Protection Optional Death Benefit, the
Death Benefit is calculated as follows:
1. the BASIC DEATH BENEFIT described above;
PLUS
2. 40% of your "GROWTH" under the Annuity, as defined below.
"GROWTH" means the sum of your Account Value in the variable investment
options and your Interim Value in the Fixed Allocations, minus the total of all
Purchase Payments reduced by the sum of all proportional withdrawals.
"PROPORTIONAL WITHDRAWALS" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT IS SUBJECT TO A
MAXIMUM OF 100% OF ALL PURCHASE PAYMENTS APPLIED TO THE ANNUITY AT LEAST 12
MONTHS PRIOR TO THE DEATH OF THE DECEDENT THAT TRIGGERS THE PAYMENT OF THE DEATH
BENEFIT
THE ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT DESCRIBED ABOVE IS
CURRENTLY BEING OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY
APPROVAL. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE
APPROVED. PLEASE SEE APPENDIX D FOR A DESCRIPTION OF THE ENHANCED BENEFICIARY
PROTECTION OPTIONAL DEATH BENEFIT OFFERED BEFORE NOVEMBER 18, 2002 IN THOSE
JURISDICTIONS WHERE WE RECEIVED REGULATORY APPROVAL. PLEASE REFER TO THE SECTION
ENTITLED "TAX CONSIDERATIONS" FOR A DISCUSSION OF SPECIAL TAX CONSIDERATIONS FOR
PURCHASERS OF THIS BENEFIT. THE ENHANCED BENEFICIARY PROTECTION DEATH BENEFIT IS
NOT AVAILABLE IF YOU ELECT "THE COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY
VALUE DEATH BENEFIT".
See Appendix B for examples of how the Enhanced Beneficiary Protection
Optional Death Benefit is calculated.
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT ("HAV")
If the Annuity has one Owner, the Owner must be age 79 or less at the time
Highest Anniversary Value Optional Death Benefit is purchased. If the Annuity
has joint Owners, the oldest Owner must be age 79 or less. If the Annuity is
owned by an entity, the Annuitant must be age 79 or less.
CERTAIN OF THE PORTFOLIOS OFFERED AS SUB-ACCOUNTS UNDER THE ANNUITY ARE
NOT AVAILABLE IF YOU ELECT THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT. IN
ADDITION, WE RESERVE THE RIGHT TO REQUIRE YOU TO USE CERTAIN ASSET ALLOCATION
MODEL(S) IF YOU ELECT THIS DEATH BENEFIT.
CALCULATION OF HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
The HAV Death Benefit depends on whether death occurs before or after the Death
Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value as of the Owner's date of death.
If the Owner dies on or after the Death Benefit Target Date, the Death
Benefit equals the greater of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value on the Death Benefit Target Date plus the sum
of all Purchase Payments less the sum of all proportional withdrawals since
the Death Benefit Target Date.
THE AMOUNT DETERMINED BY THIS CALCULATION IS INCREASED BY ANY PURCHASE
PAYMENTS RECEIVED AFTER THE OWNER'S DATE OF DEATH AND DECREASED BY ANY
PROPORTIONAL WITHDRAWALS SINCE SUCH DATE.
THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT DESCRIBED ABOVE IS CURRENTLY BEING
OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL.
CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. THE
HIGHEST ANNIVERSARY VALUE DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT "THE
COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE" OR THE "HIGHEST DAILY
VALUE DEATH BENEFIT". PLEASE SEE APPENDIX D FOR A DESCRIPTION OF THE GUARANTEED
MINIMUM DEATH BENEFIT OFFERED BEFORE NOVEMBER 18, 2002 IN THOSE JURISDICTIONS
WHERE WE RECEIVED REGULATORY APPROVAL.
Please refer to the definition of Death Benefit Target Date below. This
death benefit may not be an appropriate feature where the Owner's age is near
the age specified in the Death Benefit Target Date. This is because the benefit
may not have the same potential for growth as it otherwise would, since there
will be fewer contract anniversaries before the death benefit target date is
reached. The death benefit target date under this death benefit is earlier than
the death benefit target
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
date under the Combination 5% Roll-up and Highest Anniversary Value Death
Benefit for Owners who are age 76 or older when the contract is issued, which
may result in a lower value on the death benefit, since there will be fewer
contract anniversaries before the death benefit target date is reached.
See Appendix B for examples of how the Highest Anniversary Value Death
Benefit is calculated.
COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT
If the Annuity has one Owner, the Owner must be age 79 or less at the time the
Combination 5% Roll-up and HAV Optional Death Benefit is purchased. If the
Annuity has joint Owners, the oldest Owner must be age 79 or less. If the
Annuity is owned by an entity, the Annuitant must be age 79 or less.
CERTAIN OF THE PORTFOLIOS OFFERED AS SUB-ACCOUNTS UNDER THE ANNUITY ARE
NOT AVAILABLE IF YOU ELECT THE COMBINATION 5% ROLL-UP AND HAV DEATH BENEFIT. IN
ADDITION, WE RESERVE THE RIGHT TO REQUIRE YOU TO USE CERTAIN ASSET ALLOCATION
MODEL(S) IF YOU ELECT THIS DEATH BENEFIT.
CALCULATION OF THE COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE
DEATH BENEFIT
The Combination 5% Roll-up and HAV Death Benefit equals the greatest of:
1. the basic Death Benefit described above; and
2. the Highest Anniversary Value death benefit described above, and
3. 5% Roll-up described below.
The calculation of the 5% Roll-up depends on whether death occurs before
or after the Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date the 5% Roll up is
equal to:
- - all Purchase Payments increasing at an annual effective interest rate of 5%
starting on the date that each Purchase Payment is made and ending on the
Owner's date of death;
MINUS
- - the sum of all withdrawals, dollar for dollar up to 5% of the death
benefit's value as of the prior contract anniversary (or issue date if the
withdrawal is in the first contract year). Any withdrawals in excess of the
5% dollar for dollar limit are proportional.
If the Owner dies on or after the Death Benefit Target Date the 5% Roll-up
is equal to:
- - the 5% Roll-up value as of the Death Benefit Target Date increased by total
Purchase Payments made after the Death Benefit Target Date;
MINUS
- - the sum of all withdrawals which reduce the 5% Roll-up proportionally.
PLEASE REFER TO THE DEFINITIONS OF DEATH BENEFIT TARGET DATE BELOW. THIS
DEATH BENEFIT MAY NOT BE AN APPROPRIATE FEATURE WHERE THE OWNER'S AGE IS NEAR
THE AGE SPECIFIED IN THE DEATH BENEFIT TARGET DATE. THIS IS BECAUSE THE BENEFIT
MAY NOT HAVE THE SAME POTENTIAL FOR GROWTH AS IT OTHERWISE WOULD, SINCE THERE
WILL BE FEWER CONTRACT ANNIVERSARIES BEFORE THE DEATH BENEFIT TARGET DATE IS
REACHED.
THE COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT DESCRIBED
ABOVE IS CURRENTLY BEING OFFERED IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED
REGULATORY APPROVAL. CERTAIN TERMS AND CONDITIONS MAY DIFFER BETWEEN
JURISDICTIONS ONCE APPROVED. THE COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY
VALUE DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT THE ENHANCED BENEFICIARY
PROTECTION DEATH BENEFIT AND/OR THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT.
PLEASE SEE APPENDIX D FOR A DESCRIPTION OF THE GUARANTEED MINIMUM DEATH BENEFIT
OFFERED BEFORE NOVEMBER 18, 2002 IN THOSE JURISDICTIONS WHERE WE RECEIVED
REGULATORY APPROVAL.
See Appendix B for examples of how the Combination 5% Roll-up and Highest
Anniversary Value Death Benefit is calculated.
KEY TERMS USED WITH THE HIGHEST ANNIVERSARY VALUE DEATH BENEFIT AND THE
COMBINATION 5% ROLL-UP AND HIGHEST ANNIVERSARY VALUE DEATH BENEFIT:
- - The Death Benefit Target Date for the Highest Anniversary Value Death
Benefit is the contract anniversary on or after the 80th birthday of the
current Owner, the oldest of either joint Owner or the Annuitant, if entity
owned.
- - The Death Benefit Target Date for the Combination 5% Roll-up and HAV Death
Benefit is the later of the contract anniversary on or after the 80th
birthday of the current Owner, the oldest of either joint Owner or the
Annuitant, if entity owned, or five years after the Issue Date of the
Annuity.
- - The Highest Anniversary Value equals the highest of all previous
"Anniversary Values" less proportional withdrawals since such anniversary
and plus any Purchase Payments since such anniversary.
- - The Anniversary Value is the Account Value as of each anniversary of the
Issue Date of the Annuity. The Anniversary Value on the Issue Date is equal
to your Purchase Payment.
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Death Benefit continued
- - Proportional withdrawals are determined by calculating
the percentage of your Account Value that each prior withdrawal
represented when withdrawn. Proportional withdrawals result in a reduction
to the Highest Anniversary Value or 5% Roll-up value by reducing such
value in the same proportion as the Account Value was reduced by the
withdrawal as of the date the withdrawal occurred. For example, if your
Highest Anniversary Value or 5% Roll-up value is $125,000 and you
subsequently withdraw $10,000 at a time when your Account Value is equal
to $100,000 (a 10% reduction), when calculating the optional Death Benefit
we will reduce your Highest Anniversary Value ($125,000) by 10% or
$12,500.
HIGHEST DAILY VALUE DEATH BENEFIT ("HDV")
If the Annuity has one Owner, the Owner must be age 79 or less at the time the
Highest Daily Value Death Benefit is elected. If the Annuity has joint Owners,
the older Owner must be age 79 or less. If there are Joint Owners, death of the
Owner refers to the first to die of the Joint Owners. If the Annuity is owned by
an entity, the Annuitant must be age 79 or less and death of the Owner refers to
the death of the Annuitant.
IF YOU ELECT THIS BENEFIT, YOU MUST ALLOCATE YOUR ACCOUNT VALUE IN
ACCORDANCE WITH AN ELIGIBLE MODEL UNDER AN AVAILABLE ASSET ALLOCATION PROGRAM OR
IN ACCORDANCE WITH OTHER OPTIONS THAT WE MAY PERMIT. Because this benefit, once
elected, may not be terminated, you must keep your Account Value allocated to an
eligible model throughout the life of the Annuity. You may, however, switch from
one eligible model to another eligible model. Our asset allocation programs are
generally described in the "Are Any Asset Allocation Programs Available?"
section above. For further information on asset allocation programs, please
consult with your Investment Professional or call 1-800-752-6342.
The HDV Death Benefit depends on whether death occurs before or after the
Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the basic Death Benefit described above; and
2. the HDV as of the Owner's date of death.
If the Owner dies on or after the Death Benefit Target Date, the Death
Benefit equals the greater of:
1. the basic Death Benefit described above; and
2. the HDV on the Death Benefit Target Date plus the sum of all Purchase
Payments less the sum of all proportional withdrawals since the Death
Benefit Target Date.
The amount determined by this calculation is increased by any Purchase
Payments received after the Owner's date of death and decreased by any
proportional withdrawals since such date.
THE HIGHEST DAILY VALUE DEATH BENEFIT DESCRIBED ABOVE IS CURRENTLY BEING OFFERED
IN THOSE JURISDICTIONS WHERE WE HAVE RECEIVED REGULATORY APPROVAL. CERTAIN TERMS
AND CONDITIONS MAY DIFFER BETWEEN JURISDICTIONS ONCE APPROVED. THE HIGHEST DAILY
VALUE DEATH BENEFIT IS NOT AVAILABLE IF YOU ELECT THE GUARANTEED RETURN OPTION,
GUARANTEED RETURN OPTION PLUS, THE "COMBINATION 5% ROLL-UP AND HIGHEST
ANNIVERSARY VALUE" DEATH BENEFIT, OR THE HIGHEST ANNIVERSARY VALUE DEATH
BENEFIT. PLEASE SEE APPENDIX D FOR A DESCRIPTION OF THE GUARANTEED MINIMUM DEATH
BENEFIT OFFERED BEFORE NOVEMBER 18, 2002 IN THOSE JURISDICTIONS WHERE WE
RECEIVED REGULATORY APPROVAL.
KEY TERMS USED WITH THE HIGHEST DAILY VALUE DEATH BENEFIT:
- - The Death Benefit Target Date for the Highest Daily Value Death Benefit is
the later of the Annuity anniversary on or after the 80th birthday of the
current Owner, or the older of either the joint Owner or the Annuitant, if
entity owned, or five years after the Issue Date of the Annuity.
- - The Highest Daily Value equals the highest of all previous "Daily Values"
less proportional withdrawals since such date and plus any Purchase
Payments since such date.
- - The Daily Value is the Account Value as of the end of each Valuation Day.
The Daily Value on the Issue Date is equal to your Purchase Payment.
- - Proportional withdrawals are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
Proportional withdrawals result in a reduction to the Highest Daily Value
by reducing such value in the same proportion as the Account Value was
reduced by the withdrawal as of the date the withdrawal occurred. For
example, if your Highest Daily
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Value is $125,000 and you subsequently withdraw $10,000 at a time when your
Account Value is equal to $100,000 (a 10% reduction), when calculating the
optional Death Benefit we will reduce your Highest Daily Value ($125,000)
by 10% or $12,500.
Please see Appendix B to this prospectus for a hypothetical example of how
the HDV Death Benefit is calculated.
ANNUITIES WITH JOINT OWNERS
For Annuities with Joint Owners, the Death Benefits are calculated as shown
above except that the age of the oldest of the Joint Owners is used to
determine the Death Benefit Target Date. NOTE: If you and your spouse own the
Annuity jointly, we will pay the Death Benefit to the Beneficiary. If the sole
primary Beneficiary is the surviving spouse, then the surviving spouse can
elect to assume ownership of the Annuity and continue the contract instead of
receiving the Death Benefit.
ANNUITIES OWNED BY ENTITIES
For Annuities owned by an entity, the Death Benefits are calculated as shown
above except that the age of the Annuitant is used to determine the Death
Benefit Target Date. Payment of the Death Benefit is based on the death of the
Annuitant (or Contingent Annuitant, if applicable).
CAN I TERMINATE THE OPTIONAL DEATH BENEFITS? DO THE OPTIONAL DEATH BENEFITS
TERMINATE UNDER OTHER CIRCUMSTANCES?
You can terminate the Enhanced Beneficiary Protection Optional Death Benefit
and Highest Anniversary Value Optional Death Benefit at any time. The
"Combination 5% Roll-up and HAV Death Benefit" and the HDV Death Benefit may
not be terminated once elected. The optional Death Benefits will terminate
automatically on the Annuity Date. We may also terminate any optional Death
Benefit if necessary to comply with our interpretation of the Code and
applicable regulations.
WHAT ARE THE CHARGES FOR THE OPTIONAL DEATH BENEFITS?
We deduct a charge equal to 0.25% per year of the average daily net assets of
the Sub-accounts for each of the Highest Anniversary Value Death Benefit and
the Enhanced Beneficiary Protection Death Benefit and 0.50% of per year of the
average daily net assets of the Sub-accounts for the "Combination 5% Roll-up
and HAV Death Benefit" and the HDV Death Benefit. We deduct the charge for each
of these benefits to compensate American Skandia for providing increased
insurance protection under the optional Death Benefits.
Please refer to the section entitled "Tax Considerations" for additional
considerations in relation to the optional Death Benefit.
PAYMENT OF DEATH BENEFITS
PAYMENT OF DEATH BENEFIT TO BENEFICIARY
Except in the case of a spousal assumption as described below, in the event of
your death, the death benefit must be distributed:
- - as a lump sum amount at any time within five (5) years of the date of
death; or
- - as a series of annuity payments not extending beyond the life expectancy of
the Beneficiary or over the life of the Beneficiary. Payments under this
option must begin within one year of the date of death.
Unless you have made an election prior to death benefit proceeds becoming
due, a Beneficiary can elect to receive the Death Benefit proceeds as a series
of fixed annuity payments (annuity payment options 1-4) or as a series of
variable annuity payments (annuity payment options 1-3 or 5 and 6). See the
section entitled "What Types of Annuity Options are Available."
SPOUSAL BENEFICIARY -- ASSUMPTION OF ANNUITY
You may name your spouse as your Beneficiary. If you and your spouse own the
Annuity jointly, we assume that the sole primary Beneficiary will be the
surviving spouse unless you elect an alternative Beneficiary designation.
Unless you elect an alternative Beneficiary designation, the spouse Beneficiary
may elect to assume ownership of the Annuity instead of taking the Death
Benefit payment. Any Death Benefit (including any optional Death Benefits) that
would have been payable to the Beneficiary will become the new Account Value as
of the date we receive due proof of death and any required proof of a spousal
relationship. As of the date the assumption is effective, the surviving spouse
will have all the rights and benefits that would be available under the Annuity
to a new purchaser of the same attained age. For purposes of determining any
future Death Benefit for the surviving spouse, the new Account Value will be
considered as the initial Purchase Payment. Any additional Purchase Payments
applied after the date the assumption is effective will be subject to all
provisions of the Annuity.
See the section entitled "Managing Your Annuity -- Spousal Contingent
Annuitant" for a discussion of the treatment of a spousal Contingent Annuitant
in the case of the death of the Annuitant in an entity owned Annuity.
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Death Benefit continued
QUALIFIED BENEFICIARY CONTINUATION OPTION
The Code provides for alternative death benefit payment options when an Annuity
is used as an IRA, 403(b) or other "qualified investment" that requires Minimum
Distributions. Upon the Owner's death under an IRA, 403(b) or other "qualified
investment", a Beneficiary may generally elect to continue the Annuity and
receive Minimum Distributions under the Annuity instead of receiving the death
benefit in a single payment. The available payment options will depend on
whether the Owner died on or before the date he or she was required to begin
receiving Minimum Distributions under the Code and whether the Beneficiary is
the surviving spouse.
- - If death occurs BEFORE the date Minimum Distributions must begin under the
Code, the Death Benefit can be paid out in either a lump sum, within five
years from the date of death, or over the life or life expectancy of the
designated Beneficiary (as long as payments begin by December 31st of the
year following the year of death). However, if the spouse is the
Beneficiary, the Death Benefit can be paid out over the life or life
expectancy of the spouse with such payments beginning no earlier than
December 31st of the year following the year of death or December 31st of
the year in which the deceased would have reached age 70 1/2, which ever is
later.
- - If death occurs AFTER the date Minimum Distributions must begin under the
Code, the Death Benefit must be paid out at least as rapidly as under the
method then in effect.
A Beneficiary has the flexibility to take out more each year than required
under the Minimum Distribution rules. Until withdrawn, amounts in an IRA, 403(b)
or other "qualified investment" continue to be tax deferred. Amounts withdrawn
each year, including amounts that are required to be withdrawn under the Minimum
Distribution rules, are subject to tax. You may wish to consult a professional
tax advisor for tax advice as to your particular situation.
Upon election of this Qualified Beneficiary Continuation option:
- - the Annuity contract will be continued in the Owner's name, for the benefit
of the Beneficiary.
- - the Beneficiary will be charged at an amount equal to 1.40% daily against
the average daily assets allocated to the Sub-accounts.
- - the Account Value will be equal to any Death Benefit (including any
optional Death Benefit) that would have been payable to the Beneficiary if
they had taken a lump sum distribution.
- - the Beneficiary may request transfers among Sub-accounts, subject to the
same limitations and restrictions that applied to the Owner, except that
the Sub-accounts offered will be those offered under the Qualified
Beneficiary Continuation option at the time the option is elected.
- - the Fixed Allocations will be those offered under the Qualified Beneficiary
Continuation option at the time the option is elected.
- - no additional Purchase Payments can be applied to the Annuity.
- - other optional Benefits will be those offered under the Qualified
Beneficiary Continuation option at the time of election.
- - the basic Death Benefit and any optional Death Benefits elected by the
Owner will no longer apply to the Beneficiary.
- - the Beneficiary can request a withdrawal of all or a portion of the Account
Value at any time.
- - upon the death of the Beneficiary, any remaining Account Value will be paid
in a lump sum to the person(s) named by the Beneficiary.
- - all amounts in the Annuity must be paid out to the Beneficiary according to
the Minimum Distribution rules described above.
Your Beneficiary will be provided with a prospectus and settlement option
that will describe this option at the time he or she elects this option. Please
contact American Skandia for additional information on the availability,
restrictions and limitations that will apply to a Beneficiary under the
Qualified Beneficiary Continuation option.
ARE THERE ANY EXCEPTIONS TO THESE RULES FOR PAYING THE DEATH BENEFIT?
Yes, there are exceptions that apply no matter how your Death Benefit is
calculated. There are exceptions to the Death Benefit if the decedent was not
the Owner or Annuitant as of the Issue Date and did not become the Owner or
Annuitant due to the prior Owner's or Annuitant's death. Any Death Benefit
(including any optional Death Benefit) that applies will be suspended for a
two-year period from the date he or she first became Owner or Annuitant. After
the two-year suspension period is completed, the Death Benefit is the same as
if this person had been an Owner or Annuitant on the Issue Date.
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
WHEN DO YOU DETERMINE THE DEATH BENEFIT?
We determine the amount of the Death Benefit as of the date we receive "due
proof of death", any instructions we require to determine the method of payment
and any other written representations we require to determine the proper
payment of the Death Benefit to all Beneficiaries. "Due proof of death" may
include a certified copy of a death certificate, a certified copy of a decree
of a court of competent jurisdiction as to the finding of death or other
satisfactory proof of death. Upon our receipt of "due proof of death" we
automatically transfer the Death Benefit to the AST Money Market Sub-account
until we further determine the universe of eligible Beneficiaries. Once the
universe of eligible Beneficiaries has been determined each eligible
Beneficiary may allocate his or her eligible share of the Death Benefit to the
Sub-accounts according to our rules.
Each Beneficiary must make an election as to the method they wish to
receive their portion of the Death Benefit. Absent an election of a Death
Benefit payment method, no Death Benefit can be paid to the Beneficiary. We may
require written acknowledgment of all named Beneficiaries before we can pay the
Death Benefit. DURING THE PERIOD FROM THE DATE OF DEATH UNTIL WE RECEIVE ALL
REQUIRED PAPER WORK, THE AMOUNT OF THE DEATH BENEFIT MAY BE SUBJECT TO MARKET
FLUCTUATIONS.
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Valuing Your Investment
HOW IS MY ACCOUNT VALUE DETERMINED?
During the accumulation period, the Annuity has an Account Value. The Account
Value is determined separately for each Sub-account allocation and for each
Fixed Allocation. The Account Value is the sum of the values of each
Sub-account allocation and the value of each Fixed Allocation. When determining
the Account Value on any day other than a Fixed Allocation's Maturity Date, the
Account Value may include any Market Value Adjustment that would apply to a
Fixed Allocation (if withdrawn or transferred) on that day.
WHAT IS THE SURRENDER VALUE OF MY ANNUITY?
The Surrender Value of your Annuity is the value available to you on any day
during the accumulation period. The Surrender Value is defined under "Glossary
of Terms" above.
HOW AND WHEN DO YOU VALUE THE SUB-ACCOUNTS?
When you allocate Account Value to a Sub-account, you are purchasing units of
the Sub-account. Each Sub-account invests exclusively in shares of an
underlying Portfolio. The value of the Units fluctuates with the market
fluctuations of the Portfolios. The value of the Units also reflects the daily
accrual for the Insurance Charge and if you elected one or more optional
benefits whose annual charge is deducted daily, the additional charge made for
such benefits. There may be several different Unit Prices for each Sub-account
to reflect the Insurance Charge and the charges for any optional benefits. The
Unit Price for the Units you purchase will be based on the total charges for
the benefits that apply to your Annuity. See the section entitled "What Happens
to My Units When There is a Change in Daily Asset-Based Charges?" for a
detailed discussion of how Units are purchased and redeemed to reflect changes
in the daily charges that apply to your Annuity.
Each Valuation Day, we determine the price for a Unit of each Sub-account,
called the "Unit Price." The Unit Price is used for determining the value of
transactions involving Units of the Sub-accounts. We determine the number of
Units involved in any transaction by dividing the dollar value of the
transaction by the Unit Price of the Sub-account as of the Valuation Day.
EXAMPLE
Assume you allocate $5,000 to a Sub-account. On the Valuation Day you make the
allocation, the Unit Price is $14.83. Your $5,000 buys 337.154 Units of the
Sub-account. Assume that later, you wish to transfer $3,000 of your Account
Value out of that Sub-account and into another Sub-account. On the Valuation
Day you request the transfer, the Unit Price of the original Sub-account has
increased to $16.79. To transfer $3,000, we sell 178.677 Units at the current
Unit Price, leaving you 158.477 Units. We then buy $3,000 of Units of the new
Sub-account at the Unit Price of $17.83. You would then have 168.255 Units of
the new Sub-account.
HOW DO YOU VALUE FIXED ALLOCATIONS?
During the Guarantee Period, we use the concept of an Interim Value. The
Interim Value can be calculated on any day and is equal to the initial value
allocated to a Fixed Allocation plus all interest credited to a Fixed
Allocation as of the date calculated. The Interim Value does not include the
impact of any Market Value Adjustment. If you made any transfers or withdrawals
from a Fixed Allocation, the Interim Value will reflect the withdrawal of those
amounts and any interest credited to those amounts before they were withdrawn.
To determine the Account Value of a Fixed Allocation on any day more than 30
days prior to its Maturity Date, we multiply the Account Value of the Fixed
Allocation times the Market Value Adjustment factor.
WHEN DO YOU PROCESS AND VALUE TRANSACTIONS?
American Skandia is generally open to process financial transactions on those
days that the New York Stock Exchange (NYSE) is open for trading. There may be
circumstances where the NYSE does not open on a regularly scheduled date or
time or closes at an earlier time than scheduled (normally 4:00 p.m. EST).
Financial transactions requested before the close of the NYSE which meet our
requirements will be processed according to the value next determined following
the close of business. Financial transactions requested on a non-business day
or after the close of the NYSE will be processed based on the value next
computed on the next Valuation day. There may be circumstances when the opening
or closing time of the NYSE is different than other major stock exchanges, such
as NASDAQ or the American Stock Exchange. Under such circumstances, the closing
time of the NYSE will be used when valuing and processing transactions.
There may be circumstances where the NYSE is open, however, due to
inclement weather, natural disaster or other circumstances beyond our control,
our offices may be closed or our business processing capabilities may be
restricted. Under those circumstances, your Account Value may fluctuate based
on changes in the Unit Values, but you may not be able to transfer Account
Value, or make a purchase or redemption request.
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
The NYSE is closed on the following nationally recognized holidays: New
Year's Day, Martin Luther King, Jr. Day, Washington's Birthday, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas. On those
dates, we will not process any financial transactions involving purchase or
redemption orders.
American Skandia will also not process financial transactions involving
purchase or redemption orders or transfers on any day that:
- - trading on the NYSE is restricted;
- - an emergency exists making redemption or valuation of securities held in
the separate account impractical; or
- - the SEC, by order, permits the suspension or postponement for the
protection of security holders.
INITIAL PURCHASE PAYMENTS: We are required to allocate your initial
Purchase Payment to the Sub-accounts within two (2) business days after we
receive all of our requirements at our office to issue the Annuity. If we do
not have all the required information to allow us to issue your Annuity, we may
retain the Purchase Payment while we try to reach you or your representative to
obtain all of our requirements. If we are unable to obtain all of our required
information within five (5) business days, we are required to return the
Purchase Payment to you at that time, unless you specifically consent to our
retaining the Purchase Payment while we gather the required information. Once
we obtain the required information, we will invest the Purchase Payment and
issue the Annuity within two (2) business days. During any period that we are
trying to obtain the required information, your money is not invested.
ADDITIONAL PURCHASE PAYMENTS: We will apply any additional Purchase
Payments on the Valuation Day that we receive the Purchase Payment at our
office with satisfactory allocation instructions. We will allocate any
additional Purchase Payments you make according to your most recent allocation
instructions if none are provided.
SCHEDULED TRANSACTIONS: "Scheduled" transactions include transfers under a
Dollar Cost Averaging, rebalancing, or asset allocation program, Systematic
Withdrawals, Minimum Distributions or annuity payments. Scheduled transactions
are processed and valued as of the date they are scheduled, unless the
scheduled day is not a Valuation Day. In that case, the transaction will be
processed and valued on the next Valuation Day, unless the next Valuation Day
falls in the subsequent calendar year, in which case the transaction will be
processed and valued on the prior Valuation Day.
UNSCHEDULED TRANSACTIONS: "Unscheduled" transactions include any other
non-scheduled transfers and requests for Partial Withdrawals or Surrenders.
Unscheduled transactions are processed and valued as of the Valuation Day we
receive the request at our Office and have all of the required information.
DEATH BENEFITS: Death Benefit claims require our review and evaluation
before processing. We price such transactions as of the date we receive at our
Office all supporting documentation we require for such transactions and that
are satisfactory to us.
TRANSACTIONS IN PROFUNDS VP SUB-ACCOUNTS: Generally, purchase or
redemption orders or transfer requests must be received by us by no later than
the close of the NYSE to be processed on the current Valuation Day. However,
any purchase or redemption order or transfer request involving the ProFunds VP
Sub-accounts must be received by us no later than one hour prior to any
announced closing of the applicable securities exchange (generally, 3:00 p.m.
Eastern time) to be processed on the current Valuation Day. The "cut-off" time
for such financial transactions involving a ProFunds VP Sub-account will be
extended to 1/2 hour prior to any announced closing (generally, 3:30 p.m.
Eastern time) for transactions submitted electronically through American
Skandia's Internet website (www.americanskandia.prudential.com). You cannot
request a transaction involving the purchase, redemption or transfer of Units
in one of the ProFunds VP Sub-accounts between the applicable "cut-off" time
and 4:00 p.m. Transactions received after 4:00 p.m. will be treated as received
by us on the next Valuation Day.
WHAT HAPPENS TO MY UNITS WHEN THERE IS A CHANGE IN DAILY ASSET-BASED CHARGES?
TERMINATION OF OPTIONAL BENEFITS: Except for the Guaranteed Minimum Income
Benefit, the Combination 5% Roll-up and Highest Anniversary Value Death Benefit
and the Highest Daily Value Death Benefit which cannot be terminated by the
owner once elected, if any optional benefit terminates, we will no longer
deduct the charge we apply to purchase the optional benefit. Certain optional
benefits may be added after you have purchased your Annuity. On the date a
charge no longer applies or a charge for an optional benefit begins to be
deducted, your Annuity will become subject to a different daily asset-based
charge. This charge may result in the number of Units attributed to your
Annuity and the value of those Units being different than it was before the
change; however, the adjustment in the number of Units and Unit Price will not
affect your Account Value (although the change in charges that are deducted
will affect your Account Value).
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Tax Considerations
The tax considerations associated with the annuity vary depending on whether the
contract is (i) owned by an individual and not associated with a tax-favored
retirement plan (including contracts held by a non-natural person, such as a
trust acting as an agent for a natural person), or (ii) held under a tax-favored
retirement plan. We discuss the tax considerations for these categories of
contracts below. The discussion is general in nature and describes only federal
income tax law (not state or other tax laws). It is based on current law and
interpretations, which may change. The discussion includes a description of
certain spousal rights under the contract and under tax-qualified plans. Our
administration of such spousal rights and related tax reporting accords with our
understanding of the Defense of Marriage Act (which defines a "marriage" as a
legal union between a man and a woman and a "spouse" as a person of the opposite
sex). The information provided is not intended as tax advice. You should consult
with a qualified tax advisor for complete information and advice. References to
purchase payments below relates to your cost basis in your contract. Generally,
your cost basis in a contract not associated with a tax-favored retirement plan
is the amount you pay into your contract, or into annuities exchanged for your
contract, on an after-tax basis less any withdrawals of such payments.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA or 403(b) account, which can hold other permissible assets other than the
annuity. The terms and administration of the trust or custodial account in
accordance with the laws and regulations for IRAs or 403(b)s, as applicable,
are the responsibility of the applicable trustee or custodian.
CONTRACTS OWNED BY INDIVIDUALS (NOT ASSOCIATED WITH TAX-FAVORED RETIREMENT
PLANS)
TAXES PAYABLE BY YOU
We believe the contract is an annuity contract for tax purposes. Accordingly,
as a general rule, you should not pay any tax until you receive money under the
contract.
Generally, annuity contracts issued by the same company (and affiliates)
to you during the same calendar year must be treated as one annuity contract
for purposes of determining the amount subject to tax under the rules described
below.
It is possible that the Internal Revenue Service (IRS) would assert that
some or all of the charges for the optional benefits under the contract should
be treated for federal income tax purposes as a partial withdrawal from the
contract. If this were the case, the charge for this benefit could be deemed a
withdrawal and treated as taxable to the extent there are earnings in the
contract. Additionally, for owners under age 59 1/2, the taxable income
attributable to the charge for the benefit could be subject to a tax penalty.
If the IRS determines that the charges for one or more benefits under the
contract are taxable withdrawals, then the sole or surviving owner will be
provided with a notice from us describing available alternatives regarding
these benefits.
If you choose to defer the Annuity Date beyond the default date for your
Annuity, the IRS may not consider your contract to be an annuity under the tax
law. For more information, see "How and When Do I Choose the Annuity Payment
Option?".
TAXES ON WITHDRAWALS AND SURRENDER
If you make a withdrawal from your contract or surrender it before annuity
payments begin, the amount you receive will be taxed as ordinary income, rather
than as return of purchase payments, until all gain has been withdrawn. You
will generally be taxed on any withdrawals from the contract while you are
alive even if the withdrawal is paid to someone else.
If you assign or pledge all or part of your contract as collateral for a
loan, the part assigned generally will be treated as a withdrawal.
If you transfer your contract for less than full consideration, such as by
gift, you will trigger tax on any gain in the contract. This rule does not
apply if you transfer the contract to your spouse or under most circumstances
if you transfer the contract incident to divorce.
TAXES ON ANNUITY PAYMENTS
A portion of each annuity payment you receive will be treated as a partial
return of your purchase payments and will not be taxed. The remaining portion
will be taxed as ordinary income. Generally, the nontaxable portion is
determined by multiplying the annuity payment you receive by a fraction, the
numerator of which is your purchase payments (less any amounts previously
received tax-free) and the denominator of which is the total expected payments
under the contract.
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
After the full amount of your purchase payments have been recovered
tax-free, the full amount of the annuity payments will be taxable. If annuity
payments stop due to the death of the annuitant before the full amount of your
purchase payments have been recovered, a tax deduction may be allowed for the
unrecovered amount.
TAX PENALTY ON WITHDRAWALS AND ANNUITY PAYMENTS
Any taxable amount you receive under your contract may be subject to a 10% tax
penalty. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled;
- - generally the amount paid or received is in the form of substantially equal
payments not less frequently than annually (Please note that substantially
equal payments must continue until the later of reaching age 59 1/2 or 5
years. Modification of payments during that time period will result in
retroactive application of the 10% tax penalty.); or
- - the amount received is paid under an immediate annuity contract (in which
annuity payments begin within one year of purchase).
Special Rules in Relation to Tax-Free Exchanges Under Section 1035
Section 1035 of the Internal Revenue Code of 1986, as amended (Code) permits
certain tax-free exchanges of a life insurance, annuity or endowment contract
for an annuity. If the annuity is purchased through a tax-free exchange of a
life insurance, annuity or endowment contract that was purchased prior to
August 14, 1982, then any purchase payments made to the original contract prior
to August 14, 1982 will be treated as made to the new contract prior to that
date. (See Federal Tax Status section in the Statement of Additional
Information.)
Partial surrenders may be treated in the same way as tax-free 1035
exchanges of entire contracts, therefore avoiding current taxation of any gains
in the contract as well as the 10% tax penalty on pre-age 59 1/2 withdrawals.
The IRS has reserved the right to treat transactions it considers abusive as
ineligible for this favorable partial 1035 exchange treatment. We do not know
what transactions may be considered abusive. For example we do not know how the
IRS may view early withdrawals or annuitizations after a partial exchange. In
addition, it is unclear how the IRS will treat a partial exchange from a life
insurance, endowment, or annuity contract into an immediate annuity. As of the
date of this prospectus, we will accept a partial 1035 exchange from a
non-qualified annuity into an immediate annuity as a "tax-free" exchange for
future tax reporting purposes, except to the extent that we, as a reporting and
withholding agent, believe that we would be expected to deem the transaction to
be abusive. However, some insurance companies may not recognize these partial
surrenders as tax-free exchanges and may report them as taxable distributions
to the extent of any gain distributed as well as subjecting the taxable portion
of the distribution to the 10% tax penalty. We strongly urge you to discuss any
transaction of this type with your tax advisor before proceeding with the
transaction.
TAXES PAYABLE BY BENEFICIARIES
The death benefit options are subject to income tax to the extent the
distribution exceeds the cost basis in the contract. The value of the death
benefit, as determined under federal law, is also included in the owner's
estate.
Generally, the same tax rules described above would also apply to amounts
received by your beneficiary. Choosing any option other than a lump sum death
benefit may defer taxes. Certain minimum distribution requirements apply upon
your death, as discussed further below.
Tax consequences to the beneficiary vary among the death benefit payment
options.
- - Choice 1: the beneficiary is taxed on earnings in the contract.
- - Choice 2: the beneficiary is taxed as amounts are withdrawn (in this case
earnings are treated as being distributed first).
- - Choice 3: the beneficiary is taxed on each payment (part will be treated as
earnings and part as return of premiums).
CONSIDERATIONS FOR CONTINGENT ANNUITANTS: There may be adverse tax
consequences if a Contingent Annuitant succeeds an Annuitant when the Annuity
is owned by a trust that is neither tax exempt nor qualifies for preferred
treatment under certain sections of the Code. In general, the Code is designed
to prevent indefinite deferral of tax. Continuing the benefit of tax deferral
by naming one or more Contingent Annuitants when the Annuity is owned by a
non-qualified trust might be deemed an attempt to extend the tax deferral for
an indefinite period. Therefore, adverse tax treatment may depend on the terms
of the trust, who is named as Contingent Annuitant, as well as the particular
facts and circumstances. You should consult your tax advisor before naming a
Contingent Annuitant if you expect to use an Annuity in such a fashion.
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Tax Considerations continued
REPORTING AND WITHHOLDING ON DISTRIBUTIONS
Taxable amounts distributed from your annuity contracts are subject to federal
and state income tax reporting and withholding. In general, we will withhold
federal income tax from the taxable portion of such distribution based on the
type of distribution. In the case of an annuity or similar periodic payment, we
will withhold as if you are a married individual with 3 exemptions unless you
designate a different withholding status. In the case of all other
distributions, we will withhold at a 10% rate. You may generally elect not to
have tax withheld from your payments. An election out of withholding must be
made on forms that we provide.
State income tax withholding rules vary and we will withhold based on the
rules of your State of residence. Special tax rules apply to withholding for
nonresident aliens, and we generally withhold income tax for nonresident aliens
at a 30% rate. A different withholding rate may be applicable to a nonresident
alien based on the terms of an existing income tax treaty between the United
States and the nonresident alien's country. Please refer to the discussion
below regarding withholding rules for tax favored plans (for example, an IRA).
Regardless of the amount withheld by us, you are liable for payment of
federal and state income tax on the taxable portion of annuity distributions.
You should consult with your tax advisor regarding the payment of the correct
amount of these income taxes and potential liability if you fail to pay such
taxes.
ANNUITY QUALIFICATION
Diversification And Investor Control. In order to qualify for the tax rules
applicable to annuity contracts described above, the assets underlying the
variable investment options of the annuity contract must be diversified,
according to certain rules. We believe these diversification rules will be met.
An additional requirement for qualification for the tax treatment
described above is that we, and not you as the contract owner, must have
sufficient control over the underlying assets to be treated as the owner of the
underlying assets for tax purposes. While we also believe these investor
control rules will be met, 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. It is unclear whether such
guidelines, if in fact promulgated, would have retroactive effect. It is also
unclear what effect, if any, such guidelines may have on transfers between the
investment options offered pursuant to this Prospectus. We will take any
action, including modifications to your Annuity or the investment options,
required to comply with such guidelines if promulgated.
Please refer to the Statement of Additional information for further
information on these Diversification and Investor Control issues.
Required Distributions Upon Your Death. Upon your death, certain
distributions must be made under the contract. The required distributions
depend on whether you die before you start taking annuity payments under the
contract or after you start taking annuity payments under the contract.
If you die on or after the annuity date, the remaining portion of the
interest in the contract must be distributed at least as rapidly as under the
method of distribution being used as of the date of death.
If you die before the annuity date, the entire interest in the contract
must be distributed within 5 years after the date of death. However, if a
periodic payment option is selected by your designated beneficiary and if such
payments begin within 1 year of your death, the value of the contract may be
distributed over the beneficiary's life or a period not exceeding the
beneficiary's life expectancy. Your designated beneficiary is the person to
whom benefit rights under the contract pass by reason of death, and must be a
natural person in order to elect a periodic payment option based on life
expectancy or a period exceeding five years.
If the contract is payable to (or for the benefit of) your surviving
spouse, that portion of the contract may be continued with your spouse as the
owner.
Changes In The Contract. We reserve the right to make any changes we deem
necessary to assure that the contract qualifies as an annuity contract for tax
purposes. Any such changes will apply to all contract owners and you will be
given notice to the extent feasible under the circumstances.
ADDITIONAL INFORMATION
You should refer to the Statement of Additional Information if:
- - The contract is held by a corporation or other entity instead of by an
individual or as agent for an individual.
- - Your contract was issued in exchange for a contract containing purchase
payments made before August 14, 1982.
- - You transfer your contract to, or designate, a beneficiary who is either
37 1/2 years younger than you or a grandchild.
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- - You purchased more than one annuity contract from the same insurer within
the same calendar year (other than contracts held by tax favored plans).
CONTRACTS HELD BY TAX FAVORED PLANS
The following discussion covers annuity contracts held under tax-favored
retirement plans.
Currently, the contract may be purchased for use in connection with
individual retirement accounts and annuities (IRAs) which are subject to
Sections 408(a), 408(b) and 408A of the Code. In addition, this contract may be
purchased for use in connection with a corporate Pension and Profit-sharing
plan (subject to 401(a) of the Code), H.R. 10 plans (also known as Keogh Plans,
subject to 401(a) of the Code), Tax Sheltered Annuities (subject to 403(b) of
the Code, also known as Tax Deferred Annuities or TDAs), and Section 457 plans
(subject to 457 of the Code). This description assumes that you have satisfied
the requirements for eligibility for these products.
This contract may also be purchased as a non-qualified annuity (i.e., a
contract not held under a tax-favored retirement plan) by a trust or custodial
IRA or 403(b) account, which can hold other permissible assets other than the
annuity. The terms and administration of the trust or custodial account in
accordance with the laws and regulations for IRAs or 403(b)s, as applicable,
are the responsibility of the applicable trustee or custodian.
You should be aware that tax favored plans such as IRAs generally provide
income tax deferral regardless of whether they invest in annuity contracts.
This means that when a tax favored plan invests in an annuity contract, it
generally does not result in any additional tax benefits (such as income tax
deferral and income tax free transfers).
TYPES OF TAX FAVORED PLANS
IRAs. If you buy a contract for use as an IRA, we will provide you a copy of
the prospectus and contract. The "IRA Disclosure Statement" contains
information about eligibility, contribution limits, tax particulars, and other
IRA information. In addition to this information (some of which is summarized
below), the IRS requires that you have a "free look" after making an initial
contribution to the contract. During this time, you can cancel the contract by
notifying us in writing, and we will refund all of the purchase payments under
the contract (or, if provided by applicable state law, the amount credited
under the contract, if greater), less any applicable federal and state income
tax withholding.
Contributions Limits/Rollovers. Because of the way the contract is
designed, you may purchase a contract for an IRA in connection with a
"rollover" of amounts from a qualified retirement plan or transfer from another
IRA. In 2005 the limit is $4,000; increasing to $5,000 in 2008. After 2008 the
contribution amount will be indexed for inflation. The tax law also provides
for a catch-up provision for individuals who are age 50 and above. These
taxpayers will be permitted to contribute an additional $500, increasing to
$1,000 in 2006 and years thereafter.
The "rollover" rules under the Code are fairly technical; however, an
individual (or his or her surviving spouse) may generally "roll over" certain
distributions from tax favored retirement plans (either directly or within 60
days from the date of these distributions) if he or she meets the requirements
for distribution. Once you buy the contract, you can make regular IRA
contributions under the contract (to the extent permitted by law). However, if
you make such regular IRA contributions, you should note that you will not be
able to treat the contract as a "conduit IRA," which means that you will not
retain possible favorable tax treatment if you subsequently "roll over" the
contract funds originally derived from a qualified retirement plan or TDA into
another Section 401(a) plan or TDA.
Required Provisions. Contracts that are IRAs (or endorsements that are
part of the contract) must contain certain provisions:
- - You, as owner of the contract, must be the "annuitant" under the contract
(except in certain cases involving the division of property under a decree
of divorce);
- - Your rights as owner are non-forfeitable;
- - You cannot sell, assign or pledge the contract;
- - The annual contribution you pay cannot be greater than the maximum amount
allowed by law, including catch-up contributions if applicable (which does
not include any rollover amounts);
- - The date on which annuity payments must begin cannot be later than April
1st of the calendar year after the calendar year you turn age 70 1/2; and
- - Death and annuity payments must meet "minimum distribution requirements"
described below.
Usually, the full amount of any distribution from an IRA (including a
distribution from this contract) which is not a rollover is taxable. As taxable
income, these distributions are subject to the general tax withholding rules
described earlier. In addition to this normal tax liability, you may also be
liable for the following, depending on your actions:
- - A 10% "early distribution penalty" described below;
- - Liability for "prohibited transactions" if you, for example, borrow against
the value of an IRA; or
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Tax Considerations continued
- - Failure to take a minimum distribution also described below.
SEPs. SEPs are a variation on a standard IRA, and contracts issued to a
SEP must satisfy the same general requirements described under IRAs (above).
There are, however, some differences:
- - If you participate in a SEP, you generally do not include in income any
employer contributions made to the SEP on your behalf up to the lesser of
(a) $42,000 in 2005 or (b) 25% of the employee's earned income (not
including contribution as "earned income" for these purposes). However, for
these purposes, compensation in excess of certain limits established by the
IRS will not be considered. In 2005, this limit is $210,000;
- - SEPs must satisfy certain participation and nondiscrimination requirements
not generally applicable to IRAs; and
- - SEPs for small employers permit salary deferrals up to $14,000 in 2005 with
the employer making these contributions to the SEP. However, no new "salary
reduction" or "SARSEPs" can be established after 1996. Individuals
participating in a SARSEP who are age 50 or above by the end of the year
will be permitted to contribute an additional $4,000 in 2005, increasing to
$5,000 in 2006. Thereafter, the amount is indexed for inflation.
You will also be provided the same information, and have the same "free
look" period, as you would have if you purchased the contract for a standard
IRA.
ROTH IRAs. Like standard IRAs, income within a Roth IRA accumulates
tax-free, and contributions are subject to specific limits. Roth IRAs have,
however, the following differences:
- - Contributions to a Roth IRA cannot be deducted from your gross income;
- - "Qualified distributions" from a Roth IRA are excludable from gross income.
A "qualified distribution" is a distribution that satisfies two
requirements: (1) the distribution must be made (a) after the owner of the
IRA attains age 59 1/2; (b) after the owner's death; (c) due to the owner's
disability; or (d) for a qualified first time homebuyer distribution within
the meaning of Section 72(t)(2)(F) of the Code; and (2) the distribution
must be made in the year that is at least five tax years after the first
year for which a contribution was made to any Roth IRA established for the
owner or five years after a rollover, transfer, or conversion was made from
a traditional IRA to a Roth IRA. Distributions from a Roth IRA that are not
qualified distributions will be treated as made first from contributions
and then from earnings, and taxed generally in the same manner as
distributions from a traditional IRA.
- - If eligible (including meeting income limitations and earnings
requirements), you may make contributions to a Roth IRA after attaining age
70 1/2, and distributions are not required to begin upon attaining such age
or at any time thereafter.
Because of the way the contract is designed, you may purchase a contract
for a Roth IRA in connection with a "rollover" of amounts of another
traditional IRA, conduit IRA, SEP, SIMPLE-IRA or Roth IRA. The Code permits
persons who meet certain income limitations (generally, adjusted gross income
under $100,000), and who receive certain qualifying distributions from such
non-Roth IRAs, to directly rollover or make, within 60 days, a "rollover" of
all or any part of the amount of such distribution to a Roth IRA which they
establish. This conversion triggers current taxation (but is not subject to a
10% early distribution penalty). Once the contract has been purchased, regular
Roth IRA contributions will be accepted to the extent permitted by law.
TDAs. You may own a TDA generally if you are either an employer or
employee of a tax-exempt organization (as defined under Code Section 501
(c)(3)) or a public educational organization, and you may make contributions to
a TDA so long as the employee's rights to the annuity are nonforfeitable.
Contributions to a TDA, and any earnings, are not taxable until distribution.
You may also make contributions to a TDA under a salary reduction agreement,
generally up to a maximum of $14,000 in 2005. Individuals participating in a
TDA who are age 50 or above by the end of the year will be permitted to
contribute an additional $4,000 in 2005, increasing to $5,000 in 2006.
Thereafter, the amount is indexed for inflation. Further, you may roll over TDA
amounts to another TDA or an IRA. You may also roll over TDA amounts to a
qualified retirement plan, a SEP and a 457 government plan. A contract may only
qualify as a TDA if distributions (other than "grandfathered" amounts held as
of December 31, 1988) may be made only on account of:
- - Your attainment of age 59 1/2;
- - Your severance of employment;
- - Your death;
- - Your total and permanent disability; or
- - Hardship (under limited circumstances, and only related to salary deferrals
and any earnings attributable to these amounts).
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AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
In any event, you must begin receiving distributions from your TDA by April
1st of the calendar year after the calendar year you turn age 70 1/2 or retire,
whichever is later.
These distribution limits do not apply either to transfers or exchanges of
investments under the contract, or to any "direct transfer" of your interest in
the contract to another TDA or to a mutual fund "custodial account" described
under Code Section 403(b)(7).
Employer contributions to TDAs are subject to the same general
contribution, nondiscrimination, and minimum participation rules applicable to
"qualified" retirement plans.
MINIMUM DISTRIBUTION REQUIREMENTS AND PAYMENT OPTION
If you hold the contract under an IRA (or other tax-favored plan), IRS minimum
distribution requirements must be satisfied. This means that generally payments
must start by April 1 of the year after the year you reach age 70 1/2 and must
be made for each year thereafter. The amount of the payment must at least equal
the minimum required under the IRS rules. Several choices are available for
calculating the minimum amount. More information on the mechanics of this
calculation is available on request. Please contact us at a reasonable time
before the IRS deadline so that a timely distribution is made. Please note that
there is a 50% tax penalty on the amount of any minimum distribution not made
in a timely manner.
Effective in 2006, in accordance with recent changes in laws and
regulations, required minimum distributions will be calculated based on the sum
of the contract value and the actuarial value of any additional death benefits
and benefits from optional riders that you have purchased under the contract.
As a result, the required minimum distributions may be larger than if the
calculation were based on the contract value only, which may in turn result in
an earlier (but not before the required beginning date) distribution under the
Contract and an increased amount of taxable income distributed to the contract
owner, and a reduction of death benefits and the benefits of any optional
riders.
You can use the Minimum Distribution option to satisfy the IRS minimum
distribution requirements for this contract without either beginning annuity
payments or surrendering the contract. We will distribute to you this minimum
distribution amount, less any other partial withdrawals that you made during the
year.
Although the IRS rules determine the required amount to be distributed from
your IRA each year, certain payment alternatives are still available to you. If
you own more than one IRA, you can choose to satisfy your minimum distribution
requirement for each of your IRAs by withdrawing that amount from any of your
IRAs.
PENALTY FOR EARLY WITHDRAWALS
You may owe a 10% tax penalty on the taxable part of distributions received from
an IRA, SEP, Roth IRA, TDA or qualified retirement plan before you attain age 59
1/2. Amounts are not subject to this tax penalty if:
- - the amount is paid on or after you reach age 59 1/2 or die;
- - the amount received is attributable to your becoming disabled; or
- - generally the amount paid or received is in the form of substantially equal
payments not less frequently than annually (Please note that substantially
equal payments must continue until the later of reaching age 59 1/2 or 5
years. Modification of payments during that time period will result in
retroactive application of the 10% tax penalty.)
Other exceptions to this tax may apply. You should consult your tax
advisor for further details.
WITHHOLDING
Unless a distribution is an eligible rollover distribution that is "directly"
rolled over into another qualified plan, IRA (including the IRA variations
described above), SEP, 457 government plan or TDA, we will withhold federal
income tax at the rate of 20%. This 20% withholding does not apply to
distributions from IRAs and Roth IRAs. For all other distributions, unless you
elect otherwise, we will withhold federal income tax from the taxable portion
of such distribution at an appropriate percentage. The rate of withholding on
annuity payments where no mandatory withholding is required is determined on
the basis of the withholding certificate that you file with us. If you do not
file a certificate, we will automatically withhold federal taxes on the
following basis:
- - For any annuity payments not subject to mandatory withholding, you will
have taxes withheld by us as if you are a married individual, with 3
exemptions; and
- - For all other distributions, we will withhold at a 10% rate.
We will provide you with forms and instructions concerning the right to
elect that no amount be withheld from payments in the ordinary course. However,
you should know that, in any event, you are liable for payment of federal
income taxes on the taxable portion of the distributions, and you should
consult with your tax advisor to find out more information on your potential
liability if you fail to pay such taxes. There may be additional state income
tax withholding requirements.
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Tax Considerations continued
ERISA DISCLOSURE/REQUIREMENTS
ERISA (the "Employee Retirement Income Security Act of 1974") and the Code
prevents a fiduciary and other "parties in interest" with respect to a plan
(and, for these purposes, an IRA would also constitute a "plan") from receiving
any benefit from any party dealing with the plan, as a result of the sale of
the contract. Administrative exemptions under ERISA generally permit the sale
of insurance/annuity products to plans, provided that certain information is
disclosed to the person purchasing the contract. This information has to do
primarily with the fees, charges, discounts and other costs related to the
contract, as well as any commissions paid to any agent selling the contract.
Information about any applicable fees, charges, discounts, penalties or
adjustments may be found in the applicable sections of this Prospectus.
Information about sales representatives and commissions may be found in
the sections of this Prospectus addressing distribution of the Annuity.
Please consult your tax advisor if you have any additional questions.
SPOUSAL CONSENT RULES FOR RETIREMENT PLANS -- QUALIFIED CONTRACTS
If you are married at the time your payments commence, you may be required by
federal law to choose an income option that provides survivor annuity income to
your spouse, unless your spouse waives that right. Similarly, if you are
married at the time of your death, federal law may require all or a portion of
the death benefit to be paid to your spouse, even if you designated someone
else as your beneficiary. A brief explanation of the applicable rules follows.
For more information, consult the terms of your retirement arrangement.
Defined Benefit Plans and Money Purchase Pension Plans. If you are married
at the time your payments commence, federal law requires that benefits be paid
to you in the form of a "qualified joint and survivor annuity" (QJSA), unless
you and your spouse waive that right, in writing. Generally, this means that
you will receive a reduced payment during your life and, upon your death, your
spouse will receive at least one-half of what you were receiving for life. You
may elect to receive another income option if your spouse consents to the
election and waives his or her right to receive the QJSA. If your spouse
consents to the alternative form of payment, your spouse may not receive any
benefits from the plan upon your death. Federal law also requires that the plan
pay a death benefit to your spouse if you are married and die before you begin
receiving your benefit. This benefit must be available in the form of an
annuity for your spouse's lifetime and is called a "qualified pre-retirement
survivor annuity" (QPSA). If the plan pays death benefits to other
beneficiaries, you may elect to have a beneficiary other than your spouse
receive the death benefit, but only if your spouse consents to the election and
waives his or her right to receive the QPSA. If your spouse consents to the
alternate beneficiary, your spouse will receive no benefits from the plan upon
your death. Any QPSA waiver prior to your attaining age 35 will become null and
void on the first day of the calendar year in which you attain age 35, if still
employed.
Defined Contribution Plans (including 401(k) Plans and ERISA 403(b)
Annuities). Spousal consent to a distribution is generally not required. Upon
your death, your spouse will receive the entire death benefit, even if you
designated someone else as your beneficiary, unless your spouse consents in
writing to waive this right. Also, if you are married and elect an annuity as a
periodic income option, federal law requires that you receive a QJSA (as
described above), unless you and your spouse consent to waive this right.
IRAs, non-ERISA 403(b) Annuities, and 457 Plans. Spousal consent to a
distribution is not required. Upon your death, any death benefit will be paid
to your designated beneficiary.
ADDITIONAL INFORMATION
For additional information about federal tax law requirements applicable to tax
favored plans, see the IRA Disclosure Statement.
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General Information
HOW WILL I RECEIVE STATEMENTS AND REPORTS?
We send any statements and reports required by applicable law or regulation to
you at your last known address of record. You should therefore give us prompt
notice of any address change. We reserve the right, to the extent permitted by
law and subject to your prior consent, to provide any prospectus, prospectus
supplements, confirmations, statements and reports required by applicable law
or regulation to you through our Internet Website at
http://www.americanskandia.prudential.com or any other electronic means,
including diskettes or CD ROMs. We send a confirmation statement to you each
time a transaction is made affecting Account Value, such as making additional
Purchase Payments, transfers, exchanges or withdrawals. We also send quarterly
statements detailing the activity affecting your Annuity during the calendar
quarter. We may confirm regularly scheduled transactions, such as the Annual
Maintenance Fee, systematic withdrawals (including 72(t) payments and required
minimum distributions), bank drafting, dollar cost averaging, and static
rebalancing, in quarterly statements instead of confirming them immediately.
You should review the information in these statements carefully. You may
request additional reports. We reserve the right to charge up to $50 for each
such additional report. We may also send an annual report and a semi-annual
report containing applicable financial statements for the Separate Account and
the Portfolios, as of December 31 and June 30, respectively, to Owners or, with
your prior consent, make such documents available electronically through our
Internet Website or other electronic means.
WHO IS AMERICAN SKANDIA?
American Skandia Life Assurance Corporation, a Prudential Financial Company,
("American Skandia") is a stock life insurance company domiciled in Connecticut
with licenses in all 50 states, the District of Columbia and Puerto Rico.
American Skandia is a wholly-owned subsidiary of American Skandia, Inc.
("ASI"), whose ultimate parent is Prudential Financial, Inc. American Skandia
markets its products to broker-dealers and financial planners through an
internal field marketing staff. In addition, American Skandia markets through
and in conjunction with financial institutions such as banks that are permitted
directly, or through affiliates, to sell annuities.
American Skandia is in the business of issuing annuity and life insurance
products. American Skandia currently offers the following products: (a)
flexible premium deferred annuities and single premium fixed deferred annuities
that are registered with the SEC; (b) certain other fixed deferred annuities
that are not registered with the SEC; and (c) both fixed and variable immediate
adjustable annuities.
Effective May 1, 2003, Skandia U.S. Inc., the sole shareholder of ASI,
which is the parent of American Skandia, was purchased by Prudential Financial,
Inc. Prudential Financial, Inc. is a New Jersey insurance holding company whose
subsidiary companies serve individual and institutional customers worldwide and
include The Prudential Insurance Company of America, one of the largest life
insurance companies in the U.S. These companies offer a variety of products and
services, including life insurance, property and casualty insurance, mutual
funds, annuities, pension and retirement related services and administration,
asset management, securities brokerage, banking and trust services, real estate
brokerage franchises, and relocation services.
No company other than American Skandia has any legal responsibility to pay
amounts that it owes under its annuity and variable life insurance contracts.
However, Prudential Financial exercises significant influence over the
operations and capital structure of American Skandia.
WHAT ARE SEPARATE ACCOUNTS?
The separate accounts are where American Skandia sets aside and invests the
assets of some of our annuities. In the accumulation period, assets supporting
Account Values of the Annuities are held in a separate account established
under the laws of the State of Connecticut. We are the legal owner of assets in
the separate accounts. In the payout period, assets supporting fixed annuity
payments and any adjustable annuity payments we make available are held in our
general account. Assets supporting variable annuity payment options may be
invested in our separate accounts. Income, gains and losses from assets
allocated to these separate accounts are credited to or charged against each
such separate account without regard to other income, gains or losses of
American Skandia or of any other of our separate accounts. These assets may
only be charged with liabilities which arise from the Annuities issued by
American Skandia. The amount of our obligation in relation to allocations to
the Sub-accounts is based on the investment performance of such Sub-accounts.
However, the obligations themselves are our general corporate obligations.
SEPARATE ACCOUNT B
During the accumulation period, the assets supporting obligations based on
allocations to the variable investment options are held in Sub-accounts of
American Skandia Life Assurance
85
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
General Information continued
Corporation Variable Account B, also referred to as "Separate Account B".
Separate Account B was established by us pursuant to Connecticut law on November
25, 1987. 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.
Separate Account B consists of multiple Sub-accounts. Each Sub-account
invests only in a single mutual fund or mutual fund portfolio. The name of each
Sub-account generally corresponds to the name of the underlying Portfolio. Each
Sub-account in Separate Account B may have several different Unit Prices to
reflect the Insurance Charge and the charges for any optional benefits that are
offered under this Annuity and other annuities issued by us through Separate
Account B. Separate Account B is registered with the SEC under the Investment
Company Act of 1940 ("Investment Company Act") as a unit investment trust,
which is a type of investment company. The SEC does not supervise investment
policies, management or practices of Separate Account B.
Prior to November 18, 2002, Separate Account B was organized as a single
separate account with six different Sub-account classes, each of which was
registered as a distinct unit investment trust under the Investment Company
Act. Effective November 18, 2002 each Sub-account class of Separate Account B
was consolidated into the unit investment trust formerly named American Skandia
Life Assurance Corporation Variable Account B (Class 1 Sub-accounts), which was
subsequently renamed American Skandia Life Assurance Corporation Variable
Account B. Each Sub-account of Separate Account B has multiple Unit Prices to
reflect the daily charge deducted for each combination of the applicable
Insurance Charge, Distribution Charge (when applicable) and the charge for each
optional benefit offered under Annuity contracts funded through Separate
Account B. The consolidation of Separate Account B had no impact on Annuity
Owners.
We reserve the right to make changes to the Sub-accounts available under
the Annuity as we determine appropriate. We may offer new Sub-accounts,
eliminate Sub-accounts, or combine Sub-accounts at our sole discretion. We may
also close Sub-accounts to additional Purchase Payments on existing Annuity
contracts or close Sub-accounts for Annuities purchased on or after specified
dates. We may also substitute an underlying mutual fund or portfolio of an
underlying mutual fund for another underlying mutual fund or portfolio of an
underlying mutual fund, subject to our receipt of any exemptive relief that we
are required to obtain under the Investment Company Act. We will notify Owners
of changes we make to the Sub-accounts available under the Annuity.
VALUES AND BENEFITS BASED ON ALLOCATIONS TO THE SUB-ACCOUNTS WILL VARY
WITH THE INVESTMENT PERFORMANCE OF THE UNDERLYING MUTUAL FUNDS OR FUND
PORTFOLIOS, AS APPLICABLE. WE DO NOT GUARANTEE THE INVESTMENT RESULTS OF ANY
SUB-ACCOUNT. YOUR ACCOUNT VALUE ALLOCATED TO THE SUB-ACCOUNTS MAY INCREASE OR
DECREASE. YOU BEAR THE ENTIRE INVESTMENT RISK. THERE IS NO ASSURANCE THAT THE
ACCOUNT VALUE OF YOUR ANNUITY WILL EQUAL OR BE GREATER THAN THE TOTAL OF THE
PURCHASE PAYMENTS YOU MAKE TO US.
SEPARATE ACCOUNT D
During the accumulation period, assets supporting our obligations based on
Fixed Allocations are held in American Skandia Life Assurance Corporation
Separate Account D, also referred to as "Separate Account D". Such obligations
are based on the fixed interest rates we credit to Fixed Allocations and the
terms of the Annuities. These obligations do not depend on the investment
performance of the assets in Separate Account D. Separate Account D was
established by us pursuant to Connecticut law.
There are no units in Separate Account D. The Fixed Allocations are
guaranteed by our general account. An Annuity Owner who allocates a portion of
their Account Value to Separate Account D does not participate in the
investment gain or loss on assets maintained in Separate Account D. Such gain
or loss accrues solely to us. We retain the risk that the value of the assets
in Separate Account D may drop below the reserves and other liabilities we must
maintain. Should the value of the assets in Separate Account D drop below the
reserve and other liabilities we must maintain in relation to the annuities
supported by such assets, we will transfer assets from our general account to
Separate Account D to make up the difference. We have the right to transfer to
our general account any assets of Separate Account D in excess of such reserves
and other liabilities. We maintain assets in Separate Account D supporting a
number of annuities we offer.
We currently employ investment managers to manage the assets maintained in
Separate Account D. Each manager we employ is responsible for investment
management of a different portion of Separate Account D. From time to time
additional investment managers may be employed or investment managers may cease
being employed. We are under no
86
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
obligation to employ or continue to employ any investment manager(s) and have
sole discretion over the investment managers we retain.
We are not obligated to invest according to specific guidelines or
strategies except as may be required by Connecticut and other state insurance
laws.
WHAT IS THE LEGAL STRUCTURE OF THE UNDERLYING FUNDS?
Each underlying mutual fund is registered as an open-end management investment
company under the Investment Company Act. Shares of the underlying mutual fund
portfolios are sold to separate accounts of life insurance companies offering
variable annuity and variable life insurance products. The shares may also be
sold directly to qualified pension and retirement plans.
VOTING RIGHTS
We are the legal owner of the shares of the underlying mutual funds in which
the Sub-accounts invest. However, under SEC rules, you have voting rights in
relation to Account Value maintained in the Sub-accounts. If an underlying
mutual fund portfolio requests a vote of shareholders, we will vote our shares
based on instructions received from Owners with Account Value allocated to that
Sub-account. Owners have the right to vote an amount equal to the number of
shares attributable to their contracts. If we do not receive voting
instructions in relation to certain shares, we will vote those shares in the
same manner and proportion as the shares for which we have received
instructions. We will furnish those Owners who have Account Value allocated to
a Sub-account whose underlying mutual fund portfolio has requested a "proxy"
vote with proxy materials and the necessary forms to provide us with their
voting instructions. Generally, you will be asked to provide instructions for
us to vote on matters such as changes in a fundamental investment strategy,
adoption of a new investment advisory agreement, or matters relating to the
structure of the underlying mutual fund that require a vote of shareholders.
American Skandia Trust (the "Trust") has obtained an exemption from the
Securities and Exchange Commission that permits its co-investment advisers,
American Skandia Investment Services, Incorporated ("ASISI") and Prudential
Investments LLC, subject to approval by the Board of Trustees of the Trust, to
change sub-advisors for a Portfolio and to enter into new sub-advisory
agreements, without obtaining shareholder approval of the changes. This
exemption (which is similar to exemptions granted to other investment companies
that are organized in a similar manner as the Trust) is intended to facilitate
the efficient supervision and management of the sub-advisors by ASISI,
Prudential Investments LLC and the Trustees. The Trust is required, under the
terms of the exemption, to provide certain information to shareholders
following these types of changes. We may add new Sub-accounts that invest in a
series of underlying funds other than the Trust that is managed by an
affiliate. Such series of funds may have a similar order from the SEC. You also
should review the prospectuses for the other underlying funds in which various
Sub-accounts invest as to whether they have obtained similar orders from the
SEC.
MATERIAL CONFLICTS
It is possible that differences may occur between companies that offer shares
of an underlying mutual fund portfolio to their respective separate accounts
issuing variable annuities and/or variable life insurance products. Differences
may also occur surrounding the offering of an underlying mutual fund portfolio
to variable life insurance policies and variable annuity contracts that we
offer. Under certain circumstances, these differences could be considered
"material conflicts," in which case we would take necessary action to protect
persons with voting rights under our variable annuity contracts and variable
life insurance policies against persons with voting rights under other
insurance companies' variable insurance products. If a "material conflict" were
to arise between owners of variable annuity contracts and variable life
insurance policies issued by us we would take necessary action to treat such
persons equitably in resolving the conflict. "Material conflicts" could arise
due to differences in voting instructions between owners of variable life
insurance and variable annuity contracts of the same or different companies. We
monitor any potential conflicts that may exist.
SERVICE FEES PAYABLE TO AMERICAN SKANDIA
American Skandia or our affiliates have entered into agreements with the
investment adviser or distributor of the underlying Portfolios. Under the terms
of these agreements, American Skandia may provide administrative and support
services to the Portfolios for which it receives a fee of up to 0.75%
(currently) of the average assets allocated to the Portfolios under the Annuity
from the investment advisor, distributor and/or the fund. These agreements may
be different for each underlying mutual fund whose portfolios are offered as
Sub-accounts.
In addition, the investment adviser, sub-advisor or distributor of the
underlying Portfolios may also compensate us by providing reimbursement or
paying directly for, among other things, marketing and/or administrative
services and/or other services they provide in connection with the Annuity.
These services may include, but are not limited to: co-sponsoring various
meetings and seminars attended by broker-dealer firms' registered
representatives and creating marketing materials discussing the Annuity and the
available options.
87
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
General Information continued
WHO DISTRIBUTES ANNUITIES OFFERED BY AMERICAN SKANDIA?
American Skandia Marketing, Incorporated ("ASM"), a wholly-owned subsidiary of
American Skandia, Inc., is the distributor and principal underwriter of the
securities offered through this prospectus. ASM acts as the distributor of a
number of annuity and life insurance products we offer and co-distributor of
American Skandia Trust and American Skandia Advisor Funds, Inc., a family of
retail mutual funds. ASM also acts as an introducing broker-dealer through
which it receives a portion of brokerage commissions in connection with
purchases and sales of securities held by portfolios of American Skandia Trust
which are offered as underlying investment options under the Annuity.
ASM's principal business address is One Corporate Drive, Shelton,
Connecticut 06484. ASM is registered as broker-dealer under the Securities
Exchange Act of 1934 ("Exchange Act") and is a member of the National
Association of Securities Dealers, Inc. ("NASD").
The Annuity is offered on a continuous basis. ASM enters into distribution
agreements with broker-dealers who are registered under the Exchange Act and
with entities that may offer the Annuity but are exempt from registration
("firms"). Applications for the Annuity are solicited by registered
representatives of those firms. Such representatives will also be our appointed
insurance agents under state insurance law. In addition, ASM may offer the
Annuity directly to potential purchasers.
Commissions are paid to firms on sales of the Annuity according to one or
more schedules. The individual representative will receive a portion of the
compensation, depending on the practice of his or her firm. Commissions are
generally based on a percentage of Purchase Payments made, up to a maximum of
2.0%. Alternative compensation schedules are available that provide a lower
initial commission plus ongoing annual compensation based on all or a portion
of Account Value. We may also provide compensation to the distributing firm for
providing ongoing service to you in relation to the Annuity. Commissions and
other compensation paid in relation to the Annuity do not result in any
additional charge to you or to the Separate Account.
In addition, in an effort to promote the sale of our products (which may
include the placement of American Skandia or the Annuity on the preferred or
recommended company or product list and/or access to the firms' registered
representatives), we or ASM may enter into compensation arrangements with
certain broker-dealer firms with respect to certain or all registered
representatives of such firms under which such firms may receive separate
compensation or reimbursement for, among other things, training of sales
personnel, marketing and/or administrative services and/or other services they
provide to us. These services may include, but are not limited to: educating
customers of the firm on the Annuity's features; conducting due diligence and
analysis, providing office access, operations and systems support; holding
seminars intended to educate firm's registered representatives and make them
more knowledgeable about the Annuity; providing a dedicated marketing
coordinator; providing priority sales desk support; and providing expedited
marketing compliance approval. To the extent permitted by NASD rules and other
applicable laws and regulations, ASM may pay or allow other promotional
incentives or payments in the form of cash or non-cash compensation. These
arrangements may not be offered to all firms and the terms of such arrangements
may differ between firms. A list of the firms to whom American Skandia pays an
amount of greater than $10,000.00 for these arrangements is provided in the
Statement of Additional Information, which is available upon request. You should
note that firms and individual registered representatives and branch managers
within some firms participating in one of these compensation arrangements might
receive greater compensation for selling the Annuity than for selling a
different annuity that is not eligible for these compensation arrangements.
While compensation is generally taken into account as an expense in considering
the charges applicable to an annuity product, any such compensation will be paid
by us or ASM and will not result in any additional charge to you. Overall
compensation paid to the distributing firm does not exceed, based on actuarial
assumptions, 8.5% of the total Purchase Payments made. Your registered
representative can provide you with more information about the compensation
arrangements that apply upon the sale of the Annuity.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
American Skandia publishes annual and quarterly reports that are filed with the
SEC. These reports contain financial information about American Skandia that is
annually audited by an independent registered public accounting firm. American
Skandia's annual report for the year ended December 31, 2004, together with
subsequent periodic reports that American Skandia files with the SEC, are
incorporated by reference into this prospectus. You can obtain copies, at no
cost, of any and all of this information, including the American Skandia annual
report that is not ordinarily mailed to contract owners, the more current
reports and any subsequently filed documents at
88
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
no cost by contacting us at American Skandia -- Variable Annuities; P.O. Box
7960; Philadelphia, PA 19176 (Telephone: 203-926-1888). The SEC file number for
American Skandia is 33-44202. You may read and copy any filings made by American
Skandia with the SEC at the SEC's Public Reference Room at 450 Fifth Street,
Washington, D.C. 20549-0102. You can obtain information on the operation of the
Public Reference Room by calling (202) 942-8090. The SEC maintains an Internet
site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC at
http://www.sec.gov.
FINANCIAL STATEMENTS
The financial statements of the separate account and American Skandia Life
Assurance Corporation are included in the Statement of Additional Information.
HOW TO CONTACT US
You can contact us by:
- - calling our Customer Service Team at 1-800-752-6342 during our normal
business hours, 8:30 a.m. EST to 8:00 p.m. EST, Monday through Friday, or
Skandia's telephone automated response system at 1-800-766-4530.
- - writing to us via regular mail at American Skandia -- Variable Annuities,
P.O. Box 7960, Philadelphia, PA 19176 OR for express mail American Skandia
-- Variable Annuities, 2101 Welsh Road, Dresher, PA 19025. NOTE: Failure to
send mail to the proper address may result in a delay in our receiving and
processing your request.
- - sending an email to service@prudential.com or visiting our Internet Website
at www.americanskandia.prudential.com
- - accessing information about your Annuity through our Internet Website at
www.americanskandia.prudential.com
You can obtain account information by calling our automated response
system, and at www.americanskandia.prudential.com, our Internet Website. Our
Customer Service representatives are also available during business hours to
provide you with information about your account. You can request certain
transactions through our telephone voice response system, our Internet Website
or through a customer service representative. You can provide authorization for
a third party, including your attorney-in-fact acting pursuant to a power of
attorney, to access your account information and perform certain transactions
on your account. You will need to complete a form provided by us which
identifies those transactions that you wish to authorize via telephonic and
electronic means and whether you wish to authorize a third party to perform any
such transactions. Please note that unless you tell us otherwise, we deem that
all transactions that are directed by your investment professional with respect
to your Annuity have been authorized by you. We require that you or your
representative provide proper identification before performing transactions
over the telephone or through our Internet Website. This may include a Personal
Identification Number (PIN) that will be provided to you upon issue of your
Annuity or you may establish or change your PIN by calling our automated
response system and at www.americanskandia.prudential.com, our Internet
Website. Any third party that you authorize to perform financial transactions
on your account will be assigned a PIN for your account.
Transactions requested via telephone are recorded. To the extent permitted
by law, we will not be responsible for any claims, loss, liability or expense
in connection with a transaction requested by telephone or other electronic
means if we acted on such transaction instructions after following reasonable
procedures to identify those persons authorized to perform transactions on your
Annuity using verification methods which may include a request for your Social
Security number, PIN or other form of electronic identification. We may be
liable for losses due to unauthorized or fraudulent instructions if we did not
follow such procedures.
American Skandia does not guarantee access to telephonic, facsimile,
Internet or any other electronic information or that we will be able to accept
transaction instructions via such means at all times. Regular and/or express
mail will be the only means by which we will accept transaction instructions
when telephonic, facsimile, Internet or any other electronic means are
unavailable or delayed. American Skandia reserves the right to limit, restrict
or terminate telephonic, facsimile, Internet or any other electronic
transaction privileges at any time.
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Securities Act") may be permitted to directors, officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
89
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
General Information continued
LEGAL PROCEEDINGS
As of the date of this Prospectus, American Skandia and its affiliates are not
involved in any legal proceedings outside of the ordinary course of business.
American Skandia and its affiliates are involved in pending and threatened
legal proceedings in the normal course of its business, however, we do not
anticipate that the outcome of any such legal proceedings will have a material
adverse affect on the Separate Account, or American Skandia's ability to meet
its obligations under the Annuity, or on the distribution of the Annuity.
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The following are the contents of the Statement of Additional Information:
General Information about American Skandia
- - American Skandia Life Assurance Corporation
- - American Skandia Life Assurance Corporation Variable Account B
- - American Skandia Life Assurance Corporation Separate Account D
Principal Underwriter/Distributor -- American Skandia Marketing, Incorporated
Payments Made to Promote Sale of Our Products
How the Unit Price is Determined
Additional Information on Fixed Allocations
- - How We Calculate the Market Value Adjustment
General Information
- - Voting Rights
- - Modification
- - Deferral of Transactions
- - Misstatement of Age or Sex
- - Ending the Offer
Annuitization
Experts
Legal Experts
Financial Statements
90
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account B
- --------------------------------------------------------------------------------
Separate Account B consists of multiple Sub-accounts. Each Sub-account invests
only in a single mutual fund or mutual fund portfolio. All or some of these
Sub-accounts are available as investment options for other variable annuities
we offer pursuant to different prospectuses.
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 Sub-accounts of Separate
Account B that are being offered pursuant to this Prospectus; and (b) the
number of Units outstanding for each such Sub-account as of the dates shown.
Since November 18, 2002, we have been determining, on a daily basis, multiple
Unit Prices for each Sub-account of Separate Account B. We compute multiple
Unit Prices because several of our variable annuities invest in the same
Sub-accounts, and these annuities deduct varying charges that correspond to
each combination of the applicable Insurance Charge, Distribution Charge (when
applicable) and the charges for each optional benefit. Where an asset-based
charge corresponding to a particular Sub-account within a new annuity product
is identical to that in the same Sub-account within an existing annuity, the
Unit Price for the new annuity will be identical to that of the existing
annuity. In such cases, we will for reference purposes depict, in the condensed
financial information for the new annuity, Unit Prices of the existing annuity.
The year in which operations commenced in each such Sub-account is noted in
parentheses. To the extent a Sub-account commenced operations during a
particular calendar year, the Unit Price as of the end of the period reflects
only the partial year results from the commencement of operations until
December 31st of the applicable year. When a Unit Price was first calculated
for a particular Sub-account, we set the price of that Unit at $10.00 per Unit.
Thereafter, Unit Prices vary based on market performance. Unit Prices and Units
are provided for Sub-accounts that commenced operations prior to January 1,
2005.
A-1
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- ---------------------------------------------- -------------- -------------- --------------
AST JP Morgan International Equity Portfolio
With No Optional Benefits
Unit Price $ 12.67 $ 11.00 $ 8.56
Number of Units 3,227,381 2,415,394 2,569,506
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.65 $ 12.75 $ 9.95
Number of Units 2,064,681 936,678 90,759
With GMWB
Unit Value $ 14.62 $ 12.74 --
Number of Units 217,166 17,098 --
With any two of GRO Plus, EBP or HAV
Unit Value $ 14.57 $ 12.72 $ 9.95
Number of Units 284,319 141,470 6,047
With any one of EBP or HAV and GMWB
Unit Value $ 7.86 $ 6.87 --
Number of Units 428,765 400,112 --
With HAV, EBP and GRO Plus
Unit Price $ 14.49 $ 12.68 --
Number of Units 38,292 13,590 --
With HAV, EBP and GMWB
Unit Price $ 12.32 -- --
Number of Units 20,718 -- --
- ------------------------------------------ -- ------------ ----------- -----------
AST William Blair International Growth (1997)
With No Optional Benefits
Unit Price $ 15.30 $ 13.39 $ 9.72
Number of Units 11,265,469 5,547,558 835,523
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.21 $ 13.35 $ 9.72
Number of Units 15,481,627 6,498,151 78,368
With GMWB
Unit Value $ 15.18 $ 13.34 --
Number of Units 1,821,923 103,740 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.13 $ 13.32 $ 9.71
Number of Units 2,722,552 1,009,679 5,178
With any one of EBP or HAV and GMWB
Unit Value $ 15.74 $ 13.86 --
Number of Units 545,075 29,434 --
With HAV, EBP and GRO Plus
Unit Price $ 15.05 $ 13.28 --
Number of Units 325,809 32,626 --
With HAV, EBP and GMWB
Unit Price $ 11.94 -- --
Number of Units 135,829 -- --
- ------------------------------------------ -- ------------ ----------- -----------
A-2
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- --------------- -------------- ------------
AST LSV International Value (1994)
With No Optional Benefits
Unit Price $ 12.84 $ 10.79 $ 8.19
Number of Units 1,897,469 1,201,268 269,995
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.27 $ 12.86 $ 9.79
Number of Units 810,108 368,945 22,770
With GMWB
Unit Value $ 15.24 $ 12.85 --
Number of Units 69,494 5,504 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.19 $ 12.82 --
Number of Units 119,845 24,374 --
With any one of EBP or HAV and GMWB
Unit Value $ 6.69 $ 5.65 --
Number of Units 122,795 72,406 --
With HAV, EBP and GRO Plus
Unit Price $ 15.11 $ 12.79 --
Number of Units 16,366 1,767 --
With HAV, EBP and GMWB
Unit Value $ 12.70 -- --
Number of Units 5,736 -- --
- ----------------------------------- -- ------------ ----------- ----------
AST MFS Global Equity (1999)
With No Optional Benefits
Unit Price $ 13.16 $ 11.30 $ 9.04
Number of Units 2,276,801 1,393,001 969,509
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.29 $ 12.31 $ 9.87
Number of Units 1,897,254 916,888 32,306
With GMWB
Unit Value $ 14.26 $ 12.29 --
Number of Units 98,046 4,306 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.22 $ 12.27 --
Number of Units 219,580 62,490 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.48 $ 9.06 --
Number of Units 273,401 308,725 --
With HAV, EBP and GRO Plus
Unit Price $ 14.14 $ 12.24 --
Number of Units 26,943 6,069 --
With HAV, EBP and GMWB
Unit Value $ 12.40 -- --
Number of Units 5,188 -- --
- ----------------------------------- -- ------------ ----------- ----------
A-3
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------------- --------------- -------------- --------------
AST State Street Research Small-Cap Growth(1)
With No Optional Benefits
Unit Price $ 9.05 $ 9.89 $ 6.92
Number of Units 2,242,129 3,292,593 1,970,250
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.33 $ 13.50 $ 9.48
Number of Units 1,200,247 1,059,046 47,261
With GMWB
Unit Value $ 12.30 $ 13.49 --
Number of Units 113,913 9,676 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.26 $ 13.46 $ 9.47
Number of Units 136,313 138,936 6,595
With any one of EBP or HAV and GMWB
Unit Value $ 15.30 $ 16.82 --
Number of Units 67,370 64,850 --
With HAV, EBP and GRO Plus
Unit Price $ 12.19 $ 13.43 --
Number of Units 23,253 4,691 --
With HAV, EBP and GMWB
Unit Value $ 9.32 -- --
Number of Units 1,043 -- --
- ----------------------------------------- -- ------------ ----------- -----------
AST DeAM Small-Cap Growth (1999)
With No Optional Benefits
Unit Price $ 11.98 $ 11.13 $ 7.67
Number of Units 1,618,719 1,682,193 639,695
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.10 $ 14.06 $ 9.71
Number of Units 779,045 480,221 12,122
With GMWB
Unit Value $ 15.07 $ 14.05 --
Number of Units 56,414 1,850 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.02 $ 14.02 $ 9.71
Number of Units 192,105 89,708 1,728
With any one of EBP or HAV and GMWB
Unit Value $ 7.07 $ 6.61 --
Number of Units 129,475 131,605 --
With HAV, EBP and GRO Plus
Unit Price $ 14.94 $ 13.98 --
Number of Units 18,825 3,753 --
With HAV, EBP and GMWB
Unit Value $ 11.03 -- --
Number of Units 3,398 -- --
- ----------------------------------------- -- ------------ ----------- -----------
A-4
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------- --------------- --------------- --------------
AST Goldman Sachs High Yield Portfolio
With No Optional Benefits
Unit Price $ 12.69 $ 11.61 $ 9.71
Number of Units 13,717,128 12,201,163 5,592,940
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.34 $ 12.24 $ 10.26
Number of Units 4,901,936 3,684,174 74,022
With GMWB
Unit Value $ 13.31 $ 12.23 --
Number of Units 426,333 27,535 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.27 $ 12.21 $ 10.26
Number of Units 707,876 379,114 6,524
With any one of EBP or HAV and GMWB
Unit Value $ 11.51 $ 10.60 --
Number of Units 545,726 346,126 --
With HAV, EBP and GRO Plus
Unit Price $ 13.20 $ 12.17 --
Number of Units 54,058 28,237 --
With HAV, EBP and GMWB
Unit Value $ 11.24 -- --
Number of Units 65,084 -- --
- ------------------------------------- -- ------------ ------------ -----------
AST Goldman Sachs Small-Cap Value (1997)
With No Optional Benefits
Unit Price $ 15.19 $ 12.85 $ 9.26
Number of Units 1,541,896 1,504,296 1,492,775
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.47 $ 13.97 $ 10.09
Number of Units 222,905 102,500 624
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value $ 19.58 $ 16.67 --
Number of Units 61,521 73,852 --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------- -- ------------ ------------ -----------
A-5
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- --------------- --------------- --------------
AST Small-Cap Value (1997)
With No Optional Benefits
Unit Price $ 14.22 $ 12.42 $ 9.3
Number of Units 10,785,030 10,183,346 6,141,523
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.34 $ 13.43 $ 10.08
Number of Units 10,169,483 5,824,200 209,790
With GMWB
Unit Value $ 15.31 $ 13.41 --
Number of Units 1,007,926 100,155 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.26 $ 13.39 $ 10.08
Number of Units 1,690,870 767,455 17,411
With any one of EBP or HAV and GMWB
Unit Value $ 15.87 $ 13.95 --
Number of Units 465,784 275,971 --
With HAV, EBP and GRO Plus
Unit Price $ 15.17 $ 13.35 --
Number of Units 166,852 34,978 --
With HAV, EBP and GMWB
Unit Value $ 12.11 -- --
Number of Units 91,011 -- --
- ----------------------------------- -- ------------ ------------ -----------
AST DeAM Small-Cap Value (2002)
With No Optional Benefits
Unit Price $ 12.99 $ 10.81 $ 7.66
Number of Units 2,143,020 1,134,865 423,387
With any one of GRO Plus, EBP or HAV
Unit Price $ 17.00 $ 14.19 $ 10.08
Number of Units 1,054,696 434,509 11,686
With GMWB
Unit Value $ 16.96 $ 14.17 --
Number of Units 236,402 10,756 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 16.90 $ 14.15 $ 10.08
Number of Units 213,632 70,597 5,211
With any one of EBP or HAV and GMWB
Unit Value $ 12.78 $ 10.70 --
Number of Units 63,057 22,847 --
With HAV, EBP and GRO Plus
Unit Price $ 16.81 $ 14.11 --
Number of Units 14,277 879 --
With HAV, EBP and GMWB
Unit Value $ 12.71 -- --
Number of Units 634 -- --
- ----------------------------------- -- ------------ ------------ -----------
A-6
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- ------------------------------------------- --------------- -------------- --------------
AST Goldman Sachs Mid-Cap Growth (2000)
With No Optional Benefits
Unit Price $ 11.80 $ 10.31 $ 7.97
Number of Units 4,375,813 3,027,057 1,273,118
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.55 $ 12.75 $ 9.87
Number of Units 5,139,643 2,379,820 66,279
With GMWB
Unit Value $ 14.52 $ 12.73 --
Number of Units 516,261 37,400 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.47 $ 12.71 $ 9.87
Number of Units 994,493 365,115 2,488
With any one of EBP or HAV and GMWB
Unit Value $ 4.24 $ 3.73 --
Number of Units 457,010 175,708 --
With HAV, EBP and GRO Plus
Unit Price $ 14.39 $ 12.68 --
Number of Units 124,672 12,201 --
With HAV, EBP and GMWB
Unit Value $ 11.91 -- --
Number of Units 33,665 -- --
- --------------------------------------- -- ------------ ----------- -----------
AST Neuberger Berman Mid-Cap Growth (1994)
With No Optional Benefits
Unit Price $ 10.86 $ 9.51 $ 7.41
Number of Units 4,715,301 3,415,318 2,175,250
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.87 $ 12.18 $ 9.51
Number of Units 2,211,800 1,089,649 44,760
With GMWB
Unit Value $ 13.84 $ 12.17 --
Number of Units 153,923 16,702 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.80 $ 12.15 $ 9.51
Number of Units 377,548 96,879 1,311
With any one of EBP or HAV and GMWB
Unit Value $ 6.81 $ 6.01 --
Number of Units 369,234 294,816 --
With HAV, EBP and GRO Plus
Unit Price $ 13.72 $ 12.11 --
Number of Units 38,051 5,407 --
With HAV, EBP and GMWB
Unit Value $ 11.70 -- --
Number of Units 18,225 -- --
- --------------------------------------- -- ------------ ----------- -----------
A-7
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- ------------------------------------------ --------------- -------------- --------------
AST Neuberger Berman Mid-Cap Value (1993)
With No Optional Benefits
Unit Price $ 14.51 $ 12.01 $ 8.96
Number of Units 11,461,684 8,530,129 5,118,558
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.08 $ 13.34 $ 9.98
Number of Units 9,335,291 4,786,623 163,415
With GMWB
Unit Value $ 16.04 $ 13.33 --
Number of Units 937,314 87,253 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.99 $ 13.31 $ 9.97
Number of Units 1,457,788 610,598 10,745
With any one of EBP or HAV and GMWB
Unit Value $ 15.99 $ 13.32 --
Number of Units 537,445 370,965 --
With HAV, EBP and GRO Plus
Unit Price $ 15.91 $ 13.27 --
Number of Units 154,749 21,843 --
With HAV, EBP and GMWB
Unit Value $ 12.97 -- --
Number of Units 95,076 -- --
- -------------------------------------- -- ------------ ----------- -----------
AST Alger All-Cap Growth (2000)
With No Optional Benefits
Unit Price $ 9.67 $ 9.07 $ 6.8
Number of Units 1,798,457 2,002,166 658,419
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.25 $ 12.45 $ 9.36
Number of Units 715,598 636,548 6,409
With GMWB
Unit Value $ 13.22 $ 12.43 --
Number of Units 119,566 10,356 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.17 $ 12.41 $ 9.36
Number of Units 141,575 106,376 3,466
With any one of EBP or HAV and GMWB
Unit Value $ 6.19 $ 5.84 --
Number of Units 107,188 87,326 --
With HAV, EBP and GRO Plus
Unit Price $ 13.10 $ 12.38 --
Number of Units 22,732 4,810 --
With HAV, EBP and GMWB
Unit Value $ 10.73 -- --
Number of Units 6,346 -- --
- -------------------------------------- -- ------------ ----------- -----------
A-8
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- ------------------------------------------- --------------- -------------- --------------
AST Gabelli All-Cap Value (2000)
With No Optional Benefits
Unit Price $ 12.38 $ 10.91 $ 8.17
Number of Units 2,587,064 2,513,413 1,200,225
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.14 $ 13.38 $ 10.04
Number of Units 1,071,978 727,500 28,449
With GMWB
Unit Value $ 15.11 $ 13.37 --
Number of Units 116,474 12,627 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.06 $ 13.35 $ 10.04
Number of Units 256,671 127,279 88
With any one of EBP or HAV and GMWB
Unit Value $ 11.15 $ 9.89 --
Number of Units 194,765 166,080 --
With HAV, EBP and GRO Plus
Unit Price $ 14.98 $ 13.31 --
Number of Units 8,849 1,455 --
With HAV, EBP and GMWB
Unit Value $ 12.11 -- --
Number of Units 7,555 -- --
- --------------------------------------- -- ------------ ----------- -----------
AST T. Rowe Price Natural Resources (1995)
With No Optional Benefits
Unit Price $ 16.25 $ 12.59 $ 9.59
Number of Units 2,040,188 2,011,627 724,670
With any one of GRO Plus, EBP or HAV
Unit Price $ 17.60 $ 13.67 $ 10.44
Number of Units 1,025,462 433,891 7,378
With GMWB
Unit Value $ 17.56 $ 13.66 --
Number of Units 172,186 24,634 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 17.50 $ 13.63 $ 10.44
Number of Units 158,672 77,245 5,472
With any one of EBP or HAV and GMWB
Unit Value $ 14.40 $ 11.23 --
Number of Units 41,428 6,747 --
With HAV, EBP and GRO Plus
Unit Price $ 17.41 $ 13.60
Number of Units 37,779 1,035
With HAV, EBP and GMWB
Unit Value $ 14.36 -- --
Number of Units 13,775 -- --
- --------------------------------------- -- ------------ ----------- -----------
A-9
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- --------------- -------------- --------------
AST Alliance Growth 2 (1996)
With No Optional Benefits
Unit Price $ 9.44 $ 9.08 $ 7.46
Number of Units 2,378,881 2,098,873 1,869,353
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.76 $ 11.34 $ 9.34
Number of Units 1,189,655 717,430 31,105
With GMWB
Unit Value $ 11.73 $ 11.32 --
Number of Units 84,417 2,206 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.70 $ 11.30 $ 9.34
Number of Units 297,369 114,477 3,975
With any one of EBP or HAV and GMWB
Unit Value $ 5.91 $ 5.72 --
Number of Units 307,367 267,109 --
With HAV, EBP and GRO Plus
Unit Price $ 11.63 $ 11.27 --
Number of Units 15,562 8,067 --
With HAV, EBP and GMWB
Unit Value $ 10.57 -- --
Number of Units 4,945 -- --
- ----------------------------------- -- ------------ ----------- -----------
AST MFS Growth (1999)
With No Optional Benefits
Unit Price $ 9.97 $ 9.16 $ 7.58
Number of Units 4,529,834 4,784,269 2,930,432
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.39 $ 11.41 $ 9.47
Number of Units 2,897,175 2,222,614 134,574
With GMWB
Unit Value $ 12.37 $ 11.40 --
Number of Units 304,760 18,900 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.33 $ 11.38 $ 9.46
Number of Units 442,758 207,063 2,437
With any one of EBP or HAV and GMWB
Unit Value $ 6.72 $ 6.21 --
Number of Units 387,463 262,995 --
With HAV, EBP and GRO Plus
Unit Price $ 12.26 $ 11.35 --
Number of Units 52,718 10,550 --
With HAV, EBP and GMWB
Unit Value $ 11.00 -- --
Number of Units 33,939 -- --
- ----------------------------------- -- ------------ ----------- -----------
A-10
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------------- --------------- --------------- ---------------
AST Marsico Capital Growth (1997)
With No Optional Benefits
Unit Price $ 12.26 $ 10.78 $ 8.32
Number of Units 28,117,310 20,138,164 10,144,317
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.95 $ 12.30 $ 9.51
Number of Units 30,793,077 14,975,841 457,013
With GMWB
Unit Value $ 13.92 $ 12.28 --
Number of Units 3,136,818 215,988 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.88 $ 12.26 $ 9.51
Number of Units 4,692,895 2,031,583 30,465
With any one of EBP or HAV and GMWB
Unit Value $ 9.22 $ 8.16 --
Number of Units 2,016,277 925,591 --
With HAV, EBP and GRO Plus
Unit Price $ 13.80 $ 12.23 --
Number of Units 578,919 70,776 --
With HAV, EBP and GMWB
Unit Value $ 11.61 -- --
Number of Units 263,104 -- --
- ----------------------------------------- -- ------------ ------------ ------------
AST Goldman Sachs Concentrated Growth (1992)
With No Optional Benefits
Unit Price $ 9.64 $ 9.45 $ 7.67
Number of Units 2,785,100 2,053,023 1,349,939
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.83 $ 11.63 $ 9.46
Number of Units 1,641,544 715,845 41,632
With GMWB
Unit Value $ 11.80 $ 11.61 --
Number of Units 122,739 17,452 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.76 $ 11.59 --
Number of Units 277,607 49,620 --
With any one of EBP or HAV and GMWB
Unit Value $ 4.46 $ 4.40 --
Number of Units 541,661 395,905 --
With HAV, EBP and GRO Plus
Unit Price $ 11.70 $ 11.56 --
Number of Units 10,426 242 --
With HAV, EBP and GMWB
Unit Value $ 10.54 -- --
Number of Units 12,303 -- --
- ----------------------------------------- -- ------------ ------------ ------------
A-11
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------------- --------------- -------------- ------------
AST DeAM Large-Cap Value (2000)
With No Optional Benefits
Unit Price $ 12.53 $ 10.78 $ 8.66
Number of Units 2,351,197 1,072,256 664,649
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.36 $ 12.39 $ 9.98
Number of Units 1,347,344 583,969 18,250
With GMWB
Unit Value $ 14.33 $ 12.38 --
Number of Units 175,087 9,674 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.29 $ 12.36 $ 9.97
Number of Units 234,446 58,333 4,906
With any one of EBP or HAV and GMWB
Unit Value $ 10.72 $ 9.28 --
Number of Units 199,601 137,247 --
With HAV, EBP and GRO Plus
Unit Price $ 14.21 $ 12.32 --
Number of Units 16,355 4,412 --
With HAV, EBP and GMWB
Unit Value $ 12.25 -- --
Number of Units 6,163 -- --
- ------------------------------------------- -- ------------ ----------- ----------
AST Alliance/Bernstein Growth + Value(3) (2001)
With No Optional Benefits
Unit Price $ 10.72 $ 9.91 $ 7.99
Number of Units 1,620,391 1,387,072 965,912
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.07 $ 12.11 $ 9.79
Number of Units 1,011,796 667,395 11,345
With GMWB
Unit Value $ 13.05 $ 12.09 --
Number of Units 72,365 5,118 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.00 $ 12.07 $ 9.79
Number of Units 256,194 115,455 704
With any one of EBP or HAV and GMWB
Unit Value $ 9.31 $ 8.65 --
Number of Units 215,645 154,955 --
With HAV, EBP and GRO Plus
Unit Price $ 12.93 $ 12.04 --
Number of Units 7,165 1,041 --
With HAV, EBP and GMWB
Unit Value $ 11.15 -- --
Number of Units 1,191 -- --
- ------------------------------------------- -- ------------ ----------- ----------
A-12
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- ------------------------------------------ --------------- -------------- --------------
AST Sanford Bernstein Core Value(4) (2001)
With No Optional Benefits
Unit Price $ 12.39 $ 11.06 $ 8.76
Number of Units 4,643,022 3,621,862 6,005,922
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.18 $ 12.69 $ 10.08
Number of Units 3,959,115 2,277,726 386,259
With GMWB
Unit Value $ 14.15 $ 12.67 --
Number of Units 220,419 11,518 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.10 $ 12.65 $ 10.08
Number of Units 534,389 328,567 30,510
With any one of EBP or HAV and GMWB
Unit Value $ 11.83 $ 10.62 --
Number of Units 303,689 216,416 --
With HAV, EBP and GRO Plus
Unit Price $ 14.03 $ 12.62 --
Number of Units 49,912 10,893 --
With HAV, EBP and GMWB
Unit Value $ 11.86 -- --
Number of Units 57,669 -- --
- -------------------------------------- -- ------------ ----------- -----------
AST Cohen & Steers Realty (1998)
With No Optional Benefits
Unit Price $ 18.49 $ 13.63 $ 10.08
Number of Units 4,080,179 3,097,315 1,563,489
With any one of GRO Plus, EBP or HAV
Unit Price $ 18.84 $ 13.92 $ 10.33
Number of Units 2,863,749 1,376,696 41,098
With GMWB
Unit Value $ 18.80 $ 13.91 --
Number of Units 184,027 13,615 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 18.74 $ 13.88 $ 10.32
Number of Units 538,151 270,852 6,429
With any one of EBP or HAV and GMWB
Unit Value $ 14.12 $ 10.47 --
Number of Units 68,406 8,884 --
With HAV, EBP and GRO Plus
Unit Price $ 18.64 $ 13.84
Number of Units 17,014 8,189
With HAV, EBP and GMWB
Unit Value $ 14.07 -- --
Number of Units 5,246 -- --
- -------------------------------------- -- ------------ ----------- -----------
A-13
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- ------------------------------------------------- --------------- -------------- --------------
AST Sanford Bernstein Managed Index 500(5) (1998)
With No Optional Benefits
Unit Price $ 11.07 $ 10.23 $ 8.17
Number of Units 6,845,369 5,442,511 3,662,406
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.22 $ 12.25 $ 9.81
Number of Units 3,486,237 2,209,334 79,915
With GMWB
Unit Value $ 13.19 $ 12.24 --
Number of Units 389,368 16,957 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.15 $ 12.22 $ 9.81
Number of Units 352,176 203,573 383
With any one of EBP or HAV and GMWB
Unit Value $ 8.58 $ 7.98 --
Number of Units 343,296 293,662 --
With HAV, EBP and GRO Plus
Unit Price $ 13.08 $ 12.18 --
Number of Units 9,296 4,899 --
With HAV, EBP and GMWB
Unit Value $ 11.31 -- --
Number of Units 43,627 -- --
- --------------------------------------------- -- ------------ ----------- -----------
AST American Century Income & Growth (1997)
With No Optional Benefits
Unit Price $ 11.57 $ 10.45 $ 8.25
Number of Units 4,670,846 2,115,438 1,751,136
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.80 $ 12.50 $ 9.89
Number of Units 2,219,323 846,118 36,829
With GMWB
Unit Value $ 13.77 $ 12.48 --
Number of Units 198,789 2,386 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.73 $ 12.46 $ 9.89
Number of Units 368,328 124,008 8,874
With any one of EBP or HAV and GMWB
Unit Value $ 9.04 $ 8.22 --
Number of Units 372,540 195,232 --
With HAV, EBP and GRO Plus
Unit Price $ 13.65 $ 12.43 --
Number of Units 25,550 4,612 --
With HAV, EBP and GMWB
Unit Value $ 11.72 -- --
Number of Units 7,406 -- --
- --------------------------------------------- -- ------------ ----------- -----------
A-14
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- ---------------------------------------- --------------- --------------- --------------
AST Alliance Growth and Income(6) (1992)
With No Optional Benefits
Unit Price $ 11.46 $ 10.50 $ 8.06
Number of Units 25,850,506 21,264,670 6,667,373
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.91 $ 12.77 $ 9.83
Number of Units 27,268,222 13,386,166 165,588
With GMWB
Unit Value $ 13.88 $ 12.76 --
Number of Units 2,899,917 187,011 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.83 $ 12.74 $ 9.83
Number of Units 4,694,207 2,029,598 6,100
With any one of EBP or HAV and GMWB
Unit Value $ 10.72 $ 9.88 --
Number of Units 1,731,512 976,756 --
With HAV, EBP and GRO Plus
Unit Price $ 13.76 $ 12.70 --
Number of Units 564,502 69,435 --
With HAV, EBP and GMWB
Unit Value $ 11.50 -- --
Number of Units 228,955 -- --
- ------------------------------------ -- ------------ ------------ -----------
AST Hotchkis & Wiley Large-Cap Value
With No Optional Benefits
Unit Price $ 11.17 $ 9.83 $ 8.34
Number of Units 3,717,848 2,647,064 2,110,071
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.19 $ 11.65 $ 9.9
Number of Units 1,916,775 651,074 30,714
With GMWB
Unit Value $ 13.16 $ 11.63 --
Number of Units 173,888 21,961 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.12 $ 11.61 $ 9.9
Number of Units 198,898 90,092 5,934
With any one of EBP or HAV and GMWB
Unit Value $ 9.78 $ 8.66 --
Number of Units 419,818 347,275 --
With HAV, EBP and GRO Plus
Unit Price $ 13.05 $ 11.58 --
Number of Units 37,159 332 --
With HAV, EBP and GMWB
Unit Value $ 11.75 -- --
Number of Units 23,032 -- --
- ------------------------------------ -- ------------ ------------ -----------
A-15
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------------- --------------- -------------- --------------
AST DeAM Global Allocation(7) (1993)
With No Optional Benefits
Unit Price $ 11.19 $ 10.24 $ 8.71
Number of Units 1,061,887 898,161 847,517
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.70 $ 11.65 $ 9.94
Number of Units 278,657 155,865 3,088
With GMWB
Unit Value $ 12.67 $ 11.64 --
Number of Units 35,622 483 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.63 $ 11.62 $ 9.93
Number of Units 52,110 34,914 94
With any one of EBP or HAV and GMWB
Unit Value $ 9.12 $ 8.40 --
Number of Units 290,887 303,295 --
With HAV, EBP and GRO Plus
Unit Price $ 12.56 $ 11.58 --
Number of Units 2,849 1,169 --
With HAV, EBP and GMWB
Unit Value $ 11.23 -- --
Number of Units 2,193 -- --
- ------------------------------------------- -- ------------ ----------- -----------
AST American Century Strategic Balanced (1997)
With No Optional Benefits
Unit Price $ 11.46 $ 10.69 $ 9.14
Number of Units 2,335,598 2,045,205 1,126,058
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.43 $ 11.62 $ 9.97
Number of Units 1,308,462 930,516 15,835
With GMWB
Unit Value $ 12.40 $ 11.61 --
Number of Units 175,763 18,977 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.36 $ 11.59 $ 9.97
Number of Units 186,307 58,741 2,760
With any one of EBP or HAV and GMWB
Unit Value $ 10.08 $ 9.46 --
Number of Units 218,686 196,909 --
With HAV, EBP and GRO Plus
Unit Price $ 12.29 $ 11.56 --
Number of Units 18,231 11,783 --
With HAV, EBP and GMWB
Unit Value $ 10.98 -- --
Number of Units 125 -- --
- ------------------------------------------- -- ------------ ----------- -----------
A-16
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- ------------------------------------------ --------------- -------------- --------------
AST T. Rowe Price Asset Allocation (1994)
With No Optional Benefits
Unit Price $ 12.13 $ 11.09 $ 9.09
Number of Units 3,551,315 2,243,566 921,329
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.22 $ 12.12 $ 9.96
Number of Units 2,109,855 955,716 21,928
With GMWB
Unit Value $ 13.19 $ 12.11 --
Number of Units 349,177 27,414 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.15 $ 12.09 $ 9.96
Number of Units 464,055 160,339 150
With any one of EBP or HAV and GMWB
Unit Value $ 11.38 $ 10.48 --
Number of Units 39,231 2,741 --
With HAV, EBP and GRO Plus
Unit Price $ 13.08 $ 12.05
Number of Units 46,336 31,706
With HAV, EBP and GMWB
Unit Value $ 11.35 -- --
Number of Units 9,372 -- --
- -------------------------------------- -- ------------ ----------- -----------
AST T. Rowe Price Global Bond (1994)
With No Optional Benefits
Unit Price $ 13.45 $ 12.59 $ 11.34
Number of Units 4,717,822 2,962,471 1,739,313
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.17 $ 11.42 $ 10.31
Number of Units 6,387,666 1,827,606 36,822
With GMWB
Unit Value $ 12.14 $ 11.40 --
Number of Units 712,411 24,361 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.10 $ 11.38 $ 10.31
Number of Units 1,195,848 279,110 3,700
With any one of EBP or HAV and GMWB
Unit Value $ 14.05 $ 13.23 --
Number of Units 191,816 148,319 --
With HAV, EBP and GRO Plus
Unit Price $ 12.04 $ 11.35 --
Number of Units 137,089 12,591 --
With HAV, EBP and GMWB
Unit Value $ 10.94 -- --
Number of Units 43,652 -- --
- -------------------------------------- -- ------------ ----------- -----------
A-17
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- --------------- -------------- --------------
AMERICAN SKANDIA LIFEVEST[REGTM] II PROSPECTUS
AST Federated Aggressive Growth (2000)
With No Optional Benefits
Unit Price $ 15.42 $ 12.74 $ 7.64
Number of Units 4,808,453 3,085,373 1,255,415
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.79 $ 16.40 $ 9.86
Number of Units 5,192,694 2,615,505 63,097
With GMWB
Unit Value $ 19.75 $ 16.38 --
Number of Units 562,771 37,078 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 19.69 $ 16.35 $ 9.86
Number of Units 808,007 362,906 4,107
With any one of EBP or HAV and GMWB
Unit Value $ 9.70 $ 8.06 --
Number of Units 324,340 79,226 --
With HAV, EBP and GRO Plus
Unit Price $ 19.58 $ 16.30 --
Number of Units 95,514 20,181 --
With HAV, EBP and GMWB
Unit Value $ 12.64 -- --
Number of Units 53,866 -- --
- ----------------------------------- -- ------------ ----------- -----------
AST Lord Abbett Bond-Debenture (2000)
With No Optional Benefits
Unit Price $ 12.26 $ 11.61 $ 9.94
Number of Units 8,369,008 7,751,236 4,146,530
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.56 $ 11.92 $ 10.23
Number of Units 7,337,467 4,628,945 162,571
With GMWB
Unit Value $ 12.53 $ 11.90 --
Number of Units 904,128 42,593 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.49 $ 11.88 $ 10.23
Number of Units 1,314,641 624,019 7,474
With any one of EBP or HAV and GMWB
Unit Value $ 12.18 $ 11.60 --
Number of Units 732,155 423,485 --
With HAV, EBP and GRO Plus
Unit Price $ 12.42 $ 11.85 --
Number of Units 155,764 28,346 --
With HAV, EBP and GMWB
Unit Value $ 10.88 -- --
Number of Units 85,669 -- --
- ----------------------------------- -- ------------ ----------- -----------
A-18
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- --------------- --------------- ---------------
AST PIMCO Total Return Bond (1994)
With No Optional Benefits
Unit Price $ 11.31 $ 10.95 $ 10.57
Number of Units 33,208,757 26,287,388 20,544,075
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.82 $ 10.51 $ 10.17
Number of Units 30,067,867 16,012,778 604,147
With GMWB
Unit Value $ 10.79 $ 10.49 --
Number of Units 3,495,678 378,676 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.76 $ 10.48 $ 10.17
Number of Units 4,319,279 2,192,336 36,236
With any one of EBP or HAV and GMWB
Unit Value $ 13.09 $ 12.76 --
Number of Units 2,344,332 1,558,557 --
With HAV, EBP and GRO Plus
Unit Price $ 10.70 $ 10.45 --
Number of Units 476,033 119,982 --
With HAV, EBP and GMWB
Unit Value $ 10.32 -- --
Number of Units 323,335 -- --
- ----------------------------------- -- ------------ ------------ ------------
AST PIMCO Limited Maturity Bond (1995)
With No Optional Benefits
Unit Price $ 10.55 $ 10.51 $ 10.34
Number of Units 21,299,789 15,242,856 11,274,642
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.23 $ 10.22 $ 10.08
Number of Units 19,103,280 5,152,783 215,314
With GMWB
Unit Value $ 10.21 $ 10.21 --
Number of Units 2,764,809 36,640 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.17 $ 10.19 $ 10.08
Number of Units 2,785,690 636,860 80,547
With any one of EBP or HAV and GMWB
Unit Value $ 11.62 $ 11.65 --
Number of Units 1,143,298 329,629 --
With HAV, EBP and GRO Plus
Unit Price $ 10.12 $ 10.16 --
Number of Units 301,108 35,430 --
With HAV, EBP and GMWB
Unit Value $ 9.96 -- --
Number of Units 240,337 -- --
- ----------------------------------- -- ------------ ------------ ------------
A-19
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------------------------------------- --------------- --------------- ---------------
AST Money Market (1992)
With No Optional Benefits
Unit Price $ 9.78 $ 9.86 $ 9.96
Number of Units 29,870,585 32,730,501 36,255,772
With any one of GRO Plus, EBP or HAV
Unit Price $ 9.75 $ 9.86 $ 9.99
Number of Units 8,152,893 7,176,983 999,737
With GMWB
Unit Value $ 9.73 $ 9.85 --
Number of Units 1,312,018 81,304 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 9.70 $ 9.83 $ 9.99
Number of Units 1,742,703 1,118,618 70,899
With any one of EBP or HAV and GMWB
Unit Value $ 9.98 $ 10.13 --
Number of Units 234,402 35,505 --
With HAV, EBP and GRO Plus
Unit Price $ 9.65 $ 9.80 --
Number of Units 432,144 149,705 --
With HAV, EBP and GMWB
Unit Value $ 9.79 -- --
Number of Units 61,321 -- --
- ----------------------------------------------------------------- -- ------------ ------------ ------------
Gartmore Variable Investment Trust -- GVIT Developing Markets (1996)
With No Optional Benefits
Unit Price $ 16.02 $ 13.60 $ 8.66
Number of Units 2,103,950 1,763,660 283,466
With any one of GRO Plus, EBP or HAV
Unit Price $ 18.29 $ 15.56 $ 9.93
Number of Units 934,258 415,864 21,816
With GMWB
Unit Value $ 18.25 $ 15.54 --
Number of Units 161,653 12,503 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 18.19 $ 15.52 $ 9.93
Number of Units 141,365 44,993 442
With any one of EBP or HAV and GMWB
Unit Value $ 12.74 $ 10.88 --
Number of Units 25,630 843 --
With HAV, EBP and GRO Plus
Unit Price $ 18.09 $ 15.47 --
Number of Units 17,121 1,871 --
With HAV, EBP and GMWB
Unit Value $ 12.70 -- --
Number of Units 11,161 -- --
- ----------------------------------------------------------------- -- ------------ ------------ ------------
A-20
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- ----------------------------------------------------- ------------- ------------- ------------
Wells Fargo Variable Trust -- Equity Income(8) (1999)
With No Optional Benefits
Unit Price $ 11.18 $ 10.23 $ 8.25
Number of Units 590,808 314,757 196,720
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.36 $ 12.26 $ 9.9
Number of Units 285,526 251,071 10,707
With GMWB
Unit Value $ 13.33 $ 12.25 --
Number of Units 39,530 5,900 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.29 $ 12.23 $ 9.9
Number of Units 63,454 15,983 91
With any one of EBP or HAV and GMWB
Unit Value $ 16.60 $ 15.29 --
Number of Units 14,303 15,958 --
With HAV, EBP and GRO Plus
Unit Price $ 13.22 -- --
Number of Units 480 -- --
With HAV, EBP and GMWB
Unit Value $ 11.61 -- --
Number of Units 13 -- --
- ------------------------------------------------- -- ---------- ---------- ----------
AIM V.I. -- Dynamics (1999)
With No Optional Benefits
Unit Price $ 10.72 $ 9.61 $ 7.09
Number of Units 668,032 889,464 543,762
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.59 $ 13.12 $ 9.7
Number of Units 590,157 634,308 32,635
With GMWB
Unit Value $ 14.56 $ 13.11 --
Number of Units 61,543 4,848 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.51 $ 13.08 $ 9.7
Number of Units 55,199 38,518 576
With any one of EBP or HAV and GMWB
Unit Value $ 11.67 -- --
Number of Units 1,825 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.43 $ 13.05 --
Number of Units 4,253 3,083 --
With HAV, EBP and GMWB
Unit Value $ 11.63 -- --
Number of Units 13 -- --
- ------------------------------------------------- -- ---------- ---------- ----------
A-21
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- ------------ ------------ -------------
AIM V.I. -- Technology (1999)
With No Optional Benefits
Unit Price $ 8.09 $ 7.87 $ 5.5
Number of Units 512,424 578,651 293,307
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.71 $ 13.35 --
Number of Units 5,184 3,695 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ----------------------------------- -- ---------- ---------- ----------
AIM V.I. -- Health Sciences (1999)
With No Optional Benefits
Unit Price $ 10.64 $ 10.05 $ 8
Number of Units 937,586 698,364 475,873
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.58 $ 11.93 $ 9.51
Number of Units 578,826 381,478 5,444
With GMWB
Unit Value $ 12.56 $ 11.91 --
Number of Units 87,037 2,077 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.52 $ 11.89 $ 9.51
Number of Units 181,513 55,867 140
With any one of EBP or HAV and GMWB
Unit Value $ 11.41 $ 10.85 --
Number of Units 5,057 1,330 --
With HAV, EBP and GRO Plus
Unit Price $ 12.45 -- --
Number of Units 5,438 -- --
With HAV, EBP and GMWB
Unit Value $ 11.38 -- --
Number of Units 2,157 -- --
- ----------------------------------- -- ---------- ---------- ----------
A-22
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- -------------------------------------------- ------------- ------------- ------------
AIM V.I. -- Financial Services (1999)
With No Optional Benefits
Unit Price $ 11.94 $ 11.17 $ 8.76
Number of Units 585,185 607,265 366,258
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.44 $ 12.61 $ 9.92
Number of Units 387,921 200,360 1,897
With GMWB
Unit Value $ 13.42 $ 12.60 --
Number of Units 67,581 20,268 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.37 $ 12.58 $ 9.92
Number of Units 84,188 50,250 141
With any one of EBP or HAV and GMWB
Unit Value $ 11.11 $ 10.46 --
Number of Units 15,566 1,378 --
With HAV, EBP and GRO Plus
Unit Price $ 13.30 $ 12.54 --
Number of Units 8,806 751 --
With HAV, EBP and GMWB
Unit Value $ 11.08 -- --
Number of Units 468 -- --
- ---------------------------------------- -- ---------- ---------- ----------
Evergreen VA -- International Equity (1999)
With No Optional Benefits
Unit Price $ 13.66 $ 11.65 $ 8.15
Number of Units 414,631 189,143 113,389
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.94 $ 12.78 $ 9.67
Number of Units 195,986 76,749 3,669
With GMWB
Unit Value $ 12.21 $ 10.45 --
Number of Units 32,858 827 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.86 $ 12.74 --
Number of Units 67,201 6,492 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.40 $ 10.64 --
Number of Units 83,727 81,555 --
With HAV, EBP and GRO Plus
Unit Price $ 14.78 $ 12.71 --
Number of Units 7,362 1,395 --
With HAV, EBP and GMWB
Unit Value $ 12.36 -- --
Number of Units 2,878 -- --
- ---------------------------------------- -- ---------- ---------- ----------
A-23
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- ---------------------------------------- ------------- ------------- ------------
Evergreen VA -- Special Equity(9) (1999)
With No Optional Benefits
Unit Price $ 11.58 $ 11.12 $ 7.44
Number of Units 702,642 815,621 127,728
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.25 $ 14.69 $ 9.85
Number of Units 509,734 293,794 12,520
With GMWB
Unit Value $ 15.22 $ 14.67 --
Number of Units 46,748 3,620 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.17 $ 14.65 $ 9.85
Number of Units 177,731 58,548 533
With any one of EBP or HAV and GMWB
Unit Value $ 9.13 $ 8.83 --
Number of Units 114,259 23,503 --
With HAV, EBP and GRO Plus
Unit Price $ 15.09 -- --
Number of Units 3,411 -- --
With HAV, EBP and GMWB
Unit Value $ 10.53 -- --
Number of Units 26,034 -- --
- ------------------------------------ -- ---------- ---------- ----------
Evergreen VA -- Omega (2000)
With No Optional Benefits
Unit Price $ 11.29 $ 10.71 $ 7.78
Number of Units 570,123 404,789 39,943
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.89 $ 13.21 --
Number of Units 387,492 56,002 --
With GMWB
Unit Value $ 13.86 $ 13.19 --
Number of Units 31,153 283 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.81 $ 13.17 --
Number of Units 108,796 25,003 --
With any one of EBP or HAV and GMWB
Unit Value $ 9.40 $ 8.97 --
Number of Units 84,876 19,658 --
With HAV, EBP and GRO Plus
Unit Price $ 13.74 $ 13.13 --
Number of Units 3,028 1,855 --
With HAV, EBP and GMWB
Unit Value $ 10.92 -- --
Number of Units 30,383 -- --
- ------------------------------------ -- ---------- ---------- ----------
A-24
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- --------------- -------------- ------------
ProFund VP -- Europe 30 (1999)
With No Optional Benefits
Unit Price $ 12.17 $ 10.83 $ 7.93
Number of Units 1,812,435 2,116,400 292,396
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.80 $ 13.20 $ 9.7
Number of Units 313,111 158,208 2,625
With GMWB
Unit Value $ 14.77 $ 13.18 --
Number of Units 99,557 13,365 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.72 $ 13.16 --
Number of Units 162,300 40,636 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.39 $ 11.09 --
Number of Units 17,205 3,060 --
With HAV, EBP and GRO Plus
Unit Price $ 14.64 -- --
Number of Units 7,739 -- --
With HAV, EBP and GMWB
Unit Value $ 12.35 -- --
Number of Units 7,758 -- --
- ----------------------------------- -- ------------ ----------- ----------
ProFund VP -- Asia 30 (2002)
With No Optional Benefits
Unit Price $ 12.30 $ 12.57 $ 7.75
Number of Units 896,010 942,605 281,993
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.57 $ 15.96 $ 9.86
Number of Units 253,337 131,276 6,995
With GMWB
Unit Value $ 15.54 $ 15.94 --
Number of Units 74,988 10,432 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.49 $ 15.91 --
Number of Units 67,805 33,050 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.14 $ 10.43 --
Number of Units 28,325 1,873 --
With HAV, EBP and GRO Plus
Unit Price $ 15.40 -- --
Number of Units 5,612 -- --
With HAV, EBP and GMWB
Unit Value $ 10.10 -- --
Number of Units 6,082 -- --
- ----------------------------------- -- ------------ ----------- ----------
A-25
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- ------------ ------------ ------------
ProFund VP -- Japan (2002)
With No Optional Benefits
Unit Price $ 9.55 $ 9.03 $ 7.24
Number of Units 710,879 426,718 65,845
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.40 $ 12.70 $ 10.21
Number of Units 137,584 76,553 351
With GMWB
Unit Value $ 13.38 $ 12.69 --
Number of Units 35,968 1,883 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.33 $ 12.67 --
Number of Units 62,668 10,769 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.35 -- --
Number of Units 8,278 -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.26 -- --
Number of Units 7,559 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ----------------------------------- -- ---------- ---------- ----------
ProFund VP -- Banks (2002)
With No Optional Benefits
Unit Price $ 11.98 $ 10.90 $ 8.56
Number of Units 229,711 93,067 101,136
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.10 $ 12.86 $ 10.13
Number of Units 171,696 34,962 3,422
With GMWB
Unit Value $ 14.07 -- --
Number of Units 8,847 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.03 $ 12.83 --
Number of Units 29,071 6,833 --
With any one of EBP or HAV and GMWB
Unit Value $ 11.58 -- --
Number of Units 20,936 -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.95 $ 12.79 --
Number of Units 788 1,039 --
With HAV, EBP and GMWB
Unit Value $ 11.54 -- --
Number of Units 582 -- --
- ----------------------------------- -- ---------- ---------- ----------
A-26
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- ------------- -------------- ------------
ProFund VP -- Basic Materials (2002)
With No Optional Benefits
Unit Price $ 11.87 $ 10.95 $ 8.46
Number of Units 529,237 1,512,864 76,331
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.43 $ 13.35 $ 10.34
Number of Units 170,212 100,189 12
With GMWB
Unit Value $ 14.40 $ 13.33 --
Number of Units 23,555 8,054 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.35 $ 13.31 --
Number of Units 35,537 15,986 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.43 -- --
Number of Units 15,658 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.28 -- --
Number of Units 3,155 -- --
With HAV, EBP and GMWB
Unit Value $ 12.40 -- --
Number of Units 1,246 -- --
- ----------------------------------- -- ---------- ----------- ----------
ProFund VP -- Biotechnology (2001)
With No Optional Benefits
Unit Price $ 10.52 $ 9.75 $ 7.09
Number of Units 757,678 208,971 130,082
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.56 $ 13.53 --
Number of Units 5,878 847 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ----------------------------------- -- ---------- ----------- ----------
A-27
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- ------------ ------------ ------------
ProFund VP -- Consumer Services (2002)
With No Optional Benefits
Unit Price $ 9.56 $ 9.04 $ 7.25
Number of Units 430,620 136,269 128,022
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.31 $ 11.66 $ 9.37
Number of Units 87,433 30,700 2,426
With GMWB
Unit Value $ 12.28 -- --
Number of Units 17,197 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.24 $ 11.62 --
Number of Units 8,198 5,655 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.69 -- --
Number of Units 2,087 -- --
With HAV, EBP and GRO Plus
Unit Price $ 12.17 $ 11.59 --
Number of Units 1,211 3,817 --
With HAV, EBP and GMWB
Unit Value $ 10.66 -- --
Number of Units 14 -- --
- ----------------------------------- -- ---------- ---------- ----------
ProFund VP -- Consumer Goods (2002)
With No Optional Benefits
Unit Price $ 10.36 $ 9.64 $ 8.28
Number of Units 369,007 58,425 148,446
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.33 $ 11.51 $ 9.9
Number of Units 102,706 12,720 2,303
With GMWB
Unit Value $ 12.31 $ 11.49 --
Number of Units 8,437 954 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.27 -- --
Number of Units 54,297 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 11.40 $ 10.67 --
Number of Units 9,175 4,737 --
With HAV, EBP and GRO Plus
Unit Price $ 12.20 -- --
Number of Units 1,731 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ----------------------------------- -- ---------- ---------- ----------
A-28
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- --------------- -------------- ------------
ProFund VP -- Oil & Gas (2001)
With No Optional Benefits
Unit Price $ 13.33 $ 10.48 $ 8.71
Number of Units 1,856,882 1,225,844 299,833
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.40 $ 12.14 $ 10.12
Number of Units 888,111 114,553 1,660
With GMWB
Unit Value $ 15.37 $ 12.12 --
Number of Units 58,804 4,007 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.32 $ 12.10 --
Number of Units 174,913 25,623 --
With any one of EBP or HAV and GMWB
Unit Value $ 13.80 -- --
Number of Units 29,672 -- --
With HAV, EBP and GRO Plus
Unit Price $ 15.23 $ 12.07 --
Number of Units 14,353 2,434 --
With HAV, EBP and GMWB
Unit Value $ 13.76 -- --
Number of Units 6,676 -- --
- ----------------------------------- -- ------------ ----------- ----------
ProFund VP -- Financials (2001)
With No Optional Benefits
Unit Price $ 12.19 $ 11.23 $ 8.85
Number of Units 553,342 398,159 221,377
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.48 $ 12.45 $ 9.84
Number of Units 323,190 134,420 2,066
With GMWB
Unit Value $ 13.45 $ 12.44 --
Number of Units 17,749 1,060 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.41 $ 12.42 --
Number of Units 35,528 27,402 --
With any one of EBP or HAV and GMWB
Unit Value $ 11.26 -- --
Number of Units 15,974 -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.33 -- --
Number of Units 1,103 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ----------------------------------- -- ------------ ----------- ----------
A-29
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- --------------- ------------ ------------
AMERICAN SKANDIA LIFEVEST[REGTM] II PROSPECTUS
ProFund VP -- Health Care (2001)
With No Optional Benefits
Unit Price $ 9.23 $ 9.17 $ 7.94
Number of Units 1,318,525 707,449 388,508
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.10 $ 11.05 $ 9.59
Number of Units 518,389 244,228 6,831
With GMWB
Unit Value $ 11.07 $ 11.04 --
Number of Units 8,570 1,969 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.04 $ 11.02 --
Number of Units 139,890 56,392 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.65 -- --
Number of Units 5,322 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.98 $ 10.99 --
Number of Units 4,035 2,123 --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ----------------------------------- -- ------------ ---------- ----------
ProFund VP -- Industrials (2002)
With No Optional Benefits
Unit Price $ 11.15 $ 10.01 $ 7.93
Number of Units 253,411 318,339 12,642
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.27 $ 12.85 --
Number of Units 88,729 20,601 --
With GMWB
Unit Value $ 14.24 -- --
Number of Units 4,426 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.20 $ 12.81 --
Number of Units 14,026 4,507 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.08 -- --
Number of Units 4,381 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.12 -- --
Number of Units 945 -- --
With HAV, EBP and GMWB
Unit Value $ 12.04 -- --
Number of Units 807 -- --
- ----------------------------------- -- ------------ ---------- ----------
A-30
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- ------------- ------------- ------------
ProFund VP -- Internet (2002)
With No Optional Benefits
Unit Price $ 17.89 $ 15.00 $ 8.57
Number of Units 992,879 206,876 306,572
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.83 $ 16.67 --
Number of Units 3,806 1,210 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ----------------------------------- -- ---------- ---------- ----------
ProFund VP -- Pharmaceuticals (2002)
With No Optional Benefits
Unit Price $ 7.93 $ 8.89 $ 8.56
Number of Units 527,336 266,978 136,559
With any one of GRO Plus, EBP or HAV
Unit Price $ 8.88 $ 9.97 $ 9.63
Number of Units 246,789 77,105 2,545
With GMWB
Unit Value $ 8.86 $ 9.96 --
Number of Units 23,137 2,871 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 8.83 $ 9.94 --
Number of Units 70,946 6,346 --
With any one of EBP or HAV and GMWB
Unit Value $ 9.44 -- --
Number of Units 5,382 -- --
With HAV, EBP and GRO Plus
Unit Price $ 8.78 $ 9.91 --
Number of Units 3,939 1,646 --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ----------------------------------- -- ---------- ---------- ----------
A-31
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- --------------- -------------- --------------
ProFund VP -- Precious Metals (2002)
With No Optional Benefits
Unit Price $ 11.77 $ 13.29 $ 9.7
Number of Units 1,479,384 1,329,806 1,175,651
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.64 $ 15.44 $ 11.3
Number of Units 457,761 390,896 19,964
With GMWB
Unit Value $ 13.61 -- --
Number of Units 42,627 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.57 $ 15.39 --
Number of Units 111,588 44,664 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.17 -- --
Number of Units 93,541 -- --
With HAV, EBP and GRO Plus
Unit Price $ 13.49 $ 15.35 --
Number of Units 7,072 1,458 --
With HAV, EBP and GMWB
Unit Value $ 10.14 $ 11.55 --
Number of Units 11,671 23,284 --
- ----------------------------------- -- ------------ ----------- -----------
ProFund VP -- Real Estate (2001)
With No Optional Benefits
Unit Price $ 16.15 $ 12.91 $ 9.86
Number of Units 1,816,706 462,906 441,318
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.63 $ 13.33 $ 10.2
Number of Units 509,763 136,941 12,789
With GMWB
Unit Value $ 16.60 $ 13.31 --
Number of Units 58,062 3,835 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 16.54 $ 13.29 --
Number of Units 128,625 32,970 --
With any one of EBP or HAV and GMWB
Unit Value $ 13.06 -- --
Number of Units 22,857 -- --
With HAV, EBP and GRO Plus
Unit Price $ 16.45 -- --
Number of Units 629 -- --
With HAV, EBP and GMWB
Unit Value $ 13.02 -- --
Number of Units 1,198 -- --
- ----------------------------------- -- ------------ ----------- -----------
A-32
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- ------------ ------------ ------------
ProFund VP -- Semiconductor (2002)
With No Optional Benefits
Unit Price $ 7.15 $ 9.51 $ 5.14
Number of Units 694,352 423,958 93,241
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.95 $ 15.93 --
Number of Units 3,639 3,475 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ----------------------------------- -- ---------- ---------- ----------
ProFund VP -- Technology (2001)
With No Optional Benefits
Unit Price $ 8.48 $ 8.66 $ 6.03
Number of Units 727,580 497,972 254,131
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.99 $ 13.30 --
Number of Units 9,239 6,845 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ----------------------------------- -- ---------- ---------- ----------
A-33
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- ---------------------------------------- --------------- ------------ ------------
ProFund VP -- Telecommunications (2001)
With No Optional Benefits
Unit Price $ 8.19 $ 7.21 $ 7.15
Number of Units 460,848 398,350 272,408
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.43 $ 10.08 $ 10.03
Number of Units 212,127 47,283 3,642
With GMWB
Unit Value $ 11.40 -- --
Number of Units 6,379 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.37 $ 10.05 --
Number of Units 34,691 13,783 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.54 -- --
Number of Units 4,099 -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.31 -- --
Number of Units 11,741 -- --
With HAV, EBP and GMWB
Unit Value $ 12.50 -- --
Number of Units 2,691 -- --
- ------------------------------------ -- ------------ ---------- ----------
ProFund VP -- Utilities (2001)
With No Optional Benefits
Unit Price $ 11.13 $ 9.34 $ 7.83
Number of Units 1,060,939 618,427 521,419
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.00 $ 12.63 $ 10.61
Number of Units 332,768 93,690 8,871
With GMWB
Unit Value $ 14.97 $ 12.62 --
Number of Units 57,208 8,137 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.92 $ 12.60 --
Number of Units 87,691 10,588 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.51 -- --
Number of Units 21,365 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.84 -- --
Number of Units 7,490 -- --
With HAV, EBP and GMWB
Unit Value $ 12.47 -- --
Number of Units 573 -- --
- ------------------------------------ -- ------------ ---------- ----------
A-34
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- --------------- -------------- --------------
ProFund VP -- Bull (2002)
With No Optional Benefits
Unit Price $ 10.53 $ 9.84 $ 7.97
Number of Units 8,215,357 3,563,562 954,792
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.82 $ 12.01 $ 9.75
Number of Units 2,052,501 708,248 10,297
With GMWB
Unit Value $ 12.79 $ 12.00 --
Number of Units 171,187 1,179 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 12.75 $ 11.98 $ 9.75
Number of Units 570,114 58,349 400
With any one of EBP or HAV and GMWB
Unit Value $ 11.25 $ 10.58 --
Number of Units 31,600 427 --
With HAV, EBP and GRO Plus
Unit Price $ 12.68 $ 11.94 --
Number of Units 88,697 10,714 --
With HAV, EBP and GMWB
Unit Value $ 11.21 -- --
Number of Units 12,971 -- --
- ----------------------------------- -- ------------ ----------- -----------
ProFund VP -- Bear (2001)
With No Optional Benefits
Unit Price $ 7.45 $ 8.44 $ 11.38
Number of Units 1,202,243 1,886,515 1,532,543
With any one of GRO Plus, EBP or HAV
Unit Price $ 6.60 $ 7.49 $ 10.13
Number of Units 289,105 716,467 28,618
With GMWB
Unit Value $ 6.58 -- --
Number of Units 41,480 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 6.56 $ 7.47 $ 10.13
Number of Units 60,475 36,686 1,514
With any one of EBP or HAV and GMWB
Unit Value $ 8.15 $ 9.29 --
Number of Units 10,709 7,927 --
With HAV, EBP and GRO Plus
Unit Price $ 6.52 $ 7.45 --
Number of Units 14,578 13,622 --
With HAV, EBP and GMWB
Unit Value $ 8.12 $ 9.29 --
Number of Units 1,620 7,293 --
- ----------------------------------- -- ------------ ----------- -----------
A-35
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- --------------- -------------- --------------
ProFund VP -- UltraBull (2001)
With No Optional Benefits
Unit Price $ 11.76 $ 10.20 $ 6.78
Number of Units 2,817,803 1,431,345 297,435
With any one of GRO Plus, EBP or HAV
Unit Price $ 16.58 $ 14.42 $ 9.61
Number of Units 9,518 1,432 245
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ----------------------------------- -- ------------ ----------- -----------
ProFund VP -- OTC (2001)
With No Optional Benefits
Unit Price $ 9.94 $ 9.32 $ 6.45
Number of Units 4,885,351 4,445,234 1,346,852
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.34 $ 13.47 $ 9.36
Number of Units 1,807,904 810,005 13,113
With GMWB
Unit Value $ 14.31 $ 13.46 --
Number of Units 128,923 5,378 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 14.27 $ 13.44 --
Number of Units 225,055 34,480 --
With any one of EBP or HAV and GMWB
Unit Value $ 10.92 -- --
Number of Units 28,507 -- --
With HAV, EBP and GRO Plus
Unit Price $ 14.19 -- --
Number of Units 32,376 -- --
With HAV, EBP and GMWB
Unit Value $ 10.88 -- --
Number of Units 14,308 -- --
- ----------------------------------- -- ------------ ----------- -----------
A-36
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- --------------- -------------- -------------
ProFund VP -- Short OTC (2002)
With No Optional Benefits
Unit Price $ 5.93 $ 6.78 $ 11
Number of Units 908,064 1,535,439 433,181
With any one of GRO Plus, EBP or HAV
Unit Price $ 5.60 $ 6.42 $ 10.43
Number of Units 181,352 196,526 15,308
With GMWB
Unit Value $ 5.58 -- --
Number of Units 7,191 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 5.57 $ 6.40 --
Number of Units 65,148 20,167 --
With any one of EBP or HAV and GMWB
Unit Value -- $ 9.49 --
Number of Units -- 7,708 --
With HAV, EBP and GRO Plus
Unit Price $ 5.54 $ 6.38 --
Number of Units 16,306 16,907 --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ----------------------------------- -- ------------ ----------- -----------
ProFund VP -- UltraOTC (1999)
With No Optional Benefits
Unit Price $ 7.89 $ 7.03 $ 3.53
Number of Units 6,592,447 3,410,589 1,003,123
With any one of GRO Plus, EBP or HAV
Unit Price $ 19.36 $ 17.30 $ 8.7
Number of Units 22,282 5,905 233
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ----------------------------------- -- ------------ ----------- -----------
A-37
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- --------------- -------------- ------------
ProFund VP -- Mid-Cap Value (2002)
With No Optional Benefits
Unit Price $ 11.67 $ 10.23 $ 7.66
Number of Units 2,632,869 1,455,513 438,387
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.24 $ 13.40 $ 10.06
Number of Units 626,618 462,172 4,777
With GMWB
Unit Value $ 15.21 $ 13.39 --
Number of Units 110,312 4,164 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.16 $ 13.36 $ 10.06
Number of Units 304,648 99,189 4,799
With any one of EBP or HAV and GMWB
Unit Value $ 12.20 $ 10.77 --
Number of Units 39,454 3,516 --
With HAV, EBP and GRO Plus
Unit Price $ 15.08 $ 13.33 --
Number of Units 12,473 916 --
With HAV, EBP and GMWB
Unit Value $ 12.17 -- --
Number of Units 3,507 -- --
- ----------------------------------- -- ------------ ----------- ----------
ProFund VP -- Mid-Cap Growth (2002)
With No Optional Benefits
Unit Price $ 10.58 $ 9.69 $ 7.7
Number of Units 2,220,901 1,009,867 439,054
With any one of GRO Plus, EBP or HAV
Unit Price $ 13.42 $ 12.32 $ 9.82
Number of Units 579,666 295,528 1,587
With GMWB
Unit Value $ 13.39 $ 12.31 --
Number of Units 53,472 2,028 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 13.35 $ 12.28 $ 9.81
Number of Units 163,302 47,141 1,583
With any one of EBP or HAV and GMWB
Unit Value $ 11.12 $ 10.24 --
Number of Units 21,341 3,933 --
With HAV, EBP and GRO Plus
Unit Price $ 13.28 $ 12.25 --
Number of Units 6,489 1,274 --
With HAV, EBP and GMWB
Unit Value $ 11.09 -- --
Number of Units 9,859 -- --
- ----------------------------------- -- ------------ ----------- ----------
A-38
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- --------------- -------------- ------------
ProFund VP -- UltraMid-Cap (2002)
With No Optional Benefits
Unit Price $ 11.99 $ 9.55 $ 5.71
Number of Units 3,106,849 1,112,311 477,953
With any one of GRO Plus, EBP or HAV
Unit Price $ 20.62 $ 16.46 $ 9.86
Number of Units 338,303 136,523 1,673
With GMWB
Unit Value $ 20.57 $ 16.44 --
Number of Units 101,493 3,746 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 20.51 $ 16.41 --
Number of Units 150,540 88,028 --
With any one of EBP or HAV and GMWB
Unit Value $ 13.86 -- --
Number of Units 27,449 -- --
With HAV, EBP and GRO Plus
Unit Price $ 20.40 $ 16.37 --
Number of Units 2,161 557 --
With HAV, EBP and GMWB
Unit Value $ 13.81 -- --
Number of Units 14,660 -- --
- ----------------------------------- -- ------------ ----------- ----------
ProFund VP -- Small-Cap Value (2002)
With No Optional Benefits
Unit Price $ 11.10 $ 9.39 $ 7.09
Number of Units 4,088,760 5,144,632 994,778
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.80 $ 13.41 $ 10.15
Number of Units 2,597,154 1,218,990 19,019
With GMWB
Unit Value $ 15.76 $ 13.39 --
Number of Units 163,443 24,769 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.71 $ 13.37 --
Number of Units 596,413 207,523 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.53 $ 10.67 --
Number of Units 31,732 4,223 --
With HAV, EBP and GRO Plus
Unit Price $ 15.63 $ 13.33 --
Number of Units 29,856 28,687 --
With HAV, EBP and GMWB
Unit Value $ 12.49 -- --
Number of Units 6,158 -- --
- ----------------------------------- -- ------------ ----------- ----------
A-39
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- --------------- -------------- ------------
ProFund VP -- Small-Cap Growth (2002)
With No Optional Benefits
Unit Price $ 11.98 $ 10.16 $ 7.69
Number of Units 4,677,820 3,868,951 772,260
With any one of GRO Plus, EBP or HAV
Unit Price $ 15.34 $ 13.05 $ 9.91
Number of Units 1,611,060 1,289,398 10,572
With GMWB
Unit Value $ 15.31 $ 13.04 --
Number of Units 170,800 21,997 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 15.26 $ 13.01 --
Number of Units 285,725 210,595 --
With any one of EBP or HAV and GMWB
Unit Value $ 12.23 $ 10.44 --
Number of Units 42,134 2,529 --
With HAV, EBP and GRO Plus
Unit Price $ 15.17 $ 12.98 --
Number of Units 9,388 30,164 --
With HAV, EBP and GMWB
Unit Value $ 12.19 -- --
Number of Units 13,290 -- --
- ----------------------------------- -- ------------ ----------- ----------
ProFund VP -- UltraSmall-Cap (1999)
With No Optional Benefits
Unit Price $ 15.52 $ 12.04 $ 6.14
Number of Units 5,098,565 1,702,558 212,085
With any one of GRO Plus, EBP or HAV
Unit Price $ 24.98 $ 19.43 --
Number of Units 32,780 13,082 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ----------------------------------- -- ------------ ----------- ----------
A-40
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- ---------------------------------------------- --------------- -------------- --------------
ProFund VP -- U.S. Government Plus (2002)
With No Optional Benefits
Unit Price $ 11.79 $ 11.08 $ 11.56
Number of Units 1,051,158 731,470 2,486,854
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.34 $ 9.75 $ 10.19
Number of Units 372,142 291,892 22,148
With GMWB
Unit Value $ 10.32 $ 9.73 --
Number of Units 120,311 14,956 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.29 $ 9.72 $ 10.19
Number of Units 111,072 32,854 609
With any one of EBP or HAV and GMWB
Unit Value $ 10.80 -- --
Number of Units 4,588 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.23 -- --
Number of Units 13,114 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------------ -- ------------ ----------- -----------
ProFund VP -- Rising Rates Opportunity (2002)
With No Optional Benefits
Unit Price $ 6.63 $ 7.56 $ 8.02
Number of Units 5,314,528 1,817,924 165,792
With any one of GRO Plus, EBP or HAV
Unit Price $ 7.97 $ 9.12 $ 9.69
Number of Units 2,060,525 445,486 9,028
With GMWB
Unit Value $ 7.95 $ 9.11 --
Number of Units 333,355 4,991 --
With any two of GRO Plus, EBP or HAV
Unit Price $ 7.93 $ 9.09 --
Number of Units 588,490 82,598 --
With any one of EBP or HAV and GMWB
Unit Value $ 8.31 -- --
Number of Units 219,942 -- --
With HAV, EBP and GRO Plus
Unit Price $ 7.89 $ 9.07 --
Number of Units 52,002 10,876 --
With HAV, EBP and GMWB
Unit Value $ 8.28 -- --
Number of Units 14,108 -- --
- ------------------------------------------ -- ------------ ----------- -----------
A-41
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- ------------- ------ ------
ProFund VP -- Large-Cap Growth
With No Optional Benefits
Unit Price $ 10.37 -- --
Number of Units 72,725 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.37 -- --
Number of Units 18,860 -- --
With GMWB
Unit Value $ 10.37 -- --
Number of Units 2,860 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.37 -- --
Number of Units 6,286 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.37 -- --
Number of Units 554 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.37 -- --
Number of Units 84 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ----------------------------------- -- ---------- ---- ----
ProFund VP -- Large-Cap Value
With No Optional Benefits
Unit Price $ 10.37 -- --
Number of Units 159,605 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.36 -- --
Number of Units 36,170 -- --
With GMWB
Unit Value $ 10.36 -- --
Number of Units 3,802 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.36 -- --
Number of Units 1,123 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.36 -- --
Number of Units 554 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.36 -- --
Number of Units 84 -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ----------------------------------- -- ---------- ---- ----
A-42
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- ------------ ------ ------
ProFund VP -- Short Mid-Cap
With No Optional Benefits
Unit Price $ 9.70 -- --
Number of Units 39,360 -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ----------------------------------- -- --------- ---- ----
ProFund VP -- Short Small-Cap
With No Optional Benefits
Unit Price $ 9.54 -- --
Number of Units 136,809 -- --
With any one of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ----------------------------------- -- --------- ---- ----
A-43
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------------- ------------- ------------ -----------
First Trust[RegTM] 10 Uncommon Values (2000)
With No Optional Benefits
Unit Price $ 10.03 $ 9.16 $ 6.8
Number of Units 91,924 66,435 19,826
With any one of GRO Plus, EBP or HAV
Unit Price $ 14.39 $ 13.17 --
Number of Units 28 467 --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ----------------------------------------- -- ---------- --------- ---------
First Trust Global Target 15 (10)
With No Optional Benefits
Unit Price $ 11.85 -- --
Number of Units 311,233 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.83 -- --
Number of Units 303,452 -- --
With GMWB
Unit Value $ 11.82 -- --
Number of Units 108,014 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.81 -- --
Number of Units 65,909 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 11.80 -- --
Number of Units 6,777 -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.79 -- --
Number of Units 4,718 -- --
With HAV, EBP and GMWB
Unit Value $ 11.78 -- --
Number of Units 3,816 -- --
- ----------------------------------------- -- ---------- --------- ---------
A-44
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- --------------- ------ ------
First Trust Target Managed VIP
With No Optional Benefits
Unit Price $ 11.32 -- --
Number of Units 1,777,316 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 11.30 -- --
Number of Units 1,562,079 -- --
With GMWB
Unit Value $ 11.30 -- --
Number of Units 1,057,901 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 11.28 -- --
Number of Units 429,320 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 11.28 -- --
Number of Units 40,194 -- --
With HAV, EBP and GRO Plus
Unit Price $ 11.27 -- --
Number of Units 217,324 -- --
With HAV, EBP and GMWB
Unit Value $ 11.26 -- --
Number of Units 23,730 -- --
- ----------------------------------- -- ------------ ---- ----
First Trust NASDAQ Target 15
With No Optional Benefits
Unit Price $ 10.66 -- --
Number of Units 82,809 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.64 -- --
Number of Units 1,635 -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ----------------------------------- -- ------------ ---- ----
A-45
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- --------------------------------------- ------------- ------ ------
First Trust S&P Target 24
With No Optional Benefits
Unit Price $ 10.75 -- --
Number of Units 173,851 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.73 -- --
Number of Units 152,355 -- --
With GMWB
Unit Value $ 10.72 -- --
Number of Units 38,677 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.71 -- --
Number of Units 72,575 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.70 -- --
Number of Units 11,933 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.69 -- --
Number of Units 3,409 -- --
With HAV, EBP and GMWB
Unit Value $ 10.68 -- --
Number of Units 2,359 -- --
- ----------------------------------- -- ---------- ---- ----
First Trust The Dow(SM) DART 10
With No Optional Benefits
Unit Price $ 10.48 -- --
Number of Units 155,695 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.46 -- --
Number of Units 160,820 -- --
With GMWB
Unit Value $ 10.46 -- --
Number of Units 78,082 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.45 -- --
Number of Units 82,728 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.44 -- --
Number of Units 3,913 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.43 -- --
Number of Units 10,531 -- --
With HAV, EBP and GMWB
Unit Value $ 10.42 -- --
Number of Units 105 -- --
- ----------------------------------- -- ---------- ---- ----
A-46
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Sub-account 2004 2003 2002
- ---------------------------------------- ------------- ------ -----
First Trust Value Line(R) Target 25
With No Optional Benefits
Unit Price $ 12.59 -- --
Number of Units 389,792 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 12.57 -- --
Number of Units 4,909 -- --
With GMWB
Unit Value -- -- --
Number of Units -- -- --
With any two of GRO Plus, EBP or HAV
Unit Price -- -- --
Number of Units -- -- --
With any one of EBP or HAV and GMWB
Unit Value -- -- --
Number of Units -- -- --
With HAV, EBP and GRO Plus
Unit Price -- -- --
Number of Units -- -- --
With HAV, EBP and GMWB
Unit Value -- -- --
Number of Units -- -- --
- ------------------------------------ -- ---------- ---- ----
SP William Blair International Growth
With No Optional Benefits
Unit Price $ 10.53 -- --
Number of Units 269,671 -- --
With any one of GRO Plus, EBP or HAV
Unit Price $ 10.53 -- --
Number of Units 172,859 -- --
With GMWB
Unit Value $ 10.53 -- --
Number of Units 73,031 -- --
With any two of GRO Plus, EBP or HAV
Unit Price $ 10.52 -- --
Number of Units 23,863 -- --
With any one of EBP or HAV and GMWB
Unit Value $ 10.52 -- --
Number of Units 6,604 -- --
With HAV, EBP and GRO Plus
Unit Price $ 10.52 -- --
Number of Units 4,127 -- --
With HAV, EBP and GMWB
Unit Value $ 10.52 -- --
Number of Units 806 -- --
- ------------------------------------ -- ---------- ---- ----
A-47
APPENDIX A
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix A -- Condensed Financial Information About Separate Account
B continued
- --------------------------------------------------------------------------------
1: Effective May 2, 2005 the name of the AST State Street Research Small-Cap
Growth Portfolio has changed to AST Small-Cap Growth Portfolio.
2: Effective May 2, 2005 the name of the AST Alliance Growth Portfolio has
changed to AST AllianceBernstein Large-Cap Growth Portfolio.
3: Effective May 2, 2005 the name of the AST Alliance/Bernstein Growth + Value
Portfolio has changed to AST AllianceBernstein Growth + Value Portfolio.
4: Effective May 2, 2005 the name of the AST Sanford Bernstein Core Value
Portfolio has changed to AST AllianceBernstein Core Value Portfolio.
5: Effective May 2, 2005 the name of the AST Sanford Bernstein Managed Index
500 Portfolio has changed to AST AllianceBernstein Managed Index 500 Portfolio.
6: Effective May 2, 2005 the name of the AST Alliance Growth and Income
Portfolio has changed to AST AllianceBernstein Growth & Income Portfolio.
7: Effective May 2, 2005 the name of the AST DeAM Global Allocation Portfolio
has changed to AST Global Allocation Portfolio.
8: Effective May 2, 2005 the name of the Wells Fargo Variable Trust Equity
Income Portfolio has changed to Wells Fargo Variable Trust Advantage Equity
Income Portfolio.
9: Effective April 15, 2005 the name of the Evergreen VA--Special Equity
Portfolio has changed to Evergreen VA Growth Portfolio.
10: Effective May 2, 2005 the name of the First Trust Global Target 15
Portfolio has changed to First Trust Global Dividend Target 15 Portfolio.
A-48
APPENDIX B
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits
- --------------------------------------------------------------------------------
Examples of Enhanced Beneficiary Protection Optional Death Benefit Calculation
The following are examples of how the Enhanced Beneficiary Protection Optional
Death Benefit is calculated. Each example assumes that a $50,000 initial
Purchase Payment is made. Each example assumes that there is one Owner who is
age 50 on the Issue Date and that all Account Value is maintained in the
variable investment options. The formula for determining the Enhanced
Beneficiary Protection Optional Death Benefit is as follows:
Account Value of variable
investment options plus Interim Purchase Payments -
Growth = minus
Value of Fixed Allocations proportional withdrawals
(no MVA applies)
Example with market increase
Assume that the Owner has made no withdrawals and that the Account Value has
been increasing due to positive market performance. On the date we receive due
proof of death, the Account Value is $75,000. The basic Death Benefit is
calculated as Purchase Payments minus proportional withdrawals, or Account
Value, which ever is greater. Therefore, the basic Death Benefit is equal to
$75,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to
the amount payable under the basic Death Benefit ($75,000) PLUS 40% of the
"Growth" under the Annuity.
Growth = $75,000 - [$50,000 - $0]
= $25,000
Benefit Payable under Enhanced Beneficiary
Protection Optional Death Benefit = 40% of Growth
= $25,000 x 0.40
= $10,000
Benefit Payable under Basic Death Benefit
PLUS Enhanced Beneficiary Protection Optional
Death Benefit
= $85,000
Examples with market decline
Assume that the Owner has made no withdrawals and that the Account Value has
been decreasing due to declines in market performance. On the date we receive
due proof of death, the Account Value is $45,000. The basic Death Benefit is
calculated as Purchase Payments minus proportional withdrawals, or Account
Value, which ever is greater. Therefore, the basic Death Benefit is equal to
$50,000. The Enhanced Beneficiary Protection Optional Death Benefit is equal to
the amount payable under the basic Death Benefit ($50,000) PLUS the "Growth"
under the Annuity.
Growth = $45,000 - [$50,000 - $0]
= $-5,000
Benefit Payable under Enhanced Beneficiary
Protection Optional Death Benefit = 40% of Growth
NO BENEFIT IS PAYABLE
Benefit Payable under Basic Death Benefit
PLUS Enhanced Beneficiary Protection Optional
Death Benefit
= $ 50,000
B-1
APPENDIX B
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits continued
- --------------------------------------------------------------------------------
In this example you would receive no additional benefit from purchasing the
Enhanced Beneficiary Protection Optional
Death Benefit.
Example with market increase and withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 5 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $90,000. The basic Death Benefit is calculated as Purchase
Payments minus proportional withdrawals, or Account Value, which ever is
greater. Therefore, the basic Death Benefit is equal to $90,000. The Enhanced
Beneficiary Protection Optional Death Benefit is equal to the amount payable
under the basic Death Benefit ($90,000) PLUS 40% of the "Growth" under the
Annuity.
Growth = $90,000 - [$50,000 - ($50,000 x $15,000/$75,000)]
= $90,000 - [$50,000 - $10,000]
= $90,000 - $40,000
= $50,000
Benefit Payable under Enhanced Beneficiary Protection Optional Death
Benefit = 40% of Growth
= $50,000 x 0.40
= $20,000
Benefit Payable under Basic Death Benefit PLUS Enhanced Beneficiary
Protection Optional Death Benefit
= $110,000
Examples of Highest Anniversary Value Death Benefit Calculation
The following are examples of how the Highest Anniversary Value Death Benefit
is calculated. Each example assumes an initial Purchase Payment of $50,000.
Each example assumes that there is one Owner who is age 70 on the Issue Date
and that all Account Value is maintained in the variable investment options.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the date
we receive due proof of death, the Account Value is $75,000; however, the
Anniversary Value on the 5th anniversary of the Issue Date was $90,000. Assume
as well that the Owner has died before the Death Benefit Target Date. The Death
Benefit is equal to the greater of the Highest Anniversary Value or the basic
Death Benefit. The Death Benefit would be the Highest Anniversary Value
($90,000) because it is greater than the amount that would have been payable
under the basic Death Benefit ($75,000).
Example with withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $80,000; however, the Anniversary Value on the 5th anniversary
of the Issue Date was $90,000. Assume as well that the Owner has died before
the Death Benefit Target Date. The Death Benefit is equal to the greater of the
Highest Anniversary Value or the basic Death Benefit.
Highest Anniversary Value = $90,000 - [$90,000 x $15,000/$75,000]
= $90,000 - $18,000
= $72,000
Basic Death Benefit = max [$80,000, $50,000 - ($50,000 x $15,000/$75,000)]
= max [$80,000, $40,000]
= $80,000
The Death Benefit therefore is $80,000.
B-2
APPENDIX B
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Example with death after Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals had been made prior to the
Death Benefit Target Date. Further assume that the Owner dies after the Death
Benefit Target Date, when the Account Value is $75,000. The Highest Anniversary
Value on the Death Benefit Target Date was $80,000; however, following the
Death Benefit Target Date, the Owner made a Purchase Payment of $15,000 and
later had taken a withdrawal of $5,000 when the Account Value was $70,000. The
Death Benefit is equal to the greater of the Highest Anniversary Value plus
Purchase Payments minus proportional withdrawals after the Death Benefit Target
Date or the basic Death Benefit.
Highest Anniversary Value = $80,000 + $15,000 - [($80,000 + $15,000) x $5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $88,214
Basic Death Benefit = max [$75,000, ($50,000 + $15,000) - {($50,000 + $15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $75,000
The Death Benefit therefore is $88,214.
Examples of Combination 5% Roll-Up and Highest Anniversary Value Death Benefit
Calculation
The following are examples of how the Combination 5% Roll-Up and Highest
Anniversary Value Death Benefit are calculated. Each example assumes an initial
Purchase Payment of $50,000. Each example assumes that there is one Owner who
is age 70 on the Issue Date and that all Account Value is maintained in the
variable investment options.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the 7th
anniversary of the Issue Date we receive due proof of death, at which time the
Account Value is $75,000; however, the Anniversary Value on the 5th anniversary
of the Issue Date was $90,000. Assume as well that the Owner has died before
the Death Benefit Target Date. The Roll-Up Value is equal to initial Purchase
Payment accumulated at 5% for 6 years, or $67,005. The Death Benefit is equal
to the greatest of the Roll-Up Value, Highest Anniversary Value or the basic
Death Benefit. The Death Benefit would be the Highest Anniversary Value
($90,000) because it is greater than both the Roll-Up Value ($67,005) and the
amount that would have been payable under the basic Death Benefit ($75,000).
Example with withdrawals
Assume that the Owner made a withdrawal of $5,000 on the 6th anniversary of the
Issue Date when the Account Value was $45,000. The Roll-Up Value on the 6th
anniversary of the Issue Date is equal to initial Purchase Payment accumulated
at 5% for 6 years, or $67,005. The 5% Dollar-for-Dollar Withdrawal Limit for
the 7th annuity year is equal to 5% of the Roll-Up Value as of the 6th
anniversary of the Issue Date, or $3,350. Therefore, the remaining $1,650 of
the withdrawal results in a proportional reduction to the Roll-Up Value. On the
7th anniversary of the Issue Date we receive due proof of death, at which time
the Account Value is $43,000; however, the Anniversary Value on the 2nd
anniversary of the Issue Date was $70,000. Assume as well that the Owner has
died before the Death Benefit Target Date. The Death Benefit is equal to the
greatest of the Roll-Up Value, Highest Anniversary Value or the basic Death
Benefit.
B-3
APPENDIX B
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix B -- Calculation of Optional Death Benefits continued
- --------------------------------------------------------------------------------
Roll-Up Value = {($67,005 - $3,350) - [($67,005 - $3,350) x $1,650/($45,000 - $3,350)]} x 1.05
= ($63,655 - $2,522) x 1.05
= $64,190
Highest Anniversary Value = $70,000 - [$70,000 - $5,000 / $45,000]
= $70,000 - $7,778
= $62,222
Basic Death Benefit = max [$43,000, $50,000 - ($50,000 x $5,000/$45,000)]
= max [$43,000, $44,444]
= $44,444
The Death Benefit therefore is $64,190.
Example with death after Death Benefit Target Date
Assume that the Owner has not made any withdrawals prior to the Death Benefit
Target Date. Further assume that the Owner dies after the Death Benefit Target
Date, when the Account Value is $75,000. The Roll-Up Value on the Death Benefit
Target Date (the contract anniversary on or following the Owner's 80th
birthday) is equal to initial Purchase Payment accumulated at 5% for 10 years,
or $81,445. The Highest Anniversary Value on the Death Benefit Target Date was
$85,000; however, following the Death Benefit Target Date, the Owner made a
Purchase Payment of $15,000 and later had taken a withdrawal of $5,000 when the
Account Value was $70,000. The Death Benefit is equal to the greatest of the
Roll-Up Value, Highest Anniversary Value or the basic Death Benefit as of the
Death Benefit Target Date; each increased by subsequent purchase payments and
reduced proportionally for subsequent withdrawals.
Roll-Up Value = $81,445 + $15,000 - [($81,445 + $15,000) x $5,000/$70,000]
= $81,445 + $15,000 - $6,889
= $89,556
Highest Anniversary Value = $85,000 + $15,000 - [($85,000 + $15,000) x $5,000/$70,000]
= $85,000 + $15,000 - $7,143
= $92,857
Basic Death Benefit = max [$75,000, $50,000 + $15,000 - {($50,000 + $15,000) x
$5,000/$70,000}]
= max [$75,000, $60,357]
= $75,000
The Death Benefit therefore is $92,857.
Examples of Highest Daily Value Death Benefit Calculation
The following are examples of how the HDV Death Benefit is calculated. Each
example assumes an initial Purchase Payment of $50,000. Each example assumes
that there is one Owner who is age 70 on the Issue Date.
Example with market increase and death before Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals have been made. On the date
we receive due proof of death, the Account Value is $75,000; however, the
Highest Daily Value was $90,000. Assume as well that the Owner has died before
the Death Benefit Target Date. The Death Benefit is equal to the greater of the
Highest Daily Value or the basic Death Benefit. The Death Benefit would be the
HDV ($90,000) because it is greater than the amount that would have been
payable under the basic Death Benefit ($75,000).
B-4
APPENDIX B
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Example with withdrawals
Assume that the Account Value has been increasing due to positive market
performance and the Owner made a withdrawal of $15,000 in Annuity Year 7 when
the Account Value was $75,000. On the date we receive due proof of death, the
Account Value is $80,000; however, the Highest Daily Value ($90,000) was
attained during the fifth Annuity Year. Assume as well that the Owner has died
before the Death Benefit Target Date. The Death Benefit is equal to the greater
of the Highest Daily Value (proportionally reduced by the subsequent
withdrawal) or the basic Death Benefit.
Highest Daily Value = $90,000 - [$90,000 x $15,000/$75,000]
= $90,000 - $18,000
= $72,000
Basic Death Benefit = max [$80,000, $50,000 - ($50,000 x $15,000/$75,000)]
= max [$80,000, $40,000]
= $80,000
The Death Benefit therefore is $80,000.
Example with death after Death Benefit Target Date
Assume that the Owner's Account Value has generally been increasing due to
positive market performance and that no withdrawals had been made prior to the
Death Benefit Target Date. Further assume that the Owner dies after the Death
Benefit Target Date, when the Account Value is $75,000. The Highest Daily Value
on the Death Benefit Target Date was $80,000; however, following the Death
Benefit Target Date, the Owner made a Purchase Payment of $15,000 and later had
taken a withdrawal of $5,000 when the Account Value was $70,000. The Death
Benefit is equal to the greater of the Highest Daily Value on the Death Benefit
Target Date plus Purchase Payments minus proportional withdrawals after the
Death Benefit Target Date or the basic Death Benefit.
Highest Daily Value = $80,000 + $15,000 - [($80,000 + $15,000) x $5,000/$70,000]
= $80,000 + $15,000 - $6,786
= $88,214
Basic Death Benefit = max [$75,000, ($50,000 + $15,000) - {($50,000 + $15,000) x $5,000/$70,000}]
= max [$75,000, $60,357]
= $75,000
The Death Benefit therefore is $88,214.
B-5
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APPENDIX C
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix C -- Plus40(TM) Optional Life Insurance Rider
- --------------------------------------------------------------------------------
American Skandia's Plus40(TM) Optional Life Insurance Rider was offered, in
those states where approved, between January 17, 2002 and May 1, 2003. The
description below of the Plus40(TM) benefit applies to those Contract Owners
who purchased an Annuity during that time period and elected the Plus40(TM)
benefit.
The life insurance coverage provided under the Plus40(TM) Optional Life
Insurance Rider ("Plus40(TM) rider" or the "Rider") is supported by American
Skandia's general account and is not subject to, or registered as a security
under, either the Securities Act of 1933 or the Investment Company Act of
1940. Information about the Plus40(TM) rider is included as an Appendix to
this Prospectus to help you understand the Rider and the relationship between
the Rider and the value of your Annuity. It is also included because you can
elect to pay for the Rider with taxable withdrawals from your Annuity. The
staff of the Securities and Exchange Commission has not reviewed this
information. However, the information may be subject to certain generally
applicable provisions of the Federal securities laws regarding accuracy and
completeness.
The income tax-free life insurance payable to your Beneficiary(ies) under
the Plus40(TM) rider is equal to 40% of the Account Value of your Annuity as of
the date we receive due proof of death, subject to certain adjustments,
restrictions and limitations described below.
ELIGIBILITY
The Plus40(TM) rider may be purchased as a rider on your Annuity. The Rider
must cover those persons upon whose death the Annuity's death benefit becomes
payable -- the Annuity's owner or owners, or the Annuitant (in the case of an
entity owned Annuity). If the Annuity has two Owners, the Rider's death benefit
is payable upon the first death of such persons. If the Annuity is owned by an
entity, the Rider's death benefit is payable upon the death of the Annuitant,
even if a Contingent Annuitant is named.
The minimum allowable age to purchase the Plus40(TM) rider is 40; the
maximum allowable age is 75. If the Rider is purchased on two lives, both
persons must meet the age eligibility requirements. The Plus40(TM) rider is not
available to purchasers who use their Annuity as a funding vehicle for a Tax
Sheltered Annuity (or 403(b)) or as a funding vehicle for a qualified plan
under Section 401 of the Internal Revenue Code ("Code").
ADJUSTMENTS, RESTRICTIONS & LIMITATIONS
- If you die during the first 24 months following the effective date of the
Plus40(TM) rider (generally, the Issue Date of your Annuity), the death
benefit will be limited to the amount of any charges paid for the Rider
while it was in effect. While we will return the charges you have paid
during the applicable period as the death benefit, your Beneficiary(ies)
will receive no additional life insurance benefit from the Plus40(TM)
rider if you die within 24 months of its effective date.
- If you make a Purchase Payment within 24 months prior to the date of
death, the Account Value used to determine the amount of the death benefit
will be reduced by the amount of such Purchase Payment(s). If we reduce the
death benefit payable under the Plus40(TM) rider based on this provision,
we will return 50% of any charges paid for the Rider based on those
Purchase Payments as an additional amount included in the death benefit
under the Rider.
- If we apply Credits to your Annuity based on Purchase Payments, such
Credits are treated as Account Value for purposes of determining the death
benefit payable under the Plus40(TM) rider. However, if Credits were
applied to Purchase Payments made within 24 months prior to the date of
death, the Account Value used to determine the amount of the death benefit
will be reduced by the amount of such Credits. If we reduce the death
benefit payable under the Plus40(TM) rider based on this provision, we will
return 50% of any charges paid for the Rider based on such Credits as an
additional amount included in the death benefit under the Rider.
- If you become terminally ill (as defined in the Rider) and elect to
receive a portion of the Plus40(TM) rider's death benefit under the
Accelerated Death Benefit provision, the amount that will be payable under
the Rider upon your death will be reduced. Please refer to the Accelerated
Death Benefit provision described below.
- If charges for the Plus40(TM) rider are due and are unpaid as of the date
the death benefit is being determined, such charges will be deducted from
the amount paid to your Beneficiary(ies).
C-1
APPENDIX C
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix C -- Plus40(TM) Optional Life Insurance Rider continued
- --------------------------------------------------------------------------------
- If the age of any person covered under the Plus40(TM) rider is misstated,
we will adjust any coverage under the Rider to conform to the facts. For
example, if, due to the misstatement, we overcharged you for coverage under
the Rider, we will add any additional charges paid to the amount payable to
your Beneficiary(ies). If, due to the misstatement, we undercharged you for
coverage under the Rider, we will reduce the death benefit in proportion to
the charges not paid as compared to the charges that would have been paid
had there been no misstatement.
- On or after an Owner reaches the expiry date of the Rider (the anniversary
of the Annuity's Issue Date on or immediately after the 95th birthday),
coverage will terminate. No charge will be made for an Owner following the
expiry date. If there are two Owners, the expiry date applies separately to
each Owner; therefore, coverage may continue for one Owner and terminate as
to the other Owner.
MAXIMUM BENEFIT
The Plus40(TM) rider is subject to a Maximum Death Benefit Amount based on the
Purchase Payments applied to your Annuity. The Plus40(TM) rider may also be
subject to a Per Life Maximum Benefit that is based on all amounts paid under
any annuity contract we issue to you under which you have elected the
Plus40(TM) rider or similar life insurance coverage.
- The Maximum Death Benefit Amount is 100% of the Purchase Payments
increasing at 5% per year following the date each Purchase Payment is
applied to the Annuity until the date of death. If Purchase Payments are
applied to the Annuity within 24 months prior to the date of death, the
Maximum Death Benefit Amount is decreased by the amount of such Purchase
Payments.
- The Per Life Maximum Benefit applies to Purchase Payments applied to any
such annuity contracts more than 24 months from the date of death that
exceed $1,000,000. If you make Purchase Payments in excess of $1,000,000,
we will reduce the aggregate death benefit payable under all Plus40(TM)
riders, or similar riders issued by us, based on the combined amount of
Purchase Payments in excess of $1,000,000 multiplied by 40%. If the Per
Life Maximum Benefit applies, we will reduce the amount payable under each
applicable Plus40(TM) rider on a pro-rata basis. If the Per Life Maximum
Benefit applies upon your death, we will return any excess charges that you
paid on the portion of your Account Value on which no benefit is payable.
The Per Life Maximum Benefit does not limit the amount of Purchase Payments
that you may apply to your Annuity.
ACCELERATED DEATH BENEFIT PROVISION
If you become terminally ill, you may request that a portion of the death
benefit payable under the Plus40(TM) rider be prepaid instead of being paid to
your Beneficiary(ies) upon your death. Subject to our requirements and where
allowed by law, we will make a one time, lump sum payment. Our requirements
include proof satisfactory to us, in writing, of terminal illness after the
Rider's Effective Date.
The maximum we will pay, before any reduction, is the lesser of 50% of the
Rider's death benefit or $100,000. If you elect to accelerate payment of a
portion of the death benefit under the Plus40(TM) rider, the amount of the
remaining death benefit is reduced by the prepaid amount accumulating at an
annualized interest rate of 6.0%. Eligibility for an accelerated payout of a
portion of your Plus40(TM) rider death benefit may be more restrictive than any
medically-related surrender provision that may be applicable to you under the
Annuity.
CHARGES FOR THE PLUS40(TM) RIDER
The Plus40(TM) rider has a current charge and a guaranteed maximum charge. The
current charge for the Plus40(TM) rider is based on a percentage of your
Account Value as of the anniversary of the Issue Date of your Annuity. The
applicable percentages differ based on the attained age, last birthday of the
Owner(s) or Annuitant (in the case of an entity owned Annuity) as of the date
the charge is due. We reserve the right to change the current charge, at any
time, subject to regulatory approval where required. If there are two Owners,
we calculate the current charge that applies to each Owner individually and
deduct the combined amount as the charge for the Rider. There is no charge
based on a person's life after coverage expires as to that person. However, a
charge will still apply to the second of two Owners (and coverage will continue
for such Owner) if such Owner has not reached the expiry date.
C-2
APPENDIX C
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
Percentage of
Attained Age Account Value
Age 40-75 .80%
Age 76-80 1.60%
Age 81-85 3.20%
Age 86-90 4.80%
Age 91 6.50%
Age 92 7.50%
Age 93 8.50%
Age 94 9.50%
Age 95 10.50%
The charge for the Plus40(TM) rider may also be subject to a guaranteed
maximum charge that will apply if the current charge, when applied to the
Account Value, exceeds the guaranteed maximum charge. The guaranteed maximum
charge is based on a charge per $1,000 of insurance.
We determine the charge for the Rider annually, in arrears. We deduct the
charge: (1) upon your death; (2) on each anniversary of the Issue Date; (3) on
the date that you begin receiving annuity payments; (4) if you surrender your
Annuity other than a medically-related surrender; or (5) if you choose to
terminate the Rider. If the Rider terminates for any of the preceding reasons
on a date other than the anniversary of the Annuity's Issue Date, the charge
will be prorated. During the first year after the Annuity's Issue Date, the
charge will be prorated from the Issue Date. In all subsequent years, the
charge will be prorated from the last anniversary of the Issue Date.
You can elect to pay the annual charge through a redemption from your
Annuity's Account Value or through funds other than those within the Annuity.
If you do not elect a method of payment, we will automatically deduct the
annual charge from your Annuity's Account Value. The manner in which you elect
to pay for the Rider may have tax implications.
- If you elect to pay the charge through a redemption of your Annuity's
Account Value, the withdrawal will be treated as a taxable distribution,
and will generally be subject to ordinary income tax on the amount of any
investment gain withdrawn. If you are under age 591/2, the distribution may
also be subject to a 10% penalty on any gain withdrawn, in addition to
ordinary income taxes. We first deduct the amount of the charge pro-rata
from the Account Value in the variable investment options. We only deduct
the charge pro-rata from the Fixed Allocations to the extent there is
insufficient Account Value in the variable investment options to pay the
charge.
- If you elect to pay the charge through funds other than those from your
Annuity, we require that payment be made electronically in U.S. currency
through a U.S. financial institution. If you elect to pay the charge
through electronic transfer of funds and payment has not been received
within 31 days from the due date, we will deduct the charge as a redemption
from your Annuity, as described above.
TERMINATION
You can terminate the Plus40(TM) rider at any time. Upon termination, you will
be required to pay a pro-rata portion of the annual charge for the Rider. The
Plus40(TM) rider will terminate automatically on the date your Account Value is
applied to begin receiving annuity payments, on the date you surrender the
Annuity or, on the expiry date with respect to such person who reaches the
expiry date. We may also terminate the Plus40(TM) rider, if necessary, to
comply with our interpretation of the Code and applicable regulations. Once
terminated, you may not reinstate your coverage under the Plus40(TM) rider.
CHANGES IN ANNUITY DESIGNATIONS
Changes in ownership and annuitant designations under the Annuity may result in
changes in eligibility and charges under the Plus40(TM) rider. These changes
may include termination of the Rider. Please refer to the Rider for specific
details.
C-3
APPENDIX C
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix C -- Plus40(TM) Optional Life Insurance Rider continued
- --------------------------------------------------------------------------------
SPOUSAL ASSUMPTION
A spousal beneficiary may elect to assume ownership of the Annuity instead of
taking the Annuity's Death Benefit. However, regardless of whether a spousal
beneficiary assumes ownership of the Annuity, the death benefit under the
Plus40(TM) rider will be paid despite the fact that the Annuity will continue.
The spousal beneficiary can apply the death benefit proceeds under the
Plus40(TM) rider to the Annuity as a new Purchase Payment, can purchase a new
annuity contract or use the death benefit proceeds for any other purpose.
Certain restrictions may apply to an Annuity that is used as a qualified
investment. Spousal beneficiaries may also be eligible to purchase the
Plus40(TM) rider, in which case the Annuity's Account Value, as of the date the
assumption is effective, will be treated as the initial Purchase Payment under
applicable provisions of the Rider.
TAX CONSIDERATION
The Plus40(TM) rider was designed to qualify as a life insurance contract under
the Code. As life insurance, under most circumstances, the Beneficiary(ies)
does not pay any Federal income tax on the death benefit payable under the
Rider.
If your Annuity is being used as an Individual Retirement Annuity (IRA),
we consider the Plus40(TM) rider to be outside of your IRA, since premium for
the Rider is paid for either with funds outside of your Annuity or with
withdrawals previously subject to tax and any applicable tax penalty.
We believe payments under the accelerated payout provision of the Rider
will meet the requirements of the Code and the regulations in order to qualify
as tax-free payments. To the extent permitted by law, we will change our
procedures in relation to the Rider, or the definition of terminally ill, or
any other applicable term in order to maintain the tax-free status of any
amounts paid out under the accelerated payout provision.
C-4
APPENDIX D
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix D -- Description and Calculation of
Previously Offered Optional Death Benefits
- --------------------------------------------------------------------------------
If you purchased your Annuity before November 18, 2002 and were not a resident
of the State of New York, the following optional death benefits were offered:
ENHANCED BENEFICIARY PROTECTION OPTIONAL DEATH BENEFIT
The Enhanced Beneficiary Protection Optional Death Benefit can provide
additional amounts to your Beneficiary that may be used to offset federal and
state taxes payable on any taxable gains in your Annuity at the time of your
death. Whether this benefit is appropriate for you may depend on your
particular circumstances, including other financial resources that may be
available to your Beneficiary to pay taxes on your Annuity should you die
during the accumulation period. No benefit is payable if death occurs on or
after the Annuity Date.
The Enhanced Beneficiary Protection Optional Death Benefit provides a
benefit that is payable in addition to the basic Death Benefit. If the Annuity
has one Owner, the Owner must be age 75 or less at the time the benefit is
purchased. If the Annuity has joint Owners, the oldest Owner must be age 75 or
less. If the Annuity is owned by an entity, the Annuitant must be age 75 or
less.
Calculation of Enhanced Beneficiary Protection Optional Death Benefit
If you purchase the Enhanced Beneficiary Protection Optional Death Benefit, the
Death Benefit is calculated as follows:
1. the basic Death Benefit described above
PLUS
2. 50% of the "Death Benefit Amount" less Purchase Payments reduced by
proportional withdrawals.
"Death Benefit Amount" includes your Account Value and any amounts added
to your Account Value under the basic Death Benefit when the Death Benefit is
calculated. Under the basic Death Benefit, amounts are added to your Account
Value when the Account Value is less than Purchase Payments minus proportional
withdrawals.
"Proportional withdrawals" are determined by calculating the percentage of
your Account Value that each prior withdrawal represented when withdrawn.
The Enhanced Beneficiary Protection Optional Death Benefit is subject to a
maximum of 50% of all Purchase Payments applied to the Annuity at least 12
months prior to the death of the decedent that triggers the payment of the Death
Benefit.
Please refer to the section entitled "Tax Considerations" for a discussion of
special tax considerations for purchasers of this benefit.
NOTE: You may not elect the Enhanced Beneficiary Protection Optional Death
Benefit if you have elected any other Optional Death Benefit.
Guaranteed Minimum Death Benefit
If the Annuity has one Owner, the Owner must be age 80 or less at the time the
optional Death Benefit is purchased. If the Annuity has joint Owners, the
oldest Owner must be age 80 or less. If the Annuity is owned by an entity, the
Annuitant must be age 80 or less.
Key Terms Used with the Guaranteed Minimum Death Benefit
- - The Death Benefit Target Date is the contract anniversary on or after the
80th birthday of the current Owner, the oldest of either joint Owner or the
Annuitant, if entity owned.
- - The Highest Anniversary Value equals the highest of all previous "Anniversary
Values" on or before the earlier of the Owner's date of death and the "Death
Benefit Target Date".
D-1
APPENDIX D
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix D -- Description and Calculation of
Previously Offered Optional Death Benefits continued
- --------------------------------------------------------------------------------
- - The Anniversary Value is the Account Value as of each anniversary of the
Issue Date plus the sum of all Purchase Payments on
or after such anniversary less the sum of all "Proportional Reductions" since
such anniversary.
- - A Proportional Reduction is a reduction to the value being measured caused by
a withdrawal, equaling the percentage of the withdrawal as compared to the
Account Value as of the date of the withdrawal. For example, if your Account
Value is $10,000 and you withdraw $2,000 (a 20% reduction), we will reduce
both your Anniversary Value and the amount determined by Purchase Payments
increasing at the appropriate interest rate by 20%.
Calculation of Guaranteed Minimum Death Benefit
The Guaranteed Minimum Death Benefit depends on whether death occurs before or
after the Death Benefit Target Date.
If the Owner dies before the Death Benefit Target Date, the Death Benefit
equals the greatest of:
1. the Account Value in the Sub-accounts plus the Interim Value of any Fixed
Allocations (no MVA) as of the date we receive in writing "due proof of
death"; and
2. the sum of all Purchase Payments minus the sum of all Proportional
Reductions, each increasing daily until the Owner's date of death at a rate
of 5.0%, subject to a limit of 200% of the difference between the sum of
all Purchase Payments and the sum of all withdrawals as of the Owner's date
of death; and
3. the "Highest Anniversary Value" on or immediately preceding the Owner's date
of death.
The amount determined by this calculation is increased by any Purchase Payments
received after the Owner's date of death and decreased by any Proportional
Reductions since such date.
If the Owner dies on or after the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the Account Value as of the date we receive in writing "due proof of death"
(an MVA may be applicable to amounts in any Fixed Allocations); and
2. the greater of Item 2 & 3 above on the Death Benefit Target Date plus the
sum of all Purchase Payments less the sum of all Proportional Reductions
since the Death Benefit Target Date.
Annuities with joint Owners
For Annuities with Joint Owners, the Death Benefit is calculated as shown above
except that the age of the oldest of the Joint Owners is used to determine the
Death Benefit Target Date. NOTE: If you and your spouse own the Annuity
jointly, we will pay the Death Benefit to the Beneficiary. If the sole primary
Beneficiary is the surviving spouse, then the surviving spouse can elect to
assume ownership of the Annuity and continue the contract instead of receiving
the Death Benefit.
Annuities owned by entities
For Annuities owned by an entity, the Death Benefit is calculated as shown
above except that the age of the Annuitant is used to determine the Death
Benefit Target Date. Payment of the Death Benefit is based on the death of the
Annuitant (or Contingent Annuitant, if applicable).
Can I terminate the optional Death Benefits? Do the optional Death Benefits
terminate under other circumstances?
You can terminate the Enhanced Beneficiary Protection Optional Death Benefit
and the Guaranteed Minimum Death Benefit at any time. Upon termination, you
will be required to pay a pro-rata portion of the annual charge for the
benefit. Both optional Death Benefits will terminate automatically on the
Annuity Date. We may also terminate any optional Death Benefit if necessary to
comply with our interpretation of the Code and applicable regulations.
D-2
APPENDIX D
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
- --------------------------------------------------------------------------------
What are the charges for the optional Death Benefits?
We deduct a charge from your Account Value if you elect to purchase either
optional Death Benefit. The Enhanced Beneficiary Protection Death Benefit costs
0.25% of Account Value. The Guaranteed Minimum Death Benefit costs 0.30% of the
current Death Benefit. The charges for these death benefits are deducted in
arrears each Annuity Year. No charge applies after the Annuity Date. We deduct
the charge:
1. on each anniversary of the Issue Date;
2. when Account Value is transferred to our general account prior to the
Annuity Date;
3. if you surrender your Annuity; and
4. if you choose to terminate the benefit (Enhanced Beneficiary Protection
Optional Death Benefit only).
If you surrender the Annuity, elect to begin receiving annuity payments or
terminate the benefit on a date other than an anniversary of the Issue Date,
the charge will be prorated. During the first year after the Issue Date, the
charge will be prorated from the Issue Date. In all subsequent years, it would
be prorated from the last anniversary of the Issue Date.
We first deduct the amount of the charge pro-rata from the Account Value
in the variable investment options. We only deduct the charge pro-rata from the
Fixed Allocations to the extent there is insufficient Account Value in the
variable investment options to pay the charge. If your Annuity's Account Value
is insufficient to pay the charge, we may deduct your remaining Account Value
and terminate your Annuity. We will notify you if your Account Value is
insufficient to pay the charge and allow you to submit an additional Purchase
Payment to continue your Annuity.
Please refer to the section entitled "Tax Considerations" for additional
considerations in relation to the optional Death Benefit.
ADDITIONAL CALCULATIONS
Examples of Enhanced Beneficiary Protection Optional Death Benefit Calculation
The following are examples of how the Enhanced Beneficiary Protection Optional
Death Benefit is calculated. Each example assumes that a $50,000 initial
Purchase Payment is made and that no withdrawals are made prior to the Owner's
death. Each example assumes that there is one Owner who is age 50 on the Issue
Date and that all Account Value is maintained in the variable investment
options.
Example with market increase
Assume that the Owner's Account Value has been increasing due to positive
market performance. On the date we receive due proof of death, the Account
Value is $75,000. The basic Death Benefit is calculated as Purchase Payments
minus proportional withdrawals, or Account Value, which ever is greater.
Therefore, the basic Death Benefit is equal to $75,000. The Enhanced
Beneficiary Protection Optional Death Benefit is equal to the amount payable
under the basic Death Benefit ($75,000) PLUS 50% of the "Death Benefit Amount"
less Purchase Payments reduced by proportional withdrawals.
Purchase Payments = $50,000
Account Value = $75,000
Basic Death Benefit = $75,000
Death Benefit Amount = $75,000 - $50,000 = $25,000
Amount Payable Under Enhanced Beneficiary Protection
Optional Death Benefit
= $75,000 + $12,500 = $87,500
Examples with market decline
Assume that the Owner's Account Value has been decreasing due to declines in
market performance. On the date we receive due proof of death, the Account
Value is $45,000. The basic Death Benefit is calculated as Purchase Payments
minus proportional withdrawals, or Account Value, which ever is greater.
Therefore, the basic Death Benefit is equal to $50,000. The Enhanced
Beneficiary Protection Optional Death Benefit is equal to the amount payable
under the basic Death Benefit ($50,000) PLUS 50% of the "Death Benefit Amount"
less Purchase Payments reduced by proportional withdrawals.
D-3
APPENDIX D
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix D -- Description and Calculation of
Previously Offered Optional Death Benefits continued
- --------------------------------------------------------------------------------
Purchase Payments = $50,000
Account Value = $40,000
Basic Death Benefit = $50,000
Death Benefit Amount = $50,000 - $50,000 = $0
Amount Payable Under Enhanced Beneficiary
Protection Optional Death Benefit
= $50,000 + $0 = $50,000
In this example you would receive no additional benefit from purchasing
the Enhanced Beneficiary Protection Optional Death Benefit.
Examples of Guaranteed Minimum Death Benefit Calculation
The following are examples of how the Guaranteed Minimum Death Benefit is
calculated. Each example assumes that a $50,000 initial Purchase Payment is
made and that no withdrawals are made prior to the Owner's death. Each example
assumes that there is one Owner who is age 50 on the Issue Date and that all
Account Value is maintained in the variable investment options.
Example of market increase
Assume that the Owner's Account Value has generally been increasing due to
positive market performance. On the date we receive due proof of death, the
Account Value is $90,000. The Highest Anniversary Value at the end of any
previous period is $72,000. The Death Benefit would be the Account Value
($90,000) because it is greater than the Highest Anniversary Value ($72,000) or
the sum of prior Purchase Payments increased by 5.0% annually ($73,872.77).
Example of market decrease
Assume that the Owner's Account Value generally increased until the fifth
anniversary but generally has been decreasing since the fifth contract
anniversary. On the date we receive due proof of death, the Account Value is
$48,000. The Highest Anniversary Value at the end of any previous period is
$54,000. The Death Benefit would be the sum of prior Purchase Payments
increased by 5.0% annually ($73,872.77) because it is greater than the Highest
Anniversary Value ($54,000) or the Account Value ($48,000).
Example of market increase followed by decrease
Assume that the Owner's Account Value increased significantly during the first
six years following the Issue Date. On the sixth anniversary date the Account
Value is $90,000. During the seventh Annuity Year, the Account Value increases
to as high as $100,000 but then subsequently falls to $80,000 on the date we
receive due proof of death. The Death Benefit would be the Highest Anniversary
Value at the end of any previous period ($90,000), which occurred on the sixth
anniversary, although the Account Value was higher during the subsequent
period. The Account Value on the date we receive due proof of death ($80,000)
is lower, as is the sum of all prior Purchase Payments increased by 5.0%
annually ($73,872.77).
D-4
APPENDIX E
AMERICAN SKANDIA LIFEVEST(R) II PROSPECTUS
Appendix E -- Additional Information on Asset Allocation Programs
- --------------------------------------------------------------------------------
Program Rules
- - You can elect an asset allocator program where the Sub-accounts for each
asset class in each model portfolio are designated based on an evaluation of
available Sub-accounts. If you elect the Lifetime Five Benefit ("LT5") or
the Highest Daily Value Death Benefit ("HDV"), you must enroll in one of the
eligible model portfolios. Asset allocation is a sophisticated method of
diversification that allocates assets among asset classes in order to manage
investment risk and potentially enhance returns over the long term. However,
asset allocation does not guarantee a profit or protect against a loss.
How the Asset Allocation Program Works
- - Amounts will automatically be allocated in accordance with the percentages
and to Sub-accounts indicated for the model portfolio that you choose. If
you allocate your Account Value or transfer your Account Value among any
Sub-accounts that are outside of your model portfolio, we will allocate
these amounts according to the allocation percentages of the applicable
model portfolio upon the next rebalancing. You may only choose one model
portfolio at a time. When you enroll in the asset allocation program and
upon each rebalance thereafter, 100% of your Account Value allocated to the
variable Sub-accounts will be allocated to the asset allocation program. Any
Account Value not invested in the Sub-accounts will not be part of the
program.
- - Additional Purchase Payments: Unless otherwise requested, any additional
Purchase Payments applied to the variable Sub-accounts in the Annuity will
be allocated to the Sub-accounts according to the allocation percentages for
the model portfolio you choose. Allocation of additional Purchase Payments
outside of your model portfolio but into a Sub-account, will be reallocated
according to the allocation percentages of the applicable model portfolio
upon the next rebalancing.
- - Rebalancing Your Model Portfolio: Changes in the value of the Sub-account
will cause your Account Value allocated to the Sub-accounts to vary from the
percentage allocations of the model portfolio you select. By selecting the
asset allocation program, you have directed us to periodically (e.g.,
quarterly) rebalance your Account Value allocated to the Sub-accounts in
accordance with the percentage allocations assigned to each Sub-account
within your model portfolio at the time you elected the program or as later
modified with your consent. Some asset allocation programs will only require
that a rebalancing occur when the percent of your Account Value allocated to
the Sub-accounts are outside of the acceptable range permitted under such
asset allocation program. Note -- Any Account Value not invested in the
Sub-accounts will not be affected by any rebalance.
- - Sub-account Changes Within the Model Portfolios: From time to time you may be
notified of a suggested change in a Sub-account or percentage allocated to a
Sub-account within your model portfolio. If you consent (in the manner that
is then permitted or required) to the suggested change, then it will be
implemented upon the next rebalance. If you do not consent then rebalancing
will continue in accordance with your unchanged model portfolio, unless the
Sub-account is no longer available under your Annuity, in which case your
lack of consent will be deemed a request to terminate the asset allocation
program and the provisions under "Termination or Modification of the Asset
Allocation Program" will apply.
- - Owner Changes in Choice of Model Portfolio: You may change from the model
portfolio that you have elected to any other currently available model
portfolio at any time. The change will be implemented on the date we receive
all required information in the manner that is then permitted or required.
Termination or Modification of the Asset Allocation Program:
- - You may request to terminate your asset allocation program at any time. Any
termination will be effective on the date that American Skandia receives
your termination request in good order. If you are enrolled in HDV or LT5,
termination of your asset allocation program must coincide with enrollment
in a then currently available and approved asset allocation program or other
approved option. However, if you are enrolled in LT5 you may terminate the
LT5 benefit in order to then terminate your asset allocation program.
American Skandia reserves the right to terminate or modify the asset
allocation program at any time with respect to any programs.
Restrictions on Electing the Asset Allocation:
- - You cannot participate in auto-rebalancing or a DCA program while enrolled in
an asset allocation program. Upon election of an asset allocation program,
American Skandia will automatically terminate your enrollment in any
auto-rebalancing or DCA program. Finally, Systematic Withdrawals can only be
made as flat dollar amounts.
E-1
- --------------------------------------------------------------------------------
PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS FURTHER
DETAILS ABOUT THE AMERICAN SKANDIA ANNUITY DESCRIBED IN PROSPECTUS ASLII-PROS
(05/2005).
--------------------------------------
(print your name)
--------------------------------------
(address)
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(city/state/zip code)
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
Variable Annuity Issued by: Variable Annuity Distributed by:
AMERICAN SKANDIA LIFE AMERICAN SKANDIA
ASSURANCE CORPORATION MARKETING, INCORPORATED
A Prudential Financial Company A Prudential Financial Company
One Corporate Drive One Corporate Drive
Shelton, Connecticut 06484 Shelton, Connecticut 06484
Telephone: 1-800-752-6342 Telephone: 203-926-1888
http://www.americanskandia.prudential.com http://www.americanskandia.prudential.com
MAILING ADDRESSES:
AMERICAN SKANDIA -- VARIABLE ANNUITIES
P.O. Box 7960
Philadelphia, PA 19176
EXPRESS MAIL:
AMERICAN SKANDIA -- VARIABLE ANNUITIES
2101 Welsh Road
Dresher, PA 19025
AS APEX
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution: Not Applicable.
Item 15. Indemnification of Directors and Officers: Under Section 33-320a of the
Connecticut General Statutes, the Registrant must indemnify a director or
officer against judgments, fines, penalties, amounts paid in settlement and
reasonable expenses including attorneys' fees, for actions brought or threatened
to be brought against him in his capacity as a director or officer when certain
disinterested parties determine that he acted in good faith and in a manner he
reasonably believed to be in the best interests of the Registrant. In any
criminal action or proceeding, it also must be determined that the director or
officer had no reason to believe his conduct was unlawful. The director or
officer must also be indemnified when he is successful on the merits in the
defense of a proceeding or in circumstances where a court determines that he is
fairly and reasonable entitled to be indemnified, and the court approves the
amount. In shareholder derivative suits, the director or officer must be finally
adjudged not to have breached this duty to the Registrant or a court must
determine that he is fairly and reasonably entitled to be indemnified and must
approve the amount. In a claim based upon the director's or officer's purchase
or sale of the Registrants' securities, the director or officer may obtain
indemnification only if a court determines that, in view of all the
circumstances, he is fairly and reasonably entitled to be indemnified and then
for such amount as the court shall determine. The By-Laws of American Skandia
Life Assurance Corporation ("ASLAC") also provide directors and officers with
rights of indemnification, consistent with Connecticut Law.
The foregoing statements are subject to the provisions of Section 33-320a.
Directors and officers of ASLAC and American Skandia Marketing, Inc. ("ASM") can
also be indemnified pursuant to indemnity agreements between each director and
officer and American Skandia, Inc., 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 are covered under a directors and
officers liability insurance policy. Such policy will reimburse ASLAC or ASM, 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, as
applicable, in his or her past or present capacity as such.
Item 16. Exhibits:
Exhibits Page
-------- ----
1 Underwriting agreement incorporated by reference to Post Effective Amendment No. 1
to Registration Statement No. 333-25733, filed via EDGAR March 2, 1998.
2 Plan of acquisition, reorganization, arrangement, liquidation or succession Not applicable
3 Articles of incorporation and by-laws incorporated by reference to Post-Effective
Amendment No. 6 to Registration Statement No. 33-87010, filed via EDGAR March 2, 1998.
4 Instruments defining the rights of security holders, including indentures, incorporated by
reference to Post-Effective Amendment No. 3 to Registration Statement No. 33-87010, filed
via EDGAR April 25, 1996.
5 Opinion re legality (included as Exhibit 23b)
6 - 9 Not applicable
1
AS APEX
10 Material contracts (Investment Management Agreement):
(a) Agreement with Alliance Capital Management L.P. incorporated by reference to
Post-Effective No. 3 to Registration Statement No. 33-53507, filed via EDGAR
April 26, 2002.
(b) Agreement with Blackrock Financial Management, Inc. incorporated by reference
to Post-Effective No. 3 to Registration Statement No. 33-53507, filed via
EDGAR April 26, 2002.
11 - 22 Not applicable
23a
(i) Consent of PricewaterhouseCoopers LLP FILED HEREWITH
(ii) Consent of Ernst & Young LLP FILED HEREWITH
23b Opinion and Consent of Counsel filed via EGAR with Post-Effective Amendment 5 to this Registration Statement, filed
April 20, 2004.
24
(a) Powers of Attorney for James J. Avery, Director, Helen M. Galt, Director, Ronald P. Joelson, Director,
Andrew J. Mako, Director and David R. Odenath, Chief Executive Officer, President and Director filed
with Post-Effective Amendment No. 5 to Registration Statement No. 333-96577, filed April 20, 2004.
(b) Powers of Attorney for Directors C. Edward Chaplin and Bernard J. Jacob filed with Initial Registration
Statement No. 333-117052.
(c) Power of Attorney for Michael Bohm, Executive Vice President and Chief Financial Officer filed with
Post-Effective Amendment No. 6 to Registration Statement No. 333-96577, filed November 12, 2004.
- ------------------------------------------------------------------------------------------------------------------------------------
25 - 32 Not applicable
- ------------------------------------------------------------------------------------------------------------------------------------
An index to the financial statement schedules is omitted because it is not
required or is not applicable.
Item 17. Undertakings: (a) 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 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; and
(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.
(b) 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
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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.
(c) 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.
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LEGAL EXPERTS: The Counsel of American Skandia Life Assurance Corporation has
passed on the legal matters with respect to Federal laws and regulations
applicable to the issue and sale of the Annuities and with respect to
Connecticut law.
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AS APEX
Exhibits
Exhibit 23a
(i) Consent of PricewaterhouseCoopers LLP FILED HEREWITH
(ii) Consent of Ernst & Young LLP FILED HEREWITH
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Shelton, State of Connecticut, on the 15th day of
April, 2005.
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Depositor
By: /s/Robin Wagner
Robin Wagner, Vice President, Corporate Counsel
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the date indicated.
Signature Title Date
---------- ----- ------
(Principal Executive Officer)
David R. Odenath* Chief Executive Officer and President April 15, 2005
- -----------------
David R. Odenath
(Principal Financial Officer and Principal Accounting Officer)
Michael Bohm* Executive Vice President and April 15, 2005
------------- Chief Financial Officer
Michael Bohm
(Board of Directors)
James Avery* Helen Galt*
---------- ----------
James Avery Helen Galt
Ronald Joelson* David R. Odenath* Andrew J. Mako*
--------------- ----------------- ---------------
Ronald Joelson David R. Odenath Andrew J. Mako
C. Edward Chaplin* Bernard J. Jacob* C. Edward Chaplin Bernard J. Jacob
By: /s/Robin Wagner
---------------
Robin Wagner
*Executed by Robin Wagner on behalf of those indicated pursuant to Power of Attorney