gal2 s-2 registration

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VYa1e8+8tKZv6aEBZlD1SePD7hC1sInclaeDsWfwAbTVscVlEiM0jDLc1xdAiGiI YGqH2cx+0EfNHMgyPC7qLw== 0000881453-01-500024.txt : 20010430 0000881453-01-500024.hdr.sgml : 20010430 ACCESSION NUMBER: 0000881453-01-500024 CONFORMED SUBMISSION TYPE: POS AM PUBLIC DOCUMENT COUNT: 3 REFERENCES 429: 033-89674 FILED AS OF DATE: 20010427 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN SKANDIA LIFE ASSURANCE CORP/CT CENTRAL INDEX KEY: 0000881453 STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE CARRIERS, NEC [6399] IRS NUMBER: 061241288 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AM SEC ACT: SEC FILE NUMBER: 333-02867 FILM NUMBER: 1612240 BUSINESS ADDRESS: STREET 1: ONE CORPORATE DRIVE CITY: SHELTON STATE: CT ZIP: 06484 BUSINESS PHONE: 2039261888 MAIL ADDRESS: STREET 1: ONE CORPORATE DRIVE CITY: SHELTON STATE: CT ZIP: 06484 POS AM 1 gal2s2_04-01.htm GAL2 S-2 gal2 s-2 registration

                          Filed with the Securities and Exchange Commission on April 27, 2001

                                            Registration No. 333-02867
===================================================================================================================
                                        SECURITIES AND EXCHANGE COMMISSION
                                              WASHINGTON, D.C. 20549

                                          Post-effective Amendment No. 5
                                                    On Form S-2

                             Registration Statement Under The Securities Act of 1933*

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

                                                         CONNECTICUT
                                                         -----------
                               (State or other jurisdiction of incorporation or organization)

                                                             63
                                                             --
                                  (Primary Standard Industrial Classification Code Number)

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

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

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

                                                          Copy To:
                                             SCOTT K. RICHARDSON, ESQ.
                                                  SENIOR COUNSEL
                          One Corporate Drive, Shelton, Connecticut 06484 (203) 925-6922
                          --------------------------------------------------------------


                         Approximate date of commencement of proposed sale to the public:
            May 1, 2001 or as soon as practical after the effective date of this Registration Statement

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

If the registrant elects to deliver its latest annual report to security holders, or a complete and legible
facsimile thereof, pursuant to Item 11(a)(1) of the Form, check the following:  ___.

                                          Calculation of Registration Fee
===================================================================================================================
            Title of each                                 Proposed              Proposed
              class of                                     maximum               maximum
             securities              Amount               offering              aggregate             Amount of
                to be                 to be                 price               offering            registration
             registered            registered             per unit               price**                 fee
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
          Annuity Contracts                                                         $                     $
- -------------------------------------------------------------------------------------------------------------------
*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 statement, including Registration
File Numbers 33-67614 and 33-89674.
**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.
- -------------------------------------------------------------------------------------------------------------------
Gal2

GALAXY
CROSS REFERENCE SHEET PURSUANT TO REGULATION S-K, ITEM 501
----------------------------------------------------------

S-2 Item No. Prospectus Heading
- ------------ ------------------

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

2. Inside Front Cover and Outside Back Cover of Prospectus Available Information,
Incorporation of Certain Documents by
Reference, How Will I Receive Statements, Table of Contents

3. Summary Information, Risk Factors and Ratio of Earnings Investment Options, Fees and Charges,
Managing Your Account Value

4. Use of Proceeds Managing Your Account Value, What are Separate Accounts

5. Determination of the Offering Price Fees and Charges, Managing Your Account Value

6. Dilution Not applicable

7. Selling Security Holders Not applicable

8. Plan of Distribution Who Distributes Annuities Offered by American Skandia

9. Description of Securities to be Registered Investment Options, Purchasing Your Annuity,
Valuing Your Investment, What are Separate Accounts,
Rights, Benefits and Services

10. Interests of named Expert and Counsel Not Applicable

11. Information with Respect to the Registrant Who Is American Skandia?

12. Incorporation of Certain Documents by Reference Incorporation of Certain Documents by Reference

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

Part II Heading
---------------

14. Other Expenses of Issuance Other Expenses of Issuance
and Distribution and Distribution

15. Indemnification of Directors and Officers Indemnification of Directors and Officers

16. Exhibits Exhibits

17. Undertakings Undertakings

                                                                                         AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                                                                                     One Corporate Drive, Shelton, Connecticut 06484

This Prospectus  describes the Galaxy Variable  Annuity,  a flexible premium  deferred  annuity (the "Annuity")  offered by American
Skandia Life Assurance  Corporation  ("American  Skandia",  "we", "our" or "us")  exclusively to customers of Fleet Financial Group,
Inc. and its affiliates.  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.  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 36. 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.  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  financial  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,  the ability to
access your  annuity's  account value and the charges that you will be subject to if you choose to surrender  the annuity.  The fees
and charges may also be different between each annuity.
====================================================================================================================================

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.

WHY WOULD I CHOOSE TO PURCHASE THIS ANNUITY?
This Annuity is frequently  used for  retirement  planning.  It may be used as an investment  vehicle for  "qualified"  investments,
including  an IRA,  SEP-IRA,  Roth IRA 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 investment options.

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 additional tax
advantages  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 financial  professional as to whether
the overall benefits and costs of the Annuity are appropriate considering your overall financial plan.




- ------------------------------------------------------------------------------------------------------------------------------------
These  annuities are NOT deposits or  obligations  of, or issued,  guaranteed or endorsed by Fleet Bank or its  affiliates,  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 certain investment risks, including possible loss of principal.
- ------------------------------------------------------------------------------------------------------------------------------------

THESE  SECURITIES  HAVE NOT BEEN  APPROVED  OR  DISAPPROVED  BY THE  SECURITIES  AND  EXCHANGE  COMMISSION  OR ANY STATE  SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES  COMMISSION  PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.  ANY
REPRESENTATION  TO THE CONTRARY IS A CRIMINAL  OFFENSE.  PLEASE READ THIS  PROSPECTUS AND THE CURRENT  PROSPECTUS FOR THE UNDERLYING
MUTUAL FUNDS.  KEEP THEM FOR FUTURE REFERENCE.
                                            FOR FURTHER INFORMATION CALL 1-800-444-3970.
Prospectus Dated: May 1, 2001                                                 Statement of Additional Information Dated: May 1, 2001
GA-PROS- (05/2001)                                                                                                PROGVAPROD(5/2001)





WHAT ARE SOME OF THE KEY FEATURES OF THE ANNUITY?
|X|      The 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.
|X|      This Annuity  currently  offers both variable and fixed  investment  options  however,  fixed  investment  options were not
       offered on Annuities issued prior to March 30, 1994. 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
       investment  options of different  durations are offered that are guaranteed by us, but may have a Market Value  Adjustment if
       you withdraw your Account Value before the Maturity Date.
|X|      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  underlying  investment  options.  The variable  investment  options,  each a
       Sub-account  of  American  Skandia  Life  Assurance  Corporation  Variable  Account E,  invest in an  underlying  mutual fund
       portfolio.  Currently, portfolios of the Galaxy VIP Fund are being offered.
|X|      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.
|X|      This Annuity offers a death benefit until age 85.  On or after age 85, the death benefit is equal to the Account Value.
|X|      There is no  Contingent  Deferred  Sales Charge on  surrenders  or  withdrawals.  You can withdraw  Account Value from your
       Annuity free of any charges.
|X|      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  financial  professionals.  To purchase this Annuity you must be a customer of one
or more  subsidiaries  of Fleet  Financial  Group,  Inc. at the time the Annuity is issued.  You must  complete an  application  and
submit a minimum  initial  purchase  payment of $5,000.  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 $5,000.  There
is no age  restriction to purchase the Annuity.  However,  the  protection  provided by the death benefit is limited on or after age
85.




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                                                         Mailing Addresses
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------

New Business/Additional Purchase Payments:                                                                      Exchange Paperwork:
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------
American Skandia Life Assurance Corporation                                             American Skandia Life Assurance Corporation
P.O. Box 7040                                                                                                         P.O. Box 7039
Bridgeport, CT  06601-7040                                                                               Bridgeport, CT  06601-7039
- ------------------------------------------------------------------------------------------------------------------------------------

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

- ------------------------------------------------------------------------------------------------------------------------------------
All other correspondence:                                                                                   Express/Overnight Mail:
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
American Skandia Life Assurance Corporation                                             American Skandia Life Assurance Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
P.O. Box 7038                                                                                                 Three Corporate Drive
Bridgeport, CT  06601-7038                                                                                       Shelton, CT  06484
- ------------------------------------------------------------------------------------------------------------------------------------

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





                                                         TABLE OF CONTENTS


GLOSSARY OF TERMS..................................................................................................................5


SUMMARY OF CONTRACT FEES AND CHARGES...............................................................................................6


EXPENSE EXAMPLES...................................................................................................................7


INVESTMENT OPTIONS.................................................................................................................9

   WHAT ARE THE INVESTMENT OBJECTIVES, POLICIES AND EXPENSES OF THE PORTFOLIOS?....................................................9
   WHAT ARE THE FIXED INVESTMENT OPTIONS?..........................................................................................9

FEES AND CHARGES..................................................................................................................10

   WHAT ARE THE CONTRACT FEES AND CHARGES?........................................................................................10
   WHAT CHARGES APPLY SOLELY TO THE VARIABLE INVESTMENT OPTIONS?..................................................................10
   WHAT CHARGES APPLY TO THE FIXED ALLOCATIONS?...................................................................................11
   WHAT CHARGES APPLY IF I CHOOSE AN ANNUITY PAYOUT?..............................................................................11
   EXCEPTIONS/REDUCTIONS TO FEES AND CHARGES......................................................................................11

PURCHASING YOUR ANNUITY...........................................................................................................11

   WHAT ARE OUR REQUIREMENTS FOR PURCHASING THE ANNUITY?..........................................................................11

MANAGING YOUR ANNUITY.............................................................................................................12

   MAY I CHANGE THE PARTICIPANT, ANNUITANT AND BENEFICIARY DESIGNATIONS?..........................................................12
   MAY I RETURN THE ANNUITY IF I CHANGE MY MIND?..................................................................................12
   MAY I MAKE ADDITIONAL PURCHASE PAYMENTS?.......................................................................................12
   MAY I MAKE SCHEDULED PAYMENTS DIRECTLY FROM MY BANK ACCOUNT?...................................................................12
   MAY I MAKE PURCHASE PAYMENTS THROUGH A SALARY REDUCTION PROGRAM?...............................................................12

MANAGING YOUR ACCOUNT VALUE.......................................................................................................13

   HOW AND WHEN ARE PURCHASE PAYMENTS INVESTED?...................................................................................13
   ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?.....................................................13
   DO YOU OFFER DOLLAR COST AVERAGING?............................................................................................13
   DO YOU OFFER A PROGRAM TO BALANCE FIXED AND VARIABLE INVESTMENTS?..............................................................14
   MAY I AUTHORIZE MY FINANCIAL PROFESSIONAL TO MANAGE MY ACCOUNT?................................................................14
   HOW DO THE FIXED INVESTMENT OPTIONS WORK?......................................................................................15
   HOW DO YOU DETERMINE RATES FOR FIXED ALLOCATIONS?..............................................................................15
   HOW DOES THE MARKET VALUE ADJUSTMENT WORK?.....................................................................................15
   WHAT HAPPENS WHEN MY GUARANTEE PERIOD MATURES?.................................................................................16

ACCESS TO ACCOUNT VALUE...........................................................................................................17

   WHAT TYPES OF DISTRIBUTIONS ARE AVAILABLE TO ME?...............................................................................17
   ARE THERE TAX IMPLICATIONS FOR DISTRIBUTIONS?..................................................................................17
   CAN I WITHDRAW A PORTION OF MY ANNUITY?........................................................................................17
   CAN I MAKE PERIODIC WITHDRAWALS FROM THE ANNUITY DURING THE ACCUMULATION PERIOD?...............................................17
   WHAT ARE MINIMUM DISTRIBUTIONS AND WHEN WOULD I NEED TO MAKE THEM?.............................................................17
   CAN I SURRENDER MY ANNUITY FOR ITS VALUE?......................................................................................18
   WHAT TYPES OF ANNUITY OPTIONS ARE AVAILABLE?...................................................................................18
   HOW AND WHEN DO I CHOOSE THE ANNUITY PAYMENT OPTION?...........................................................................19
   HOW ARE ANNUITY PAYMENTS CALCULATED?...........................................................................................19

DEATH BENEFIT.....................................................................................................................20

   WHAT TRIGGERS THE PAYMENT OF A DEATH BENEFIT?..................................................................................20
   PAYMENT OF DEATH BENEFITS......................................................................................................21







VALUING YOUR INVESTMENT...........................................................................................................22

   HOW IS MY ACCOUNT VALUE DETERMINED?............................................................................................22
   WHAT IS THE SURRENDER VALUE OF MY ANNUITY?.....................................................................................22
   HOW AND WHEN DO YOU VALUE THE SUB-ACCOUNTS?....................................................................................22
   HOW DO YOU VALUE FIXED ALLOCATIONS?............................................................................................22
   WHEN DO YOU PROCESS AND VALUE TRANSACTIONS?....................................................................................22

TAX CONSIDERATIONS................................................................................................................23

   WHAT ARE SOME OF THE FEDERAL TAX CONSIDERATIONS OF THIS ANNUITY?...............................................................23
   HOW ARE AMERICAN SKANDIA AND THE SEPARATE ACCOUNTS TAXED?......................................................................23
   IN GENERAL, HOW ARE ANNUITIES TAXED?...........................................................................................23
   HOW ARE DISTRIBUTIONS TAXED?...................................................................................................23
   WHAT TAX CONSIDERATIONS ARE THERE FOR TAX-QUALIFIED RETIREMENT PLANS OR QUALIFIED
     CONTRACTS?...................................................................................................................25
   HOW ARE DISTRIBUTIONS FROM QUALIFIED CONTRACTS TAXED?..........................................................................26
   GENERAL TAX CONSIDERATIONS.....................................................................................................27

GENERAL INFORMATION...............................................................................................................28

   HOW WILL I RECEIVE STATEMENTS AND REPORTS?.....................................................................................28
   WHO IS AMERICAN SKANDIA?.......................................................................................................28
   WHAT ARE SEPARATE ACCOUNTS?....................................................................................................29
   WHAT IS THE LEGAL STRUCTURE OF THE UNDERLYING FUNDS?...........................................................................30
   WHO DISTRIBUTES ANNUITIES OFFERED BY AMERICAN SKANDIA?.........................................................................30
   AVAILABLE INFORMATION..........................................................................................................31
   INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE................................................................................31
   HOW TO CONTACT US..............................................................................................................32
   INDEMNIFICATION................................................................................................................32
   LEGAL PROCEEDINGS..............................................................................................................32
   EXECUTIVE OFFICERS AND DIRECTORS...............................................................................................32
   CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION............................................................................36

APPENDIX A - FINANCIAL INFORMATION ABOUT AMERICAN SKANDIA..........................................................................1


APPENDIX B - CONDENSED FINANCIAL INFORMATION ABOUT SEPARATE ACCOUNT E..............................................................1






                                                         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 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  Annual
Maintenance  Fee. The Account Value is determined  separately for each Sub-account and for each Fixed  Allocation,  and then totaled
to determine  Account  Value for your entire  Annuity.  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 to one of the available  annuity options 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 the 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 other than the
Maturity Date of such Fixed Allocation.

Owner/Participant:  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 Annual Maintenance Fee and Tax Charge.

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.





SUMMARY OF CONTRACT FEES AND CHARGES

Below is a summary of the fees and  expenses we charge for the  Annuity.  Some  charges are  assessed  against  your  Annuity  while
others are assessed  against  assets  allocated  to the  variable  investment  options.  The charges  that are assessed  against the
Annuity include the Set-Up Fee, Annual  Maintenance  Fee,  Transfer Fee and the Tax Charge.  The charge that is assessed against the
variable  investment  options is the Insurance Charge,  which is the combination of a mortality and expense risk charge and a charge
for  administration  of the Annuity.  Each  portfolio of the Galaxy VIP Fund  assesses a charge for  investment  management  and for
other  expenses.  The  prospectus for the Galaxy VIP Fund provides more detailed  information  about the expenses for the underlying
funds.  In certain  states,  a premium tax charge may be  applicable.  All of these fees and expenses  are  described in more detail
within this Prospectus.


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                                                       YOUR TRANSACTION EXPENSES
- ----------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------- ----------------------------------------------------------------- --------------------------------------
                                                        Amount Deducted/
         Fee/Expense                                 Description Of Charge                                    When Deducted
- ------------------------------- ----------------------------------------------------------------- --------------------------------------
- ------------------------------- ----------------------------------------------------------------- --------------------------------------
Contingent Deferred Sales                                                                            There is no Contingent Deferred
Charge                                                   Not Applicable                           Sales Charge deducted upon surrender
The charge is a percentage of                                                                                 or withdrawal
each applicable purchase
payment
- ------------------------------- ----------------------------------------------------------------- --------------------------------------
- ------------------------------- ----------------------------------------------------------------- --------------------------------------
Annual Maintenance Fee                       Smaller of $30 or 2% of Account Value                     Annually on the contract's
                                      (Only applicable if Account Value is under $50,000)          anniversary date or upon surrender
- ------------------------------- ----------------------------------------------------------------- --------------------------------------
- -------------------------------
Transfer Fee                                                 $10.00                               After the 20th transfer each annuity
                                                                                                                  year
- ------------------------------- ----------------------------------------------------------------- --------------------------------------
- ------------------------------- ----------------------------------------------------------------- --------------------------------------
Tax Charge                         Depends on the requirements of the applicable jurisdiction                    Various

- ------------------------------- ----------------------------------------------------------------- --------------------------------------
- ------------------------------- ----------------------------------------------------------------- --------------------------------------
Set-Up Fee                          $25.00 if initial Purchase Payment is less than $10,000                    Upon Issue
- ------------------------------- ----------------------------------------------------------------- --------------------------------------


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                                                  ANNUAL EXPENSES OF THE SUB-ACCOUNTS
                                 (as a percentage of the average daily net assets of the Sub-accounts)
- ------------------------------- ----------------------------------------------------------------- --------------------------------------
Mortality & Expense Risk
Charge                                                       0.40%
                                                                                                                  Daily
Administration Charge                                        0.15%

Total  Annual  Expenses of the          0.55% per year of the value of each Sub-account              Applies to Variable Investment
Sub-accounts*                                                                                                 Options only
- ------------------------------- ----------------------------------------------------------------- --------------------------------------
*  The combination of the Mortality and Expense Risk Charges and Administration Charge is referred to as the "Insurance Charge"
elsewhere in this prospectus.







- ----------------------------------------------------------------------------------------------------------------------------------------
                                           Underlying Mutual Fund Portfolio Annual Expenses
                               (as a percentage of the average net assets of the underlying Portfolios)
- ----------------------------------------------------------------------------------------------------------------------------------------

Below are the  investment  management  fees,  other  expenses,  and the total annual  expenses for each  underlying  Portfolio as of
December 31, 2000.  The total  annual  expenses are the sum of the  investment  management  fee and other  expenses.  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 is being waived  and/or other  expenses are being  partially  reimbursed.  "N/A"  indicates  that no
portion of the  management  fee and/or other  expenses is being waived  and/or  reimbursed.  The  underlying  mutual fund  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 1-800-444-3970.

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

                                                 Management          Other        Total Annual      Fee Waivers      Net Annual
             UNDERLYING PORTFOLIO                   Fees           Expenses         Portfolio      and Expense          Fund
                                                                                    Operating     Reimbursement      Operating
                                                                                    Expenses                          Expenses

  ------------------------------------------- ----------------- ---------------- ---------------- ---------------- ----------------
  The Galaxy VIP Fund:
    Money Market                                   0.40%             0.45%            0.85%            0.42%            0.43%
    Equity                                         0.75%             0.23%            0.98%             N/A             0.98%
    High Quality Bond                              0.55%             0.44%            0.99%            0.28%            0.71%
    Asset Allocation                               0.75%             0.26%            1.01%             N/A             1.01%
  ------------------------------------------- ----------------- ---------------- ---------------- ---------------- ----------------

EXPENSE EXAMPLES
These  examples  are  designed to assist you in  understanding  the various  costs and expenses you will incur with the Annuity over
certain periods of time based on specific  assumptions.  The examples reflect expenses of our Sub-accounts,  as well as those of the
underlying mutual fund portfolios.  The Securities and Exchange Commission ("SEC") requires these examples.

The examples shown assume that: (a) you only allocate  Account Value in the  Sub-accounts;  (b) the Insurance  Charge is assessed as
0.55% per year; (c) the Annual  Maintenance  Fee is reflected as a charge equal to 0.05% based on an assumed  contract size; (d) you
make no  withdrawals  of  Account  Value  during  the period  shown;  (e) you make no  transfers,  withdrawals,  surrender  or other
transactions  that we charge a fee during the period shown;  (f) no tax charge applies;  and (g) the expenses  throughout the period
for the underlying mutual fund portfolios will be the "Net Annual Fund Operating  Expenses",  as shown above in the section entitled
"Underlying Mutual Fund Portfolio Annual Expenses."

THE EXAMPLES ARE  ILLUSTRATIVE  ONLY - THEY SHOULD NOT BE CONSIDERED A  REPRESENTATION  OF PAST OR FUTURE EXPENSES OF THE UNDERLYING
MUTUAL FUNDS OR THEIR PORTFOLIOS - ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.






- -----------------------------------------------------------------------------------------------------------------------------------------
                                                                  Expense Examples
                                                  (amounts shown are rounded to the nearest dollar)
- -----------------------------------------------------------------------------------------------------------------------------------------

Whether or not you surrender your Annuity at the end of the applicable time period or begin taking annuity payments at such time, you would
pay the following expenses on a $1,000 investment, assuming 5% annual return on assets:

                                       ---------------------------------------------- ------- -----------------------------------------
                                       If your initial  Purchase Payment is at least           If your initial  Purchase Payment is at
                                       $10,000,  so that  the  set-up  fee  does not           least  $10,000,  so that the set-up fee
                                       apply,  and at the end of each  period  shown           does not apply,  and at the end of each
                                       your Account  Value is $50,000 or higher,  so           period  shown  your  Account  Value  is
                                       that the maintenance fee does not apply:                below $50,000,  so that the maintenance
                                                                                               fee applies:
                                       ---------------------------------------------- ------- -----------------------------------------


After:                                                                                 After:
- -----------------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------- --------- ---------- --------- ---------- ------- ---------- --------- ---------- ----------
Sub-Account:                                 1 Year    3 Years    5 Years   10 Years           1 Year     3 Years   5 Years    10 Years
- --------------------------------------------
- -------------------------------------------- --------- ---------- --------- ---------- ------- ---------- --------- ---------- ----------
GAL Money Market                                10        31         54        120                12         36        62         136
GAL Equity                                      16        49         84        183                17         53        91         197
GAL High Quality Bond                           13        40         69        152                14         44        76         166
GAL Asset Allocation                            16        50         86        188                17         54        93         200
- -------------------------------------------- --------- ---------- --------- ---------- ------- ---------- --------- ---------- ----------

                                         --------------------------------------------
                                         If your initial  Purchase  Payment is below
                                         $10,000,  so that the set-up  fee  applies,
                                         and at the end of each  period  shown  your
                                         Account  Value  is below  $50,000,  so that
                                         the maintenance fee applies:

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

- --------------------------------------------------------------------------------------
                                               After:
- -------------------------------------------- --------- ---------- --------- ----------
Sub-Account:                                 1 Year    3 Years    5 Years   10 Years
- -------------------------------------------- --------- ---------- --------- ----------
GAL Money Market                                19        50         83        172
GAL Equity                                      25        68        113        234
GAL High Quality Bond                           22        59         98        204
GAL Asset Allocation                            25        68        113        236
- -------------------------------------------- --------- ---------- --------- ----------







INVESTMENT OPTIONS

WHAT ARE THE INVESTMENT OBJECTIVES, POLICIES AND EXPENSES OF THE PORTFOLIOS?

Each variable  investment option is a Sub-account of American Skandia Life Assurance  Corporation  Variable Account E (see "What are
Separate  Accounts" for more detailed  information.) Each Sub-account  invests  exclusively in one Portfolio of the Galaxy VIP Fund.
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. The investment  advisor of the Galaxy VIP Fund,  Fleet  Investment
Advisors, Inc., is a subsidiary of Fleet Financial Group, Inc.

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 that the Portfolio may have been modeled after at the  Portfolio's  inception.  Certain  retail mutual funds may
also have been modeled after a Portfolio.  While the investment  objective and policies of the funds may be  substantially  similar,
the actual  investments  made by the funds will  differ to  varying  degrees.  Differences  in the  performance  of the funds can be
expected,  and in some cases could be substantial.  Details about the investment objectives,  policies,  risks, costs and management
of the  Portfolios  are found in the  prospectus  of the Galaxy VIP Fund.  There is no  guarantee  that any  underlying  mutual fund
portfolio will meet its investment objective.



Please refer to Appendix B for certain required financial information related to the historical performance of the Sub-accounts.



- ------------------- ------------------------------------------------------------------------------------------------ -----------------------
                                                                                                                           PORTFOLIO
      STYLE/                                        INVESTMENT OBJECTIVES/POLICIES                                          ADVISOR/
       TYPE                                                                                                               SUB-ADVISOR
- ------------------- ------------------------------------------------------------------------------------------------ -----------------------
- ------------------- ------------------------------------------------------------------------------------------------ -----------------------
                    GAL VIP Money Market:  seeks as high a level of current income as is consistent  with liquidity
                    and stability of principal.  The Portfolio  invests in a diversified  portfolio of money market
     CAPITAL        instruments,  including  commercial  paper,  notes  and  bonds  issued  by  U.S.  corporations,     Fleet Investment
  PRESERV-ATION     obligations  issued  by the  U.S.  Government  and  its  agencies  and  instrumentalities,  and      Advisors, Inc.
                    obligations  issued by U.S. and foreign banks,  such as certificates of deposit.  The Portfolio
                    also invests in repurchase agreements backed by U.S. Government obligations.
                    ------------------------------------------------------------------------------------------------ -----------------------
- ------------------- ------------------------------------------------------------------------------------------------ -----------------------
                    GAL VIP High Quality Bond:  seeks a high level of current income  consistent  with prudent risk
  LONG-TERM BOND    of capital.  The Portfolio  invests  primarily in obligations  issued or guaranteed by the U.S.
                    Government,  its agencies and instrumentalities,  as well as in corporate debt obligations such     Fleet Investment
                    as notes and bonds. The Portfolio also invests in asset-backed and  mortgage-backed  securities      Advisors, Inc.
                    and in money market instruments, such as commercial paper and bank obligations.
- ------------------- ------------------------------------------------------------------------------------------------ -----------------------
- ------------------- ------------------------------------------------------------------------------------------------ -----------------------
                    GAL VIP Asset  Allocation:  seeks a high  total  return by  providing  both a current  level of
                    income  that is greater  than that  provided by the popular  stock  market  averages as well as
ASSET ALLOCA-TION   long-term growth in the value of the Portfolio's  assets.  The Portfolio aims to provide income
                    that is higher than the average income  provided by stocks included in the popular stock market     Fleet Investment
                    averages.  The Portfolio also seeks long-term growth in the value of its assets. The investment      Advisors, Inc.
                    adviser  attempts to achieve these goals and reduce risk by allocating the  Portfolio's  assets
                    among  short-term debt  securities,  common stocks,  preferred  stocks and bonds. The Portfolio
                    seeks a mix of stocks and bonds that will produce both income and long-term capital growth.
- ------------------- ------------------------------------------------------------------------------------------------ -----------------------
                    GAL VIP  Equity:  seeks  long-term  growth  by  investing  in  companies  that the  Portfolio's
                    investment  adviser believes have  above-average  earnings  potential.  The Portfolio  normally
                    invests  at least  75% of its  total  assets  in a  broadly  diversified  portfolio  of  equity     Fleet Investment
      GROWTH        securities  issued by U.S.  companies,  primarily  common  stocks  and  securities  that can be      Advisors, Inc.
                    converted into common stocks.  The Portfolio  normally invests at least 65% of its total assets
                    in the common stocks of U.S.  companies with large market  capitalizations  (generally  over $2
                    billion) in growing industries.
- ------------------- ------------------------------------------------------------------------------------------------ -----------------------

WHAT ARE THE FIXED INVESTMENT OPTIONS?
We offer  fixed  investment  options of  different  durations  during the  accumulation  phase.  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 of 1, 2, 3, 5, 7 and 10 years.  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.


FEES AND CHARGES

WHAT ARE THE CONTRACT FEES AND CHARGES?

Set-Up Fee:  We deduct a Set-Up Fee if your initial Purchase Payment is less than $10,000.

Contingent  Deferred  Sales Charge:  There is no Contingent  Deferred  Sales Charge  applied if you surrender your Annuity or make a
partial withdrawal.

Annual  Maintenance Fee: During the accumulation  period we deduct an Annual  Maintenance Fee. The Annual  Maintenance Fee is $30.00
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.  The  Annual  Maintenance  Fee is only  deducted  if your  Account  Value  is less  than  $50,000  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.



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  program when we count the twenty free  transfers.  Transfers made as part of a rebalancing,  market timing or third party
investment  advisory  service will be subject to the  twenty-transfer  limit.  However,  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.


Tax  Charges:  Several  states and some  municipalities  charge  premium  taxes or similar  taxes.  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%. We generally will deduct the
amount of tax payable at the time the tax is imposed,  but may also decide to deduct tax charges 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.

WHAT CHARGES APPLY SOLELY TO THE VARIABLE INVESTMENT OPTIONS?

Insurance  Charge:  We deduct an Insurance Charge daily against the average daily assets allocated to the  Sub-accounts.  The charge
is equal to 0.55% on an annual basis.  The Insurance  Charge is intended to compensate  American Skandia for providing the insurance
benefits under the Annuity,  including the Annuity's 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 administrative and non-mortality  expenses under this
Annuity are incorrect.  We may increase the portion of the Insurance Charge for  administrative  costs.  However,  any increase will
only apply to Annuities issued after the date of the increase.

American  Skandia may make a profit on the Insurance  Charge if, over time,  the actual cost 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 distributing, issuing and administering the Annuity.

The Insurance  Charge is not deducted  against  assets  allocated to a fixed  investment  option.  However,  the amount we credit to
Fixed  Allocations  may also reflect  similar  assumptions  about the  insurance  guarantees  provided to Contract  Owners under the
Annuity.

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 PAYOUT?
In certain states a tax is due if and when you exercise your right to receive  periodic  annuity  payments.  The amount payable will
depend on the applicable  jurisdiction  and on the annuity  payment  option you select.  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 continue to be subject to an insurance charge.

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 Set-Up Fee,  reduce or eliminate the amount of the Annual  Maintenance Fee or
reduce  the  portion  of the  Insurance  Charge for  administrative  costs.  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 the portion of the Insurance  Charge  attributed to the charge covering
administrative costs.

PURCHASING YOUR ANNUITY

WHAT ARE OUR REQUIREMENTS FOR PURCHASING THE ANNUITY?

Initial Purchase  Payment:  To purchase this Annuity,  you must be a customer of one or more  subsidiaries of Fleet Financial Group,
Inc.  at the time the Annuity is issued.  You must make a minimum  initial  Purchase  Payment of $5,000.  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 $5,000 in total Purchase Payments.

Where allowed by law,  initial  Purchase  Payments in excess of $1,000,000  require our approval prior to  acceptance.  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,  changing the number of  transfers  allowable  under the Annuity or
restricting the Sub-accounts that are available to the Contract owner.  Other limitations and/or restrictions may apply.

Age  Restrictions:  There is no age restriction to purchase the Annuity.  However,  the protection  provided by the Death Benefit is
limited  on or after age 85.  You  should  consider  your need to  access  the value in your  contract  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.

Participant, Annuitant and Beneficiary Designations: On your Application, we will ask you to name the Participant(s), Annuitant
and one or more Beneficiaries for your Annuity.

|X|      Participant:  The  Participant(s)  holds all rights  under the  Annuity.  You may name more than one  Participant  in which
         -----------
       case all ownership  rights are held jointly.  However,  this Annuity does not provide a right of  survivorship.  Refer to the
       Glossary of Terms for a complete description of the term "Participant."
|X|      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.
|X|      Beneficiary:  The  Beneficiary  is the  person(s) or entity you name to receive the death  benefit.  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.

MANAGING YOUR ANNUITY

MAY I CHANGE THE PARTICIPANT, ANNUITANT AND BENEFICIARY DESIGNATIONS?
You may change the  Participant,  Annuitant and Beneficiary  designations by sending us a request in writing.  Where allowed by law,
such changes will be subject to our acceptance.  Some of the changes we will not accept include, but are not limited to:
|X|      a new Participant  subsequent to the death of the  Participant or the first of any joint  Participants to die, except where
     a spouse-Beneficiary has become the Participant as a result of a Participant's death;
|X|      a new Participant or Annuitant who does not meet our then current underwriting guidelines;
|X|      a new Annuitant subsequent to the Annuity Date;
|X|      for "non-qualified" investments, a new Annuitant prior to the Annuity Date if the Annuity is owned by an entity; and
|X|      a change in Beneficiary if the Participant had previously made the designation irrevocable.

Spousal Participants/Spousal Beneficiaries
If an Annuity is co-owned by spouses,  we will assume that the sole primary  Beneficiary is the surviving spouse 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  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.

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  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?
(The right to return the Annuity is often referred to as the "free-look" right or "right to cancel.")

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.  Depending  on the state in which you  purchased  your  Annuity,  and,  in some
states,  whether 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.  This amount may be higher or lower
than your  original  Purchase  Payment.  Where  required by law, we will return  your  current  Account  Value or the amount of your
initial  Purchase  Payment,  whichever  is  greater.  The same rules may apply to an Annuity  that is  purchased  as an IRA.  In any
situation  where we are required to return the greater of your  Purchase  Payment or Account  Value,  we may  allocate  your Account
Value to the GAL Money  Market  Sub-account  during the right to cancel  period and for a  reasonable  additional  amount of time to
allow for delivery of your Annuity.

MAY I MAKE ADDITIONAL PURCHASE PAYMENTS?
The minimum amount that we accept as an additional  Purchase  Payment is $500 unless you  participate in bank drafting or a periodic
purchase  payment  program.  We will allocate any additional  Purchase  Payments you make  according to your most recent  allocation
instructions, unless you request new allocations when you submit a new Purchase Payment.


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".  Purchase  Payments made through bank drafting
may only be allocated to the variable  investment  options when  applied.  Bank  drafting  allows you to invest in an Annuity with a
lower initial  Purchase  Payment,  as long as you  authorize  payments that will equal at least $5,000 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  $5,000.  The minimum
additional Purchase Payment you may make through a salary reduction program is $50.


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 and any applicable  set-up fee. 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.


In those  states  where we are  required  to return your  Purchase  Payment if you  exercise  your right to return the  Annuity,  we
initially  allocate  all  amounts  that  you  choose  to  allocate  to the  variable  investment  options  to the GAL  Money  Market
Sub-account.  At the end of the  right to cancel  period  we will  reallocate  your  Account  Value  according  to your most  recent
allocation  instructions.  Where permitted by law, we will allocate your Purchase Payments  according to your initial  instructions,
without  temporarily  allocating  to the GAL Money Market  Sub-account.  To do this,  we will ask that you execute our form called a
"return  waiver" that authorizes us to allocate your Purchase  Payment to your chosen  Sub-accounts  immediately.  If you submit the
"return  waiver" and then decide to return your Annuity  during the right to cancel  period,  you will receive your current  Account
Value which may be more or less than your initial Purchase Payment (see "May I Return the Annuity if I Change my Mind?").


Subsequent  Purchase  Payments:  We will allocate any additional  Purchase  Payments you make  according to your current  allocation
instructions.  We assume that your current  allocation  instructions  are valid for  subsequent  Purchase  Payments until you make a
change to those allocations or request new allocations when you submit a new Purchase Payment.


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.

Currently,  we will charge $10.00 for each transfer  after the twentieth  (20th) in each Annuity Year,  including  transfers made as
part of any rebalancing,  market timing,  asset  allocation or similar program which you have authorized.  Transfers made as part of
a dollar cost averaging  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  eliminate  the  Transfer  Fee for  transfer  requests  transmitted
electronically or through other means that reduce our processing costs.


We reserve the right to limit the number of  transfers in any Annuity  Year for all  existing or new  Participants.  We also reserve
the right to limit the number of  transfers  in any Annuity Year or to refuse any  transfer  request for an  Participant  or certain
Participants  if: (a) we believe that  excessive  trading 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 one or more of the  Portfolios
that the  purchase or  redemption  of shares must be  restricted  because of  excessive  trading or a specific  transfer or group of
transfers is deemed to have a detrimental  effect on the share prices of affected  Portfolios.  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.  Under such a circumstance,  we will process  transfers
according to our rules then in effect and provide  notice if the transfer  request was denied.  If a transfer  request is denied,  a
new transfer request may be required.

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  each month 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.  Dollar  Cost  Averaging  allows you to invest  regularly  each  month,
regardless  of the current unit value (or price) of the  Sub-account(s)  you invest in. This enables you to purchase more units when
the market  price is low and fewer  units  when the market  price is high.  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.

You must have a minimum Account Value of at least $25,000 to enroll 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:
|X|      You may only use Fixed Allocations with Guarantee Periods of 1, 2 or 3 years.
|X|      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.
|X|      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.


DO YOU OFFER A PROGRAM TO BALANCE FIXED AND VARIABLE INVESTMENTS?
Some  investors  wish to invest in the  variable  investment  options  but also wish to protect a portion of their  investment  from
market  fluctuations.  We offer a balanced  investment  program  where a portion of your  Purchase  Payment is  allocated to a Fixed
Allocation for a Guarantee Period that you select and the remaining  Account Value is allocated to the variable  investment  options
that you  select.  The  amount  that we  allocate  to the Fixed  Allocation  is the amount  that will 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 no amounts are  transferred  or withdrawn from the Fixed  Allocation,  at the end of the Guarantee  Period,  it will
have grown to equal the  "principal  amount".  The remaining  Account Value that was not  allocated to the Fixed  Allocation  can be
allocated to any of the  Sub-accounts  that you choose.  Account Value  allocated to the variable  investment  options is subject to
market fluctuations and may increase or decrease in value.

Example
Assume you have  $100,000 to invest.  You choose to 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 6.05%*.  Based on the chosen  Guarantee Period and interest rate,
the factor for  determining  how much of your Account Value can be allocated to the Fixed  Allocation  is 0.555768.  That means that
$55,557 will be allocated to the Fixed  Allocation  and the  remaining  Account  Value  ($44,443)  will be allocated to the variable
investment  options.  Assuming that you do not make any withdrawals 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.

MAY I AUTHORIZE MY FINANCIAL PROFESSIONAL TO MANAGE MY ACCOUNT?
Yes.  You may  authorize  your  financial  professional  to direct the  allocation  of your Account  Value and to request  financial
transactions  between  investment  options while you are living,  subject to our rules.  We require that you provide us with written
proof that you have authorized your financial  professional to request  financial  transactions on your behalf.  You must contact us
immediately  if and when you revoke such  authority.  We will not be  responsible  for acting on  instructions  from your  financial
professional  if you fail to  inform us that  such  person's  authority  has been  revoked.  We may also  suspend  or  cancel  these
privileges at any time.  We will notify you if we do.

We or an  affiliate of ours may provide  administrative  support to  licensed,  registered  financial  professionals  or  investment
advisors who you authorize to make financial  transactions  on your behalf.  These financial  professionals  may be firms or persons
who also are  appointed by us as  authorized  sellers of the  Annuity.  However,  we do not offer advice about how to allocate  your
Account Value under any  circumstance.  Any financial  professionals  you engage to provide  advice and/or make transfers for you is
not acting on our behalf. We are not responsible for any  recommendations  such financial  professionals  make, any market timing or
asset allocation programs they choose to follow or any specific transfers they make on your behalf.

We may require  financial  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 financial  professional's or investment  advisor's ability to
request  financial  transactions on your behalf.  These  limitations are intended to minimize the detrimental  impact of a financial
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.  The
administrative agreement may limit the available investment options,  require advance notice of large transactions,  or impose other
trading  limitations on your financial  professional.  Your financial  professional  will be informed of all such restrictions on an
ongoing  basis.  We may also require that your  financial  professional  transmit all financial  transactions  using the  electronic
trading  functionality  available  through our Internet  website  (www.americanskandia.com).  Limitations that we may impose on your
financial  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 INVESTMENT OPTIONS WORK?
(Fixed Allocations may not be available in all states and may not be available for certain durations.)

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  of 1, 2, 3, 5, 7 and 10  years.  We may make  Fixed  Allocations  of
different  durations  available  in the future.  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 1-800-444-3970.

A Guarantee Period for a Fixed Allocation begins:
|X|      when all or part of a net Purchase Payment is allocated to that particular Guarantee Period;
|X|      upon transfer of any of your Account Value to a Fixed Allocation for that particular Guarantee Period; or
|X|      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 a Program to Balance Fixed and Variable  Investments?").  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.

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.

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 Market  Value
Adjustment  formula  compares the interest  rates credited for Fixed  Allocations at the time you invested,  to interest rates being
credited  when you make a transfer or  withdrawal.  The amount of any Market Value  Adjustment  can be either  positive or negative,
depending on the rates that are currently being credited on Fixed Allocations.






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/12

                                                               where:

                  I is the fixed  interest rate we guaranteed to credit to the Fixed  Allocation as of its starting
                  date;

                  J is the fixed  interest  rate for your class of  annuities at the time of the  withdrawal  for a
                  new Fixed  Allocation  with a Guarantee  Period  equal to the  remaining  number of years in your
                  original Guarantee Period;

                  N is the number of months 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/12.


If the transfer or  withdrawal  does not occur on the yearly or monthly  anniversary  of the beginning of the Fixed
Allocation, the numbers used in `J' and `N' will be rounded to the next highest integer.

MVA Examples
The following hypothetical examples show the effect of the MVA in determining Account Value.  Assume the following:
|X|      You allocate $50,000 into a Fixed Allocation with a Guarantee Period of 5 years.
|X|      The interest rate for your Fixed Allocation is 5.0% (I = 5.0%).
|X|      You make no  withdrawals  or transfers  until you decided to withdraw the entire Fixed  Allocation  after exactly three (3)
         years, therefore 24 months remain before the Maturity Date (N = 24).

Example of Positive MVA
Assume that at the time you request the withdrawal,  the fixed interest rate for a new Fixed  Allocation with a Guarantee  Period of
24 months is 3.5% (J = 3.5%).  Based on these assumptions, the MVA would be calculated as follows:

                                  MVA Factor = [(1+I)/(I+J+0.0010)]N/12 = [1.05/1.036]2 = 1.027210
                                                     Interim Value = $57,881.25
                                 Account Value after MVA = Interim Value X MVA Factor = $59,456.20.

Example of Negative MVA
Assume that at the time you request the withdrawal,  the fixed interest rate for a new Fixed  Allocation with a Guarantee  Period of
24 months is 6.0% (J = 6.0%).  Based on these assumptions, the MVA would be calculated as follows:

                                 MVA Factor = [(1+I)/(1+J+0.0010)]N/12 = [1.05/1.061)]2 = 0.979372
                                                     Interim Value = $57,881.25
                                 Account Value after MVA = Interim Value X MVA Factor = $56,687.28.


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 GAL 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.







ACCESS TO ACCOUNT VALUE


WHAT TYPES OF DISTRIBUTIONS ARE AVAILABLE TO ME?
During the  accumulation  phase 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. If you surrender your Annuity
we may deduct the Annual  Maintenance Fee and any Tax charge that applies.  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  phase. We call this a "Partial  Withdrawal."  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.


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  1-800-444-3970  or
visit our Internet Website at www.americanskandia.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.
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 $25,000  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, we may
postpone  the  withdrawal  and add the  expected  amount to the amount  that is to be  withdrawn  on the next  scheduled  Systematic
Withdrawal.

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.  We may charge you for
calculating  required  Minimum  Distributions.   You  may  elect  to  have  Minimum  Distributions  paid  out  monthly,   quarterly,
semi-annually or annually.  The $100 minimum that applies to Systematic Withdrawals does not apply to Minimum Distributions.

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  phase 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.


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  1-800-444-3970  or visit our
Internet Website at www.americanskandia.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.

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 up to 30 days before the Annuity  Date.  A maximum  Annuity Date may be required by law. Any
change to these  options  must be in  writing.  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, 15, or 20 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 to 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 a Certain Period:  Under this option,  income is payable  periodically  for a specified  number of years. The
number of years cannot be less than 5 or more than 50.  Payments may increase or decrease  depending on the  investment  performance
of the  Sub-Accounts.  If the payee dies before the end of the specified  number of years,  the  remaining  payments are paid to the
Beneficiary  to the end of  such  period.  Note  that  under  this  option,  payments  are  not  based  on 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.  If this option is selected,  full  surrenders may be made from the Annuity
prior to the last guaranteed Payment Date.  No partial surrenders are permitted if this option is selected.

Option 6
- --------
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 7
- --------
Variable  Payments  for Life with a Cash Value and  Guarantee:  Under this  option,  benefits  are payable as described in Option 6;
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,  making a purchase  payment within seven
years of the Annuity  Date limits your  annuity  payment  options.  Certain  annuity  payment  options may not be  available if your
Annuity Date occurs during the period that a CDSC would apply.

If you have not provided us with your Annuity Date or Annuity Payment Option in writing, then:
|X|      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
|X|      the annuity payments, where allowed by law, will be calculated on a fixed basis under Option 3, Payments for Life with 10
     years certain.

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
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.  The remaining  annuity payments
will fluctuate  based on the  performance  of the Portfolios  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.

|X|      Variable Payments (Options 1-3 & 5)
         -----------------
         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%.

|X|      Stabilized Variable Payments (Option 6)
         ----------------------------
         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 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%.

|X|      Stabilized Variable Payments with a Guaranteed Minimum (Option7)
         ------------------------------------------------------
         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%.

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.

DEATH BENEFIT

WHAT TRIGGERS THE PAYMENT OF A DEATH BENEFIT?

The Annuity  provides a Death  Benefit  during its  accumulation  phase.  The  Insurance  Charge we deduct  from the  Account  Value
allocated to the  Sub-accounts  is used, in part, to pay us for the risk we assume in providing  the Death Benefit  guarantee  under
the  Annuity.  If the  Annuity is owned by one or more  natural  persons,  the Death  Benefit is payable  upon the first  death of a
Participant.  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."

The Death Benefit depends on the decedent's age on the date of death:

         If death occurs before the decedent's age 85:  The Death Benefit is the greater of:

|X|      The sum of all Purchase Payments less the sum of all withdrawals; and
|X|      The sum of your Account Value in the variable investment options and your Interim Value in the Fixed Allocations.

         If death occurs when the decedent is age 85 or older:  The Death Benefit is your Account Value.

PAYMENT OF DEATH BENEFITS

Payment of Death Benefit to Beneficiary
Except in the case of a spousal Beneficiary, in the event of your death, the death benefit must be distributed:
|X|      as a lump sum amount at any time within five (5) years of the date of death; or
|X|      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 Option 1-4) or as a series of variable  annuity payments
(Annuity Payment Option 1-3 or 5-7).  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.

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.

Inherited IRA Death Benefit Payout
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.  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.

|X|      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 31 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.

|X|      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."

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 minimum 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" 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 GAL 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.

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 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 equal to your  Account  Value  minus any Annual  Maintenance  Fee.  The  Surrender  Value  will also  include  any  Market  Value
Adjustment that may apply.

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  fluctuate  with  the  market  fluctuations  of the
Portfolios.  The value of the Units also reflect the daily accrual for the Insurance Charge.

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 other than its Maturity Date or within 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?

Initial  Purchase  Payments:  We are required to allocate  your initial  Purchase  Payment to the  Sub-accounts  within two (2) days
after we receive  all of our  requirements  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) 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) 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 with satisfactory instructions.

Scheduled  Transactions:  "Scheduled"  transactions  include transfers under a Dollar Cost Averaging,  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 Valuation Day prior to the scheduled transaction date.

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 in good order.

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 materials we require for such transaction and that are satisfactory to us.

TAX CONSIDERATIONS

WHAT ARE SOME OF THE FEDERAL TAX CONSIDERATIONS OF THIS ANNUITY?
Following is a brief summary of some of the Federal tax  considerations  relating to this Annuity.  However,  since the tax laws are
complex and tax consequences are affected by your individual  circumstances,  this summary of our interpretation of the relevant tax
laws is not  intended  to be  fully  comprehensive  nor is it  intended  as tax  advice.  Therefore,  you  may  wish  to  consult  a
professional tax advisor for tax advice as to your particular situation.

HOW ARE AMERICAN SKANDIA AND THE SEPARATE ACCOUNTS TAXED?
The Separate  Accounts are taxed as part of American  Skandia.  American Skandia is taxed as a life insurance  company under Part I,
subchapter  L of the Code.  No taxes are due on  interest,  dividends  and  short-term  or  long-term  capital  gains  earned by the
Separate Accounts with respect to the Annuities.

IN GENERAL, HOW ARE ANNUITIES TAXED?
Section 72 of the Code governs the taxation of annuities in general.  Taxation of the Annuity will depend in large part on:

1.       whether the Annuity is used by:
|X|      a qualified  pension plan,  profit  sharing plan or other  retirement  arrangement  that is eligible for special  treatment
         under the Code (for purposes of this discussion, a "Qualified Contract"); or
|X|      an individual or a corporation, trust or partnership (a "Non-qualified Contract"); and

2.       whether the Owner is:
|X|      an individual person or persons; or
|X|      an entity including a corporation, trust or partnership.

Individual  Ownership:  If one or more  individuals own an Annuity,  the Owner of the Annuity is generally not taxed on any increase
in the value of the Annuity  until an amount is received (a  "distribution").  This is  commonly  referred to as "tax  deferral".  A
distribution  can be in the form of a lump sum payment  including  payment of a Death Benefit,  or in annuity  payments under one of
the annuity payment options.  Certain other transactions may qualify as a distribution and be subject to taxation.


Entity  Ownership:  If the Annuity is owned by an entity and is not a Qualified  Contract,  generally  the Owner of the Annuity must
currently  include  any  increase in the value of the Annuity  during a tax year in its gross  income.  An  exception  from  current
taxation  applies for annuities held by an employer with respect to a terminated  tax-qualified  retirement plan, a trust holding an
annuity as an agent for a natural  person,  or by a decedent's  estate by reason of the death of the decedent.  A tax-exempt  entity
for Federal tax purposes will not be subject to income tax as a result of this provision.


HOW ARE DISTRIBUTIONS TAXED?
Distributions from an Annuity are taxed as ordinary income and not as capital gains.

Distributions  Before  Annuitization:  Distributions  received before annuity  payments begin are generally  treated as coming first
from "income on the contract" and then as a return of the  "investment  in the  contract".  The amount of any  distribution  that is
treated  as receipt of  "income  on the  contract"  is  includible  in the  taxpayer's  gross  income and  taxable in the year it is
received.  The amount of any  distribution  treated as a return of the  "investment  in the  contract"  is not  includible  in gross
income.


|X|      "Income on the  contract" is calculated by  subtracting  the  taxpayer's  "investment  in the contract"  from the aggregate
     value of all "related contracts" (discussed below).
|X|      "Investment  in the  contract"  is equal to  total  purchase  payments  for all  "related  contracts"  minus  any  previous
     distributions  or portions of such  distributions  from such  "related  contracts"  that were not  includible  in gross income.
     "Investment  in the  contract"  may be affected by whether an annuity or any  "related  contract"  was  purchased  as part of a
     tax-free  exchange of life insurance,  endowment,  or annuity  contracts under Section 1035 of the Code. The "investment in the
     contract" for a Qualified Contract will be considered zero for tax reporting purposes.

Distributions  After  Annuitization:  A portion of each  annuity  payment  received on or after the Annuity  Date will  generally be
taxable.  The taxable  portion of each annuity  payment is determined by a formula which  establishes the ratio that the "investment
in the contract"  bears to the total value of annuity  payments to be made.  This is called the  "exclusion  ratio." The  investment
in the contract is excluded  from gross income.  Any portion of an annuity  payment  received that exceeds the exclusion  ratio will
be entirely  includible  in gross  income.  The formula for  determining  the  exclusion  ratio  differs  between fixed and variable
annuity  payments.  When annuity  payments  cease  because of the death of the person upon whose life  payments are based and, as of
the date of death,  the  amount of  annuity  payments  excluded  from  taxable  income by the  exclusion  ratio  does not exceed the
"investment in the contract," then the remaining  portion of unrecovered  investment is allowed as a deduction by the beneficiary in
the tax year of such death.


Penalty Tax on  Distributions:  Generally,  any  distribution  from an annuity  not used in  conjunction  with a Qualified  Contract
(Qualified  Contracts are  discussed  below) is subject to a penalty  equal to 10% of the amount  includible  in gross income.  This
penalty does not apply to certain distributions, including:
|X|      Distributions made on or after the taxpayer has attained age 591/2;
|X|      Distributions made on or after the death of the contract owner, or, if the owner is an entity, the death of the annuitant;
|X|      Distributions attributable to the taxpayer's becoming disabled;
|X|      Distributions  which are part of a series of  substantially  equal periodic  payments for the life (or life  expectancy) of
     the taxpayer (or the joint lives of the taxpayer and the taxpayer's Beneficiary);
|X|      Distributions of amounts which are treated as "investments in the contract" made prior to August 14, 1982;
|X|      Payments under an immediate annuity as defined in the Code;
|X|      Distributions under a qualified funding asset under Code Section 130(d); or
|X|      Distributions  from an annuity  purchased by an employer on the termination of a qualified pension plan that is held by the
     employer until the employee separates from service.


Special rules  applicable to "related  contracts":  Contracts  issued by the same insurer to the same contract owner within the same
calendar year (other than certain  contracts owned in connection with a tax-qualified  retirement  arrangement) are to be treated as
one annuity contract when determining the taxation of distributions  before  annuitization.  We refer to these contracts as "related
contracts."  In situations  involving  related  contracts we believe that the values under such  contracts and the investment in the
contracts  will be added  together to determine the proper  taxation of a  distribution  from any one contract  described  under the
section  "Distributions  before  Annuitization."  Generally,  distributions  will be  treated  as coming  first  from  income on the
contract  until all of the  income on all such  related  contracts  is  withdrawn,  and then as a return  of the  investment  in the
contract.  There is some uncertainty  regarding the manner in which the Internal  Revenue Service would view related  contracts when
one or more  contracts are immediate  annuities or are contracts that have been  annuitized.  The Internal  Revenue  Service has not
issued guidance  clarifying this issue as of the date of this Prospectus.  You are  particularly  cautioned to seek advice from your
own tax advisor on this matter.

Special  concerns  regarding  "substantially  equal  periodic  payments":  (also  known as  "72(t)" or  "72(q)"  distributions)  Any
modification to a program of  distributions  which are part of a series of substantially  equal periodic  payments that occur before
the later of the taxpayer  reaching age 59 1/2or five (5) years from the first of such payments will result in the  requirement to pay
the 10%  premature  distribution  penalty  that would have been due had the payments  been  treated as subject to the 10%  premature
distribution  penalty in the years  received,  plus  interest.  This does not apply when the  modification  is by reason of death or
disability.  American Skandia does not currently support a section 72(q) program.

Special concerns regarding immediate  annuities:  The Internal Revenue Service has ruled that the immediate annuity exception to the
10% penalty described above under "Penalty Tax on Distributions" for  "non-qualified"  immediate annuities as defined under the Code
may not apply to annuity payments under a contract  recognized as an immediate  annuity under state insurance law obtained  pursuant
to an exchange of a contract if: (a) purchase  payments for the exchanged  contract  were  contributed  or deemed to be  contributed
more than one year  prior to the  annuity  starting  date  under the  immediate  annuity;  and (b) the  annuity  payments  under the
immediate annuity do not meet the requirements of any other exception to the 10% penalty.

Special rules in relation to tax-free  exchanges under Section 1035:  Section 1035 of the Code permits certain tax-free exchanges of
a life insurance,  annuity or endowment  contract for an annuity.  If an annuity is purchased  through a tax-free exchange of a life
insurance,  annuity or endowment contract that was purchased prior to August 14, 1982, then any distributions  other than as annuity
payments will be considered to come:
|X|      First, from the amount of "investment in the contract" made prior to August 14, 1982 and exchanged into the annuity;
|X|      Then,  from any "income on the  contract"  that is  attributable  to the  purchase  payments  made prior to August 14, 1982
       (including income on such original purchase payments after the exchange);
|X|      Then, from any remaining "income on the contract"; and
|X|      Lastly, from the amount of any "investment in the contract" made after August 13, 1982.

Therefore,  to the extent a distribution is equal to or less than the remaining  investment in the contract made prior to August 14,
1982,  such amounts are not included in taxable  income.  Further,  distributions  received  that are  considered  to be a return of
investment on the contract from purchase  payments made prior to August 14, 1982, such  distributions are not subject to the 10% tax
penalty.  In all other respects,  the general  provisions of the Code apply to distributions from annuities obtained as part of such
an exchange.

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% IRS tax penalty on pre-age 59 1/2withdrawals.  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.  As of the  date of this  prospectus,  we will  treat a  partial  surrender  of this  type  involving  a
non-qualified  annuity  contract 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% IRS early  distribution
penalty.  We  strongly  urge you to  discuss  any  transaction  of this  type  with  your tax  advisor  before  proceeding  with the
transaction.

There is no guidance from the Internal Revenue Service as to whether a partial  exchange from a life insurance  contract is eligible
for  non-recognition  treatment  under Section 1035 of the Code. We will continue to report a partial  surrender of a life insurance
policy as subject to current  taxation to the extent of any gain.  In addition,  please be cautioned  that no specific  guidance has
been provided as to the impact of such a transaction  for the remaining life  insurance  policy,  particularly  as to the subsequent
methods  to be used to test for  compliance  under  the Code for both the  definition  of life  insurance  and the  definition  of a
modified endowment contract.

WHAT TAX CONSIDERATIONS ARE THERE FOR TAX-QUALIFIED RETIREMENT PLANS OR QUALIFIED CONTRACTS?
An annuity may be suitable as a funding vehicle for various types of  tax-qualified  retirement  plans.  We have provided  summaries
of the types of  tax-qualified  retirement  plans with which we may issue an Annuity.  These summaries  provide general  information
about the tax rules and are not intended to be complete  discussions.  The tax rules regarding  qualified  plans are complex.  These
rules may include  limitations on contributions and restrictions on distributions,  including  additional  taxation of distributions
and  additional  penalties.  The terms and  conditions  of the  tax-qualified  retirement  plan may  impose  other  limitations  and
restrictions  that are in addition to the terms of the Annuity.  The  application  of these rules  depends on  individual  facts and
circumstances.  Before  purchasing an Annuity for use in a qualified  plan, you should obtain  competent tax advice,  both as to the
tax treatment and suitability of such an investment.  American  Skandia does not offer all of its annuities to all of these types of
tax-qualified retirement plans.

Corporate  Pension and  Profit-sharing  Plans:  Annuities may be used to fund  employee  benefits of various  corporate  pension and
profit-sharing  plans  established by corporate  employers  under Section 401(a) of the Code including  401(k) plans.  Contributions
to such plans are not taxable to the employee until  distributions  are made from the retirement plan. The Code imposes  limitations
on the amount that may be contributed  and the timing of  distributions.  The tax treatment of  distributions  is subject to special
provisions of the Code, and also depends on the design of the specific  retirement plan.  There are also special  requirements as to
participation, nondiscrimination, vesting and nonforfeitability of interests.

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

Tax Sheltered  Annuities:  Under Section 403(b) of the Code, a tax sheltered annuity ("TSA") is a contract into which  contributions
may be  made  by  certain  qualifying  employers  such  as  public  schools  and  certain  charitable,  educational  and  scientific
organizations  specified  in Section  501(c)(3)  for the  benefit of their  employees.  Such  contributions  are not  taxable to the
employee  until  distributions  are made from the TSA.  The Code  imposes  limits on  contributions,  transfers  and  distributions.
Nondiscrimination requirements also apply.

- ------------------------------------------------------------------------------------------------------------------------------------
Under a TSA, you may be prohibited from taking  distributions  from the contract  attributable to  contributions  made pursuant to a
salary reduction agreement unless the distribution is made:
- ------------------------------------------------------------------------------------------------------------------------------------
|X|      After the participating employee attains age 59 1/2;
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
|X|      Upon separation from service, death or disability; or
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
|X|      In the case of financial hardship (subject to restrictions).
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------






Section 457 Plans:  Under Section 457 of the Code,  deferred  compensation  plans  established by governmental and certain other tax
exempt  employers  for their  employees  may invest in annuity  contracts.  The Code limits  contributions  and  distributions,  and
imposes  eligibility  requirements as well.  Contributions  are not taxable to employees until  distributed from the plan.  However,
plan assets  remain the  property of the  employer  and are subject to the claims of the  employer's  general  creditors  until such
assets are made available to participants or their beneficiaries.

Individual  Retirement Programs or "IRAs":  Section 408 of the Code allows eligible individuals to maintain an individual retirement
account or individual  retirement  annuity  ("IRA").  IRAs are subject to  limitations  on the amount that may be  contributed,  the
contributions  that may be deducted  from  taxable  income,  the persons who may be eligible to  establish  an IRA and the time when
distributions  must commence.  Further,  an Annuity may be established with  "roll-over"  distributions  from certain  tax-qualified
retirement plans and maintain the tax-deferred status of these amounts.

Roth IRAs:  A form of IRA is also  available  called a "Roth  IRA".  Contributions  to a Roth IRA are not tax  deductible.  However,
distributions  from a Roth IRA are free from  Federal  income taxes and are not subject to the 10% penalty tax if five (5) tax years
have passed since the first  contribution  was made or any conversion from a traditional  IRA was made and the  distribution is made
                                                                                                       ---
(a) once the taxpayer is age 59 1/2or older,  (b) upon the death or disability of the taxpayer,  or (c) for qualified  first-time home
buyer expenses,  subject to certain  limitations.  Distributions  from a Roth IRA that are not "qualified" as described above may be
subject to Federal income and penalty taxes.

Purchasers  of IRAs and Roth  IRAs  will  receive a  special  disclosure  document,  which  describes  limitations  on  eligibility,
contributions,  transferability  and  distributions.  It also  describes  the  conditions  under which  distributions  from IRAs and
qualified plans may be rolled over or transferred into an IRA on a tax-deferred  basis and the conditions under which  distributions
from traditional IRAs may be rolled over to, or the traditional IRA itself may be converted into, a Roth IRA.

SEP IRAs:  Eligible  employers  that meet  specified  criteria may  establish  Simplified  Employee  Pensions or SEP IRAs.  Employer
contributions  that may be made to employee SEP IRAs are larger than the amounts that may be  contributed  to other IRAs, and may be
deductible to the employer.

HOW ARE DISTRIBUTIONS FROM QUALIFIED CONTRACTS TAXED?
Distributions  from  Qualified  Contracts are generally  taxed under  Section 72 of the Code.  Under these rules,  a portion of each
distribution  may be excludable  from income.  The  excludable  amount is the proportion of a  distribution  representing  after-tax
contributions.  Generally,  a 10% penalty tax applies to the taxable portion of a distribution from a Qualified  Contract made prior
to age 59 1/2.  However, the 10% penalty tax does not apply when the distribution:
|X|      is part of a properly executed transfer to another IRA or another eligible qualified account;
|X|      is subsequent to the death or  disability  of the taxpayer (for this purpose  disability is as defined in Section  72(m)(7)
     of the Code);
|X|      is part of a series  of  substantially  equal  periodic  payments  to be paid not less  frequently  than  annually  for the
     taxpayer's life or life expectancy or for the joint lives or life expectancies of the taxpayer and a designated beneficiary;
|X|      is subsequent to a separation from service after the taxpayer attains age 55*;
|X|      does not exceed the employee's allowable deduction in that tax year for medical care*;
|X|      is made to an alternate payee pursuant to a qualified domestic relations order*; and
|X|      is made pursuant to an IRS levy.

The exceptions above which are followed by an asterisk (*) do not apply to IRAs.  Certain other exceptions may be available.

Minimum  Distributions  after age 70 1/2: A participant's  interest in a Qualified Contract must generally be distributed,  or begin to
be distributed, by the "required beginning date".  This is April 1st of the calendar year following the later of:
|X|      the calendar year in which the individual attains age 70 1/2; or
|X|      the calendar  year in which the  individual  retires from service with the employer  sponsoring  the plan.  The  retirement
      option is not available to IRAs.


The IRS has released proposed  Treasury  regulations  containing new Minimum  Distribution  rules.  Under the new rules, the Minimum
Distribution  amount  will be lower  for the vast  majority  of  individuals.  The new  rules are  available,  at the  option of the
individual,  for  Minimum  Distributions  required  in the year 2001.  For Minimum  Distributions  required in 2002 and beyond,  the
individual must utilize the new Minimum Distribution rules.


Under existing  Minimum  Distribution  rules,  the  participant's  entire  interest must be distributed  beginning no later than the
required  beginning date over a period which may not extend beyond a maximum of the life or life  expectancy of the  participant (or
the life  expectancies  of the owner and a  designated  beneficiary).  Each  annual  distribution  must  equal or exceed a  "minimum
distribution  amount" which is determined by dividing the account value by the applicable  life expectancy or pursuant to an annuity
payout.  If the account  balance is used,  it generally is based upon the Account  Value as of the close of business on the last day
of the previous calendar year.

If the  participant  dies before  reaching his or her  "required  beginning  date",  his or her entire  interest  must  generally be
distributed  within five (5) years of death.  However,  this rule will be deemed satisfied if  distributions  begin before the close
of the calendar year following death to a designated  beneficiary (or over a period not extending  beyond the life expectancy of the
beneficiary).  If the Beneficiary is the individual's surviving spouse,  distributions may be delayed until the deceased owner would
have  attained  age 701/2. A  surviving  spouse  would  also have the  option to assume the IRA as his or her own if he or she is the
sole designated  beneficiary.  If a participant dies after reaching his or her required  beginning date or after  distributions have
commenced,  the  individual's  interest must  generally be distributed  at least as rapidly as under the method of  distribution  in
effect at the time of the individual's death.

If the amount  distributed is less than the minimum  required  distribution for the year, the participant is subject to a 50% tax on
the amount that was not properly distributed.


Under the new Minimum  Distribution  rules, a uniform life expectancy table will be utilized by all participants except those with a
spouse who is more than ten (10)  years  younger  than the  participant.  In that case,  the new rules  permit  the  participant  to
utilize the actual life  expectancies of the  participant  and the spouse.  In addition,  the designated  beneficiary  under the new
rules  is not  determined  until  December  31 of the year  following  the  year of the  participant's  death.  In most  cases,  the
beneficiary  may be  changed  during  the  participant's  lifetime  with no  affect on the  Minimum  Distributions.  At  death,  the
designated  Beneficiary  may take  Minimum  Distributions  over  his/her  life  expectancy  or in a lump sum.  In the  absence  of a
designated beneficiary, the beneficiary may take a lump sum or distributions over five (5) years.

It is  important  to note that the new  Minimum  Distribution  rules may not apply to certain  qualified  retirement  plans (at this
time), but currently generally apply to IRA's and 403(b)'s.


GENERAL TAX CONSIDERATIONS

Diversification:  Section  817(h) of the Code provides that a variable  annuity  contract,  in order to qualify as an annuity,  must
have an "adequately  diversified"  segregated asset account (including  investments in a mutual fund by the segregated asset account
of  insurance  companies).  If the  diversification  requirements  under the Code are not met and the  annuity is not  treated as an
annuity,  the  taxpayer  will be subject to income tax on the annual gain in the  contract.  The Treasury  Department's  regulations
prescribe the diversification  requirements for variable annuity contracts.  We believe the underlying mutual fund portfolios should
comply with the terms of these regulations.

Transfers Between Investment  Options:  Transfers between investment  options are not subject to taxation.  The Treasury  Department
may  promulgate  guidelines  under  which a variable  annuity  will not be treated as an annuity for tax  purposes  if persons  with
ownership  rights have excessive  control over the  investments  underlying  such variable  annuity.  Such guidelines may or may not
address the number of investment  options or the number of transfers  between  investment  options offered under a variable annuity.
It is not known whether such guidelines,  if in fact promulgated,  would have retroactive  effect. It is also not known what effect,
if any, such guidelines may have on transfers  between the investment  options of the Annuity offered  pursuant to this  Prospectus.
We will take any action,  including  modifications to your Annuity or the  Sub-accounts,  required to comply with such guidelines if
promulgated.

Federal  Income Tax  Withholding:  Section  3405 of the Code  provides  for  Federal  income  tax  withholding  on the  portion of a
distribution  which is  includible  in the gross  income of the  recipient.  Amounts to be  withheld  depend  upon the nature of the
distribution.  However,  under most  circumstances  a recipient  may elect not to have income  taxes  withheld or have income  taxes
withheld at a different rate by filing a completed election form with us.


Certain  distributions,  known as  eligible  rollover  distributions,  from  Qualified  Contracts,  are  subject  to  automatic  20%
withholding for Federal income taxes. The following  distributions  are not eligible  rollover  distributions and not subject to 20%
withholding::
|X|      any portion of a distribution paid as Minimum Distributions;
|X|      direct transfers to the trustee of another retirement plan;
|X|      distributions from an individual retirement account or individual retirement annuity;
|X|      distributions  made as  substantially  equal periodic  payments for the life or life  expectancy of the  participant in the
     retirement plan or the life or life expectancy of such participant and his or her designated beneficiary under such plan;
|X|      distributions  that are part of a series of substantial  periodic  payments pursuant to Section 72(q) or 72(t) of the Code;
     and
|X|      certain other distributions where automatic 20% withholding may not apply.


Loans,  Assignments  and Pledges:  Any amount  received  directly or indirectly  as a loan from, or any  assignment or pledge of any
portion of the value of, an annuity before annuity  payments have begun are treated as a distribution  subject to taxation under the
distribution  rules set forth  above.  Any gain in an annuity on or after the  assignment  or pledge of an entire  annuity and while
such  assignment  or pledge  remains  in effect is  treated as  "income  on the  contract"  in the year in which it is  earned.  For
annuities not issued





as Qualified  Contracts,  the cost basis of the annuity is increased by the amount of any  assignment or pledge  includible in gross
income.  The cost basis is not  affected  by any  repayment  of any loan for which the  annuity is  collateral  or by payment of any
interest thereon.

Gifts:  The gift of an annuity to someone  other than the spouse of the owner (or former  spouse  incident to a divorce) is treated,
for income tax purposes, as a distribution.

Estate and Gift Tax  Considerations:  You should obtain  competent tax advice with respect to possible  federal and state estate and
gift tax consequences flowing from the ownership and transfer of annuities.

Generation-Skipping  Transfers:  Under the Code  certain  taxes may be due when all or part of an  annuity is  transferred  to, or a
death  benefit is paid to, an  individual  two or more  generations  younger than the  contract  holder.  These  generation-skipping
transfers  generally  include those subject to federal  estate or gift tax rules.  There is an aggregate $1 million  exemption  from
taxes for all such  transfers.  We may be required to determine  whether a  transaction  is a direct skip as defined in the Code and
the amount of the  resulting  tax. We will  deduct from your  Annuity or from any  applicable  payment  treated as a direct skip any
amount of tax we are required to pay.

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.

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.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.  You may request  additional  reports.  We reserve the right to charge
up to $50 for each such additional  report.  Instead of immediately  confirming  transactions made pursuant to some type of periodic
transfer  program (such as a dollar cost averaging  program) or a periodic  Purchase  Payment  program,  such as a salary  reduction
arrangement,  we may confirm such  transactions  in quarterly  statements.  You should review the  information  in these  statements
carefully.

All errors or  corrections  must be reported to us at our Office as soon as possible to assure  proper  accounting  to your Annuity.
For transactions  that are confirmed  immediately,  we assume all transactions are accurate unless you notify us otherwise within 10
days from the date you receive the  confirmation.  For transactions  that are only confirmed on the quarterly  statement,  we assume
all  transactions  are  accurate  unless  you  notify us  within 10 days from the date you  receive  the  quarterly  statement.  All
transactions  confirmed  immediately or by quarterly  statement are deemed  conclusive  after the applicable  10-day period.  We may
also send an annual report and a semi-annual  report  containing  applicable  financial  statements,  as of December 31 and June 30,
respectively,  to  Participants  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  ("American  Skandia") is a stock life insurance  company domiciled in Connecticut with
licenses in all 50 states and the District of Columbia.  American  Skandia is a wholly-owned  subsidiary of American  Skandia,  Inc.
formerly known as American  Skandia  Investment  Holding  Corporation,  whose ultimate parent is Skandia  Insurance  Company Ltd., a
Swedish  company.  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 variable annuity and variable life insurance  contracts.  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;  (c) certain  group
variable  annuities  that are exempt from  registration  with the SEC that serve as funding  vehicles for various types of qualified
pension and profit sharing plans;  (d) a single premium  variable life insurance  policy that is registered  with the SEC; and (e) a
flexible premium life insurance policy that is registered with the SEC.

WHAT ARE SEPARATE ACCOUNTS?
The assets  supporting  our  obligations  under the Annuities may be held in various  accounts,  depending on the  obligation  being
supported.  In the accumulation phase, assets supporting Account Values are held in separate accounts  established under the laws of
the State of Connecticut.  We are the legal owner of assets in the separate accounts.  In the payout phase,  assets supporting fixed
annuity payments and any adjustable  annuity payments we make available are held in our general  account.  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 annuity  contracts  issued by  American  Skandia  Life  Assurance  Corporation.  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 E
During the accumulation  phase, 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 E, also referred to as "Separate  Account E".
Separate  Account E consists of four  Sub-accounts  each of which  invests only in a single  portfolio  of the Galaxy VIP Fund.  The
name of each  Sub-account  generally  corresponds to the name of the underlying  Portfolio.  The names of each Sub-account are shown
in  the  Statement  of  Additional  Information.  Separate  Account  E was  established  by us  pursuant  to  Connecticut  law.  The
Sub-accounts  offered pursuant to this Prospectus are all  Sub-accounts of Separate Account E. You will find additional  information
about these underlying mutual funds and portfolios in the prospectuses for such funds.

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


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 of 1940.  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.

Separate Account D
During the  accumulation  phase,  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  Participant
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 have sole discretion over the investment  managers  retained 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).


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. The Galaxy VIP
Fund is registered under the Investment Company Act as an open-end  diversified  management  investment  company. It was established
as a Massachusetts business trust under an Agreement and Declaration of Trust dated May 27, 1992.

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 in the manner  directed by  Participants  with Account Value allocated to
that  Sub-account.  Participants  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  Participants  who have  Account  Value
allocated to a Sub-account  whose underlying  mutual fund portfolio has requested a "proxy" vote with the necessary forms to provide
us with their  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.

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.

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 both 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.

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  independent  broker-dealers  who are
registered  under the Exchange Act and with  entities that may offer the Annuity to customers of one or more  subsidiaries  of Fleet
Financial Group,  Inc., but are exempt from registration.  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. The  investment
advisor of the underlying  mutual fund, Fleet Investment  Advisors,  Inc., is a subsidiary of Fleet Financial Group, Inc. In certain
cases, the  broker-dealer  may also be an affiliate of the investment  advisor of the underlying  mutual fund. In addition,  ASM may
offer the Annuity directly to potential purchasers.

In addition,  firms may receive  separate  compensation  or  reimbursement  for,  among other things,  training of sales  personnel,
marketing or other services they provide to us or our affiliates.  We or ASM may enter into  compensation  arrangements with certain
firms.  These  arrangements  will not be offered to all firms and the terms of such  arrangements may differ between firms. Any such
compensation  will be paid by us or ASM and will not result in any additional  charge to you. 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
other compensation.

Advertising:  We may  advertise  certain  information  regarding  the  performance  of the  investment  options.  Details  on how we
calculate  performance for the  Sub-accounts  are found in the Statement of Additional  Information.  This  information may help you
review the  performance of the investment  options and provide a basis for comparison  with other  annuities.  It may be less useful
when comparing the  performance of the investment  options with other savings or investment  vehicles.  Such other  investments  may
not provide  some of the benefits of  annuities,  or may not be designed  for  long-term  investment  purposes.  Additionally  other
savings or investment vehicles may not be receive the beneficial tax treatment given to annuities under the Code.

We may advertise the  performance  of the  underlying  mutual fund  portfolios in the form of "Standard"  and  "Non-standard"  Total
Returns.  "Standard  Total Return"  figures  assume that all charges and fees are  applicable  for the period  shown.  "Non-standard
Total  Return"  figures may be used that do not reflect all fees and charges.  We may calculate  Non-standard  Total Returns that do
not reflect deduction of the Set-Up Fee and/or the Annual Maintenance Fee.

Performance  information on the Sub-accounts is based on past performance only and is not an indication or  representation of future
performance.  Performance of the Sub-accounts is not fixed.  Actual  performance  will depend on the type,  quality and, for some of
the  Sub-accounts,  the maturities of the  investments  held by the underlying  mutual fund  portfolios and upon  prevailing  market
conditions and the response of the underlying  mutual fund portfolios to such  conditions.  Actual  performance  will also depend on
changes in the expenses of the underlying  mutual fund portfolios.  Such changes are reflected,  in turn, in the Sub-accounts  which
invest in such  underlying  mutual fund  portfolios.  In addition,  the amount of charges  assessed  against each  Sub-account  will
affect performance.

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

Advertisements  we distribute may also compare the  performance of our  Sub-accounts  with: (a) certain  unmanaged  market  indices,
including but not limited to the Dow Jones Industrial  Average,  the Standard & Poor's 500, the NASDAQ 100, the Shearson Lehman Bond
Index,  the Frank Russell  non-U.S.  Universal Mean, the Morgan Stanley  Capital  International  Index of Europe,  Asia and Far East
Funds, and the Morgan Stanley Capital  International World Index; and/or (b) other management  investment  companies with investment
objectives  similar to the mutual fund or portfolio  underlying the  Sub-accounts  being compared.  This may include the performance
ranking assigned by various publications,  including but not limited to the Wall Street Journal,  Forbes,  Fortune, Money, Barron's,
Business Week, USA Today and  statistical  services,  including but not limited to Lipper  Analytical  Services Mutual Funds Survey,
Lipper Annuity and Closed End Survey,  the Variable  Annuity Research Data Survey,  SEI, the Morningstar  Mutual Fund Sourcebook and
the Morningstar Variable Annuity/Life Sourcebook.

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

AVAILABLE INFORMATION
A Statement of  Additional  Information  is available  from us without  charge upon your  request.  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 those  registration  statements and the exhibits  thereto.  You may obtain copies of these materials at the prescribed rates from
the SEC's Public Reference  Section,  450 Fifth Street N.W.,  Washington,  D.C., 20549. You may inspect and copy those  registration
statements  and  exhibits  thereto at the SEC's  public  reference  facilities  at the above  address,  Room 1024,  and at the SEC's
Regional  Offices,  7 World Trade Center,  New York, NY, and the Everett  McKinley  Dirksen  Building,  219 South  Dearborn  Street,
Chicago,  IL. 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.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
To the extent and only to the extent that any statement in a document  incorporated  by reference  into this  Prospectus is modified
or  superseded  by a statement in this  Prospectus  or in a  later-filed  document,  such  statement is hereby deemed so modified or
superseded and not part of this  Prospectus.  The Annual Report on Form 10-K for the year ended December 31, 2000  previously  filed
by the Company with the SEC under the Exchange Act is incorporated by reference in this Prospectus.

We will furnish you without charge a copy of any or all of the documents  incorporated  by reference in this  Prospectus,  including
any exhibits to such documents which have been  specifically  incorporated by reference.  We will do so upon receipt of your written
or oral request.






HOW TO CONTACT US
You can contact us by:
|X|      calling our Customer  Service Team at  1-800-444-3970  or our automated  telephone  access and response  system  (STARS) at
       1-800-766-4530
|X|      writing to us at American Skandia Life Assurance  Corporation,  Attention:  Galaxy Annuity Customer Service, P.O. Box 7038,
       Bridgeport, Connecticut 06601-7038
|X|      sending an email to customerservice@americanskandia.com or visiting our Internet Website at www.americanskandia.com
|X|      accessing information about your Annuity through our Internet Website at www.americanskandia.com

You  can  obtain   account   information   through  our   automated   telephone   access  and   response   system   (STARS)  and  at
www.americanskandia.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 or a  financial  professional,  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.  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 through our automated  telephone  access
and response  system (STARS) and at  www.americanskandia.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 and electronic  information or that we will be able to accept  transaction
instructions  via the  telephone  or  electronic  means at all times.  American  Skandia  reserves  the right to limit,  restrict or
terminate telephonic and 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,  neither we nor ASM were involved in any litigation  outside of the ordinary course of business,
and know of no material claims.

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

Name/                                                         Position with American Skandia
Age                                                           Life Assurance Corporation                        Principal Occupation
- ---                                                           --------------------------                        --------------------

Patricia J. Abram                                             Senior Vice President                           Senior Vice President:
49                                                            and Director (since September, 2000)                 American Skandia
                                                                                                             Marketing, Incorporated

Ms.  Abram joined us in 1998.  She  previously  held the  position of Senior Vice  President,  Chief  Marketing  Officer with Mutual
Service Corporation.  Ms. Abram was employed there since 1982.

Lori Allen                                                    Vice President                                         Vice President:
31                                                                                                                 American Skandia
                                                                                                             Marketing, Incorporated

Robert M. Arena                                               Vice President                                         Vice President:
32                                                                                                             American Skandia Life
                                                                                                               Assurance Corporation

Gordon C. Boronow                                             Deputy Chief Executive Officer         Deputy Chief Executive Officer:
48                                                            and Director (since July, 1991)                  American Skandia Life
                                                                                                               Assurance Corporation

Robert W. Brinkman                                            Senior Vice President                           Senior Vice President:
36                                                                                                                  American Skandia
                                                                                                             Marketing, Incorporated

Malcolm M. Campbell                                           Director (since July, 1991)                 Director of Operations and
45                                                                                                     Chief Actuary, Assurance and
                                                                                                        Financial Services Division:
                                                                                                      Skandia Insurance Company Ltd.

Carl Cavaliere                                                Vice President                                         Vice President:
38                                                                                                             American Skandia Life
                                                                                                               Assurance Corporation

Mr. Cavaliere joined us in 1998.  He previously held the position of Director of Operations with Aetna, Inc. since 1989.

Y.K. Chan                                                     Senior Vice President                            Senior Vice President
43                                                            and Director (since September, 2000)    and Chief Information Officer:
                                                                                                        American Skandia Information
                                                                                                 Services and Technology Corporation

Mr. Chan joined us in 1999. He  previously  held the position of Chief  Information  Officer with E.M.  Warburg  Pincus from January
1995 until April 1999 and the position of Vice President,  Client Server  Application  Development  with Scudder,  Stevens and Clark
from January 1991 until January 1995.

Lucinda C. Ciccarello                                         Vice President                                         Vice President:
42                                                                                                                 American Skandia
                                                                                                             Marketing, Incorporated

Ms.  Ciccarello  joined us in 1997.  She  previously  held the position of Assistant Vice President with Phoenix Duff & Phelps since
1984.

Lincoln R. Collins                                            Senior Vice President                           Senior Vice President:
40                                                            Director (since February, 1996)                  American Skandia Life
                                                                                                               Assurance Corporation

Tim Cronin                                                    Vice President                                         Vice President:
35                                                                                                             American Skandia Life
                                                                                                               Assurance Corporation

Mr. Cronin joined us in 1998.  He previously  held the position of  Manager/Client  Investor with Columbia  Circle  Investors  since
1995.

Harold Darak                                                  Vice President                                         Vice President:
40                                                                                                             American Skandia Life
                                                                                                               Assurance Corporation

Mr. Darak joined us in 1999.  He  previously  held the position of  Consultant/Senior  Manager with Deloitte & Touche since 1998 and
the positions of Second Vice President with The Guardian since 1996 and The Travelers from October, 1982 until December, 1995.






Wade A. Dokken                                                President and Chief Executive Officer                    President and
41                                                            and Chairman of the Board                     Chief Executive Officer:
                                                                                                              American Skandia, Inc.

Elaine C. Forsyth                                             Vice President                                         Vice President:
39                                                                                                             American Skandia Life
                                                                                                               Assurance Corporation

Larisa Gromyko                                                Director, Insurance Compliance         Director, Insurance Compliance:
54                                                                                                             American Skandia Life
                                                                                                               Assurance Corporation

Maureen Gulick                                                Director, Business Operations           Director, Business Operations:
38                                                                                                             American Skandia Life
                                                                                                               Assurance Corporation

Ian Kennedy                                                   Senior Vice President                           Senior Vice President:
53                                                            and Director (since September, 2000)                  American Skandia
                                                                                                             Marketing, Incorporated

Mr. Ian Kennedy  joined us in 1998. He previously was  self-employed  since 1996 and held the position of Vice  President,  Customer
Service with SunLife of Canada from September, 1968 to August, 1995.

N. David Kuperstock                                           Vice President                                         Vice President:
49                                                                                                             American Skandia Life
                                                                                                               Assurance Corporation

Robert K. Leach                                               Vice President and                                     Vice President,
46                                                            Chief Actuary                                           Chief Actuary:
                                                                                                               American Skandia Life
                                                                                                               Assurance Corporation

Mr. Robert K. Leach joined us in 2000.  He  previously  was employed in the U.S.  Retirement  Products and Services  Division of Sun
Life of Canada and held the position of Vice President, Finance and Product.

Thomas M. Mazzaferro                                          Executive Vice President and              Executive Vice President and
48                                                            Chief Financial Officer,                      Chief Financial Officer:
                                                              Director (since September, 1994)                 American Skandia Life
                                                                                                               Assurance Corporation

Gunnar J. Moberg                                              Director (since October, 1994)         Director - Marketing and Sales,
46                                                                                                          Assurances and Financial
                                                                                                                  Services Division:
                                                                                                      Skandia Insurance Company Ltd.

David R. Monroe                                               Senior Vice President,                          Senior Vice President,
39                                                            Treasurer and                                            Treasurer and
                                                              Corporate Controller                             Corporate Controller:
                                                                                                               American Skandia Life
                                                                                                               Assurance Corporation

Michael A. Murray                                             Senior Vice President                           Senior Vice President:
32                                                                                                                  American Skandia
                                                                                                             Marketing, Incorporated

Polly Rae                                                     Vice President                                         Vice President:
38                                                                                                             American Skandia Life
                                                                                                               Assurance Corporation

Rebecca Ray                                                   Vice President                                  Senior Vice President:
45                                                                                                                  American Skandia
                                                                                                             Marketing, Incorporated

Ms. Ray joined us in 1999.  She  previously  held the position of First Vice President  with  Prudential  Securities  since 1997 and
Vice President with Merrill Lynch since 1995.

Rodney D. Runestad                                            Vice President                                         Vice President:
51                                                                                                             American Skandia Life
                                                                                                               Assurance Corporation

Hayward L. Sawyer                                             Senior Vice President                           Senior Vice President:
56                                                                                                                 American Skandia
                                                                                                             Marketing, Incorporated

Lisa Shambelan                                                Vice President                                         Vice President:
35                                                                                                             American Skandia Life
                                                                                                               Assurance Corporation

Karen Stockla                                                 Vice President                                         Vice President:
34                                                                                                             American Skandia Life
                                                                                                               Assurance Corporation

Ms.  Stockla  joined us in 1998.  She  previously  held the position of Manager,  Application  Development  with Citizens  Utilities
Company since 1996 and HRIS Tech Support Representative with Yale New Haven Hospital since 1993.

William H. Strong                                             Vice President                                         Vice President:
57                                                                                                             American Skandia Life
                                                                                                               Assurance Corporation

Mr. Strong joined us in 1997. He previously  held the position of Vice President with American  Financial  Systems from June 1994 to
October 1997 and the position of Actuary with Connecticut Mutual Life from June 1965 to June 1994.

Guy Sullivan                                                  Vice President                                         Vice President:
40                                                                                                             American Skandia Life
                                                                                                               Assurance Corporation

Mr.  Sullivan  joined us in 2000. He previously  held the positions of Managing  Director,  Wholesale  Distribution  with  Allmerica
Financial Services since 1999 and Managing Director and Member of the Executive Committee with Putnam Investments since 1995.

Leslie S. Sutherland                                          Vice President                                         Vice President:
47                                                                                                                  American Skandia
                                                                                                             Marketing, Incorporated

Amanda C. Sutyak                                              Vice President                                         Vice President:
43                                                            Director (since July, 1991)                      American Skandia Life
                                                                                                               Assurance Corporation

Christian W. Thwaites                                         Senior Vice President                           Senior Vice President:
43                                                            and Director (since September, 2000)                  American Skandia
                                                                                                             Marketing, Incorporated

Mary Toumpas                                                  Vice President                                      Vice President and
49                                                                                                              Compliance Director:
                                                                                                                    American Skandia
                                                                                                             Marketing, Incorporated

Ms.  Toumpas joined us in 1997. She  previously  held the position of Assistant  Vice  President  with Chubb  Life/Chubb  Securities
since 1973.

Bayard F. Tracy                                               Senior Vice President and                       Senior Vice President:
53                                                            Director (since September, 1994)                      American Skandia
                                                                                                             Marketing, Incorporated

Deborah G. Ullman                                             Senior Vice President                           Senior Vice President:
46                                                            and Director (since September, 2000)             American Skandia Life
                                                                                                               Assurance Corporation

Ms. Ullman joined us in 1998.  She previously held the position of Vice President with Aetna, Inc. since 1977.

Jeffrey M. Ulness                                             Vice President                                         Vice President:
40                                                                                                             American Skandia Life
                                                                                                               Assurance Corporation

Kirk Wickman                                                  General Counsel                                       General Counsel:
44                                                                                                             American Skandia Life
                                                                                                               Assurance Corporation

Mr. Wickman joined us in 2001. He previously  held the position of Senior Vice  President and General  Counsel with Aetna  Financial
Services since 1992.

Brett M. Winson                                               Senior Vice President and                       Senior Vice President:
45                                                            Director (since March 2000)                     American Skandia, Inc.

Mr. Winson joined us in 1998.  He previously held the position of Senior Vice President with Sakura Bank, Ltd. since 1990.

CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The following are the contents of the Statement of Additional Information:

General Information about American Skandia
|X|      American Skandia Life Assurance Corporation
|X|      American Skandia Life Assurance Corporation Variable Account E
|X|      American Skandia Life Assurance Corporation Separate Account D

Principal Underwriter/Distributor - American Skandia Marketing, Incorporated

How Performance Data is Calculated
|X|      Current and Effective Yield
|X|      Total Return

How the Unit Price is Determined

Additional Information on Fixed Allocations
|X|      How We Calculate the Market Value Adjustment

General Information
|X|      Voting Rights
|X|      Modification
|X|      Deferral of Transactions
|X|      Misstatement of Age or Sex
|X|      Ending the Offer

Independent Auditors

Legal Experts

Financial Statements
|X|      Appendix A - American Skandia Life Assurance Corporation Variable Account E









                                     APPENDIX A - FINANCIAL INFORMATION ABOUT AMERICAN SKANDIA




SELECTED FINANCIAL DATA

The following table summarizes information with respect to the operations of the Company:

(in thousands)                                                            For the Year Ended December 31,
                                                         2000           1999           1998            1997           1996
                                                         ----           ----           ----            ----           ----
STATEMENT OF OPERATIONS DATA
- ----------------------------

Revenues:
Annuity and life insurance charges and fees*         $424,578        $289,989         $186,211       $121,158        $69,780

Fee income
                                                     130,610           83,243           50,839         27,593         16,420
Net investment income
                                                      11,656           10,441           11,130          8,181          1,586
Premium income and other revenues
                                                       4,778            3,688            1,360          1,082            265
                                                       -----            -----            -----          -----            ---

Total revenues                                     $ 571,622        $ 387,361        $ 249,540       $ 158,014      $ 88,051
                                                      ======        =========          =======        =========    ============


Benefits and Expenses:
Annuity and life insurance benefits                   $  751            $ 612            $ 558        $  2,033        $  613

Change in annuity and life insurance                  45,018            3,078            1,053              37           635
   policy reserves

Cost of minimum death benefit reinsurance                  -            2,945            5,144           4,545         2,867

Return credited to contractowners
                                                       9,046           (1,639)          (8,930)         (2,018)          673
Underwriting, acquisition and other insurance
   expenses
                                                     335,213          206,350          167,790          90,496        49,887

Interest expense                                      85,998           69,502           41,004          24,895        10,791
                                                     ---------     ---------       ---------      ---------       ------------


Total benefits and expenses                        $ 476,026    $     280,848    $     206,619   $     119,988   $    65,466
                                                     ======        =============   =============  =============   ===========


Income tax expense (benefit)                       $  30,779    $      30,344    $       8,154   $      10,478   $    (4,038)
                                                     ========      ==============  ==========     ==============  =


Net income                                         $  64,817    $      76,169    $      34,767   $      27,548   $    26,623
                                                     ========      ========        ========       ==============  ===========


STATEMENT OF FINANCIAL CONDITION DATA
- -------------------------------------

Total Assets                                         $31,702,705   $30,881,579     $18,848,273    $12,894,290     $8,268,696
                                                     ===========   ===========     ===========    ===========     ==========

Future fees payable to parent                        $   934,410   $   576,034     $   368,978    $   233,034     $   47,112
                                                     ======        =============   =============  =============   ============



Surplus Notes                                        $  159,000    $   179,000     $   193,000    $   213,000     $  213,000
                                                     ==========     =============   ==========      =============   ===========


Shareholder's Equity                                 $  496,911    $   359,434     $   250,417    $   184,421     $   126,345
                                                     ======        =============   ======         =============   ===========


*    On annuity and life insurance  sales of $8,216,167,  $6,862,968,  $4,159,662,  $3,697,990,  and $2,795,114  during the
     years ended December 31, 2000, 1999, 1998, 1997, and 1996,  respectively,  with contractowner  assets under management
     of $29,751,822,  $29,396,693,  $17,854,761,  $12,119,191, and $7,764,891 as of December 31, 2000, 1999, 1998, 1997 and
     1996, respectively.





MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's  Discussion  and Analysis of Financial  Condition  and Results of Operations  should be read in  conjunction
with the consolidated financial statements and the notes thereto and Item 6, Selected Financial Data.

Management's  Discussion and Analysis of Financial Condition and Results of Operations  contains certain  forward-looking
statements  pursuant to the Private  Securities  Litigation  Reform Act of 1995.  These  forward-looking  statements  are
based on estimates and assumptions  that involve certain risks and  uncertainties,  therefore actual results could differ
materially  due to factors not  currently  known.  These factors  include  significant  changes in financial  markets and
other economic and business conditions, state and federal legislation and regulation, ownership and competition.

 Results of Operations
 ---------------------

 Annuity and life  insurance  sales  increased 20% in 2000 to  $8,216,167,000  as compared to 65% in 1999.  Overall sales
growth in 2000 was driven by  significant  sales  volume in the first  quarter of 2000 due to the  strong  equity  market
performance.  However,  the decline in the equity markets during the remainder of the year  negatively  impacted sales as
the first quarter growth rate was not sustained.  The Company  continues to focus on increasing sales through  innovative
product  development  activities,  the  recruitment  and retention of top producers,  high quality  customer  service and
improvements in web-based technology.  All three major distribution channels achieved sales growth in 2000.

 Average assets under management totaled  $31,413,809,000 in 2000 and  $21,984,759,000 in 1999,  representing an increase
of 43%. As a result of the growth in sales and average assets under  management,  annuity and life insurance  charges and
fees  increased 46% in 2000 and 56% in 1999.  Fee income  generated  from transfer  agency-type  and  investment  support
activities increased 57% in 2000 and 64% in 1999.

Net  investment  income  increased 12% in 2000  compared to 1999 and decreased 6% in 1999 compared to 1998.  The increase
in 2000 is primarily due to a higher level of  investments,  partially  offset by $6,939,000 of  amortization of premiums
paid on derivative  instruments.  The decrease in 1999 was primarily  the result of  $1,036,000  of  amortization  of the
premium paid on a derivative  instrument  purchased  during 1999. See Note 2D to the  consolidated  financial  statements
for information  related to derivative  instruments  used to hedge the guaranteed  minimum death benefit ("GMDB") reserve
fluctuations.  Excluding the derivative  amortization,  net investment  income  increased 62% in 2000 and increased 3% in
1999 as a result of increased bond holdings that support the Company's risk-based capital objectives.

 Premium income  represents  premiums  earned on the sale of ancillary  contracts  such as immediate  annuities with life
contingencies,  supplementary  contracts with life contingencies and certain life insurance products.  Increased sales of
these  products led to an increase in premium  income in 2000.  The increase in 2000 and 1999 was primarily due to higher
sales of  supplementary  contracts.  Management  expects  supplementary  contracts to grow over time with the maturing of
core business lines.

Net  realized  investment  losses  totaled  $688,000 in 2000,  compared to gains of $578,000 in 1999 and $99,000 in 1998.
The  change  from  1999 to 2000 is  primarily  due to  realized  losses  on sales of  securities  in the  fixed  maturity
portfolio.  These losses were  partially  offset by realized  gains on sales of fixed  maturities  and mutual funds.  The
increase in realized gains in 1999 compared to 1998 is due to higher gains on sales of mutual fund investments.

 The change in annuity policy reserves  includes changes in reserves related to annuity contracts with mortality risks as
well as the Company's GMDB liability.  In 2000,  equity markets  declined and the underlying  fund  performance was lower
than the prior year. In contrast,  the equity markets and  underlying  fund  performance  were up  significantly  in 1999
compared to 1998.  The  combination  of these events  resulted in an increase in GMDB  reserves of  $39,866,000  in 2000.
This compares to an increase in GMDB reserves of $2,323,000 in 1999.






 In 1999,  the Company began to develop a program  utilizing  equity put options to manage the risks embedded in the GMDB
in annuity contracts that would result from significant  declines in the equity markets.  Prior to the  implementation of
the hedge strategies  utilizing equity put options,  the Company had reinsured  substantially  all of its exposure on the
GMDB  liability.  The  reinsurance  was  terminated  during the second  quarter of 1999 as the  reinsurer had exited this
market.

 Return credited to contractowners  consists of revenues on the variable and market value adjusted annuities and variable
life  insurance,  offset by the benefit  payments  and  changes in  reserves  required  on this  business.  Market  value
adjusted  annuity  activity has the largest  impact on this benefit.  In 2000 and 1999, the Separate  Account  investment
returns on the market  value  adjusted  annuities  were less than the expected  returns as  calculated  in the  reserves,
contributing to the significant  increase in the return credited to contractholders  benefit.  In addition,  this benefit
increased as a result of the  amortization  of unearned  Performance  Advantage  target value  credits,  which  increased
$6,826,000  in 2000 over  1999.  Other  significant  contributors  to the  change  from 1999 to 2000  include  guaranteed
minimum death benefit  payments on variable  annuities which were driven up due to the market declines in 2000 as well as
increased  costs  associated with processing of backdated  financial  transactions.  These increased costs were partially
offset by a 2000 experience refund on certain reinsurance treaties in the amount of $4,339,000.

 Underwriting, acquisition and other insurance expenses for 2000, 1999 and 1998 were as follows:

                     (in thousands)                                  2000                 1999                1998
                                                                     ----                 ----                ----

   Commissions and purchase credits                              $ 393,494            $ 358,279           $ 201,008

   General operating expenses                                      252,206              214,269             141,586

   Acquisition costs deferred during the year                     (495,103)            (450,059)           (261,432)
   Acquisition costs amortized during the year                     184,616               83,861              86,628
                                                                   -------   -           ------   -          ------

   Net capitalization of deferred acquisition costs               (310,487)            (366,198)           (174,804)
                                                       -          ---------            ---------           ---------

   Underwriting, acquisition and other
        insurance expenses                                       $ 335,213            $ 206,350           $ 167,790
                                                                 =========            =========           =========


 Underwriting,  acquisition  and  other  insurance  expenses  increased  62%  and  23% in 2000  and  1999,  respectively.
 Increased  commissions  and  purchase  credits  reflect  the  increase  in sales  in both  2000  and  1999.  Significant
 investments  in new  product  development  and  internet-based  technology  contributed  to  general  operating  expense
 increases in both 2000 and 1999. The  amortization  of acquisition  costs  increased  substantially  in 2000 compared to
 1999 as the  associated  costs  from  record  sales in late  1999 and early  2000 were  recognized  in  accordance  with
 accounting principles generally accepted in the United States profit and expense recognition models.

 Interest expense increased  $16,496,000 in 2000 and $28,498,000 in 1999 as a result of additional  securitized financing
transactions,  which  consist  of  the  transfer  of  rights  to  receive  future  fees  to the  Parent  ("securitization
transactions").  In  addition,  the  Company  retired  surplus  notes on  December  10,  2000 and  December  31,  1999 of
$20,000,000  and  $14,000,000,  respectively.  Surplus  notes  outstanding  as of  December  31,  2000 and  1999  totaled
$159,000,000 and $179,000,000, respectively.

 The  effective  income  tax  rates  for the  years  ended  December  31,  2000,  1999 and 1998  were  32%,  28% and 19%,
respectively.  The effective  rate is lower than the corporate  rate of 35% due to permanent  differences,  with the most
significant item being the dividend  received  deduction.  Management  believes that based on the taxable income produced
in the past two years,  as well as the continued  growth in annuity sales,  the Company will produce  sufficient  taxable
income in future years to realize its deferred tax assets.






 The  Company  generated  net income  after tax of  $64,817,000,  $76,169,000  and  $34,767,000  in 2000,  1999 and 1998,
respectively.  Revenue  increases in 2000 were more than offset by higher  benefits and expenses  driven  primarily  from
the  increase  in the  reserve  requirement  related  to the GMDB as a  result  of the  decline  in the  equity  markets.
Investments  in new product  development  and  technology  also  contributed  to the increase in expenses.  These factors
resulted in the 15% decline in net income.  Net income  increased  119% in 1999 due to strong sales growth and  favorable
market  conditions  which led to higher  asset-based  revenue.  The Company  considers  Mexico an emerging market and has
invested in the Skandia Vida  operations with the expectation of generating  profits from long-term  savings  products in
future years.  As such,  Skandia Vida has generated net losses of  $2,540,000,  $2,523,000  and  $2,514,000 for the years
ended December 31, 2000, 1999 and 1998,  respectively.  The Company  expects to transfer  ownership of Skandia Vida to an
upstream affiliate during 2001.

 On March 22, 2001, the Company announced that it will begin an aggressive  operating expense reduction program to better
align its operating  infrastructure  with the current  investment  environment.  The planned moves include a reduction of
approximately  150 positions,  representing  13% of the Company's  workforce,  reductions in the compensation and benefit
programs and the curtailment of certain discretionary expenses.

 Total assets grew 3% in 2000  partially as a result of the modest  increase in separate  account  assets  reflecting the
impact of strong  sales  which  were  almost  entirely  offset by the  decline  in  equity  markets.  Increased  deferred
acquisition  costs also  contributed  to the  increase  in  assets.  Liabilities  grew 2% in 2000 due to higher  reserves
required to support the increase in annuity and life insurance  business,  and increased  financing  activity  related to
the transfer of rights to receive future fees and charges.

 Liquidity and Capital Resources
 -------------------------------

 The Company's liquidity requirement was met by cash from insurance operations,  investment  activities,  borrowings from
 ASI and the securitization transactions with ASI.

 The majority of the operating  cash outflow  resulted from the sale of variable  annuity and variable life products that
carry a  contingent  deferred  sales  charge.  This type of product  causes a  temporary  cash strain in that 100% of the
proceeds are invested in separate  accounts  supporting the product leaving a cash (but not capital) strain caused by the
acquisition  cost for the new business.  This cash strain  required the Company to look beyond the cash made available by
insurance  operations and  investments of the Company to financing in the form of surplus notes,  capital  contributions,
securitization transactions and modified coinsurance reinsurance arrangements:

o        During 2000 and 1999, the Company  received  $69,000,000 and  $34,800,000,  respectively,  from ASI to support the
     capital  needs and  anticipated  growth in business  of its U.S.  operations.  In  addition,  the  Company  received
     $2,450,000 and $1,690,000 from ASI in 2000 and 1999, respectively, to support its investment in Skandia Vida.

o        Funds received from new  securitization  transactions  amounted to $476,288,000  in 2000 and  $265,710,000 in 1999
     (see Note 8 to the consolidated financial statements).

o        During  2000 and 1999,  the  Company  extended  its  reinsurance  agreements.  The Company  also  entered  into an
     agreement with SICL in 2000. The reinsurance  agreements are modified  coinsurance  arrangements where the reinsurer
     shares in the experience of a specific book of business.

 The  Company  expects  the  continued  use of  reinsurance  and  securitization  transactions  to fund the  cash  strain
anticipated from the acquisition costs on the coming years' sales volume.

 As of December  31, 2000 and 1999,  shareholder's  equity  totaled  $496,911,000  and  $359,434,000,  respectively.  The
increases  were  driven  by the  previously  mentioned  capital  contributions  received  from  ASI and net  income  from
operations.

 The Company has long-term surplus notes and short-term borrowings with ASI.  No dividends have been paid to ASI.






 The  National  Association  of Insurance  Commissioners  ("NAIC")  requires  insurance  companies to report  information
regarding  minimum  Risk  Based  Capital  ("RBC")  requirements.  These  requirements  are  intended  to allow  insurance
regulators  to  identify  companies  that may need  regulatory  attention.  The RBC model  law  requires  that  insurance
companies  apply various  factors to asset,  premium and reserve  items,  all of which have inherent  risks.  The formula
includes  components  for asset risk,  insurance  risk,  interest rate risk and business  risk.  The Company has complied
with the NAIC's RBC reporting requirements and has total adjusted capital well above required capital.

 Effects of Inflation
 --------------------

The rate of inflation has not had a significant effect on the Company's financial statements.

Outlook
- -------

The Company  believes that it is well  positioned  to retain and enhance its position as a leading  provider of financial
products for long-term  savings and  retirement  purposes as well as to address the economic  impact of premature  death,
estate and business  planning  concerns and supplemental  retirement  needs.  The Company  continues to focus on offering
innovative  long-term  savings and income products and providing  superior customer service in order to gain market share
and improve profitability in an increasingly competitive market.

The  Gramm-Leach-Bliley  Act of 1999  (the  Financial  Services  Modernization  Act)  permits  affiliation  among  banks,
securities  firms  and  insurance   companies.   This  legislative   change  has  created   opportunities  for  continued
consolidation  in the financial  services  industry and increased  competition as large  companies  offer a wide array of
financial products and services.

Various  other  legislative  initiatives  could impact the Company such as pension  reform,  capital gains and estate tax
changes,  privacy  standards and internet  regulation.  Pension  reform may change  current tax deferral  rules and allow
increased  contributions to retirement plans,  which may lead to higher  investments in tax-deferred  products and create
growth  opportunities  for the  Company.  A  capital  gains tax  reduction  may cause  tax-deferred  products  to be less
attractive to consumers,  which could adversely  impact the Company.  New privacy  standards and internet  regulation may
impact the Company's  strategic  initiatives  especially  related to potential  partnerships  with  web-based  technology
providers.

 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  Company  is  subject  to  potential  fluctuations  in  earnings  and the fair  value of  certain  of its  assets and
liabilities,  as well as  variations in expected cash flows due to changes in market  interest  rates and equity  prices.
The  following  discussion  focuses on specific  exposures  the Company  has to interest  rate and equity  price risk and
describes  strategies used to manage these risks.  The discussion is limited to financial  instruments  subject to market
risks and is not intended to be a complete discussion of all of the risks to which the Company is exposed.

 Interest Rate Risk
 ------------------

 Fluctuations in interest rates can potentially  impact the Company's  profitability  and cash flows. The Company has 97%
of assets held under  management that are in  non-guaranteed  Separate  Accounts for which the Company's  exposure is not
significant  as the  contractowner  assumes  substantially  all the investment  risk. On the remaining 3% of assets,  the
interest  rate risk from  contracts  that carry  interest rate exposure is managed  through an  asset/liability  matching
program which takes into account the risk variables of the insurance liabilities supported by the assets.

 At December 31, 2000, the Company held fixed maturity  investments in its general  account that are sensitive to changes
in interest  rates.  These  securities  are held in support of the Company's  fixed  immediate  annuities,  supplementary
contracts,  the fixed  components of variable life insurance  contracts,  and in support of the Company's target solvency
capital.  The Company has a conservative  investment  philosophy  with regard to these  investments.  All investments are
investment grade corporate securities, government agency or U.S. government securities.






 The Company's  deferred  annuity  products  offer a fixed option which  subjects the Company to interest rate risk.  The
fixed option  guarantees a fixed rate of interest for a period of time selected by the  contractowner.  Guarantee  period
options  available range from one to ten years.  Withdrawal of funds before the end of the guarantee  period subjects the
contractowner  to a market  value  adjustment  ("MVA").  In the  event of rising  interest  rates,  which  make the fixed
maturity  securities  underlying  the  guarantee  less  valuable,  the MVA could be  negative.  In the event of declining
interest  rates,  which make the fixed maturity  securities  underlying  the guarantee  more  valuable,  the MVA could be
positive.  The  resulting  increase or decrease in the value of the fixed option,  from  calculation  of the MVA,  should
substantially  offset the  increase or decrease in the market  value of the  securities  underlying  the  guarantee.  The
Company  maintains  strict  asset/liability  matching  to enable this  offset.  However,  the Company  still takes on the
default risk for the underlying  securities,  the interest rate risk of reinvestment of interest payments and the risk of
failing to maintain the asset/liability matching program with respect to duration and convexity.

Liabilities  held in the  Company's  general  account and  guaranteed  separate  account as of December  31, 2000 totaled
$1,095,100,000.  Fixed income investments  supporting those liabilities had a fair value of  $1,098,500,000.  The Company
performed a sensitivity  analysis on these  interest-sensitive  liabilities and assets at December 31, 2000. The analysis
showed that an  immediate  decrease of 100 basis points in interest  rates would result in a net increase in  liabilities
and the  corresponding  assets of  approximately  $37,300,000 and $41,500,000,  respectively.  An analysis of a 100 basis
point  decline in interest  rates at December 31, 1999 showed a net increase in  interest-sensitive  liabilities  and the
corresponding assets of approximately $10,200,000 and $24,800,000, respectively.

 Equity Market Exposure
 ----------------------

 The primary  equity market risk to the Company comes from the nature of the variable  annuity and variable life products
sold by the Company.  Various fees and charges  earned are  substantially  derived as a percentage of the market value of
assets  under  management.  In a market  decline,  this income  would be  reduced.  This could be further  compounded  by
customer  withdrawals,  net of applicable  surrender charge  revenues,  partially offset by transfers to the fixed option
discussed  above.  A 10% decline in the market value of the assets  under  management  at December  31,  2000,  sustained
throughout  2001,  would result in an approximate  drop in related annual fee income of $54,000,000.  This result was not
materially different than the result obtained from the analysis performed as of December 31, 1999.

 Another equity market risk exposure of the Company relates to the guaranteed minimum death benefit  liability.  Declines
in equity markets and  correspondingly  the performance of the underlying mutual funds,  increases the guaranteed minimum
death  benefit  liabilities.  As discussed in Note 2D of the  consolidated  financial  statements,  the Company  utilizes
derivative   instruments  to  hedge  against  the  risk  of  significant  decreases  in  equity  markets.  Prior  to  the
implementation of this program the Company utilized reinsurance to transfer this risk.

 The  Company  has a small  portfolio  of equity  investments;  mutual  funds  which are held in  support  of a  deferred
compensation  program.  In the event of a decline in market values of underlying  securities,  the value of the portfolio
would decline,  however the accrued benefits payable under the related deferred  compensation  program would decline by a
corresponding amount.

 Estimates of interest rate risk and equity price risk were obtained using computer  models that take into  consideration
various  assumptions  about the future.  Given the  uncertainty  of future  interest  rate  movements,  volatility in the
equity markets and consumer behavior, actual results may vary from those predicted by the Company's models.













                                       AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF
                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION









                                               INDEPENDENT AUDITOR'S REPORT


To the Board of Directors and Shareholder of American Skandia Life Assurance Corporation
Shelton, Connecticut

We have audited the  consolidated  statements of financial  condition of American  Skandia Life Assurance  Corporation (the
"Company" which is a wholly-owned  subsidiary of Skandia  Insurance Company Ltd.) as of December 31, 2000 and 1999, and the
related  consolidated  statements  of  operations,  shareholder's  equity and cash flows for the three  year  period  ended
December 31, 2000.  These  consolidated  financial  statements  are the  responsibility  of the Company's  management.  Our
responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance  with auditing  standards  generally  accepted in the United States.  Those standards
require that we plan and perform the audit to obtain reasonable  assurance about whether the financial  statements are free
of material  misstatement.  An audit includes examining,  on a test basis,  evidence supporting the amounts and disclosures
in the financial  statements.  An audit also includes  assessing the accounting  principles used and significant  estimates
made by  management,  as well as  evaluating  the overall  financial  statement  presentation.  We believe  that our audits
provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly,  in all material  respects,  the consolidated
financial  position of American  Skandia Life Assurance  Corporation  at December 31, 2000 and 1999,  and the  consolidated
results of their  operations  and their cash flows for each of the three  years in the period  ended  December  31, 2000 in
conformity with accounting principles generally accepted in the United States.



/s/Ernst & Young

February 2, 2001
Hartford, Connecticut





                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                      Consolidated Statements of Financial Condition
                                                      (in thousands)

                                        See notes to consolidated financial statements.

                                                                             As of December 31,
                                                                          2000                        1999
                                                                     ---------------            ----------------
ASSETS
- ------

Investments:
  Fixed maturities - at fair value                                          285,708             $       198,165                                                                                $
  Fixed maturities - at amortized cost                                                                    3,360
                                                                                  -
  Equity securities - at fair value                                          20,402                      16,404
  Derivative instruments
                                                                              3,015                         189
  Policy loans                                                                3,746                       1,270
                                                                      --------------              --------------
                                                                      --------------              --------------

    Total investments                                                       312,871                     219,388

Cash and cash equivalents                                                    76,499                      89,212
Accrued investment income                                                     5,209                       4,054
Deferred acquisition costs                                                1,398,192                   1,087,705
Reinsurance receivable                                                        3,642                       4,062
Receivable from affiliates                                                    3,327
                                                                                                              -
Income tax receivable
                                                                             34,620                           -
Income tax receivable - deferred                                                                         51,726
                                                                                  -
State insurance licenses                                                      4,113                       4,263
Fixed assets                                                                 10,737                       3,305
Other assets                                                                 96,403                      36,698
Separate account assets                                                  29,757,092                  29,381,166
                                                                     ---------------            ----------------
                                                                     ---------------            ----------------

  Total assets                                                       $   31,702,705             $    30,881,579
                                                                     ===============            ================
                                                                     ===============            ================

LIABILITIES AND SHAREHOLDER'S EQUITY
- ------------------------------------

Liabilities:
Reserves for future insurance policy and contract benefits                  135,545             $        73,292                                                                                $
Drafts outstanding                                                           63,758                      51,059
Accounts payable and accrued expenses                                       137,040                     158,590
Income tax payable                                                                                       24,268
                                                                                  -
Income tax payable - deferred
                                                                              8,949                           -
Payable to affiliates
                                                                                  -                      68,736
Future fees payable to parent                                               934,410
                                                                                                        576,034
Short-term borrowing                                                         10,000                      10,000
Surplus notes                                                               159,000                     179,000
Separate account liabilities                                             29,757,092                  29,381,166
                                                                     ---------------            ----------------
                                                                     ---------------            ----------------

  Total liabilities                                                      31,205,794                  30,522,145
                                                                     ---------------            ----------------
                                                                     ---------------            ----------------

Shareholder's equity:
Common stock, $100 par value, 25,000 shares authorized,
    issued and outstanding                                                    2,500                       2,500
Additional paid-in capital                                                  287,329                     215,879
Retained earnings                                                           205,979                     141,162
Accumulated other comprehensive income (loss)                                 1,103                       (107)
                                                                     ---------------            ----------------
                                                                     ---------------            ----------------

    Total shareholder's equity                                              496,911                     359,434
                                                                     ---------------            ----------------
                                                                     ---------------            ----------------

    Total liabilities and shareholder's equity                           31,702,705             $    30,881,579                                                                                $
                                                                     ===============            ================





                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                           Consolidated Statements of Operations
                                                      (in thousands)


                                        See notes to consolidated financial statements.

                                                                        For the Year Ended December 31,
                                                                   2000                  1999                 1998
                                                             ----------------      ---------------      ---------------
                                                             ----------------      ---------------      ---------------

REVENUES
- --------

Annuity and life insurance charges and fees                  $                     $                    $
                                                                     424,578              289,989              186,211
Fee income                                                           130,610               83,243               50,839
Net investment income                                                 11,656               10,441               11,130
Premium income                                                         3,118                1,278                  874
Net realized capital (losses) gains                                    (688)                  578                   99
Other                                                                  2,348                1,832                  387
                                                             ----------------      ---------------      ---------------
                                                             ----------------      ---------------      ---------------

  Total revenues                                                     571,622              387,361              249,540
                                                             ----------------      ---------------      ---------------
                                                             ----------------      ---------------      ---------------


EXPENSES
- --------

Benefits:
  Annuity and life insurance benefits                                    751                  612                  558
  Change in annuity and life insurance policy reserves                45,018                3,078                1,053
  Cost of minimum death benefit reinsurance
                                                                           -                2,945                5,144
  Return credited to contractowners                                    9,046               (1,639)              (8,930)
                                                             ----------------      ---------------      ---------------
                                                             ----------------      ---------------      ---------------

                                                                      54,815                4,996              (2,175)

Expenses:
  Underwriting, acquisition and other insurance
    expenses                                                         335,213              206,350              167,790
  Interest expense                                                    85,998               69,502               41,004
                                                             ----------------      ---------------      ---------------
                                                             ----------------      ---------------      ---------------

                                                                     421,211              275,852              208,794
                                                             ----------------      ---------------      ---------------
                                                             ----------------      ---------------      ---------------

  Total benefits and expenses                                        476,026              280,848              206,619
                                                             ----------------      ---------------      ---------------
                                                             ----------------      ---------------      ---------------

    Income from operations before income tax                          95,596              106,513               42,921

      Income tax expense
                                                                      30,779               30,344                8,154
                                                             ----------------      ---------------      ---------------
                                                             ----------------      ---------------      ---------------

        Net income                                           $                     $                    $
                                                                      64,817               76,169               34,767
                                                             ================      ===============      ===============
                                                             ================      ===============      ===============







                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                      Consolidated Statements of Shareholder's Equity
                                                      (in thousands)


                                      See notes to consolidated financial statements.

                                                                   For the Year Ended December 31,
                                                               2000                 1999                  1998
                                                         ---------------     -----------------     -----------------
                                                         ---------------     -----------------     -----------------


Common stock:
  Beginning balance                                      $                   $                     $
                                                                  2,500                 2,000                 2,000
  Increase in par value
                                                                      -                   500                     -
                                                         ---------------     -----------------     -----------------
                                                         ---------------     -----------------     -----------------

    Ending balance
                                                                  2,500                 2,500                 2,000
                                                         ---------------     -----------------     -----------------
                                                         ---------------     -----------------     -----------------

Additional paid in capital:
  Beginning balance                                             215,879               179,889               151,527
  Transferred to common stock
                                                                      -                  (500)                    -
  Additional contributions                                       71,450                36,490                28,362
                                                         ---------------     -----------------     -----------------
                                                         ---------------     -----------------     -----------------

    Ending balance                                              287,329               215,879               179,889
                                                         ---------------     -----------------     -----------------
                                                         ---------------     -----------------     -----------------

Retained earnings:
  Beginning balance                                             141,162                64,993                30,226
  Net income                                                     64,817                76,169                34,767
                                                         ---------------     -----------------     -----------------
                                                         ---------------     -----------------     -----------------

    Ending balance                                              205,979               141,162                64,993
                                                         ---------------     -----------------     -----------------
                                                         ---------------     -----------------     -----------------

Accumulated other comprehensive income (loss):
  Beginning balance
                                                                  (107)                 3,535                   668
  Other comprehensive income (loss)
                                                                  1,210                (3,642)                2,867
                                                         ---------------     -----------------     -----------------
                                                         ---------------     -----------------     -----------------

    Ending balance
                                                                  1,103                 (107)                 3,535
                                                         ---------------     -----------------     -----------------
                                                         ---------------     -----------------     -----------------

      Total shareholder's equity                         $                   $                     $
                                                                496,911               359,434               250,417
                                                         ===============     =================     =================
                                                         ===============     =================     =================







                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                           Consolidated Statements of Cash Flow
                                                      (in thousands)

                                      See notes to consolidated financial statements.

                                                                        For the Year Ended December 31,
                                                                  2000               1999                1998
                                                             -------------      --------------      -------------

Cash flow from operating activities:
  Net income                                                 $                  $                   $
                                                                   64,817              76,169             34,767
  Adjustments to reconcile net income to net
    cash used in operating activities:
      Amortization and depreciation
                                                                    7,565               1,495                251
      Deferred tax expense
                                                                   60,023             (10,903)           (14,242)
      Change in unrealized losses on derivatives
                                                                  (2,935)               3,749                  -
      Increase in policy reserves
                                                                   50,892               4,367              1,130
      (Decrease) increase in payable to affiliates
                                                                 (72,063)              69,897                166
      Change in income tax payable/receivable
                                                                 (58,888)              17,611              7,704
      Increase in other assets
                                                                 (59,987)             (32,954)            (1,173)
      Increase in accrued investment income
                                                                  (1,155)             (1,174)              (438)
      Decrease in reinsurance receivable
                                                                      420                 129              2,152
      Net increase in deferred acquisition costs
                                                                (310,487)            (366,198)          (174,804)
      (Decrease) increase in accounts payable and accrued
        expenses                                                 (21,550)              66,763             20,637
      Increase in drafts outstanding
                                                                   12,699              22,118              9,663
      Change in foreign currency translation, net
                                                                    (101)                 701                (22)
      Net realized capital gain on expiration of derivatives
                                                                    (500)                   -                  -
      Net realized capital losses (gains)
                                                                      688               (578)                (99)
                                                             -------------      --------------      -------------

        Net cash used in operating activities                    (330,562)          (148,808)           (114,308)

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

Cash flow from investing activites:
      Purchase of fixed maturity investments
                                                                (380,737)            (99,250)            (31,828)
      Proceeds from sale and maturity of fixed
        maturity investments
                                                                  303,736              36,226              4,049
      Purchase of derivatives
                                                                  (6,722)             (4,974)                  -
      Purchase of shares in mutual funds
                                                                 (18,136)            (17,703)             (7,158)
      Proceeds from sale of shares in mutual funds
                                                                   8,345              14,657               6,086
      Purchase of fixed assets
                                                                  (7,348)             (3,178)                (18)
      Increase in policy loans
                                                                  (2,476)               (701)                118
                                                             -------------      --------------      -------------

        Net cash used in investing activities
                                                                (103,338)            (17,703)            (28,751)
                                                             -------------      --------------      -------------

Cash flow from financing activities:
      Capital contribution from parent
                                                                   51,450              22,490              8,362
      Increase in future fees payable to parent, net
                                                                  358,376             207,056            135,944
      Net deposits to (withdrawals from) contractowner
        accounts                                                   11,361               5,872            (5,696)
- --------------------------------------------------------------------------      --------------      -------------

        Net cash provided by financing activities
                                                                  421,187             235,418            138,610
                                                             -------------      --------------      -------------

          Net (decrease) increase in cash and cash
            equivalents
                                                                 (12,713)              11,687            (4,449)
          Cash and cash equivalents at beginning of period
                                                                   89,212              77,525             81,974
                                                             -------------      --------------      -------------

            Cash and cash equivalents at end of period       $                  $                   $
                                                                   76,499              89,212             77,525
                                                             =============      ==============      =============

     Income taxes paid                                       $                  $                   $
                                                                   29,644              23,637             14,651
                                                             =============      ==============      =============

      Interest paid                                          $                  $                   $
                                                                   85,551              69,697             35,588
                                                             =============      ==============      =============







                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                        Notes to Consolidated Financial Statements
                                                     December 31, 2000


1.       ORGANIZATION AND OPERATION

         American Skandia Life Assurance  Corporation (the "Company") is a wholly-owned  subsidiary of American  Skandia,
         Inc. ("ASI") whose ultimate parent is Skandia Insurance Company Ltd., ("SICL") a Swedish Corporation.

         The Company  develops  long-term  savings and retirement  products which are distributed  through its affiliated
         broker/dealer company,  American Skandia Marketing,  Incorporated ("ASM"). The Company currently issues variable
         and term life  insurance and variable,  fixed,  market value adjusted and immediate  annuities for  individuals,
         groups and qualified pension plans.

         The Company has 99.9%  ownership  in Skandia  Vida,  S.A. de C.V.  ("Skandia  Vida")  which is a life  insurance
         company  domiciled in Mexico.  Skandia Vida had total  shareholder's  equity of $4,402,000  and $4,592,000 as of
         December 31, 2000, and 1999,  respectively.  The Company considers Mexico an emerging market and has invested in
         the Skandia Vida  operations  with the  expectation  of generating  profits from long-term  savings  products in
         future years.  As such,  Skandia Vida has generated net losses of $2,540,000,  $2,523,000 and $2,514,000 for the
         years ended December 31, 2000, 1999 and 1998, respectively.


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         A.       Basis of Reporting
                  ------------------

                  The  accompanying  consolidated  financial  statements have been prepared in conformity with accounting
                  principles  generally accepted in the United States.  Intercompany  transactions and balances have been
                  eliminated in consolidation.

                  Certain  reclassifications  have been made to prior  year  amounts  to conform  with the  current  year
                  presentation.

         B.       New Accounting Standard
                  -----------------------

                  The FASB has issued  Statement of Financial  Accounting  Standards No. 133,  "Accounting for Derivative
                  Instruments and Hedging  Activities",  as amended by SFAS 137 and SFAS 138 (collectively,  "SFAS 133").
                  SFAS 133 is  effective  for all fiscal  quarters of all fiscal  years  beginning  after June 15,  2000;
                  accordingly,  the Company  adopted SFAS 133 on January 1, 2001. This statement  establishes  accounting
                  and reporting standards for derivative  instruments,  including certain derivative instruments embedded
                  in other contracts,  and for hedging  activities.  SFAS No. 133 requires that all derivative  financial
                  instruments  be measured at fair value and recognized in the statement of condition as either assets or
                  liabilities.  Changes in the fair value of the  derivative  financial  instruments  will be reported in
                  either earnings or comprehensive  income,  depending on the use of the derivative and whether or not it
                  qualifies for hedge accounting.

                  Special hedge accounting  treatment is permitted only if specific criteria are met,  including that the
                  hedging  relationship  be highly  effective both at inception and on an ongoing  basis.  Accounting for
                  hedges  varies based on the type of hedge - fair value or cash flow.  Results of  effective  hedges are
                  recognized in current  earnings for fair value hedges and in other  comprehensive  income for cash flow
                  hedges. Ineffective portions of hedges are recognized immediately in earnings.





                                       AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                  Notes to Consolidated Financial Statements (continued)


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

                  The  derivative  instruments  held by the  Company in 2000 and 1999  consisted  of equity  put  options
                  utilized to manage the market risk and reserve  fluctuations  associated  with the  guaranteed  minimum
                  death benefit  ("GMDB").  The adoption of SFAS No. 133 did not have a material  effect on the Company's
                  financial statements.

        C.       Investments

                  The  Company  has   classified  its  fixed  maturity   investments   as  either   held-to-maturity   or
                  available-for-sale.  Investments  classified as  held-to-maturity  are investments that the Company has
                  the ability and intent to hold to  maturity.  Such  investments  are carried at amortized  cost.  Those
                  investments  which are  classified  as  available-for-sale  are  carried at fair  value and  changes in
                  unrealized gains and losses are reported as a component of other comprehensive income.

                  The Company has classified its mutual fund investments held in support of a deferred  compensation plan
                  (see Note 13) as  available-for-sale.  Such  investments  are  carried  at fair  value and  changes  in
                  unrealized gains and losses are reported as a component of other comprehensive income.

                  Policy loans are carried at their unpaid principal balances.

                  Realized  gains and losses on disposal of  investments  are  determined by the specific  identification
                  method and are included in revenues.

         D.       Derivative Instruments
                  ----------------------

                  The Company uses derivative  instruments  which consist of equity option  contracts for risk management
                  purposes,  and not for trading or speculation.  The Company hedges the market value fluctuations of the
                  GMDB exposure  embedded in its policy  reserves.  Premiums paid on option  contracts are amortized into
                  net investment  income over the terms of the contracts.  The options are carried at amortized cost plus
                  intrinsic   value,   if  any,  at  the  valuation  date.  An  option  has  intrinsic  value  if  it  is
                  "in-the-money."  For a put option to be  "in-the-money,"  the  exercise  price must be greater than the
                  value of the  underlying  index.  Changes in intrinsic  value are recorded as a component of the change
                  in annuity and life insurance policy reserves consistent with changes in the GMDB reserve.

        E.       Cash Equivalents
                 ----------------

                  The Company  considers all highly liquid time deposits,  commercial paper and money market mutual funds
                  purchased with a maturity at date of acquisition of three months or less to be cash equivalents.

        F.       Fair Values of Financial Instruments
                 ------------------------------------

                  The methods and assumptions used to determine the fair value of financial instruments are as follows:

                  Fair values of fixed  maturities  with  active  markets are based on quoted  market  prices.  For fixed
                  maturities  that trade in less active  markets,  fair values are obtained from an  independent  pricing
                  service.






                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                  Notes to Consolidated Financial Statements (continued)


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


                  Fair values of investments in mutual funds are based on quoted market prices.

                  The intrinsic  value portion of the derivative  instrument is determined  based on the current value of
                  the underlying index.

                  The carrying value of cash and cash equivalents  (cost)  approximates  fair value due to the short-term
                  nature of these investments.

                  The carrying  value of  short-term  borrowings  (cost)  approximates  fair value due to the  short-term
                  nature of these liabilities.

                  Fair values of certain financial  instruments,  such as future fees payable to parent and surplus notes
                  are not readily determinable and are excluded from fair value disclosure requirements.

         G.       State Insurance Licenses
                  ------------------------

                  Licenses to do business in all states have been  capitalized  and  reflected at the  purchase  price of
                  $6,000,000  less  accumulated  amortization.  The  cost  of  the  licenses  is  being  amortized  on  a
                  straight-line basis over 40 years.

         H.       Software Capitalization
                  -----------------------

                  The Company  capitalizes  certain costs  associated  with internal use software in accordance  with the
                  American  Institute  of  Certified  Public  Accountants   Statement  of  Position  98-1  ("SOP  98-1"),
                  "Accounting  for the Costs of Software  Developed  or Obtained for  Internal  Use.  The SOP,  which was
                  adopted  prospectively as of January 1, 1999,  requires the capitalization of certain costs incurred in
                  connection with developing or obtaining  internal use software.  Prior to the adoption of SOP 98-1, the
                  Company  expensed  all  internal use software  related  costs as incurred.  Details of the  capitalized
                  software  costs,  which are  included in fixed  assets,  and related  amortization  for the years ended
                  December 31, are as follows:

                  (in thousands)                                              2000              1999
                                                                              ----              ----

                  Balance at beginning of year                               $2,920             $  -
                                                                             ------             ----

                  Software costs capitalized during the year                  4,804            3,035


                  Software costs amortized during the year                     (512)            (115)
                                                                               -----            -----

                                                                              4,292             2,920
                                                                              -----             -----


                  Balance at end of year                                     $7,212            $2,920
                                                                             ======            ======








                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                  Notes to Consolidated Financial Statements (continued)


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         I.       Income Taxes
                  ------------

                  The Company is included in the  consolidated  federal  income tax return and combined  state income tax
                  return of an  upstream  company,  Skandia  AFS  Development  Holding  Corporation  and  certain  of its
                  subsidiaries.  In  accordance  with the tax  sharing  agreement,  the  federal  and  state  income  tax
                  provisions  are  computed on a separate  return basis as adjusted  for  consolidated  items such as net
                  operating loss carryforwards.

                  Deferred  income  taxes  reflect  the net tax effects of  temporary  differences  between the  carrying
                  amounts of assets and liabilities for financial  reporting purposes and the amounts used for income tax
                  purposes.

         J.       Recognition of Revenue and Contract Benefits
                  --------------------------------------------

                  Revenues for variable  deferred  annuity  contracts  consist of charges against  contractowner  account
                  values  for  mortality  and  expense  risks,  administration  fees,  surrender  charges  and an  annual
                  maintenance fee per contract.  Benefit  reserves for variable annuity  contracts  represent the account
                  value of the contracts and are included in the separate account liabilities.

                  Revenues for variable  immediate  annuity  contracts  with and without  life  contingencies  consist of
                  certain  charges  against  contractowner  account  values  including  mortality  and expense  risks and
                  administration  fees. Benefit reserves for variable  immediate annuity contracts  represent the account
                  value of the contracts and are included in the separate account liabilities.

                  Revenues for market value  adjusted  fixed annuity  contracts  consist of separate  account  investment
                  income  reduced by benefit  payments and changes in reserves in support of  contractowner  obligations,
                  all of which are included in return credited to  contractowners.  Benefit  reserves for these contracts
                  represent  the account  value of the  contracts,  and are included in the general  account  reserve for
                  future contractowner benefits to the extent in excess of the separate account assets.

                  Revenues for immediate annuity contracts without life  contingencies  consist of net investment income.
                  Revenues for immediate  annuity  contracts with life  contingencies  consist of single premium payments
                  recognized as annuity  considerations when received.  Benefit reserves for these contracts are based on
                  the Society of Actuaries  1983 Table-a with  assumed  interest  rates that vary by issue year.  Assumed
                  interest rates ranged from 6.25% to 8.25% at December 31, 2000 and 1999.

                  Revenues for variable life insurance contracts consist of charges against  contractowner account values
                  for mortality and expense risk fees,  cost of insurance  fees,  taxes and  surrender  charges.  Certain
                  contracts  also include  charges  against  premium to pay state  premium  taxes.  Benefit  reserves for
                  variable life insurance  contracts represent the account value of the contracts and are included in the
                  separate account liabilities.






                                       AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                  Notes to Consolidated Financial Statements (continued)


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


         K.       Deferred Acquisition Costs
                  --------------------------

                  The costs of acquiring new business,  which vary with and are  primarily  related to the  production of
                  new  business,  are being  deferred,  net of  reinsurance.  These costs include  commissions,  costs of
                  contract  issuance,  and certain  selling  expenses  that vary with  production.  These costs are being
                  amortized  generally in proportion to expected gross profits from surrender  charges,  policy and asset
                  based fees and  mortality  and expense  margins.  This  amortization  is adjusted  retrospectively  and
                  prospectively  when  estimates  of current  and future  gross  profits to be  realized  from a group of
                  products are revised.

                  Details of the deferred  acquisition  costs and related  amortization  for the years ended December 31,
                  are as follows:


                          (in thousands)                                  2000             1999              1998
                                                                          ----             ----              ----

                  Balance at beginning of year                          $1,087,705       $721,507          $546,703
                                                                        ----------       --------          --------

                  Acquisition costs deferred during the year               495,103        450,059           261,432


                  Acquisition costs amortized during the year             (184,616)       (83,861)          (86,628)
                                                                          ---------      ------------       ---------

                                                                           310,487        366,198           174,804
                                                                     ----  -------        -------          --------


                  Balance at end of year                                $1,398,192     $1,087,705          $721,507
                                                                        ==========        ==========       ========


         L.       Reinsurance
                  -----------

                  The  Company  cedes   reinsurance   under  modified   co-insurance   arrangements.   These  reinsurance
                  arrangements  provide  additional  capacity  for growth in  supporting  the cash flow  strain  from the
                  Company's  variable  annuity and variable life insurance  business.  The  reinsurance is effected under
                  quota share contracts.

                           The Company reinsured its exposure to market  fluctuations  associated with its GMDB liability
                  in the first half of 1999 and in 1998.  Under this  reinsurance  agreement,  the Company ceded premiums
                  of $2,945,000 and  $5,144,000;  received claim  reimbursements  of $242,000 and $9,000;  and,  recorded
                  increases/(decreases) in reserves of ($2,763,000) and $323,000 in 1999 and 1998, respectively.

                  At December 31, 2000 and 1999, in accordance with the provisions of modified coinsurance agreements, the Company
                  accrued $4,339,000 and $41,000,  respectively,  for amounts receivable from favorable reinsurance  experience on
                  certain blocks of variable annuity business.





                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                  Notes to Consolidated Financial Statements (continued)


2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


         M.       Translation of Foreign Currency
                  -------------------------------

                  The financial  position and results of operations of Skandia Vida are measured  using local currency as
                  the functional  currency.  Assets and liabilities are translated at the exchange rate in effect at each
                  year-end.  Statements of income and  shareholder's  equity  accounts are translated at the average rate
                  prevailing during the year.  Translation  adjustments  arising from the use of differing exchange rates
                  from period to period are reported as a component of other comprehensive income.

         N.       Separate Accounts
                  -----------------

                  Assets and  liabilities  in Separate  Accounts  are included as separate  captions in the  consolidated
                  statements of financial  condition.  Separate  Account assets  consist  principally of long term bonds,
                  investments  in mutual funds,  short-term  securities and cash and cash  equivalents,  all of which are
                  carried at fair value.  The  investments  are managed  predominately  through the Company's  investment
                  advisory  affiliate,  American Skandia  Investment  Services,  Inc.  ("ASISI"),  utilizing various fund
                  managers as sub-advisors.  The remaining  investments are managed by independent  investment firms. The
                  contractowner  has the option of directing  funds to a wide  variety of mutual  funds.  The  investment
                  risk on the  variable  portion of a  contract  is borne by the  contractowner.  A fixed  option  with a
                  minimum  guaranteed  interest rate is also  available.  The Company is responsible  for the credit risk
                  associated with these investments.

                  Included in Separate Account  liabilities are reserves of  $1,059,987,000  and $896,205,000 at December
                  31,  2000 and 1999,  respectively,  relating  to  annuity  contracts  for which  the  contractowner  is
                  guaranteed a fixed rate of return.  Separate  Account  assets of  $1,059,987,000  and  $896,205,000  at
                  December  31,  2000 and 1999,  respectively,  consisting  of long term  bonds,  short-term  securities,
                  transfers  due from the  general  account  and cash and cash  equivalents  are held in support of these
                  annuity contracts, pursuant to state regulation.

         O.       Estimates
                  ---------

                  The preparation of financial statements in conformity with accounting  principles generally accepted in
                  the United States  requires that  management  make estimates and  assumptions  that affect the reported
                  amount of assets and  liabilities at the date of the financial  statements and the reported  amounts of
                  revenues and expenses during the reporting period.  The more significant  estimates and assumptions are
                  related to deferred  acquisition  costs and involve policy lapses,  investment  return and  maintenance
                  expenses.  Actual results could differ from those estimates.





                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                  Notes to Consolidated Financial Statements (continued)


3.       COMPREHENSIVE INCOME

         The components of comprehensive income, net of tax, for the years ended December 31 were as follows:

                           (in thousands)                                            2000          1999        1998
                                                                                     ----          ----        ----

         Net income                                                                 $64,817       $76,169    $34,767
         Other comprehensive income:
            Unrealized investment (losses) gains on
                available for sale securities                                        (1,681)       (3,438)     2,801
            Reclassification adjustment for realized losses (gains)
                included in investment income                                         2,957          (660)        88
                                                                                   ---------  -----   ----- ----------
            Net unrealized gains (losses) on securities                               1,276        (4,098)     2,889

            Foreign currency translation                                                (66)          456        (22)
                                                                                    -------     ---------- -----------


         Other comprehensive income (loss)                                             1,210       (3,642)     2,867
                                                                                   ---------       -------    ------

         Comprehensive income                                                        $66,027      $72,527    $37,634
                                                                                    =======       =======     =======


         The components of accumulated other comprehensive income, net of tax, as of December 31 were as follows:

                     (in thousands)                                                    2000          1999
                                                                                       ----          ----

        Unrealized investment gains (losses)                                          $1,021         ($255)
        Foreign currency translation                                                      82           148
                                                                                      ------         ------

        Accumulated other comprehensive income (loss)                                 $1,103         ($107)
                                                                                      ======         ======






                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                  Notes to Consolidated Financial Statements (continued)


4.       INVESTMENTS

         The  amortized  cost,  gross  unrealized  gains/losses  and  estimated  fair  value  of  available-for-sale  and
         held-to-maturity  fixed  maturities  and  investments in mutual funds as of December 31, 2000 and 1999 are shown
         below.  All securities held at December 31, 2000 and 1999 were publicly traded.

         Investments in fixed maturities as of December 31, 2000 consisted of the following:


                       (in thousands)                                     Available-for-Sale
                                                                          ------------------

                                                                           Gross              Gross
                                                        Amortized        Unrealized        Unrealized         Fair
                                                           Cost            Gains             Losses          Value
                                                           ----            -----             ------          -----

         U.S. Government obligations                       $206,041        $4,445             $ (11)        $210,475

         Foreign government obligations                       2,791           195                 -            2,986


         Obligations of state and political
            subdivisions                                        253             1                 -              254

         Corporate securities                                72,237         1,565            (1,809)          71,993
                                                             ------         -----            -------          ------

             Totals                                        $281,322        $6,206           $(1,820)        $285,708
                                                           ========        ======           ========        ========


         The amortized cost and fair value of fixed maturities,  by contractual  maturity, at December 31, 2000 are shown
         below.

                       (in thousands)                        Available-for-Sale
                                                             ------------------

                                                          Amortized           Fair
                                                            Cost             Value
                                                            ----             -----

         Due in one year or less                              $ 7,005           $ 7,018

         Due after one through five years                     157,111           158,344

         Due after five through ten years                     107,729           110,469

         Due after ten years                                    9,477             9,877
                                                             --------          ---------

            Total                                            $281,322          $285,708
                                                             ========          ========






                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                  Notes to Consolidated Financial Statements (continued)


4.       INVESTMENTS  (continued)

         Investments in fixed maturities as of December 31, 1999 consisted of the following:

                        (in thousands)                                            Available-for-Sale
                                                                                  ------------------

                                                                            Gross             Gross
                                                          Amortized       Unrealized       Unrealized         Fair
                                                            Cost            Gains            Losses           Value
                                                            ----            -----            ------           -----

         U.S. Government obligations                      $ 81,183             $ -           $(678)          $ 80,505

         Obligations of state and political
            subdivisions                                       253               -              (3)               250

         Corporate securities                              121,859               -          (4,449)           117,410
                                                           -------                          -------           -------

             Totals                                       $203,295             $ -         $(5,130)          $198,165
                                                          ========             ===         ========          ========


                        (in thousands)                                            Held-to-Maturity
                                                                                  ----------------

                                                                            Gross             Gross
                                                          Amortized       Unrealized       Unrealized         Fair
                                                            Cost            Gains            Losses           Value
                                                            ----            -----            ------           -----

         U.S. Government obligations                       $1,105             $ -              $ (1)         $1,104

         Corporate securities                               2,255               -               (15)          2,240
                                                           -------             --               ----         ------

             Totals                                        $3,360             $ -              $(16)         $3,344
                                                           ======             ===              =====         ======

         Proceeds  from  sales of fixed  maturities  during  2000,  1999 and 1998  were  $302,632,000,  $32,196,000,  and
         $999,000,  respectively.  Proceeds from maturities during 2000, 1999 and 1998 were $1,104,000,  $4,030,000,  and
         $3,050,000, respectively.






                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                  Notes to Consolidated Financial Statements (continued)



4.       INVESTMENTS (continued)


        The cost, gross unrealized gains/losses and fair value of investments in mutual funds at December 31, 2000 and 1999 are shown
         below:


                    (in thousands)                                          Gross             Gross
                                                                         Unrealized        Unrealized         Fair
                                                            Cost            Gains            Losses           Value
                                                            ----            -----            ------           -----

         2000                                             $23,218           $ 372           $(3,188)           $20,402
                                                          =======           =====           ========           =======

         1999                                             $11,667          $4,763            $ (26)            $16,404
                                                          =======          ======            ======            =======


         Net realized investment gains (losses) were as follows for the years ended December 31:


                    (in thousands)                                           2000             1999            1998
                                                                             ----             ----            ----

         Fixed maturities:
           Gross gains                                                      $1,002            $ 253            $ -
           Gross losses                                                     (3,450)            (228)              (1)
         Investment in mutual funds:
           Gross gains                                                       1,913              990              281
           Gross losses                                                       (153)            (437)            (181)
                                                                          ---  -----     --    -----            -----

         Totals                                                             $ (688)           $ 578             $ 99
                                                                            =======           =====            ====



5.       NET INVESTMENT INCOME

         The sources of net investment income for the years ended December 31 were as follows:

                    (in thousands)                                           2000             1999            1998
                                                                             ----             ----            ----

         Fixed maturities                                                  $13,502           $ 9,461         $ 8,534
         Cash and cash equivalents                                            5,154            2,159           1,717
         Investment in mutual funds                                              99               32           1,013
         Policy loans                                                            97               31              45
         Derivative instruments                                              (6,939)          (1,036)              -
                                                                             -------          -------

         Total investment income                                             11,913           10,647          11,309

         Investment expenses                                                    257              206             179
                                                                             ------           ------          ------

         Net investment income                                              $11,656          $10,441         $11,130
                                                                           =======           =======         =======









                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                  Notes to Consolidated Financial Statements (continued)


6.       INCOME TAXES

         The significant components of income tax expense for the years ended December 31 were as follows:

                       (in thousands)                                            2000             1999        1998
                                                                                 ----             ----        ----

         Current tax (benefit) expense                                         ($29,244)         $41,248      $22,384

         Deferred tax expense (benefit)                                          60,023          (10,904)     (14,230)
                                                                                -------         --------     -------


         Total income tax expense                                               $30,779          $30,344       $8,154
                                                                                 =======         =======       ======

         The tax effects of significant  items comprising the Company's  deferred tax balance as of December 31, 2000 and
         1999 are as follows:

                      (in thousands)                                                     2000                 1999
                                                                                         ----                 ----

         Deferred tax liabilities:
             Deferred acquisition costs                                              ($411,417)             ($321,873)
             Payable to reinsurers                                                     (29,985)               (26,733)
             Future contractowner benefits                                             (11,526)
                                                                                                           -
             Internal use software                                                      (2,524)
                                                                                                               (1,022)
             Policy fees                                                                (1,551)                (1,146)
             Net unrealized gains                                                         (550)
                                                                                                           -
             Foreign exchange translation                                                  (45)                   (80)
                                                                    ---------              ----  ---------        ----

             Total                                                                    (457,598)              (350,854)
                                                                                      ---------              ---------

         Deferred tax assets:
             Net separate account liabilities
                                                                                       421,662                333,521
             Future contractowner benefits
                                                                                             -                  3,925
             Other reserve differences
                                                                                         2,675                 39,645
             Deferred compensation
                                                                                        17,869                 18,844
             Surplus notes interest
                                                                                         5,536                  5,030
             Net unrealized losses
                                                                                             -                    137
             Other
                                                                                           907                  1,478
                                                                    --------               ---                  -----

             Total
                                                                                           -
                                                                                       448,649                402,580
                                                                                       -------                -------

             Income tax (payable) receivable - deferred                            ($   8,949)                $51,726
                                                                                    ===========               =======









                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                  Notes to Consolidated Financial Statements (continued)


6.       INCOME TAXES (continued)

         The income tax expense was different from the amount computed by applying the federal  statutory tax rate of 35%
         to pre-tax income from continuing operations as follows:

                    (in thousands)                                                2000           1999           1998
                                                                                  ----           ----           ----

         Income (loss) before taxes
            Domestic                                                             $98,136      $109,036       $45,435
            Foreign                                                               (2,540)       (2,523)       (2,514)
                                                                                  -------    --- -------      -------
            Total                                                                 95,596       106,513        42,921

            Income tax rate                                                          35%            35%           35%
                                                                                -------         ------       --------

         Tax expense at federal statutory income tax rate                         33,459         37,280        15,022

         Tax effect of:
            Dividend received deduction                                           (7,350)        (9,572)       (9,085)
            Losses of foreign subsidiary                                             889            883           880

            Meals and entertainment                                                  841            664           487

            State income taxes                                                      (524)         1,071           673
            Other                                                                  3,464             18           177
                                                                                 --------     ----------     ---------

         Income tax expense                                                     $ 30,779       $ 30,344       $ 8,154
                                                                                ========       ========       =======



7.       COST ALLOCATION AGREEMENTS WITH AFFILIATES

         Certain  operating  costs  (including  personnel,  rental of office space,  furniture,  and equipment) have been
         charged to the Company at cost by American Skandia Information  Services and Technology  Corporation  ("ASIST"),
         an affiliated  company.  The Company has also charged  operating  costs to ASISI.  The total cost to the Company
         for these items was  $13,974,000,  $11,136,000,  and $7,722,000 for the years ended December 31, 2000,  1999 and
         1998,  respectively.  Income received for these items was  $11,186,000,  $3,919,000 and $1,355,000 for the years
         ended December 31, 2000, 1999 and 1998, respectively.

         Beginning in 1999, the Company was reimbursed by ASM for certain  distribution related costs associated with the
         sales of business  through an  investment  firm where ASM serves as an  introducing  broker  dealer.  Under this
         agreement,  the expenses  reimbursed  were  $5,842,000  and $1,441,000 for the years ended December 31, 2000 and
         1999. As of December 31, 2000 and 1999,  amounts  receivable  under this  agreement  were $492,000 and $245,000,
         respectively.








                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                  Notes to Consolidated Financial Statements (continued)


8.       FUTURE FEES PAYABLE TO PARENT

         In a series of  transactions  with ASI,  the  Company  transferred  certain  rights to receive  future  fees and
         contract  charges  expected  to be  realized  on variable  portions  of  designated  blocks of deferred  annuity
         contracts.

         The proceeds from the transfers  have been  recorded as a liability and are being  amortized  over the remaining
         surrender  charge period of the designated  contracts  using the interest  method.  The Company did not transfer
         the right to receive future fees and charges after the expiration of the surrender charge period.

         In connection with these transactions,  ASI issued collateralized notes in private placements, which are secured
         by the rights to receive future fees and charges purchased from the Company.

         Under the terms of the  Purchase  Agreements,  the rights  transferred  provide for ASI to receive a  percentage
         (60%, 80% or 100% depending on the underlying  commission  option) of future  mortality and expense  charges and
         contingent  deferred  sales charges,  after  reinsurance,  expected to be realized over the remaining  surrender
         charge period of the designated contracts (6 to 8 years).

         Payments  representing  fees and charges in the aggregate amount of  $219,454,000,  $131,420,000 and $69,226,000
         were made by the Company to the Parent for the years  ended  December  31,  2000,  1999 and 1998,  respectively.
         Related  interest  expense of  $70,667,000,  $52,840,000  and  $22,978,000 has been included in the statement of
         income for the years ended December 31, 2000, 1999 and 1998, respectively.

         The Commissioner of the State of Connecticut has approved the transfer of future fees and charges;  however,  in
         the event that the Company becomes subject to an order of liquidation or  rehabilitation,  the  Commissioner has
         the ability to stop the payments due to the Parent under the  Purchase  Agreement  subject to certain  terms and
         conditions.

         The present values of the transactions as of the respective effective date were as follows:

                              Closing      Effective          Contract Issue         Discount       Present
           Transaction         Date           Date                Period               Rate          Value
           -----------         ----           ----                ------               ----          -----

             1996-1           12/16/96         9/1/96        1/1/94  -   6/30/96       7.5%           $50,221
             1997-1            7/23/97         6/1/97        3/1/96  -   4/30/97       7.5%            58,767
             1997-2           12/30/97        12/1/97        5/1/95  -  12/31/96       7.5%            77,552
             1997-3           12/30/97        12/1/97        5/1/96  -  10/31/97       7.5%            58,193
             1998-1            6/30/98         6/1/98        1/1/97  -   5/31/98       7.5%            61,180
             1998-2           11/10/98        10/1/98        5/1/97  -   8/31/98       7.0%            68,573
             1998-3           12/30/98        12/1/98        7/1/96  -  10/31/98       7.0%            40,128
             1999-1            6/23/99         6/1/99        4/1/94  -   4/30/99       7.5%           120,632
             1999-2           12/14/99        10/1/99       11/1/98  -   7/31/99       7.5%           145,078
             2000-1            3/22/00         2/1/00        8/1/99  -   1/31/00       7.5%           169,459
             2000-2            7/18/00         6/1/00        2/1/00  -   4/30/00       7.25%           92,399
             2000-3           12/28/00        12/1/00        5/1/00  -  10/31/00       7.25%          107,291
             2000-4           12/28/00        12/1/00        1/1/98  -  10/31/00       7.25%          107,139






                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                  Notes to Consolidated Financial Statements (continued)


8.       FUTURE FEES PAYABLE TO PARENT (continued)

         Expected payments of future fees payable to ASI as of December 31, 2000 are as follows:

                                                     Year Ended
               (in thousands)                        December 31,                          Amount
                                                     ------------                          ------

                                                         2001                             $164,892
                                                         2002                              169,511
                                                         2003                              165,626
                                                         2004                              151,516
                                                         2005                              128,053
                                                         2006 and thereafter               154,812
                                                                                           -------

                                                        Total                             $934,410
                                                                                          ========


9.       LEASES

         The Company  leases office space under a lease  agreement  established in 1989 with ASIST.  The Company  entered
         into a lease agreement for office space in Westminster,  Colorado,  effective January 1, 2001. Lease expense for
         2000, 1999 and 1998 was $6,593,000,  $5,003,000 and $3,588,000  respectively.  Future minimum lease payments per
         year and in aggregate as of December 31, 2000 are as follows:

                 (in thousands)          2001                              $6,487
                                         2002                               8,032
                                         2003                               8,098
                                         2004                               8,209
                                         2005                               8,756
                                         2006 and thereafter               51,922
                                                                       -----------

                                         Total                            $91,504
                                                                       ===========


10.      RESTRICTED ASSETS

         To comply with certain state insurance  departments'  requirements,  the Company maintains cash, bonds and notes
         on deposit with various  states.  The carrying value of these deposits  amounted to $4,636,000 and $4,868,000 as
         of December 31, 2000,  and 1999,  respectively.  These deposits are required to be maintained for the protection
         of contractowners within the individual states.






                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                  Notes to Consolidated Financial Statements (continued)


11.      RETAINED EARNINGS AND DIVIDEND RESTRICTIONS

         Statutory  basis  shareholder's  equity  was  $342,804,000  and  $286,385,000  at  December  31,  2000 and 1999,
         respectively.

         The statutory  basis net income for the year ended December 31, 2000 was  $11,550,000,  as compared to losses of
         $17,672,000 and $13,152,000 for the years ended December 31, 1999 and 1998, respectively.

         Under various state  insurance  laws, the maximum amount of dividends that can be paid to  shareholders  without
         prior approval of the state insurance  department is subject to restrictions  relating to statutory  surplus and
         net gain from operations.  At December 31, 2000, no amounts may be distributed without prior approval.

         On November 8, 1999,  the Board of  Directors  authorized  the Company to increase  the par value of its capital
         stock from $80 per share to $100 per share in order to comply  with  minimum  capital  levels as required by the
         California  Department  of  Insurance.  This  transaction  resulted in a  corresponding  decrease in paid in and
         contributed surplus of $500,000 and had no effect on capital and surplus.

12.      STATUTORY ACCOUNTING PRACTICES

         The National  Association of Insurance  Commissioners  ("NAIC") revised the Accounting  Practices and Procedures
         Manual in a process  referred to as  Codification.  The State of  Connecticut  has adopted the provisions of the
         revised manual,  which is effective January 1, 2001. The revised manual has changed, to some extent,  prescribed
         statutory  accounting  practices and will result in changes to the accounting practices that the Company uses to
         prepare its  statutory-basis  financial  statements.  The  adoption of the revised  accounting  practices is not
         expected to have a material adverse effect on the Company's statutory-basis capital and surplus.

13.      EMPLOYEE BENEFITS

         The Company has a 401(k) plan for which  substantially all employees are eligible.  Under this plan, the Company
         contributes 3% of salary for all  participating  employees and matches employee  contributions at a 50% level up
         to an additional  3% Company  contribution.  Company  contributions  to this plan on behalf of the  participants
         were $3,734,000, $3,164,000 and $2,115,000 for the years ended December 31, 2000, 1999 and 1998, respectively.

         The Company has a deferred  compensation  plan,  which is available to the internal  field  marketing  staff and
         certain officers.  Company contributions to this plan on behalf of the participants were $399,000,  $193,000 and
         $342,000 for the years ended December 31, 2000, 1999 and 1998, respectively.

         The Company and certain  affiliates  cooperatively  have a  long-term  incentive  program  under which units are
         awarded to  executive  officers  and other  personnel.  The Company and  certain  affiliates  also have a profit
         sharing program which benefits all employees below the officer level.  These programs  consist of multiple plans
         with new plans  instituted  each year.  Generally,  participants  must  remain  employed  by the  Company or its
         affiliates at the time such units are payable in order to receive any payments  under the programs.  The accrued
         liability  representing  the value of these units was  $31,632,000  and  $42,619,000 as of December 31, 2000 and
         1999,  respectively.  Payments  under these programs were  $13,542,000,  $4,079,000 and $2,407,000 for the years
         ended December 31, 2000, 1999, and 1998, respectively.





                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                                 (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                  Notes to Consolidated Financial Statements (continued)


14.      REINSURANCE

         The effect of reinsurance for the years ended December 31, 2000, 1999 and 1998 is as follows:

         (in thousands)                                       2000
                                                              ----

                                Annuity and Life Insurance   Change in Annuity and Life          Return Credited
                                     Charges and Fees                 Insurance                to Contractowners
                                     ----------------                                          -----------------
                                                                   Policy Reserves
                                                                   ---------------

        Gross                            $477,802                      $45,784                      $13,607
        Ceded                             (53,224)                        (766)                      (4,561)
                                         --------                       ------                      -------
        Net                              $424,578                      $45,018                      $ 9,046
                                         ========                      =======                      =======

                                                           1999
                                                           ----

                                Annuity and Life Insurance   Change in Annuity and Life          Return Credited
                                     Charges and Fees                 Insurance                to Contractowners
                                     ----------------                                          -----------------
                                                                   Policy Reserves
                                                                   ---------------

        Gross                            $326,670                       $4,151                      ($1,382)
        Ceded                             (36,681)                      (1,073)                        (257)
                                         --------                      -------                        -----
        Net                              $289,989                       $3,078                      ($1,639)
                                         ========                       ======                      ========

                                                           1998
                                                           ----

                                Annuity and Life Insurance   Change in Annuity and Life          Return Credited
                                     Charges and Fees                 Insurance                to Contractowners
                                     ----------------                                          -----------------
                                                                   Policy Reserves
                                                                   ---------------

        Gross                            $215,425                       $ 691                       ($8,921)
        Ceded                             (29,214)                        362                            (9)
                                         --------                         ---                      ---------
        Net                              $186,211                      $1,053                       ($8,930)
                                         ========                      ======                       ========


         In December 2000, the Company entered into a modified  coinsurance  agreement with SICL effective  January 1996.
         During 2000, ceded premiums received net of commission  expenses and reserve  adjustments were  $10,360,000.  At
         December 31, 2000, $6,109,000 was payable to SICL under this agreement.

         Such ceded  reinsurance  does not relieve the Company of its obligations to  policyholders.  The Company remains
         liable to its  policyholders  for the  portion  reinsured  to the extent  that any  reinsurer  does not meet its
         obligations assumed under the reinsurance agreements.








                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                  Notes to Consolidated Financial Statements (continued)


15.      SURPLUS NOTES

The Company has issued surplus notes to its Parent in exchange for cash.  Surplus notes outstanding as of December 31, 2000
         and 1999 were as follows:

              (in thousands)
                                                                                            Interest for the
         ---------------------------------
                                            Interest       2000         1999           Years Ended December 31,
         ---------------------------------
                 Issue Date                   Rate        Amount       Amount         2000       1999        1998
                 ----------                   ----        ------       ------         ----       ----        ----
         ---------------------------------

         ---------------------------------
         December 29, 1993                   6.84%              -               -           -           -       1,387

         ---------------------------------
         February 18, 1994                   7.28%                         10,000         732         738         738
                                                      -
         ---------------------------------
         March 28, 1994                      7.90%                         10,000         794         801         801
                                                      -
         ---------------------------------
         September 30, 1994                  9.13%          15,000         15,000       1,392       1,389       1,389
         ---------------------------------
         December 28, 1994                   9.78%                              -           -       1,308       1,388
                                                           -
         ---------------------------------
         December 19, 1995                   7.52%          10,000         10,000         765         762         762
         ---------------------------------
         December 20, 1995                   7.49%          15,000         15,000       1,142       1,139       1,139
         ---------------------------------
         December 22, 1995                   7.47%           9,000          9,000         684         682         682
         ---------------------------------
         June 28, 1996                       8.41%          40,000         40,000       3,420       3,411       3,411
         ---------------------------------
         December 30, 1996                   8.03%          70,000         70,000       5,715       5,698       5,699
                                                      ---   ------  ---    ------ ---   ----- ---   ----- ---   -----
         ---------------------------------

         Total                                            $159,000       $179,000     $14,644     $15,928     $17,396
                                                          ========       ========     =======     =======     =======
         ---------------------------------


         Surplus notes for  $10,000,000  dated February 18, 1994 and  $10,000,000  dated March 28, 1994 were converted to
         additional  paid-in  capital on December 27, 2000. A surplus note for  $14,000,000  dated  December 28, 1994 was
         converted to  additional  paid-in  capital on December 10, 1999.  All surplus  notes mature seven years from the
         issue date.

         Payment of interest  and  repayment of principal  for these notes is subject to certain  conditions  and require
         approval by the Insurance  Commissioner of the State of Connecticut.  At December 31, 2000 and 1999, $15,816,000
         and  $14,372,000,  respectively,  of accrued  interest on surplus notes was not approved for payment under these
         criteria.


16.      SHORT-TERM BORROWING

         The  Company  had a  $10,000,000  short-term  loan  payable to ASI at  December  31,  2000 and 1999 as part of a
         revolving  loan  agreement.  The loan has an  interest  rate of 7.13% and matures on March 12,  2001.  The total
         interest  expense to the Company was $687,000,  $585,000 and $622,000 and for the years ended December 31, 2000,
         1999 and 1998,  respectively.  Accrued  interest  payable was  $222,000 and $197,000 as of December 31, 2000 and
         1999, respectively.


17.      CONTRACT WITHDRAWAL PROVISIONS

         Approximately  99% of the Company's  separate  account  liabilities are subject to  discretionary  withdrawal by
         contractowners  at market value or with market value  adjustment.  Separate  account assets which are carried at
         fair value are adequate to pay such withdrawals  which are generally  subject to surrender  charges ranging from
         10% to 1% for contracts held less than 10 years.





                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                  Notes to Consolidated Financial Statements (continued)


18.      SEGMENT REPORTING

         In recent years, in order to complete the array of products  offered by the Company and its affiliates to meet a
         wide variety of financial planning,  the Company developed the variable life insurance and qualified  retirement
         plan annuity  products.  Assets under  management and sales for the products other than variable  annuities have
         not been  significant  enough to warrant full segment  disclosures as required by SFAS 131,  "Disclosures  about
         Segments of an Enterprise and Related Information."







                                        AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                               (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                                  Notes to Consolidated Financial Statements (continued)


19.      QUARTERLY FINANCIAL DATA (UNAUDITED)

         The following table summarizes information with respect to the operations of the Company on a quarterly basis:

        (in thousands)                                                       Three months Ended

                                                            March 31     June 30      September 30     December 31
                                                            --------     -------      ------------     -----------
        2000
        Premiums and other insurance
           revenues                                        $137,255       $139,317           $147,923         $136,159
        Net investment income                                 2,876          3,628              4,186              966

        Net realized capital gains (losses)                     729         (1,436)              (858)             877
                                                            -------        -------             -----           -------
        Total revenues                                      140,860         141,509            151,251         138,002
        Benefits and expenses                               106,641         121,356            137,514         110,515
                                                            -------        --------           --------         -------
        Pre-tax net income                                   34,219          20,153             13,737          27,487

        Income taxes                                         10,038           5,225              3,167          12,349
                                                             ------         ---------          ------          ------

        Net income                                          $24,181         $14,928            $10,570         $15,138
                                                            =======         =======            =======         =======


        1999
        Premiums and other insurance
           revenues                                          $78,509         $88,435           $97,955        $111,443
        Net investment income                                  2,654           2,842             2,735           2,210

        Net realized capital gains                               295              25               206              52
                                                             -------       ---------           -------       ---------

        Total revenues                                        81,458          91,302           100,896         113,705
        Benefits and expenses                                 64,204          67,803            71,597          77,244
                                                              ------        ---------          -------          ------

        Pre-tax net income                                    17,254           23,499           29,299          36,461

        Income taxes                                           3,844            7,142            7,898          11,460
                                                              ------           ------        ----------         -------

        Net income                                          $ 13,410        $ 16,357          $ 21,401        $ 25,001
                                                            ========        ========          ========        ========


        1998
        Premiums and other insurance
           revenues                                          $50,593        $57,946             $62,445        $67,327
        Net investment income                                  3,262          2,410               2,469          2,989

        Net realized capital gains (losses)                      156             13                 (46)           (24)
                                                             -------        --------             -------       --------

        Total revenues                                        54,011         60,369              64,868         70,292
        Benefits and expenses                                 46,764         42,220              48,471         69,164
                                                              ------         ------              -------        -------
        Pre-tax net income                                     7,247         18,149              16,397          1,128
        Income taxes                                           1,175          4,174               2,223            582
                                                               -----          -----              ------        -------

        Net income                                            $6,072        $13,975             $14,174       $    546
                                                              ======        =======             =======        ========



                               APPENDIX B - CONDENSED FINANCIAL INFORMATION ABOUT SEPARATE ACCOUNT E

The Unit Prices and number of Units in the Sub-accounts that commenced operations prior to January 1, 2001 are shown below.

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-account  of  Separate  Account E that  commenced  operations  prior to January 1, 2001 and are being  offered  pursuant  to this
Prospectus;  and (b) the number of Units  outstanding in each such  Sub-account as of the dates shown.  The year in which operations
commenced in each such  Sub-account is noted in  parentheses.  The portfolios in which a particular  Sub-account  invests may or may
not have  commenced  operations  prior to the date such  Sub-account  commenced  operations.  The  initial  offering  price for each
Sub-account was $10.00.


                                                                       Year Ended December 31,
- ------------------------------------------------------------------------------------------------------------------------------------------
                            2000       1999       1998        1997       1996        1995       1994       1993        1992       1991
- -------------------------
- ------------------------------------------------------------------------------------------------------------------------------------------
GAL Money Market
(1993)
Unit Price                   $13.86      13.13       12.59      12.05       11.54      11.06      10.56       10.22          -          -
Number of Units             398,234    493,675     607,600    827,966   1,006,007  1,350,072  1,257,546   1,063,152          -          -
                                                                                                                               -----------
- ------------------------------------------------------------------------------------------------------------------------------------------
GAL Equity
(1993)
Unit Price                   $31.29      32.05       25.34      20.63       16.24      13.44      10.66       10.36          -          -
Number of Units           1,439,526  1,577,146   1,853,943  2,033,164   2,136,942  2,119,810  1,818,564   1,246,452          -          -
                                                                                                                               -----------
- ------------------------------------------------------------------------------------------------------------------------------------------
GAL High Quality Bond
(1993)
Unit Price                   $15.57      13.87       14.50      13.29       12.22      12.04       9.88       10.55          -          -
Number of Units             653,417    704,105     777,739    668,832     740,891    830,395    811,254     929,546          -          -
                                                                                                                               -----------
- ------------------------------------------------------------------------------------------------------------------------------------------
GAL Asset Allocation
(1993)
Unit Price                   $22.45      22.09       20.65      17.75       15.00      13.12      10.20       10.48          -          -
Number of Units             754,224    946,287   1,026,113  1,062,839   1,083,176  1,136,906  1,037,131   1,126,518          -          -
- ------------------------------------------------------------------------------------------------------------------------------------------








                                            American Skandia Life Assurance Corporation
                                             Attention: Galaxy Annuity Customer Service

                                                       For Written Requests:

                                                            P.O. Box 883
                                                     Shelton, Connecticut 06484

                                                      For Electronic Requests:

                                                 customerservice@americanskandia.com

                                                       For Requests by Phone:

                                                           1-800-444-3970


- -------------------------------------------------------------------------------------------------------------------
                  PLEASE SEND ME A STATEMENT OF  ADDITIONAL  INFORMATION  THAT CONTAINS  FURTHER  DETAILS ABOUT THE
                  AMERICAN SKANDIA ANNUITY DESCRIBED IN PROSPECTUS GA-PROS (05/2001).
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------

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


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                ADDITIONAL INFORMATION: Inquiries will be answered by calling your representative or by writing to:

                                             AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                                                                 at

                                                            P.O. Box 883
                                                     Shelton, Connecticut 06484

                                                                 or

                                                 customerservice@americanskandia.com



Issued by:                                                                                                     Serviced at:

AMERICAN SKANDIA LIFE                                                                                 AMERICAN SKANDIA LIFE
ASSURANCE CORPORATION                                                                                 ASSURANCE CORPORATION
One Corporate Drive                                                                                            P.O. Box 883
Shelton, Connecticut 06484                                                                       Shelton, Connecticut 06484
Telephone: 1-800-444-3970                                                                        Telephone:  1-800-444-3970
http://www.americanskandia.com                                                               http://www.americanskandia.com

                                                          Distributed by:

                                              AMERICAN SKANDIA MARKETING, INCORPORATED
                                                        One Corporate Drive
                                                     Shelton, Connecticut 06484
                                                      Telephone: 203-926-1888
                                                   http://www.americanskandia.com

GALAXY

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

Item 16.  Exhibits:

         Exhibits                                                                                                    Page
         --------                                                                                                    ----

1        Underwriting agreement (Incorporated by reference to Post-Effective Amendment No. 1 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. 7 to Registration Statement No. 33-47976, filed March 10, 1994).
         EDGAR filing via Registration Statement No. 33-47976 simultaneously

5        Opinion re legality.                                                                   (Included as Exhibit 23b)

6 - 9                                                                                                      Not applicable

10       Material contracts (Investment Management Agreements)

(a)      Agreement with J.P. Morgan Investment Management Inc. incorporated by reference to
         Post-Effective Amendment No. 1 to Registration Statement No. 333-00941, filed via EDGAR
         February 25, 1997.

(b)      Agreement with Fleet Investment Advisors Inc., incorporated by reference to Post-Effective
         Amendment No. 1 to Registration Statement No. 333-00941, filed via EDGAR February 25, 1997.

11 - 22                                                                                                    Not applicable

23       Consents of experts and counsel

         23a    Consent of Ernst & Young LLP.                                                              FILED HEREWITH

         23b    Opinion & consent of Counsel.                                                              FILED HEREWITH

24       Power of Attorney

         Directors  Abram,  Boronow,  Campbell,  Chan,  Collins,  Dokken,  Kennedy,  Mazzaferro,   Moberg,
         Thwaites,  Tracy, Ullman and Winson  incorporated by reference to Post-Effective  Amendment No. 1
         to this  Registration Statement No. 333-53596, filed January 18, 2001.

25 - 28                                                                                                    Not applicable
- ---------------------------------------------------------------------------------------------------------------------------

Item 17.  Undertakings:  The undersigned Registrant hereby undertakes:

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

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

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

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

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

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

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

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

- ---------------------------------------------------------------------------------------------------------------------------
LEGAL EXPERTS:  The General  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.












                                                         Exhibits


Exhibit 23a       Consent of Ernst & Young LLP                         FILED HEREWITH

Exhibit 23b       Opinion & Consent of Counsel                         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-2 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 27th day of April, 2001.

AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Registrant

By:/s/ Kathleen A. Chapman Attest:/s/ Scott K. Richardson
Kathleen A. Chapman, Assistant Corporate Secretary Scott K. Richardson

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

Signature Title Date
--------- ----- ----
(Principal Executive Officer)

Wade A. Dokken* President and Chief Executive Officer,
--------------- 4/27/01
Wade A. Dokken Chairman of the Board and Director

(Principal Financial Officer and Principal Accounting Officer)

/s/ Thomas M. Mazzaferro Executive Vice President and
4/27/01
Thomas M. Mazzaferro Chief Financial Officer

/s/ David R. Monroe Senior Vice President, Treasurer
4/27/01
David R. Monroe and Corporate Controller

(Board of Directors)

Patricia Abram* Gordon C. Boronow* Malcolm M. Campbell*
--------------- ------------------ --------------------
Patricia Abram Gordon C. Boronow Malcolm M. Campbell

Wade A. Dokken* Y.K. Chan* Lincoln R. Collins*
--------------- ---------- -------------------
Wade A. Dokken Y.K. Chan Lincoln R. Collins

Ian Kennedy* Thomas M. Mazzaferro* Gunnar Moberg*
-------------- ------------------- --------------
Ian Kennedy Thomas M. Mazzaferro Gunnar Moberg

Christian Thwaites* Bayard F. Tracy* Deborah G. Ullman*
------------------- ---------------- ------------------
Christian Thwaites Bayard F. Tracy Deborah G. Ullman

Brett M. Winson*
----------------
Brett M. Winson

*By: /s/ Kathleen A. Chapman
----------------------------
Kathleen A. Chapman

*Pursuant to Powers of Attorney previously filed with Post-Effective Amendment No. 1 to Registration Statement No.
333-53596.

EX-23 2 gal2_s2auditorconsent.htm GAL2 S2 EY CONSENT gal2 s2 auditor consent

GAL2







INDEPENDENT AUDITORS' CONSENT
- -----------------------------

We consent to the  reference  to our firm under the caption  "Independent  Auditors"  and to the  incorporation  by
reference in this Registration  Statement (Form S-2 No.  333-02867) of our report dated February 2, 2001,  included
in the Annual Report on Form 10-K of American  Skandia Life Assurance  Corporation  for the year ended December 31,
2000  appearing in the  Prospectus,  and to the use of our report dated  February 2, 2001 on American  Skandia Life
Assurance  Corporation  Variable  Account E for the year ended  December  31, 2000,  appearing in the  Statement of
Additional Information, which are part of this Registration Statement.


                                                                       /s/ Ernst & Young LLP

Hartford, Connecticut
April 25, 2001

EX-23 3 gal2_s2gcopinion.htm GAL2 S2 LEGAL gal2 s2 legal opinion

April 25, 2001

American Skandia Life Assurance Corporation
One Corporate Drive
Shelton, Connecticut 06484

RE: Post-Effective Amendment No. 5 to Registration Statement on Form S-2
filed by American Skandia Life Assurance Corporation, Registrant
Securities Act Registration No. 333-02867

Dear Sir/Madam:

I have acted as Counsel to American Skandia Life Assurance Corporation (the "Company"), a Connecticut
insurance company, in connection with the registration of certain securities with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, in the form of a market value adjustable fixed
investment option (the "Contracts") issued by the Company.

I have examined or caused to be examined such documents (including the Form S-2 registration statement) and
reviewed or caused to be reviewed such questions of law as I considered necessary and appropriate, and on the
basis of such examination and review, it is my opinion that:
1. The Company is a corporation duly organized and validly existing as a stock life insurance company under
the laws of the State of Connecticut and is duly authorized by the Insurance Department of the State of
Connecticut to issue the Contacts.
2. The Contracts, when issued as contemplated by the Form S-2 Registration Statement, will constitute
legal, validly issued and binding obligations of the Company.

I hereby consent to the filing of this opinion as an exhibit to the Form S-2 registration statement for the
Contracts and the Account.

Sincerely yours,

/s/Scott K. Richardson

Scott K. Richardson
Senior Counsel

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